Mayer Mansion owners win appeal case

Mayer Mansion owners win appeal case
They will also keep the $3m deposit paid by Travista
By WEE LI-EN
(SINGAPORE) Owners of Mayer Mansion on Devonshire Road have won their case in the Court of Appeal against a company that sued them for cancelling a $30 million collective sale.
The owners of the 10-unit property will also get to keep the $3 million deposit paid by foreign-owned property developer Travista Development.

They have sold their homes for $42 million to Golden Flower Group (GFG) which is owned by the Indonesian family of its chairman Po Sun Kok.

GFG has its core businesses in apparel manufacturing, real estate and financial services.

Its real estate division, Golden Flower Group Real Estate (GFGRE), bought MacDonald House in 2003.

Yesterday, GFGRE chief executive Nico Po told BT that the company bought all 10 units in Mayer Mansion through its subsidiary Somerset Residences, and plans to develop the estate into 30 units of ’boutique, ultra-luxurious apartments’.

The case began in December last year when Travista agreed to buy Mayer Mansion and offered the owners of the 10 unit residential property $30 million in the collective sale.

However, Travista, which had to get a qualifying certificate to buy the property because it was foreign-owned, did not complete the transaction by March 12 as had been agreed between the parties.

Travista sued the owners on April 3 and applied for an injunction to restrain them from exercising their rights under the agreement, but failed in its application.

Two days later, the owners notified Travista that they had rescinded the sale and purchase agreement. Travista finally obtained the qualifying certificate on April 11.

The case went to the High Court where Travista argued that it was entitled to complete the purchase but owners argued that Travista was obliged to use its ‘best endeavours’ to obtain the certificate and to do so ‘without delay’.

Travista’s case was dismissed by the High Court in May and the Court of Appeal last month.

The owners were represented by senior counsel Davinder Singh, Hri Kumar and Tham Feei Sy of Drew & Napier.

Source :  Business Times - 22 Aug 2007

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Freehold site at Wilkie Terrace up for sale

Freehold site at Wilkie Terrace up for sale

By HAN MIN CHUNG
A FREEHOLD site on Wilkie Terrace in the vicinity of Mount Sophia has been put on the market.
The site belongs to a family-owned investment company, and thus, unlike an en-bloc sale, the sale of the property is not dependent on a Strata Titles Board’s order of sale. The buyer will have vacant possession on completion of the sale.

Located at 7 to 11 Wilkie Terrace, the area has a potential gross plot ratio of 2.1. A seven-storey apartment block with some 30 units of boutique residential suites averaging 865 sq ft each could be built on the 13,209 sq ft site.

Credo Real Estate, which is handling the sale, said it expects to receive offers ranging from $22 million to $24 million, reflecting a land rate of $797 to $868 per sq ft per plot ratio, inclusive of an estimated development charge of about $120,000.

The successful developer’s break-even cost would likely be $1,290 to $1,375 psf and units there may fetch about $1,600 psf.

‘This property is suitable for building a seven-storey apartment block comprising some 30 units of boutique residential suites with an average size of 865 sq ft,’ said Credo Real Estate managing director Karamjit Singh. ‘Such two-bedroom units enjoy strong demand from students of the (nearby) Singapore Management University and single expatriates.’

He said that the buyer could also build service apartments or a boutique hotel, if approval is given.

‘The location is popular for its close proximity to the strategic Dhoby Ghaut MRT station, educational institutions and both Orchard Road and the Raffles Place,’ he added. ‘The upcoming Wilkie Edge development is set to further enhance the vibrancy of the area,’ said Mr Singh.
Source :  Business Times - 22 Aug 2007

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Three Sentosa bungalow plots released for sale

Three Sentosa bungalow plots released for sale
New benchmark price of $1,233 psf set for a waterway bungalow site
By KALPANA RASHIWALA

SENTOSA Cove Pte Ltd (SCPL) yesterday released another three 99-year leasehold bungalow plots for sale, after reporting new benchmarks being set for waterway and fairway facing plots in the upscale locale.

After the latest offer, the only sites the master developer will have left for sale are two more individual bungalow plots, a man-made island (which can be developed for 19 bungalows) and a plum condo plot at the mouth of the marina.

In all, the developer will have sold plots for a total of about 2,500 homes since October 2003.

SCPL said yesterday that an expression of interest (EOI) for four bungalow parcels that closed in July saw a new benchmark price of $1,233 per square foot of land area being achieved for a waterway bungalow lot, surpassing the $960 psf previous record for such land set earlier this year.

The other two waterway plots offered in the July EOI were also sold at above $960 psf. The sole fairway bungalow site in that EOI fetched $1,065 psf, surpassing the previous high of $910 psf for such sites achieved earlier this year.

The last seafront bungalow plot at Sentosa Cove was sold for a record $1,473 psf during an EOI in May, surpassing the top price of $1,308 psf previously for such plots seen at an EOI late last year.

SCPL’s latest EOI, which is being launched tomorrow, is for three bungalow sites - all waterway-fronting plots, one of which also boasts nearby views of, but is not directly fronting, the Tanjong Golf Course and the sea.

This plot has a land area of 6,941 sq ft. The other two plots are 7,414 sq ft and 10,663 sq ft.

The EOI closes on Sept 4, with the award being based solely on price.

Credo Real Estate managing director Karamjit Singh predicts that the three latest waterway plots could fetch prices ranging from $1,100 to $1,300 psf, with scarcity value raising the price.

Following this EOI sale, the last two individual bungalow plots at Sentosa Cove - both of which face fairways - will be sold by private treaty.

Pearl Island and a coveted high-rise condo plot (dubbed C-13) at the entrance to Sentosa Cove’s marina basin will be offered for sale before the year runs out.
Source :  Business Times - 22 Aug 2007

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HDB upgrading: more groups will benefit

HDB upgrading: more groups will benefit
Subsidised optional improvements will cheer sandwich class
By ARTHUR SIM
(SINGAPORE) The Housing and Development Board (HDB) has released details of two new upgrading programmes which are seen as benefiting a broad spectrum of Singaporeans, including the middle class.
New look: Under the two new programmes, HIP and NRP, the government will pay for essential improvements like spalling concrete and repairing ceiling leaks
The two new programmes, which Prime Minister Lee Hsien Loong mentioned during his National Day Rally speech, are the Home Improvement Programme (HIP) and the Neighbourhood Renewal Programme (NRP).

The government will pay for essential improvements like spalling concrete and repairing ceiling leaks under HIP.

Compared to the existing Main Upgrading Programme (MUP), it will be a targeted programme that will also offer optional improvements like the upgrading of toilets and the replacement of entrance doors, for which the government will subsidise between 87.5-95 per cent of the cost.

Speaking on the sidelines of an event yesterday, Minister of State for National Development (MND) Grace Fu added that the new programmes are expected to, ‘benefit a large number of residents’.

National University of Singapore sociology professor Paulin Straughan told BT: ‘Generally, what was announced focuses on the lower income and the lower-income elderly.’

But she noted that general housing estate upgrades that can be expected through HIP and NRP ‘will benefit everyone’.

Although some of the improvements under these programmes may not cost a lot - renovating a toilet is expected to cost around $2,000 - Prof Straughan believes that there is a growing middle class, or, ’sandwich class’ that finds itself over-stretched.

Typically in their 40s and 50s, with children and ageing parents, some of these people do not even have the option of downgrading. ‘Selling their flats and downgrading is not feasible because they would have bought their homes at a high,’ she added.

That’s why the help will be handy.

HIP will apply to flats built in 1986 or before. MUP applied only to flats built in 1980 or before. Up to 300,000 flats are now eligible compared to just 100,000 flats under MUP.

Co-payments under HIP are also significantly less at an estimated $550-$1,375 compared to $2,490-$6,225 under MUP. ‘One must see co-payment as part of stake-holding,’ said Prof Straughan.

NRP - a general upgrading programme which could be more comprehensive and consultative than in the past - will be completely funded by the government.

While more people are expected to benefit from upgrading works, PropNex CEO Mohamed Ismail pointed out that under MUP, upgrades were more extensive and even included the addition of extra rooms or toilets. ‘In terms of adding value, HIP cannot compare with MUP,’ he said.

Mr Mohamed did add however, that with HIP, homeowners, ‘will enjoy the benefits earlier with fewer disturbances and the value of their property will be enhanced in general’.

With their values, ‘enhanced’, it could be more feasible for cash-strapped home owners to monetise their assets and downgrade.

However, resale figures from ERA Singapore suggests that the downgrading trend has plateaued as the economy has improved.

ERA’s vice-president Eugene Lim notes that the percentage of resale three-room flats has dropped from 36 per cent two years ago to about 30 per cent today. Four-room flats also make up less of the resale market at 38 per cent, down 2 per cent from two years ago, while the the number of resale five-room and executive flats have gone up.

Mr Lim believes that upgrading flats through HIP and NRP is more about improving living conditions. ‘There is a world of difference between a new flat today and a flat built 20 years ago,’ he added.

MND’s Ms Fu also said that HIP and NRP applies to opposition wards as long as they meet the criteria.

Source :  Business Times - 22 Aug 2007

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New peg next year for key CPF interest rate

New peg next year for key CPF interest rate
Interest on Special, Medisave, Retirement accounts to be tied to long-term bond yield
By NANDE KHIN

(SINGAPORE) The buzz that has surrounded changes in the CPF scheme was given a new direction yesterday, when Manpower Minister Ng Eng Hen highlighted a significant move in the offing.

The interest rate on savings in the CPF Special, Medisave and Retirement Accounts (SMRA) will no longer be 4 per cent from next year, but will be pegged to an appropriate long-term bond yield.

‘The new SMRA rate will be a little lower, based on current yields, when we introduce it. But over time it should be more than 4 per cent,’ said Dr Ng.

Currently, the SMRA interest rate is pegged to the prevailing Ordinary Account (OA) interest rate, earning an additional 1.5 percentage points above this rate.

The current OA rate is 2.5 per cent while SMRA savings earn 4 per cent.

Since the new SMRA rate will be ‘pegged to the market’, there ‘will be fluctuations but it will be less volatile than equities’, said Dr Ng.

Dr Ng said that the exact formula for the new peg as well as the benchmark long-term bond rate to be used will be announced during his ministerial statement in Parliament.

Currently, 20-year Singapore government bonds have yields-to-maturity of about 3.3 per cent, but Dr Ng expects the rate to be more than 4 per cent over time.

Speaking to the media yesterday, Dr Ng injected more clarity into the debate on CPF changes when he elaborated on the proposals.

For one thing, he cooled industry speculation that the private sector would probably be asked to manage the proposed compulsory annuity scheme. In fact, CPF Board could well administer the scheme itself, Dr Ng said.

He also assured CPF members that the bulk of their Minimum Sum could still be drawn down, as only a small portion of it would go towards the annuity premium.

Prime Minister Lee Hsien Loong had announced in his National Day Rally speech that some form of annuity would be made compulsory for CPF members.

Dr Ng said the government had still not decided who would administer the scheme.

‘But as I outline the scheme - what we want to do - it gives a certain clarity, and if the industry can offer attractive terms and propositions, we are open to them participating,’ he said.

The Minimum Sum is aimed at providing CPF members payouts after their drawdown age of 65 until they are 85 years old.

CPF members will receive the annuity payouts after the age of 85.

‘The basic idea that we are after…is what I call Very Long Life Expectancy Protection. If you are lucky enough to live past 85…then I want to make sure that you have some savings that can start paying you out after 85,’ said Dr Ng.

Some members may want the annuity payouts to go to their family should they die before the age of 85, but such a scheme would mean higher premiums as there would be no pooling of risk, said Dr Ng.

Others thought they did not need the scheme as they were unlikely to live to 85. This was a myth that Dr Ng was anxious to debunk.

Statistics showed that for people here who reach 62, half will live beyond the age of 85. ‘This means that 50 per cent might outlive their retirement sums, and that’s what I want to cater to,’ he said.

The annuity payouts would be small to start out with - around a subsistence level which is about $250-$300 by today’s standards. This is so that the CPF member will not have to pay a large premium upfront and can have more in his Minimum Sum at drawdown age.

Another key strategy to ensure that Singaporeans have enough savings for their old age is to increase the returns on CPF savings.

The Prime Minister had announced a one percentage-point increase in interest on the first $60,000 in a CPF member’s combined CPF accounts, with not more than $20,000 from the OA account.

Dr Ng said that this additional interest on the maximum $20,000 in OA savings will be paid into the Special Account, instead of the OA. The remaining 2.5 per cent interest will continue to be paid into the OA.

‘That makes sense because I am not giving you that extra one per cent to buy a larger home if you can’t afford it,’ said Dr Ng. This extra interest is for retirement needs.

This $20,000 in OA savings will also not be available for investment under the CPF Investment Scheme.

Industry players have said that with this change, CPF members may be denied higher returns available in the market.

But Dr Ng pointed out that CPF members who invest on their own typically receive less than the 2.5 per cent interest guaranteed in the OA by CPF.

‘Our own data suggests that more people have been less smart than they thought.’

Between Oct 1, 2005 and Sept 30, 2006, about 45 per cent of CPF members who invested their CPF savings suffered losses, while another 32 per cent had returns of less than 2.5 per cent
Source :  Business Times - 22 Aug 2007

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MAS paving way for banks to buy mortgage insurance

MAS paving way for banks to buy mortgage insurance
Regulator not saying when new rules take effect but bankers say it could be ‘quite soon’
By Grace Ng & Erica Tay
THE Government is drafting new rules to pave the way for banks in Singapore to take up mortgage insurance for the first time.
Such insurance protects banks from the risk of borrowers defaulting on their mortgages, which make up a major chunk of banks’ loans portfolio.

Some banks may implement mortgage insurance later next year, say industry players. This may be in anticipation of a surge in new mortgages when more properties are completed and home owners on deferred payment schemes take up loans.

Deferred payment schemes, which allow homebuyers to delay paying the bulk of a new home’s price for up to a few years, have been popular here.

In response to The Straits Times’ queries, the Monetary Authority of Singapore (MAS) said it is ‘drafting the required legislation’ for mortgage insurance. This follows the consultation paper it issued last October that set out the proposed regulatory framework for the business.

Almost every bank in Singapore has been in talks with mortgage insurers to cover borrowers with higher loan-to-value (LTV) mortgage, typically above 80 per cent. LTV refers to the loan amount as a percentage of the property’s value.

Mortgage insurance, which is available widely in other markets such as the United States, Australia and Hong Kong, protects residential mortgage lenders against losses if borrowers default.

There are no mortgage insurers operating in Singapore but the MAS said it has ‘received indications of interest from several internationally renowned’ providers to open outlets here. Two firms thought to be eyeing the Singapore market are Hong Kong Mortgage Corp and one of the US’ largest mortgage insurers, Genworth Financial.

The MAS declined to say when the legislation will be put in place but some bankers expect it to be ‘quite soon’, especially with concerns about defaults on higher-risk home loans.

‘Against the backdrop of the subprime home loan crisis in the US, there is inadvertently more pressure on banks to take precautions with their mortgages,’ said a banker.

While the risk of defaults is generally low here, there is still a danger that an economic downturn may affect the ability of borrowers, especially those on deferred payment schemes, to service their loans, he added.

Citibank Singapore business director Tan Chia Seng also noted that ‘if property prices keep rising faster than increases in income, it may make sense for banks to consider additional tools for managing default risk, such as mortgage insurance’.

Banks now must set aside higher amounts of capital for mortgages with an LTV of more than 80 per cent.

But the banks will be able to reduce the amount of capital they set aside by buying mortgage insurance.

The MAS said it is ‘prepared to apply a lower capital risk charge for high LTV loans with mortgage insurance as a risk mitigant’.

Banks may also decide to pass on some of the mortgage insurance costs to borrowers in the form of higher interest rates. In Hong Kong, all banks, including DBS, must take out mortgage insurance for loans with an LTV above 70 per cent.

But the MAS said it ‘does not interfere with banks’ decisions about whether or not to use mortgage insurance to mitigate mortgage risks’.

Even with the upcoming regulations, it is unclear whether mortgage insurers will pile into the Singapore market.

One Hong Kong player, PMI Group, noted that selling mortgage insurance in Singapore could be ‘quite difficult’.

This is because ‘mortgage pricing is quite low in Singapore and banks are very comfortable with the lending at the 80 per cent LTV,’ said Mr Albert Ting, PMI Hong Kong’s country manager. PMI is a reinsurer to Hong Kong Mortgage.

Another mortgage insurer, Radian Group, is understood to be in talks with several banks in Singapore. But its plans may be put on hold as it is currently facing massive losses of well over US$460 million (S$701 million) in sub-prime loan investments, said one source.
Source :  Straits Times - 22 Aug 2007

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HDB flat owners can pay less when opting out of upgrades

HDB flat owners can pay less when opting out of upgrades
Also, essential repairs to older flats will be free under new home improvement scheme
By Tan Hui Yee, Housing Correspondent
OWNERS of ageing Housing Board flats will soon be able to pay less when opting out of bigger improvements and have essential repairs done for free.
The changes are part of the new Home Improvement Programme announced by Prime Minister Lee Hsien Loong on Sunday.

The programme, which is tailored to be more responsive to residents’ views, will introduce greater flexibility.

Under the existing scheme, upgrading flats could involve anything from new toilets, doors and even additional rooms - but at a cost.

Some households landed bills of $6,200 or so, which could not be cut even if they opted out of various items. The extra rooms the HDB used to offer for old flats were rejected by several residents who feared the disruption involved.

But the new programme means flat owners will have the option to reduce their bills by opting out of extras such as new doors and grille gates.
The Government will fully pay for essential improvements like replacing waste pipes and fixing spalling concrete, and subsidise the cost of optional items like new doors or toilets.

Subsidies for this work will be increased. An owner of a four-room flat, for example, will have to pay only 7.5 per cent of the upgrading bill for optional items instead of 15 per cent.

That means eligible households will pay $550 to $1,375 if they opt for the full package, instead of $2,490 to $6,225 now.

The changes were all about tailoring upgrading to suit residents’ needs, said Minister of State for National Development Grace Fu yesterday.

‘We thought in order to cover a wider group of residents, it’s good that we focus on the issues they’re most bothered with and just address them,’ she said.

About 200,000 more homes now stand to benefit from this smaller scale plan, which is targeted more at fixing the common problem of spalling concrete and ceiling leaks in old flats.

Spalling occurs when steel bars embedded in concrete corrode and expand, causing walls and ceilings to crack.

An MP for Pasir Ris-Punggol GRC, Mr Charles Chong, said the problem has been reported in as many as 30 per cent of flats in some blocks more than 10 years old.

Precincts in Yishun and Tampines will be the first to try the new programme. Work will start once 75 per cent of owners in a selected block vote on upgrading.

The new plan is a relief for housewife Zeenat Kausar, 46, whose bathroom ceiling in her Tampines flat has been leaking for around three years even though it was repaired about seven years earlier.

‘We don’t mind paying as long as they do a good job,’ said Ms Zeenat.

‘If HDB does it, people will feel more reassured, as opposed to finding your own contractor who might disappear after a few years.’

Meanwhile, bigger improvements to older estates will be readjusted to account for residents’ views, which will be gleaned from ‘town hall’ meetings.

Individual precincts - which comprise about eight to 10 blocks each - will be grouped so the cost of big items like tennis courts or skate parks can be shared.

These changes were suggested by residents during a recent series of dialogues on building community ties.

Mr Chong hopes the consultative approach will make residents appreciate the compromises needed when adding community facilities.

He said: ‘By making the process more transparent, hopefully we will get a more sophisticated society that works out issues with the Government.’

Source :  Straits Times - 22 Aug 2007

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Only small part of CPF Minimum Sum to be used

Only small part of CPF Minimum Sum to be used
Plan will kick in with smaller payouts at age 85 until member dies
By Sue-Ann Chia & Aaron Low
A NEW scheme making annuities compulsory for Central Provident Fund (CPF) members will be tailored to cover them only in the last phase of their lives.
It will thus be different from current annuities members can buy now.

For a start, members do not use all of their CPF Minimum Sum on the annuity, as is the case now.

Only a small portion of the Minimum Sum will be used to purchase a ‘tail-end annuity’ which will kick in only after the member’s Minimum Sum runs out.

An annuity is a scheme which one buys by paying a lump sum to an insurer, who invests the money, and pays him a monthly income for life.

With the new compulsory annuity, a CPF member will get a monthly payout for the rest of his life from the age of 85 at a subsistence level of $250 to $300.

Bond-pegged interest rate from Jan
FROM Jan 1 next year, CPF members will have a new interest rate on their CPF savings.

Manpower Minister Ng Eng Hen gave these details yesterday. He was elaborating on Prime Minister Lee Hsien Loong’s announcement in his National Day Rally speech on Sunday that annuities will be compulsory for CPF members below age 50.

Said Dr Ng: ‘The basic idea that we are after is to ensure the tail end of life expectancy… very long life protection, or if you like, extreme longevity protection.’

The Government will consult widely before introducing it, he promised.

The new details should go some way to assuage concerns that arose after Sunday’s announcement.

Broadly, this is how it will work:

Members withdraw their CPF savings at age 55, but leave behind the Minimum Sum. This sum is set at $99,600.

They then use a small portion of the Minimum Sum to buy the annuity. When they reach 65, they start drawing down a monthly payout from the Minimum Sum until it runs out at age 85.

If they are alive then, the annuity gives a monthly payout - expected to be lower than their Minimum Sum payout - for the rest of their life.

Dr Ng noted that half of the people who reach 62 here are expected to live beyond 85.

‘If I live past 85, I will get payouts from this sum which I insure. If I don’t, it goes back into the pool to pay out for those who are still alive,’ he said.

The news that annuities will be compulsory had miffed some CPF members as they felt they were denied a choice and forced to use up their Minimum Sum to buy the annuities.

Many would rather leave it in the Minimum Sum, as their family could get the remainder if they die before using it all up. Annuities do not return the remainder.

Yesterday, Dr Ng assured CPF members that, with the new annuities scheme, members will still draw down a large proportion of their Minimum Sum from age 65.

‘We are not looking at putting the entire Minimum Sum into annuities,’ he said.

He added that those who want the balance of their annuities payment returned to their family if they die before 85, will have to a bigger upfront payment
Source :  Straits Times - 22 Aug 2007

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