Govt releases new hotel site at Alexandra Road

Govt releases new hotel site at Alexandra Road
By Fiona Chan
THE Government has released a new hotel site where the former Safra Bukit Merah Club is located, at the junction of Alexandra Road and Jalan Bukit Merah.
The 0.79ha land parcel has a 99-year lease and can be built up to a total floor area of 239,486 sq ft.

A developer that wins the site can choose to demolish or retain the Safra building, which stands empty.

The site is the first of four hotel plots to be released on the Government’s reserve list in the second half of this year.

This means it will not be put up for tender until an interested developer submits a minimum bid acceptable to the Government.

But some property consultants, such as Mr Nicholas Mak, director of research and consultancy at Knight Frank, doubt that the site will attract much interest from developers due to its location.

‘If any developer were to be interested in this site, it is likely to be a small developer or hotel operator such as Fragrance Land or Hotel 81,’ he said.

However, Mr Ku Swee Yong, director of business development and marketing at Savills Singapore, noted that there could be room for a hotel in the area.

‘It looks like a weird place to have a hotel, but down the road you have office buildings where Hewlett-Packard, Neptune Orient Lines and PSA are,’ he noted.

‘All these companies are without hotel rooms to support their business traffic.’

Mr Mak estimates that the site can host a 600-room hotel. Its likely selling price is $95 million to $103 million, or $400 to $420 per sq ft per plot ratio, he added.
Source :  Straits Times - 17 Aug 2007

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CapitaLand buys two Malaysian malls for $527m

CapitaLand buys two Malaysian malls for $527m
‘QUALITY ASSET’: Opened in 1997, Mines Shopping Fair has a unique Venetian-styled canal flowing through the shopping mall. It is part of the Mines Resort City in Selangor and measures about 650,000 sq ft in net lettable area. — PHOTO: CAPITALAND

CAPITALAND has bought two Malaysian shopping centres for around $527.1 million, it announced yesterday.
The property giant, working through two of its subsidiaries, paid $336.8 million for Gurney Plaza in Penang and about $190.3 million for Selangor’s Mines Shopping Fair.

The malls will form the first two seed assets for the proposed CapitaLand-sponsored Malaysian retail real estate investment trust (Reit), CapitaLand said.

Gurney Plaza is a seven-storey mall strategically located on Penang’s Gurney Drive promenade. The mall is about five minutes’ drive from the city centre of Georgetown.

It has more than 700,000 sq ft in net lettable area and more than 300 specialty stores.

Mines Shopping Fair is a prime retail mall that is part of the Mines Resort City in Selangor. Opened in 1997, it has a unique Venetian-styled canal flowing through the mall.

The mall is located in the growth corridor in the south of Kuala Lumpur, and measures around 650,000 sq ft in net lettable area.

CapitaLand Retail’s chief executive, Mr Pua Seck Guan, said Mines Shopping Fair is a ‘quality asset’ that ‘enjoys a good flow of human traffic’ while Gurney Plaza ‘enjoys close to 100 per cent occupancy’.

‘The acquisitions provide CapitaLand with a unique opportunity to extend our retail real estate platform to Malaysia which, in addition to Singapore, China, India and Japan, will further strengthen our position as the leading retail property company in Asia,’ he said.

CapitaLand Group president and chief executive Liew Mun Leong said in a statement that the two acquisitions will help the company increase its Reit portfolio in Singapore and overseas.

‘In line with our current Reit strategy, we have identified other quality Malaysian retail assets that will augment Gurney Plaza and Mines Shopping Fair, and form the pipeline of assets for our pure-play Malaysian retail Reit, which could possibly be listed within a year,’ he added.

CapitaLand has sponsored five Reits. Four are listed on the Singapore Exchange and one on Bursa Malaysia.
Source :  Straits Times - 17 Aug 2007

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CDL to invest up to $460m in Korean project

CDL to invest up to $460m in Korean project
It signs MOU to develop residential and commercial site in Incheon
By Gabriel Chen
CITY Developments (CDL) will be giving one of South Korea’s leading cities, Incheon, an image boost, with plans to invest up to US$300 million (S$459.2 million) in a major residential and commercial project.
The Singapore-listed property giant yesterday signed a memorandum of understanding with DC Chemical Company (DCC) to develop a large site in the city.

Under the deal, it will pump between US$150 million and US$300 million into the site, which is more than 600,000 sq m. By comparison, Suntec City Mall has only about 82,498 sq m of retail space.

Incheon, which will play host to the 2014 Asian Games, is a major seaport with a population of about 2.5 million, not far from the country’s capital of Seoul.

A large-scale commercial centre will be built on a site of 281,850 sq m, DCC said at a press conference held in Incheon yesterday.

The centre will consist of a 50-storey tower, incorporating a ‘top-class’ hotel, a service residence and an office building. These will be anchor facilities.

Department stores, brand outlets, multiplex cinemas and an e-sports gaming hall will flank both sides of the tower.

To the north of the integrated commercial centre, another large site of about 380,000 sq m of land is slated for residential development.

Renowned British and engineering firm Atkins - which was responsible for the Burj Al-Arab in Dubai, the world’s first seven-star hotel - has been roped in to be the conceptual designer for the project.

Development work is scheduled to begin in two years with the main commercial centre to be constructed first, followed by residential blocks in 2010.

The large-scale commercial centre, according to DCC’s chief executive, Mr Baik Woo Suk, will ’significantly increase’ economic activity in the area and will create many jobs, in a boost to Incheon’s economy.

‘When Incheon City hosts the Asian Games in 2014, this commercial centre will be the very first image visitors will see when crossing over on Incheon Bridge into Incheon City,’ he said.

CDL’s group general manager, Mr Chia Ngiang Hong, said the firm is always on the lookout for ‘new strategic growth opportunities’, and it believes this investment is timely, given the ‘exciting developments’ in South Korea.

‘With the synergistic collaboration of an established company such as DCC, coupled with our many decades of experience in the real estate and hotel industry, we are very positive about the prospects of this project,’ he added.

This is not CDL’s first investment in South Korea’s burgeoning economy.

Subsidiary Millennium and Copthorne Hotels owns and operates Millennium Seoul Hilton hotel, Hong Leong Group spokesman Gerry de Silva told The Straits Times. ‘Of course we’re looking for viable investments in the region, and we’ve been looking at Korea for several years now. We think Korea is a market that can offer more value.’

Shares of CDL, which is part of the Hong Leong Group, closed 50 cents lower at $13.60 yesterday. The announcement came after the market had closed.

Listed on the Korean Stock Exchange, DCC is among the world’s top producers of carbon black,

Source :  Straits Times - 17 Aug 2007

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Blue chips tumble but rebound expected soon

Blue chips tumble but rebound expected soon
STI slides again; analysts say it may be a good time to hunt for bargains
By Alvin Foo
EVERYONE knows the script by now - Wall Street plunges overnight, Asia follows it down. But it was the numbers that really told yesterday’s dismal story.
Fund managers and jittery investors continued their rush for the exit and sent the Straits Times Index (STI) plunging by 121.09 points to 3,152.16, its lowest close since March 20.

Its 234-point fall since Wednesday is the index’s biggest two-day slide since the terrorist attacks of Sept 11, 2001.

More than $44.2 billion has been wiped off the value of the top 15 stocks since the STI’s July 24 peak.

Volume yesterday was 2.78 billion shares worth $3.3 billion. Gainers trailed losers by 127 to 914.

At one point, the STI tumbled by as much as 168.78 points, mirroring Wall Street’s overnight fall of 167.45 points, sparked by more concern over credit markets.

Not even the healthy corporate results of Singapore companies have managed to calm the volatile domestic market.

Credit Suisse Asia-Pacific chief strategist Arjuna Mahendran told The Straits Times: ‘It’s a case of overshooting, in which the market gets into panic mode and overreacts.’

As with other regional bourses, the Singapore market has been plagued by worries that the United States housing slump was spreading beyond credit markets and dampening consumer spending.

That again hit banking stocks. The day’s top loser was United Overseas Bank, which fell $1 to $19.90. DBS Group Holdings dipped 60 cents to $19.60 while OCBC Bank lost 35 cents to $8.

The Singapore Exchange has been the worst-hit blue chip among the top 15 stocks since July 24. It fell by 70 cents, or 7.8 per cent, yesterday to $8.25, making it a drop of more than 23 per cent in a month.

Yesterday’s slide was sparked by news that the company had liquidated its portfolio of $139 million held in 14 externally managed funds due to recent market volatility.

Likewise, key property plays and conglomerate counters also ventured into negative territory. City Developments dropped 50 cents to $13.60, while CapitaLand shed 30 cents to $6.60 and Keppel Corp nosedived 70 cents to $11.30.

But not all blue chips were in the red yesterday. Jardine Matheson - an operator of hotels and grocery and drug stores in Asia - jumped by 50 US cents to US$23.10.

Its shares were supported by the company’s plans to buy back some of its own shares at US$24 to US$25 apiece.

Its holding company, Jardine Strategic, was the day’s top gainer - up 70 US cents at US$13.50.

Likewise, the shares were supported by a tender offer; Jardine Matheson is offering to buy up to 17.9 million Jardine Strategic shares at US$14 to US$14.50 apiece.

As a result, Jardine Strategic has been little affected by the market sell-off, with its market capitalisation shrinking by a relatively low US$300 million (S$459.2 million).

DBS, by contrast, has seen its market value plummet by $5.8 billion.

Yet, despite the mayhem, most analysts recommend this as an opportune time to pick up blue chips on the cheap.

Fraser Securities research head Najeeb Jarhom said yesterday: ‘Trade selected blue chips, as the STI is likely to rebound quickly from a support area of 3,050-3,100 to 3,200-3,250.’

And Citigroup’s chief Asian strategist, Mr Markus Rosgen, noted yesterday that ‘large-caps stocks will be back in fashion’ in the region.

‘Valuation premiums for the large caps are at their lowest in more than a decade,’ he said. He highlighted SembCorp Industries as one stock to buy, with a target price of $7.10. SembCorp closed 15 cents lower at $5 yesterday.

And the tide of the recent blue-chip selldown looks set to turn.

Said a retail investor yesterday: ‘The blue chips will be the first to recover when the STI rebounds. And a technical recovery could come as early as tomorrow.’

Source :  Straits Times - 17 Aug 2007

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July construction of new homes dips to 10-year low

July construction of new homes dips to 10-year low
Pace drops 6.1% last month to seasonally adjusted annual rate of 1.38m units
(WASHINGTON) Construction of new homes in the US fell to the lowest level in more than a decade in July as builders continued to struggle with the steepest housing slump since 1991.

The housing industry’s problems have been worsened by rising home foreclosures.

The Commerce Department yesterday reported that construction of new homes and apartments dropped 6.1 per cent last month to a seasonally adjusted annual rate of 1.38 million units.

That was down 20.9 per cent from the pace of activity a year ago and represented the slowest pace since January 1997.

The housing industry, which had enjoyed a prolonged boom until 2006, has been struggling this year with a deepening slump as builders are slashing prices and throwing in various incentives in an effort to unload record levels of unsold homes.

The problems have been worsened by rising home foreclosures, especially in the sub-prime market, a development which is dumping even more homes onto the glutted market.

The July drop in housing construction followed a 2.1 per cent rise in June, which had been driven by a big increase in apartment building.

Applications for building permits, considered a good barometer of future activity, fell by 2.8 per cent in July to an annual rate of 1.373 million units.

Housing construction fell in all parts of the country except the Midwest, which posted a 2.6 per cent increase in July.

Construction starts were down 11 per cent in the South, 3.7 per cent in the West and 1.3 per cent in the North-east.

The current housing slump is the worst since a downturn that occurred during an economic recession in 1990-91.

Overall economic growth has slowed but so far, there has been no recession as other sectors have offset the weakness in housing.

However, private economists said that the threat of a recession would rise if consumer and business confidence were seriously eroded by the current troubles in financial markets.

Meanwhile, Fannie Mae, the nation’s largest source of home loan funding, increased its share of risky sub-prime loans through 2006, although to a smaller degree than other institutions, the company said yesterday.

As the share of higher- risk sub-prime loans increased from 2003 through mid-2006, ‘our purchase and securitisation of loans that pose a higher credit risk . . . also increased, although to a lesser degree than many other institutions’, the company said in a securities filing.

About 12 per cent of the company’s single-family book of business was higher risk Alt-A mortgages as at the end of June, Fannie Mae said.

About 2.2 per cent of its book was sub-prime as at the end of June.

The company said it expects to see higher delinquencies and credit losses this year compared with 2006 and that it faces concentration risk as other mortgage industry companies fail, which should shift business to Fannie Mae.

The company also said that, as at the end of 2006, it identified eight material weaknesses in its internal control systems and that those weaknesses could harm investor confidence. — AP, Reuters
Source :  Business Times - 17 Aug 2007

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Bukit Merah hotel site up for sale

Bukit Merah hotel site up for sale

By ARTHUR SIM
THE first of the four hotel sites to be put on the reserve list of the Government Land Sales Programme for the second half of this year is to be at the junction of Jalan Bukit Merah and Alexandra Road.
The site has an area of 0.79 ha and a maximum permissible gross floor area of 22,249 square metres (239,486 sq ft).

A spokesman for the Urban Redevelopment Authority (URA) said it has already received some market interest for the site, which is close to Mount Faber and Sentosa.

The URA said: ‘The area is of a mixed-use character and there is no change in planning intentions in the near future.’

Cushman & Wakefield managing director Donald Han says that, as the site is near Alexandra Hospital, a hotel there might attract ‘medical tourists’.

At present, the area is predominantly an industrial and car showroom enclave.

‘There’s a price to everything and hotel sites are well in demand now - regardless to location,’ Mr Han said.

He thinks the site could sell for between $400 to $450 per square foot per plot ratio (psf ppr), putting it in the $100 million range.

He pointed out that hotels near regional hubs are needed to help commercial growth as part of URA’s decentralisation strategy.

Mr Han reckons a 3-star hotel with up to 400 rooms would be feasible. Rates would be below $180 per night.

Highlighting that the current $220 per night average room rate has caused some concern within the tourism industry, Mr Han said: ‘More suburban or 3-star hotels may be needed to keep hotel rates affordable, particularly for the budget-conscious tourists.’

Knight Frank director (research and consultancy) Nicholas Mak believes interest for the site is not likely to come from any of the big players.

‘If any developer were to be interested in this site, they are likely to be small developers or hotel operators such as Fragrance Land or Hotel 81,’ he said.

For the first half of the year, URA released three hotel sites on the reserve list.

In July, a hotel site in the Tanjong Pagar area sold for $97.07 million or $562 psf ppr.

Source :  Business Times - 17 Aug 2007

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Exports to UAE jump 24% to $2.7b in H1

Exports to UAE jump 24% to $2.7b in H1
Gulf nations pouring more funds into industries and infrastructure
By ARUN JOHN
SINGAPORE exports to the UAE have surged by 24 per cent to S$2.7 billion in the first half of the year, with only 7 per cent being oil related, a seminar heard yesterday.
Mr Tan: S’pore firms need to be on the ground to tap vast opportunities opening up in the Middle East
The figures came from IE Singapore, which hosted the seminar aimed at facilitating business expansion in the Middle East and in particular the Gulf Cooperation Council (GCC) countries.

These states include Saudi Arabia, Kuwait, Qatar, Oman, Bahrain and the UAE. These countries are seen as key growth areas as an increased amount of funds is now being invested into developing new infrastructure and industries.

‘Record oil prices have enabled the Middle Eastern countries to re-examine their economic development strategy. In particular, countries in the GCC have decided to diversify their economy from their dependence on oil & gas,’ said Ted Tan, deputy CEO of IE Singapore.

Mr Tan said that with the total value of planned and active infrastructure projects in the Middle East reaching an estimated US$1.5 trillion, Singapore-based companies are now open to a lot more opportunities there.

‘Businesses must first familiarise themselves with the market and where possible set up a presence to carry out focused market development. Our companies will have to be on the ground if they are to tap the region’s economic vibrancy, and more importantly to build up the relationships critical to accessing these opportunities,’ Mr Tan said.

Since 2004, more than US$6 billion worth of projects and investments in the Middle East have been secured by local companies.

An estimated US$60 billion worth of capital outflows from the GCC also made its way into Asia in the last few years. In Singapore alone, there has been an influx of investment activity from the Middle East with Qatar Telecom’s purchase of a stake in Asia Mobile Holdings and the recent S$650 million acquisition of Pan-United Marine by Dubai Drydocks.

The seminar featured speeches by various industry leaders, who covered aspects relating to business culture, tax and legal considerations specific to the Middle East.

It is also part of the various seminars organised by IE Singapore aimed at providing relevant expertise in supporting overseas expansion by local companies.
Source :  Business Times - 17 Aug 2007

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Soleil @ Sinaran condo 80% sold

Soleil @ Sinaran condo 80% sold

By KALPANA RASHIWALA
FRASERS Centrepoint has sold 80 per cent of its Soleil @ Sinaran condo near Novena MRT Station at an average price of nearly $1,500 psf, with 173 units sold at yesterday’s soft launch, following last week’s staff and VIP preview when 156 units were sold.

Soleil @ Sinaran: 173 units were sold at yesterday’s soft launch, with prices averaging nearly $1,500 psf –
The 99-year leasehold condo seems to have attracted predominantly Singaporeans and permanent residents, according to Frasers Centrepoint Homes chief operating officer Cheang Kok Kheong.

Buyers included a mix of investors as well as likely owner occupiers, drawn by the project’s location and its proximity to the Orchard Road belt, he added. There was a buyer who purchased an entire floor of seven apartments, Mr Cheang revealed.

‘Those who’re buying properties are basically looking at a long-term investment and the real economy here is still doing well,’ Mr Cheang said in explaining why the US sub-prime woes and global stock market rout seem to have had little impact on Soleil buyers.

Soleil @ Sinaran comprises two 36-storey blocks. Apartments come with one, two, three and four bedrooms. Frasers Centrepoint will release the project’s four penthouses - each with five bedrooms - at today’s official launch. Their prices start from $8.5 million.
Source :  Business Times - 17 Aug 2007

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S’pore firms likely to weather sub-prime storm

S’pore firms likely to weather sub-prime storm
Electronics, financial services somewhat vulnerable: analysts
By NANDE KHIN
(SINGAPORE) The stock market may catch a cold, but Singapore companies in general are unlikely to be infected by US sub-prime woes, analysts said.
The only ones slightly vulnerable to the fallout are those in the electronics and financial services sectors, they added. That, too, is indirectly so.

It is the uncertainty in stock markets and poor investor sentiments, rather than any collateral debt obligation (CDO) exposure, that could hurt financial services companies.

‘Trading volumes are already starting to dry up,’ noted Citigroup economist Chua Hak Bin.

Offshore lending, which has been growing very strongly, is also likely to slow down.

Market observers also pointed out that fewer deals such as mergers and acquisitions (M&As) and initial public offerings (IPOs) are taking place.

‘So there will probably be an impact on banks’ fee-based income for the second half,’ said David Lum, an analyst with Daiwa Institute of Research.

Companies in the electronics sector may also take a hit.
‘What is worrying is whether the sub-prime crisis will translate into dampened demand in investment and consumption,’ said UOB economist Alvin Liew.

If it does, companies will start paring down investments.

And if the US economy goes into a recession, companies in the electronics sector may suffer. Said Citigroup’s Mr Chua: ‘A lot of the electronic exports are dependent on US consumer demand which is already very weak.’

There is also some risk to the luxury property market segment here, as a large proportion of the buyers are wealthy foreigners ‘who are more sensitised to global sentiments and who may have had their financial assets hit already’, said Mr Chua.

But the risks are largely contained.

Domestic economic growth will continue to be fuelled by burgeoning construction and building activities which are not going to halt, said analysts.

‘Domestic demand is going to hold up fairly well, and investments should still be quite strong. We still see a lot of commercial and industrial construction investments going on,’ said UOB’s Mr Liew.

Agreed Daiwa’s Mr Lum: ‘I doubt any of the projects are going to be delayed. The IRs (integrated resorts) are still going to be built, and many of the other projects are already pre-sold.’

The tight office space supply also means that there will continue to be strong demand for office space.

‘So the building and construction driver is not going to slow down at all, and that driver is good for a few more years, not just this year,’ said Mr Lum.

Other sectors like pharmaceuticals and tourism will be fairly resilient, said Mr Chua.

Companies, even in the electronics business are not too worried.

‘While USA remains the largest economy, the consumption power of China, India and others has edged up considerably in recent years,’ said Tan Kay Guan, chief operating officer of Miyoshi Precision Ltd. This could mitigate any US slowdown.

Not mincing his words, Leslie Wa, CEO of HLN Technologies, said: ‘The world market does not hinge solely on the US market. For example, one of our smartphone makers will launch its products in Europe. Moreover, the China market is booming.’

The weakening Singapore dollar against the greenback could also make up for any weakness in demand, said Miyoshi, HLN and other companies with export sales.

Said Tan Kok Hiang, executive director of Viz Branz Ltd: ‘Most of our exports are invoiced in US dollar, so the strong US dollar is positive for us.’

Would the drying up of liquidity cause concern? Analysts don’t think so. ‘For a long time, money supply growth has been incredible in Singapore,’ said Daiwa’s Mr Lum. ‘If you look at the local interbank rates, they are not spiking up, so there is ample liquidity in Singapore.’

The loans to deposits ratio in banks here is also very low, so they do have the ability to finance companies in their expansion and businesses, he added.

Companies also said that they do not foresee difficulty in raising capital, said Miyoshi’s Mr Tan, as the fundamentals are still strong.

However, Singapore companies that might be adversely affected are the larger ones that have been turning to global capital markets to raise funds, said Citigroup’s Mr Chua.

‘Corporate bond spreads have been widening, even for investment grade in the US. They are increased by about 50-70 basis points,’ he added. ‘So those companies that had been able to price their bonds very cheaply in the past - at only 20-30 basis points above the Libor (London Interbank Offered Rate) - may now find that their cost of capital has increased.’
Source :  Business Times - 17 Aug 2007

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Bond funds provide haven amid chaos

Bond funds provide haven amid chaos
Flight to safety will continue for some time, says strategist
By OH BOON PING
(SINGAPORE) Bond funds have come out tops in the list of best-performing funds for the past month, as the slump in equity markets continued yesterday.
Henderson Global Bond Fund-Class A units took pole position with a return of 2.7 per cent, while UOB United Global Bond in Singapore dollars posted a yield of 2.21 per cent, according to Fundsupermart.

PIMCO Total Return Bond (US dollars) took fourth spot with a 2.09 per cent return, while fifth-placed DBS Shenton Dynamic Bond delivered a yield of 1.91 per cent.

The strong performance in these funds came as regional bourses were again hit by US sub-prime woes.

Yesterday, the Straits Times Index (STI) ended 121.09 points or 3.7 per cent lower at 3,152.16, while the Hang Seng Index fell 3.3 per cent, its second largest fall this year.

Meanwhile, US treasuries staged a sharp rally, pushing two-year yields to their lowest in 22 months.

Ten-year yields dropped seven basis points to 4.65 per cent - the lowest since May 11. The spread between two and 10-year yields was 46 basis points, showing investors preferred shorter-maturity debt.

In a report, Bloomberg quoted Rachana Mehta, global bonds and currency strategist at DBS Asset Management, as saying ‘the flight to safety will definitely continue for some time and the central bank may have to act’.

‘We have added more cash and bonds and we’re neutral on emerging markets.’

Meanwhile, the overall UOB SGS Index, which measures the performance of Singapore government bonds, has risen steadily to 164.55 last month from 160.373 in January this year. However, some traders said sale of Singapore government bonds have not benefited significantly from the equity turmoil.

According to a dealer, ‘there has not been increased activity in government bonds market, even though investors are selling down in other markets’.

‘There is price appreciation on some parts of the curve, but the market has remained fairly muted thus far,’ she added.

Another dealer pointed out that international investors are liquidating their sovereign holdings due to fears of currency depreciation.

‘So they are selling their Sing dollar investments including the bonds, and parking the monies in US treasuries,’ a trader said.

On Wednesday, the fear of credit risk among investors drove up the prices for Asian credit default swaps - particularly on lower-ranked debt - according to a Dow Jones report.

These swaps allow investors to insure themselves against default or debt restructuring or to express a view on those risks.
Source :  Business Times - 17 Aug 2007

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