Soilbuild paying $58m for Meyer Road site

Soilbuild paying $58m for Meyer Road site
Separately, URA launches tender for Sin Ming light industrial site
By KALPANA RASHIWALA

SOILBUILD Group Holdings has bought the freehold Margate Mansion off Meyer Road for $58 million through a collective sale.

Recognising potential: Soilbuild factored in a 20% rise in DC rates in the Margate Mansion deal
The deal reflects a unit land price of $882 psf per plot ratio including an estimated $6.5 million development charge (DC) based on July 18, 2007 DC rates. Provisional permission for a new development has not been obtained, so the $6.5 million estimated DC quantum has not been locked in.

Soilbuild will have to pay DC based on Sept 1, 2007 rates, which most market watchers say will shoot up in tandem with sharp gains in residential land values over the past six months.

Asked why Soilbuild announced a deal just a day before the latest DC rates are announced, the group’s executive director Low Soon Sim said: ‘We have factored in a 20 per cent rise in DC rates for the area come Sept 1, and we see the potential of the area. This is a District 15 site located in the much sought-after Meyer Road residential enclave.’

Margate Mansion’s collective sale, which is subject to approval by the Strata Titles Board, was brokered by CB Richard Ellis.

The 34,804 sq ft site has a 2.1 plot ratio - the ratio of maximum potential gross floor area to land area. Assuming an average size of 1,500 sq ft per unit, the site can be redeveloped into a new project up to 24 storeys high, with a total of 48 units, Soilbuild said in a statement yesterday.

The project may be launched towards the end of next year.

Separately, the Urban Redevelopment Authority launched a tender yesterday for a 5.13-hectare industrial site in Sin Ming Lane. The land has a 2.5 plot ratio and is being sold on 60-year leasehold tenure. Colliers International director (industrial) Tan Boon Leong reckons the top bid is likely to be in the $60 psf per plot ratio range. This would translate to a breakeven cost of $230-250 psf for the completed development.

‘If a developer wants to maximise profit, he will build a ramp-up development,’ Mr Tan said.

The site is zoned for Business 1 use and can be used for clean and light industrial use. It is within the established Sin Ming Industrial Estate.

The tender for the site, which is on the confirmed list of the Government Industrial Land Sale Programme, closes on Oct 24
Source : Business Times - 31 Aug 2007

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Horizon Towers saga reaches a turning point

Horizon Towers saga reaches a turning point

By MICHELLE QUAH
(SINGAPORE) The long-running saga that has gripped the Singapore property market has reached a turning point; the majority sellers in the Horizon Towers debacle now have just over a week to respond to lawsuits filed against them.
Sued for allegedly messing up the en bloc sale of the development, the majority sellers need to decide if they should contest the action or give in to the demands.

BT spoke to several lawyers to determine the implications of each decision.

Background

The tale began in February when 84 per cent of Horizon Towers owners - the majority sellers - agreed to sell the Leonie Hill development en bloc to Hotel Property Ltd (HPL), Morgan Stanley Real Estate-managed funds and Qatar Investment Authority for $500 million.

The sale fell through when the Strata Titles Board (STB) in early August refused to grant an order for the collective sale. The board said the sale application was defective because certain documents were missing.

STB’s rejection came just days before the Aug 11 deadline for the completion of the collective sale. To salvage the deal, HPL and its partners asked the majority sellers to extend the deadline and either to appeal against the STB’s decision or file a fresh application.
“The majority sellers can easily rectify the situation: they can extend the deadline and refile an application to save the sale.’

- Nicholas Narayanan
of law firm Nicholas & Co

When the majority sellers did not respond, HPL and its partners decided to make good on their threat to sue.

The lawsuit

Through their lawyers, Allen & Gledhill, HPL and its partners filed an originating summons in the High Court last week - naming all 255 owners and the sales committee members who signed off on the collective sale as defendants.

It is believed that HPL feels the majority sellers may not have kept faith with them - especially when some sellers were not keen on having the en bloc sale succeed, when subsequent collective sales of neighbouring developments fetched much higher prices.

HPL and its partners are now demanding that the majority sellers ‘do everything necessary’ to obtain the collective sales order - including extending the sale completion deadline by four months to Dec 11, appealing against STB’s decision and/or filing a fresh application for a new sales order, if needed.

Should the sellers fail to take one of these actions, HPL and its partners will sue for damages of between $800 million and $1 billion. This means each of the majority sellers could be liable for about $4 million.

The majority sellers have until Sept 11 to decide on what to do.

The minority owners are not being sued because they were not part of the collective agreement to sell Horizon Towers, but the majority’s decision would impact whether they would have to move out of their homes.

What should Horizon owners do?

The sales committee of Horizon Towers told BT they have asked the High Court to appeal against STB’s decision, but have not yet decided if they should give in to the other demands.

Some sellers have indicated their intention to contest the lawsuit, with one apartment owner saying the sellers intend to raise up to $5 million to engage lawyers to prepare their defence.

The majority is now collectively represented by Tan Rajah & Cheah, but individuals have begun seeking their own legal advice.

BT spoke to lawyers not involved in the Horizon Towers saga. While refraining from making a direct judgment on the case, the lawyers acknowledged that the majority sellers are obliged to ‘do everything in their power’ to file a proper sale application to the STB, given that they agreed to do so in the sale-and-purchase agreement.

Patrick Ee, director of law firm Legal21 LLC, told BT: ‘It’s an accepted position in law that parties to an agreement have to use their best endeavours to achieve the condition precedent in that agreement. In a previous en bloc deal I was involved in, we advised the sales committee to extend the sale completion deadline because that was what was needed to ensure that the sellers were ‘doing everything in their power’ to make a proper collective sale application to the STB.’

Mr Ee also pointed out that in the case of Horizon Towers, the STB had rejected the collective sale order application because of improper documentation. ‘Speaking generally, technicalities which can be rectified should be dealt with,’ he said.

Some majority sellers have also indicated their intention to name the lawyers and sales agents who advised them on the collective sale application as third parties to the claims made by HPL and its partners.

A corporate lawyer, who asked to remain unnamed, commented on such a course of action: ‘Naming their advisers as third parties doesn’t absolve the sellers of their contractual obligations to the buyers; it merely serves to indemnify them against some of the damages which HPL is looking to claim against them.’

Alvin Chang of M&A Law Corporation explains the position further: ‘Bringing in the advisers as third parties doesn’t mean the sellers can shift the blame completely on the advisers. It just means that, should HPL prove its case against the sellers and succeed in their claim for damages, the sellers can try to get their advisers to indemnify them for those damages caused as a result of the advisers’ negligence or inadequate advice.

‘But whether the sellers have a case would depend a lot on the scope of work their advisers were supposed to provide during the en bloc sale application.’

Nicholas Narayanan of law firm Nicholas & Co believes the focus should be on resolving the issue, rather than assigning blame. ‘I feel it’s premature at this juncture to point fingers at various parties as to who’s to blame for the STB’s decision, when a resolution for the whole matter is clearly in sight. The majority sellers can easily rectify the situation: they can extend the deadline and refile an application to save the sale,’ Mr Narayanan said.

Source : Business Times - 31 Aug 2007

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Foreign funds, individuals on property spree

Foreign funds, individuals on property spree
Almost $2b spent on buying condos this year
By ARTHUR SIM
(SINGAPORE) Institutional investors and foreign individuals have been bulk-buying 10 to 50 condominium units at a time here, with such deals expected to have hit almost $2 billion so far this year.
High net worth individuals are primarily driven by confidence in the market and personal interest in a particular project.
CB Richard Ellis (CBRE) Research says at least 16 deals worth a total of about $1.7 billion have been done in the first eight months.

And CBRE executive director (investment properties) Jeremy Lake believes 20-25 per cent more deals could also be going undetected.

The deals are usually registered as acquisitions by companies. More detailed data is held by the Inland Revenue Authority of Singapore but is not available to the public.

The Urban Redevelopment Authority releases quarterly figures on purchases by companies but these are only for sold, uncompleted private residential projects.

The figures nevertheless show that companies bought 279 units in the second quarter of this year - six times more than the 39 units in Q2 2006.

Societe Generale (SG) said in April that it had set up a property fund that had already raised $20 million that was quickly invested in 10-15 properties in prime districts.

These transactions were not captured by CBRE. And when contacted recently for more information, SG said that because the fund is a private one, it could not give details.

Other institutional investors said to have made bulk-buys recently are Kuwait Finance House and Goldman Sachs.

According to CBRE, only three deals were done in 2006. Citadel Equity Fund, for one, bought 25 units at One Tree Hill Residence.

The trend is not new. Mr Lake said Pramerica made bulk-buys at Avalon, Holland Hill and Duchess Crest in early 2002.

The current buoyancy in the property market is the major factor behind the resurgence of such deals.

As Mr Lake pointed out: ‘You can participate in this market as a developer - as Lehman Brothers is doing through joint ventures with Chip Eng Seng. The other route is to buy units.’

The returns may be less, but Mr Lake said: ‘There is also less risk compared to a development project.’

The investment in a development project is also much larger. ‘Some of these investors are not looking to spend large amounts of money,’ he said.

According to CBRE, most bulk-buying was by individual foreign investors. Their identities are not readily available, as they could have bought through companies. But Mr Lake believes these high net worth individuals are ‘primarily driven by confidence in the market and personal interest in a particular project’.

Bulk purchases at Reflections @ Keppel Bay included one such private investor as well as a Middle Eastern fund, he said.

He reckons these buyers are looking for either rental returns or capital appreciation. ‘In either case, they expect prices to increase.’

They may also want to diversify their portfolio and spread risks, he said.

But in light of the global credit crunch, investors everywhere will be re-evaluating risk.

And according to Mr Lake, it is ‘unlikely’ that the same number of investors - institutional or otherwise - would choose to park their money in real estate in the months ahead. ‘They will be more selective now,’ he said.
Source : Business Times - 31 Aug 2007

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Prime state sites in Toa Payoh, Alexandra for sale

Prime state sites in Toa Payoh, Alexandra for sale

By Tan Hui Yee, Housing Correspondent

TWO prime state sites - an Alexandra Road residential plot and a commercial one in Toa Payoh - are now available for sale.
The Alexandra site is a 99-year leasehold plot near Tanglin View, Tanglin Regency and the upcoming Metropolitan just a stone’s throw away from the Redhill MRT station.

The site area is 0.86ha and has a maximum gross floor area of 451,428 sq ft. With these dimensions, a condominium 40 storeys high with 360 to 400 homes can be developed on the site.

The Urban Redevelopment Authority is marketing the site, which is on the Government’s reserve list.

It will go to tender once a developer commits to an acceptable bid.

Analysts agree that the site is a prime one but have given wide-ranging estimates on how much it will fetch.

Mr Nicholas Mak, director of consultancy and research at Knight Frank, expects a top bid of $375 to $400 per sq ft per plot ratio (psf ppr).

CB Richard Ellis executive director Li Hiaw Ho, however, tips it at $650 to $750 psf ppr, while Jones Lang LaSalle’s regional director and head of investments, Mr Lui Seng Fatt, forecasts a bullish $1,000 psf ppr or more. That values the plot at $451 million.

Mr Li likened the condo that could be built on the site to the one going up next door - the 99-year leasehold Metropolitan, which drew long queues when it was launched.

‘We expect the new project to be popular among prospective home buyers. Investors will be attracted to this project, too, as apartments in the locality are popular among tenants,’ he said.

Mr Li expects the condo units to each sell for an average price of $1,200 psf to $1,300 psf.

The Toa Payoh commercial land, meanwhile, is a 99-year leasehold site in Lorong 6 with an area of about 0.14ha.

It can take up to 45,105 sq ft of built-up space comprising retail, food and beverage, office and entertainment outlets.

The tender, which is being handled by the Housing Board, closes on Oct 16.

Mr Lui of Jones Lang LaSalle estimated that the site could yield about 30,000 sq ft of lettable space and would fetch at least $70 million in the tender.

The small site near the bustling HDB Hub can accommodate a three- to four-storey development suitable for retail or food outlets serving the mature housing estate and offices nearby, he said.

Source : Straits Times - 30 Aug 2007

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Good class bungalow sold for record $29m

Good class bungalow sold for record $29m

By Fiona Chan, Property Reporter

A BIT OF HISTORY : Glencaird - a restored, 105-year-old Victorian bungalow - was completed in 1999 as part of The Glencaird Residences. — PHOTO: WHEELOCK PROPERTIES

A GOOD class bungalow at 15 White House Park has become mainland Singapore’s most expensive, after it was sold for a record $1,308 per sq ft (psf) - eight years after the historic property was restored and put on sale.
The 22,000 sq ft conservation bungalow - called Glencaird - was sold to a Singaporean for $28.8 million, Wheelock Properties said in a statement yesterday.

Wheelock has been managing the property for Oroll, a wholly-owned unit of The Wharf (Holdings), which is also owned by Wheelock’s parent, Wheelock and Company.

Glencaird is one of 12 luxury bungalows that make up The Glencaird Residences and the only conservation bungalow in the series.

Oroll developed the bungalows.

The other 11 bungalows have already been sold at an average price of $838 psf.

Before it finally found a buyer, Glencaird - a restored, 105-year- old Victorian bungalow with five bedrooms - had sat empty since its completion in 1999.

‘We received several offers for Glencaird over the years,’ said Mr David Lawrence, Wheelock’s chief executive officer, in the statement.

‘However, we felt they were not reflective of the value, given that this is a very unique conservation piece in an excellent location.’

Prior to Glencaird’s sale, the record for mainland Singapore’s priciest bungalow was held by 63 Dalvey Road - sold in March for $16.45 million, or $1,091 psf.

On Sentosa, the highest price fetched by a bungalow plot is $1,473 psf.

Good class bungalows, Singapore’s most prestigious homes, are now enjoying astronomical asking prices amid the property boom.

Source : Straits Times - 30 Aug 2007

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Wing Tai full-year income soars to $382m

Wing Tai full-year income soars to $382m

By Tan Hui Yee, Housing Correspondent

PROPERTY and retail group Wing Tai Holdings almost tripled its full- year net profit to $382 million on sparkling home sales and revaluation gains.
Revenue grew 10 per cent to $982 million.

Wing Tai proposed a one-for-10 rights issue at a price of $2.05 a share - a discount of 41 per cent - as well as a special rights dividend of 25 cents per share, on top of the final dividend of three cents per share and a special dividend of five cents per share.

A revaluation of assets - mainly of its Winsland House property - alone lifted Wing Tai’s income by $189 million.

More income was also booked from homes sold in its developments - Draycott Eight, Kovan Melody, The Light@Cairnhill and Amaryllis Ville.

The company sold 1,311 homes worth $1.79 billion in Singapore in the 12 months ended June 30. It sold a further 313 units worth $219 million in Malaysia, Hong Kong and China.

Among its projects under development or completed, Wing Tai has only 30 unsold units in VisionCrest Residence in Oxley Rise and 70 left among the 140 units in Helios Residences in Cairnhill Circle.

The company has residential projects covering one million sq ft of floor area in the pipeline in Singapore, including Belle Vue Residences in Oxley Walk and L’viv in Newton Road, and a further 11.3 million sq ft in Malaysia and China.

It aims to launch most of these within the next 12 to 18 months.

Earnings per share grew from 17.84 cents last year to 53.12 cents, while net asset value per share grew 30 per cent to 2.07 cents.

Chairman Cheng Wai Keung did not appear too concerned yesterday when asked if the impending tightening of rules on collective sales would affect the company’s prospects.

He said the rules would lengthen the procedure for collective sales, increasing the risk that developers face.

Developers who cannot buy enough land will find it hard to expand, but Wing Tai is in a ‘reasonable position’, he said.

Mr Cheng added that the subprime crisis in the United States had temporarily affected the take- up rate of properties.

‘But it’s actually not a bad thing,’ he said, adding that the prices of high-end homes had risen very fast over the past few months and that the market needed some consolidation.

Mr Cheng believes that there is still room for property prices to grow if the US sub-prime crisis resolves itself within ‘a reasonable period of time’.

He said Singapore’s economy is performing well, and property prices here are lagging behind in cities with similar developments.

Source : Straits Times - 30 Aug 2007

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Ascott to buy Wilkie Road serviced apts for $79m

Ascott to buy Wilkie Road serviced apts for $79m
Property to take on Citadines brand, will open in 2009

By CHEN HUI FEN

THE Ascott Group has agreed to buy a 99-year leasehold serviced residence in town for $79.3 million, the company announced yesterday.

Strategic location: The property is part of lifestyle complex Wilkie Edge, a mixed development consisting of offices, retail, and F&B outlets currently being built
The property, located at Wilkie Road, is part of lifestyle complex Wilkie Edge, which is under construction. Wilkie Edge is a mixed development consisting of offices, retail, and food and beverage outlets.

The acquisition, to be funded from internal resources and external borrowings, will bring Ascott’s property portfolio in Singapore to 11, with a combined 1,042 units. It will be named Citadines Singapore Mount Sophia and open in the first half of 2009.

‘Citadines Singapore Mount Sophia is strategically located in the heart of Singapore’s upcoming arts, learning and entertainment hub in the Bras Basah-Bugis area,’ said Ascott president and CEO Jennie Chua. ‘It is in the city centre with excellent access to the central business district and the shopping and entertainment attractions of Orchard Road.’

The Ascott Group had earlier inked a memorandum of understanding to manage Wilkie Edge’s serviced residences for an initial 10-year term with an option to extend it for another 10 years.

‘Strong demand for extended-stay accommodation, the vibrant real estate market, and the property’s attractive location are reasons for Ascott to acquire leasehold interests in the serviced residence instead of only managing the property for fee income,’ added Ms Chua. ‘This will enable us to maximise shareholder returns.’

The new property will have 154 units and be Ascott’s first Citadines-branded serviced residence in Singapore. It will cater to the young and trendy, expatriates working in the creative services community as well as foreign students and academics from the nearby Singapore Management University, Nanyang Academy of Fine Arts and LaSalle College of The Arts.

The acquisition agreement is inked between Ascott’s indirect wholly owned subsidiary Ascott Scotts Pte Ltd, CapitaLand Selegie Pte Ltd and HSBC Institutional Trust Services, which is the trustee of CapitaCommercial Trust (CCT).

Just last month, CCT had announced that it is buying Wilkie Edge for $262 million. The pact comes with an option to lease the serviced apartments for a $79.3 million consideration. When this option is exercised, CCT’s purchase price for Wilkie Edge will be reduced to $182.7 million.

Source : Business Times - 30 Aug 2007

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Alexandra condo site up for tender

Alexandra condo site up for tender
HDB also invites bids for sale of commercial plot at Toa Payoh Lorong 6

By LYNETTE KHOO

THE Urban Redevelopment Authority yesterday asked for tenders for a 99-year leasehold residential plot at Alexandra Road, close to the Redhill MRT station and opposite the Metropolitan, after receiving a minimum bid price that triggered the launch from the Reserve List.

The Alexandra site may draw strong interest as it is located at the fringe of the Tanglin housing district.

The site occupies some 8,559 square metres with a gross plot ratio of 4.9, which can generate a maximum permissible gross floor area of 41,939 square metres.

It is zoned for development of condominium or serviced apartments. Property consultancies said the site could be developed into a 40-storey condominium.

Knight Frank managing director Tan Tiong Cheng said that he expects the project to have some 380 units averaging 1,200 square feet in size, given that its height and plot ratio are similar to those of the Metropolitan - a joint project between CapitaLand and Lippo Group.

Mr Tan reckons that bids for the site could have been in the region of $400 per square feet per plot ratio (psf ppr) or a lump sum of $180 million and expects the units to fetch average prices of $950-1,000 psf when they are put on the market, given that units in the nearby Metropolitan are fetching some $924 psf in resale prices in the third quarter.

CB Richard Ellis executive director Li Hiaw Ho estimates that the site could have drawn bids in a higher range of $650-750 psf ppr.

‘This will translate to an average selling price of between $1,200 psf and $1,300 psf, which could be attainable in the second half of 2008,’ he said, expecting strong demand to come from upgraders and investors who are looking to rent out the units given its proximity to the city and amenities.

In comparison, the Metropolitan site was purchased by the developers at $350 psf ppr in November 2005.

Based on the strong demand seen in Metropolitan where all 382 units were sold within six months, market watchers said that they expect the Alexandra site to draw strong interest from developers given that it is located at the fringe of the established Tanglin housing district which is within a five to 10 minute drive to Orchard Road, the Central Business District, Marina Bay, and the southern waterfront area.

Yesterday, the Housing & Development Board invited tenders for the sale of a commercial site at Toa Payoh Lorong 6, under the Confirmed List of the Government Land Sales Programme.

The 99-year leasehold site has a land area of 1,396.8 square metres with maximum allowable gross floor area of 4,190.4 square metres, and is located near the HDB Hub.

Its tender will close on Oct 16 and the project is expected to be completed by 66 months from the date of tender acceptance.

Mr Li from CBRE estimates that the site could yield about 34,000 square feet of net lettable area of commercial space and can be developed for a variety of uses including retail, F&B, office and entertainment facilities such as cinemas, bowling alleys and fitness centres.

‘It is likely that the successful bidder would devote 100 per cent of the maximum gross floor area for retail use, so as to tap on the large population catchment within the Toa Payoh housing estate as well as workers and visitors at HDB Hub,’ he added.

‘We expect bids to range between $600 and $700 psf ppr. Assuming that the mall is able to fetch a monthly rent of about $7-9 psf per month, this would provide the developer with a stabilised yield of about 5.5-6 per cent.’

Source : Business Times - 30 Aug 2007

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Wing Tai chief cautiously upbeat on property prices

Wing Tai chief cautiously upbeat on property prices

WING Tai Holdings’ head honchos yesterday said the US sub-prime woes have slowed property transactions across the whole market here but believe that property prices are still on a growth path ‘if the sub-prime (crisis) stabilises within a reasonable period’.

Mr Cheng: Sub-prime crisis has temporarily affected property market
Wing Tai chairman Cheng Wai Keung said: ‘Yes, temporarily, it has affected some of the take-up rates. But it is actually not a bad thing. The market needs a bit of consolidation. High-end home prices have gone up 100 per cent within the last six to nine months. It’s just not sustainable. But if sub-prime settles within a reasonable period, I believe there is still room to grow in the property market. We are not at the end of the property cycle.’

Mr Cheng and his brother, Edmund, the group’s deputy chairman, were fielding questions during the group’s full-year results briefing.

‘On the other hand, if sub-prime or the credit market continues to be in turmoil and it affects confidence in general, then of course it will be a completely different scenario,’ he added.

Mr Cheng also acknowledged that Wing Tai had seen an increase in buyers not exercising options but the rate is ‘not alarming’, at ‘just a handful’.

Buyers giving up options is a factor of two things: how aggressively a developer pushes for a sale and its selling price. ‘Our style is that given that the market is slow, there’s no point to push for a sale (and then have the buyer) back out later. Secondly, our pricing maximises our profit but we also leave something on the table (for the buyer) so at least he has a hope that the price is supportable,’ Mr Cheng said.

As for the proposed changes to legislation governing collective sales, Mr Cheng reckons they will slow down en bloc sales since such deals will now take longer to execute. ‘From a positive angle, it will slow down supply of land with redevelopment potential which means there will be less competition for companies that already have some landbank. But on the other hand, if you have less land to buy, then you cannot grow your business as fast as you would like to.

‘But given the recent run-up in property prices, people will be a lot more cautious in buying more development land. So in a nutshell, I think it’s good. At least it allows the market to consolidate and adjust itself, and also takes away some of the uncertainty under old en bloc rules.’

Source : Business Times - 30 Aug 2007

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Property firms record good H1 gains, outlook bright

Property firms record good H1 gains, outlook bright
Progressive booking of profits from projects sold will underpin results

By KALPANA RASHIWALA

ALL the big listed property groups have reported substantial gains in net earnings for the period ended June 30, 2007.

And the earnings outlook for the second half is positive, as developers continue to progressively recognise profits from Singapore residential projects already sold based on percentage of completion, enjoy higher rents from their Singapore office portfolios and book fair value gains on investment properties, says DBS Vickers Securities analyst Wallace Chu.

In fact, in the latest results reason, bottom lines were substantially boosted in many instances by revaluation gains on investment properties - particularly office properties that have gone up sharply in price - arising from the implementation this year of Financial Reporting Standard 40 (FRS 40).

This standard requires that fair-value gains and losses on investment properties be recorded in the profit-and-loss account. Some companies chose to do valuations and book gains on investment properties for their financial periods ended June 30 this year, such as CapitaLand and UOL Group, while others, such as Keppel Land and Singapore Land, have said they will do so at the end of the year.

The biggest revaluation gains seen this reporting season came from CapitaLand. It booked fair value gains of $645.4 million for Q2 ended June 30, 2007 and $647.4 million in H1 2007. But that’s not surprising since the group, including its listed unit CapitaCommercial Trust, has one of the biggest office portfolios in Singapore.

In the latest results reason, bottom lines were substantially boosted in many instances by revaluation gains on investment properties

But even without such gains, CapitaLand’s net earnings were up substantially year-on-year for Q2 and H1, due to the strength of its overall operations, especially residential development sales in Singapore and China, and higher fee-based income from commercial and retail operations.

City Developments, too, posted the best result in its history - with strong showings from residential property development, rental properties and hotel operations under listed Millennium & Copthorne Hotels and CDL Hospitality Trusts. Q2 net earnings rose 333 per cent year on year to $194.4 million, and CityDev’s H1 bottom line improved 272 per cent to $320.5 million.

Management emphasised that the sterling results were achieved without booking any revaluation gains on the group’s substantial investment property portfolio, including offices.

CityDev said it is continuing its conservative accounting policy of stating investment properties at cost less accumulated depreciation and impairment losses, an option allowed under FRS 40.

KepLand, which has said it will revalue its investment properties at year-end, saw its Q2 and H1 net earnings go up 42 per cent and 56 per cent respectively on the back of strong residential sales in Singapore and overseas and the robust Singapore office market.

Analysts expect the group to book gains of $221.6 million in the second half of this year from the divestment of its one-third stake in One Raffles Quay to K-Reit Asia - if the transaction is approved by shareholders of both companies.

As well, KepLand’s second-half earnings are expected to be boosted by fair-value gains on revaluation of its investment properties at year-end under FRS 40, given the group is a major office landlord.

Most Singapore listed developers, which have enjoyed strong Singapore residential sales in the recent past, can look forward to continue progressively booking profits from these projects in accordance with the percentage of completion. CityDev will start booking from its Solitaire condo from Q4 2007 onwards, while profits from One Shenton will be recognised in stages starting next year.

The group sold 1,315 homes valued around $2.4 billion in H1 2007 - about three times the value in the same period last year. The group’s share of pre-tax profit from residential sales yet to be booked is about $1.4 billion. This is expected to be recognised progressively over the next few years.

So far, the sub-prime woes and ensuing credit crunch in the US do not appear to have cooled developers’ residential sales in Singapore or prices - as is evident from the strong take-up rate for Frasers Centrepoint’s Soleil @ Sinaran launch, despite the benchmark price for the location.

But if and when they do, that could cast a pall on developers’ residential profits going forward. ‘Sentiment and strength of the equity market will be more important share price drivers for listed property groups,’ an analyst with a foreign broking house says.

Source : Business Times - 30 Aug 2007

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URA to auction 12 Sembawang sites for landed homes

URA to auction 12 Sembawang sites for landed homes

FOR the first time in six years, the Urban Redevelopment Authority is offering small sub-divided landed housing plots for sale. It will auction 12 on 99-year leasehold tenure at Sembawang Road/Andrews Avenue on Oct 30.

The plots, in Phase 1 of a new landed housing estate called Sembawang Green, can be developed into a total of 57 homes - 42 terrace houses, 14 semi-detached homes and a bungalow. The sale is aimed at encouraging wider participation by smaller developers and even individuals wanting to build dream homes opposite Sembawang Park and near Sembawang Beach. The approach is similar to that taken by URA for Kew Drive in 1993-1994 and Eastwood Park in 1995-1996, both in the Bedok area, and Chuan Green in 1997-2001. The Sembawang plots range in area from 4,243 sq ft (for a two semi-detached house development), to 43,694 sq ft (for a 23 terrace-home project). All 12 plots can be developed up to three storeys.

Knight Frank director Nicholas Mak expects the terrace plots to fetch $220-250 psf of land area and the semi-detached and bungalow plots around $180-200 psf. These reflect breakeven costs of $870,000 to $930,000 per terrace house, $1.025 million to $1.1 million per semi-D and $1.5-1.6 million per bungalow.

CB Richard Ellis executive director (residential) Joseph Tan expects the terrace plots to fetch $220 to $250 psf of land area, the semi-D plots $240 to $270 psf and the sole bungalow site $260-$300 psf. Based on these bid ranges, the terrace houses could sell for about $1.0-1.1 million, the semi-Ds for $1.4-1.5 million and the bungalow for $2.6-2.8 million, according to Mr Tan.

The plots are next to the established landed housing estates of Straits Garden and Sembawang Straits Estate. URA has already put in infrastructure. A URA spokeswoman said the authority will decide on the number of phases for Sembawang Green and the number of homes in each phase after the auction of the Phase 1 plots.

Source : Business Times - 29 Aug 2007

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Property stocks slip on fears over new rules

Property stocks slip on fears over new rules
Investors worried over impact on land-banking; office market retains shine
By LYNETTE KHOO

RESIDENTIAL property stocks took a beating yesterday as investors got the jitters over tougher en bloc legislation that could slow land-banking.
City Developments slipped 40 cents or 2.6 per cent to $14.70, CapitaLand lost five cents or 0.7 per cent to $7.40 and Keppel Land shed five cents or 0.6 per cent to $7.90.

The counters were hit in a lacklustre market, as the benchmark Straits Times Index slid 45.44 points or 1.3 per cent to 3,343.

CIMB-GK property analyst Donald Chua said property firms were sold on worries the government could take further measures to contain prices.

‘Investors are sitting back to wait and see what policy comes out and how it affects the market,’ he said. ‘But even if you look at the en bloc legislation, it has no real impact on fundamentals.’

Other analysts also said proposed changes to en bloc sale rules are unlikely to have a major impact on developers, with the pace of such sales having already slowed because of higher asking prices.

Winston Liew of OCBC Investment Research said the dispute between en bloc sellers at Horizon Towers and buyers including Hotel Properties Ltd has been a dampener. ‘And these changes to legislation are just further impediments that have been put in place to reduce the rate of en bloc developments.’

OCBC has a ‘hold’ call on CapitaLand and Keppel Land while keeping a ‘buy’ call on City Developments given its exposure to the office market and substantial pre-sold projects that reduce earnings risk.

Some analysts feel the new legislation will not hit developers’ earnings too hard. ‘It’s a tweaking of rules but not very prohibitive,’ said Macquarie Research Equities analyst Soong Tuck Yin said. ‘The pace of land-banking depends more on pricing than the rules.’

CIMB-GK’s Mr Chua said: ‘The property market is still strong and prices for the past half-year have consistently surprised on the upside. But at current levels, we don’t think investors are willing to take much risk, so the bullish view of further physical price appreciation may be halted for the moment.’

He is more upbeat about the office market, with rents expected to keep going up amid the supply crunch. The highest current office rent of about $18.50 per sq ft per month is expected to breach $20 for prime space by this year, Mr Chua said.

He reckons the residential sector is expected to ‘take a step back’ to see whether demand is sustained.

Among developers, he favours those that have aggressively built up landbanks at lower prices, such as Ho Bee Investment and CityDev. He has a ‘buy’ rating on both stocks in view of current low valuations caused by the recent market correction.
Source : Business Times - 29 Aug 2007

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Owners eager to push pending collective sales

Owners eager to push pending collective sales
They could soon face higher hurdles under new rules aimed at more transparency
By LYNETTE KHOO
(SINGAPORE) Ahead of proposed changes to the Land Titles (Strata) Act, property agents and owners of affected en bloc sites are eager to push pending sales as they may soon face bigger hurdles when the amendments become law.
Changes in en bloc sale legislation, expected to be passed in early October, are aimed at providing more transparency and safeguards to ensure all stakeholders get a fair deal.

But this means owners that want to sell en bloc will have to follow new rules, which could mean higher costs and a prolonged process.

Jones Lang LaSalle’s regional director and head of investments, Lui Seng Fatt, estimated there are some 50 en bloc sites already launched by tender or expression of interest in the market, with about half of these not having obtained consent from owners holding at least 80 per cent of share value. ‘They would have strong incentives to get through. Otherwise, if the new law kicks in… they would have higher hurdles to clear,’ Mr Lui said.

The amendment will mean that the majority consent is to be based on the area of the units in the development. This is in addition to the current requirement for consent from owners holding at least 80 per cent of share values for developments more than 10 years old, or 90 per cent for developments less than 10 years old.

En bloc deals that have not taken the area of units in the development in their definition of majority consent will have to redraft their collective sale agreement (CSA) if they fail to reach the market before the new legislation is passed. ‘If we don’t achieve the 80 per cent consent we’ll have to restart the exercise,’ said Jeremy Lake, executive director of investment properties CB Richard Ellis.

‘That’s extremely time-consuming, so it makes more sense to try to achieve the 80 per cent as quickly as possible. And for projects that are far away from it with no chance of achieving 80 per cent before the legislation sets in, we will have to review the situation.’ Mr Lake said the new legislation will encourage owners who have been ’sitting on the fence’ about selling en bloc to decide sooner rather than later.

CBRE has about five en bloc applications that have not passed the 80 per cent mark, with the level of consent obtained so far averaging 50 per cent. DTZ Debenham Tie Leung revealed that six of the en bloc deals it is handling are at various stages of signature collection, with some close to achieving 80 per cent consent.

Credo Real Estate has seven or eight projects that have not reached 80 per cent. These consultancies said that while the amendments to en bloc sale legislation will enhance clarity and transparency, they will add to costs and slow the pace of sales. For instance, owners will have to spend more hiring lawyers to witness the signing of CSAs and obtaining valuation reports, said Credo managing director Karamjit Singh.

These consultancies have received calls from concerned sellers who want to discuss the implications of the new legislation on existing en bloc procedure. DTZ director Shaun Poh said: ‘We would probably need to reassess the situation right now. For those close to the 80 per cent mark, I would advise them to hold a meeting with our lawyers to discuss the salient points of the new legislation and encourage them to push through the 80 per cent mark.’ For those far from achieving the minimum consent requirement, DTZ will meet sales committees to help them make informed decisions and redraft CSAs if need be.

While there could be a rush to collect signatures for en bloc sites ahead of the changes to the Land Titles Act, this could be followed by a lull as prospective sellers mull over the new en bloc requirements. ‘I think the bottle-neck will clear once this new legislation becomes standard operating procedure but I can see that temporarily, it will slow down the pipeline,’ Mr Lui of JLL said.

Source : Business Times - 29 Aug 2007

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Rafidah highlights opportunities for Singapore business

Rafidah highlights opportunities for Singapore business
Malaysian minister points to close economic ties between neighbours
By NANDE KHIN

(SINGAPORE) Singapore and Malaysia have more to gain by working together than constantly competing with each other, Malaysia’s International Trade and Industry Minister Rafidah Aziz said yesterday.

Call to work together: Ms Rafidah, with Singapore’s Minister for Trade and Industry Lim Hng Kiang, at a seminar on business opportunities in Malaysia
Speaking in Singapore at a seminar on business opportunities in Malaysia, the minister rattled off figures to show how intertwined the Asean neighbours were.

She said both countries could not avoid working together when 205,000 or so Malaysians work in the Republic, including 120,000 who commute daily.

Conversely, 130,000 Singaporeans visit Malaysia daily.

‘That’s how close we are,’ she said.

Such close ties are also evident at other levels.

Last year, two-way trade jumped almost 10 per cent year-on-year to US$40.1 billion in 2006.

Singapore was Malaysia’s second largest trading partner that year, accounting for 16 per cent of Malaysia’s total trade.

Top traded items include electronics and electrical products and refined petroleum products.

‘Exports via Singapore amounted to US$12.68 billion, or 7.9 per cent of Malaysia’s global exports, while the value of imports via Singapore was US$23.14 billion, accounting for 17.7 per cent of Malaysia’s global imports,’ Ms Rafidah said.

‘It is clear that as competition gets more keen, industry competitors and rivals have found it a viable strategy to forge alliances and to work together rather than dissipate resources by competing,’ she said.

On the investment front, 196 Singapore manufacturing projects in Malaysia worth a total of $1.6 billion were approved between January 2006 and July this year.

These include 66 projects approved so far this year with a total investment of $759.4 million.

‘These links cannot be severed,’ Ms Rafidah told an audience of business executives from both sides of the Causeway. ‘In other words, we grew together. We are not there trying to kill each other.’

Investment opportunities abound in Malaysia, not only in manufacturing but also in the services sector, she said.

Under Malaysia’s Third Industrial Master Plan, the services sector is expected to grow an average of 7.5 per cent a year over the next 15 years and its contribution to GDP is expected to increase to 59.7 per cent by 2020 from 50.8 per cent in 2006.

The sector’s total investment target over this period is $300 billion.

Opportunities for Singapore companies are available in business and professional services, integrated logistics, information and communication technology (ICT), education, health and tourism services, Ms Rafidah said.

She also urged Singapore companies to set up operational headquarters in Malaysia which has advantages in terms of a well-developed infrastructure, relatively low business costs, an educated and multi-lingual workforce, attractive investment packages and liberal policies on foreign equity participation and expatriate employment.

Ms Rafidah also highlighted the Iskandar Development Region (IDR) and the Northern Corridor Economic Region as attractive investment destinations.

The IDR, for example, offers incentives for companies in tourism, education, healthcare, logistics and creative industries.

During the seminar, organised by parties including Malaysia’s Ministry of International Trade and Industry, the Singapore Business Federation and International Enterprise Singapore, the minister had a candid dialogue lasting about 90 minutes on the concerns of Singapore investors.

She assured them the Malaysian government is stepping up efforts to combat crime and said the situation is not as bad as portrayed in the media.

On red tape in Malaysia, she said it is ‘not the norm’ and her ministry will do its best to minimise bureaucracy. She also encouraged investors to e-mail her on any difficulties they have doing business in Malaysia so she can get her department to look into the matter.
Source : Business Times - 29 Aug 2007

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Marina Bay IR to cost more than the US$2.4b Venetian Macao

Marina Bay IR to cost more than the US$2.4b Venetian Macao
Cost could jump by up to 40%, pushing price tag of S’pore resort beyond S$5b
By ARTHUR SIM
IN MACAU
GAMING and resorts operator Las Vegas Sands’ newly opened US$2.4 billion Venetian Macao in the Chinese territory may be the biggest single structure in Asia, and it may be the second biggest building in the world.
Ready for business: A replica of St Mark’s Square at the Venetian Macao, which officially opened yesterday. The resort will host 44 major events over the next 2 years, the largest one expected to attract 30,000 visitors.
But its Marina Bay Sands (MBS) integrated resort in Singapore will be more expensive - especially now that costs could escalate by as much as 40 per cent to hit some S$5.2 billion, or about US$3.4 billion.

Speaking at a press conference here yesterday at the official opening of the Venetian Macao, Las Vegas Sands COO William Weid-ner said that it had been ’struggling to stay on budget’, but rising construction costs coupled with the refinement of design on the complicated curving structure of the hotel towers is likely to push up the overall cost of the Singapore project by between 20 and 40 per cent.

Sands beat three other bidders in a hard-fought campaign last year to clinch the licence for the Marina Bay integrated resort. The cost of MBS had previously been estimated at S$5.05 billion including S$1.3 billion for the land. Taking away the land value and factoring in a 40 per cent rise in project cost, the Marina Bay resort could come to about S$5.2 billion.

Mr Weidner was nevertheless optimistic about the opening date of the Singapore project. ‘If we keep our noses to the ground, we can open in late 2009,’ he said.

So far, Sands says it has awarded S$700 million in construction contracts for the Singapore project. A S$1 billion contract will soon be awarded to build the hotels.

Mr Weidner said that Sands was in discussions with the Singapore government on construction costs but did not disclose details. ‘The government knows where we stand,’ he said.

Unlike most casino business models, Sands will also depend on the meetings, incentives, conventions and exhibitions (Mice) business.

Giving an update, Mr Weidner said it has currently 20 major events booked at MBS up to the year 2013. For the Venetian Macao, 44 major events have been booked for the next two years, with the largest expected to attract 30,000 visitors.

But Mr Weidner does not expect the North Asia market to eat into the South Asia market. He added: ‘When they see what is available (at the Venetian Macao), it will be much easier to sell Singapore.’

Selling Macau as more than just a casino destination has not been tested in the Chinese territory but Sands hopes to attract visitors to extend their stay with attractions that include a 15,000-seat arena, a US$150 million Cirque du Soleil show and a one million sq ft mall with 350 shops.

The number of visitors to Macau has been increasing; up to 26 million people are estimated to visit the territory this year.

Indeed, demand for travel to Macau has become so intense that the Chinese government decided to place some travel restrictions on its nationals earlier this year.

Macau has benefited from a surge in mass market players from China and, interestingly, Sands’ first casino in Macau - the smaller Sands Macao - was targeted largely at this market. It was so successful that it recouped its investment within a year.

The much more expensive Venetian Macao will be targeted at the leisure and Mice segment. Although Mr Weidner would not say when it would break even, he said it expects a yield of over 20 per cent per year on its investment. He added that Sands could sell some of its assets, including the mall.

Sands will also be looking to grow its premium-play segment which currently makes up 60 per cent of its gaming revenue.

Another strategy is to expand within Asia.

Also speaking at the press conference, Sands CEO and chairman Sheldon Adelson said that it would open other integrated resorts in Asia if allowed. But he added: ‘This is not a race.’

Noting that China alone hosted 60 million Mice delegates in 2003, Mr Adelson said, ‘There are only so many events you can hold in one building.’
Source : Business Times - 29 Aug 2007

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