Singapore Straits Trading aims to redevelop Specialists’ Centre, Hotel Phoenix

Singapore Straits Trading aims to redevelop Specialists’ Centre, Hotel Phoenix

Its ‘advanced talks’ with OCBC may see new complex taking shape come year-end

By Joyce Teo, Property Correspondent

THERE seems to be some progress at last in the much-anticipated redevelopment of the Specialists’ Shopping Centre and Hotel Phoenix complex in Orchard Road.
The Straits Trading Company - which is the object of a buyout offer - announced yesterday that it is in ‘advanced negotiations’ with site owner OCBC Bank regarding redevelopment and management plans.

Construction of a 21-storey complex with shops and a 580-room hotel will begin in the second half of this year, according to OCBC.

The complex will be linked to Far East Organization’s upcoming Orchard Central mall and Lend Lease’s upcoming Somerset Central mall, both nearby.

The announcement yesterday was as much about the complex ownership and development structure put in place in response to amended restrictions that prevent banks from getting involved in property development.

Straits Trading is a holding company with businesses that range from smelting and mining to hotel investment and property development.

As it is the subject of a buyout offer by The Cairns, a privately held investment firm that is part of the Tecity group, it had to inform shareholders of its advanced talks with OCBC.

Tecity is controlled by the family of the late Dr Tan Chin Tuan, a past chairman of OCBC. Dr Tan set up Tecity, which has held a stake in Straits Trading since the 1950s.

The OCBC group also holds a stake, directly and indirectly, amounting to 26.1 per cent.

Dr Tan also started the old 392-room Hotel Phoenix, which closed in August after 35 years.

In yesterday’s statement, Straits Trading said OCBC will appoint a Straits Trading special-purpose vehicle to undertake the construction of the complex.

The proposed arrangements include funding for the vehicle and the construction based on a maximum development cost to be agreed on between Straits Trading and OCBC.

Once the complex has been completed, Straits Trading will sell it to OCBC and then lease it back for three years, with an option to renew the lease for a further three years.

OCBC said it had opted for a sale and leaseback plan because it sees the property investment as one that will bring ‘long-term financial returns’.

Design details for the new complex, which will have a total gross floor area of 50,079.07 sq m and a net retail lettable area of 14,014 sq m, are still being finalised.

Sixty per cent of the gross floor area will be taken up by the hotel, and the remainder by retail shops and a carpark that will accommodate 262 vehicles.

Tange Associates is the architect for the project.

Source : Straits Times - 11 Jan 2008

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Singapore Eng Wah shares soar to record high

Singapore Eng Wah shares soar to record high

CINEMA group Eng Wah Organisation’s share price shot up by 16.5 cents to 85 cents - an all-time high - on news that its portfolio of properties was up for sale.
The counter went as high as 91 cents during the day.

Eng Wah’s properties could be worth as much as $190 million so, based on the 150 million shares in the market, shareholders could get as much as $1.20 in cash per share if all the cash proceeds were distributed.

The group announced in May that it would buy the business of Japanese pharmaceutical firm Transcutaneous Technologies (TTI) by issuing new shares to TTI shareholders. Existing assets of Eng Wah would be sold off, with practically all of the proceeds going back to the shareholders.

Yesterday, Ms Goh Min Yen, Eng Wah’s managing director, reiterated that the asset disposal had always been part of the deal.

Still, a report unveiling details of the sale of the properties by marketing agent Jones Lang LaSalle breathed life into the counter.

Kim Eng Research calculated that each share’s fair value is $1.70. That means even after the jump to 85 cents, the shares look undervalued.

The assets up for sale are the Toa Payoh Entertainment Centre, Jubilee Theatre at Ang Mo Kio, the former Mandarin Theatre at Kallang Bahru, Empress Theatre at Clementi and the 16th floor of Orchard Towers.

LEE SU SHYAN
Source : Straits Times - 11 Jan 2008

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Singapore Office redevelopment worsens space crunch; rents soar

Singapore Office redevelopment worsens space crunch; rents soar

CBD supply fell 3.7% y-o-y in Q4 2007 to 19.98m sq ft: DTZ
By ARTHUR SIM
ONLY 341,180 sq ft of new office supply became available for the whole of last year. At the same time, 1.02 million sq ft of office space was taken away, as a result of buildings undergoing redevelopment or addition and alteration work.

A report by DTZ Debenham Tie Leung shows that existing stock in the central business district (CBD) was 19.98 million sq ft in the final quarter of the year, a decline of 3.7 per cent year-on-year.

Island-wide, the decline of existing stock was marginally less at 1.2 per cent to 56.04 million sq ft.

For non-central areas, existing stock increased by 0.6 per cent to 15.16 million sq ft.

Tight supply has pushed up occupancy levels to 97.5 per cent island-wide, an increase of 2.5 percentage points from the comparable quarter in 2006.

DTZ says that office rents have consequently risen to record levels, with prime office rents in Raffles Place for the quarter 94.1 per cent higher than 12 months previously, at $16.50 psf per month.

High rents prompted companies to consider relocating to lower-cost premises in the CBD fringe, non-central areas and several business parks.

Average monthly gross rents for office buildings in areas like Marina Centre, Alexandra Belt and Tampines Finance Park jumped 81.3 per cent to $14.50 psf per month, 85 per cent to $7.40 psf per month and 62.2 per cent to $7.30 psf per month respectively year-on-year.

While the short-term situation remains challenging, DTZ believes the mid and long-term situation could prove better for office tenants.

DTZ executive director Cheng Siow Ying said: ‘The pace of rental growth is expected to moderate as tenants become more rent-sensitive and more choices of office supply such as transitional offices, disused state properties and business park space are made available to occupiers.’

DTZ is forecasting that about 7 million sq ft of net lettable area could come on stream in the next four years.

In 2007 alone, it estimates that 1.9 million sq ft of gross floor area of office space was generated through the conversion of disused state properties for office space and transitional office sites.

Supply of business park space in the industrial sector also increased in 2007.

Island-wide, existing stock of industrial space increased 4.1 per cent to 297.36 million sq ft.

Of the 7.6 million sq ft of private industrial space that was completed in the first three quarters of 2007, DTZ said that 5 per cent was business park space. DTZ also estimates that 7 per cent of the 20.4 million sq ft potential supply of private industrial space over the next three years could be business park space.

DTZ executive director Chua Wei Lin said: ‘An increased number of business park developments, built-to-suit and high-tech facilities are expected to come on stream, partly due to heightened demand from qualifying office users as the office market tightens.’

Average monthly gross rents for business park/science park/high- tech industrial space recorded increases of 50 per cent year-on-year to hit $3.90 psf per month.

Source : Business Times - 11 Jan 2008

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Blair joins JPMorgan as part-time adviser

Blair joins JPMorgan as part-time adviser
(LONDON) Former British prime minister Tony Blair will join Wall Street bank JPMorgan Chase as a part-time senior adviser, the company said yesterday.
Mr Blair, who became the international community’s envoy to the Middle East after standing down following a decade as premier in June last year, will advise the company on political and strategic issues.

Mr Blair has accepted the offer but it will not affect his work as the Mideast envoy, his spokeswoman Ruti Winterstein said.

She said Mr Blair would advise JPMorgan’s senior management team, ‘drawing on his international experience, and provide strategic advice and provide insights on global issues’.

The appointment, effective yesterday, will be the only banking commitment Mr Blair will take, she said.

JPMorgan Chase’s chairman and chief executive Jamie Dimon said from New York that they were honoured to have Mr Blair on board.

‘We operate our business all over the world and Tony Blair will bring our leaders and clients a unique and invaluable global perspective that is especially critical in turbulent times like these,’ he added.

‘Our firm will benefit greatly from his knowledge and experience.’

Mr Blair declined to say how much he would be paid for his work with the bank, although media reports here put the figure as much as US$1 million a year. — AFP, AP
Source : Business Times - 11 Jan 2008

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Singapore Hotel sector shaping up for bumper takings

Singapore Hotel sector shaping up for bumper takings

Operators see room rates rising 25-40% on host of demand and supply factors
By UMA SHANKARI
(SINGAPORE) A bumper 2008 awaits hotels in Singapore as the Formula One (F1) Grand Prix race comes to town and tourist numbers rise to new highs.

Hotel operators are already on a roll after a good year that saw a record number of tourists checking in, raising room rates by 15-25 per cent in 2007. They expect rates to shoot up another 25-40 per cent as the supply of rooms remain tight.

Last year’s growth was largely spurred by the positive economic climate, hotels said.

‘The hotel industry did very well in 2007, with tremendous growth and increase in tourism arrival,’ said Aiden McAuley, general manager of Swissotel The Stamford. ‘For 2008, we expect an even better year for the tourism industry in Singapore, with big events such as the Singapore Air Show in February and F1 in September.’

Swissotel sees room rates increasing 30-35 per cent this year, while Marina Mandarin Singapore is targeting to up its rates by 25-40 per cent.

Hoteliers are banking on both demand-side and supply-side factors as they hike room rates. Demand will climb with increased corporate and meetings, incentives, conventions & exhibitions (MICE) travellers as well as more tourists drawn here by events such as the F1 race.

‘The trend of growth in corporate meetings, especially, continues to be significant and will be sustained in 2008,’ said Cheryl Ng, Pan Pacific’s public relations manager.

Hotels expect the MICE and corporate traveller segment to account for a big chunk of their takings this year as several major events roll into town.

What is likely to generate the greatest buzz this year is the F1 race. Trackside hotels are expecting a full house during race week, with room rates likely to be at least twice the regular rates, according to industry sources.

‘Comparative to the general rates quoted in the industry, our room rates will increase relatively by about 2-3 times the usual rate during the week of the race,’ said a spokeswoman for Marina Mandarin Singapore.

A sample survey done by DBS Vickers Securities last November showed that room rates could be expected to increase by about 114 per cent year-on-year in 2008 during the race period. For trackside hotels during peak race weekdays, the rates hike will be even greater - up to 311 per cent - the survey showed.

Rates will also be raised by supply-side factors. On the back of surging tourist arrivals, the average occupancy rate has climbed from 74 per cent in 2002 to over 80 per cent in 2006 and 2007. For 2008, it is expected to be close to 90 per cent. This is because growth in room stock has been relatively flat, while the demand for rooms has increased.

The situation, said DBS Vickers, has been exacerbated by significant underinvestment from 2002 to 2006. Room stock as of end-2006 stood at 30,476, relatively unchanged from 30,468 rooms at end-2002.

‘On the basis that Singapore is on track to meet its target of 17 million visitors by 2015 . . . the demand-supply imbalance for hotel rooms is expected to worsen in the next few years, leading to further upside in room rates which bodes well for hotel operators,’ said the research firm in a recent note.

The bulk of future supply is tipped to come on-stream between 2009 and 2010. Upon completion in 2009, the Marina Bay Sands is projected to add around 2,600 rooms to supply, while about 1,800 rooms are expected from the Resorts World at Sentosa when it opens in 2010.

In the near term, however, the industry does face one big challenge - labour shortage.

‘For our industry, we usually have to look overseas to hire some of the staff as well as hiring foreign talents for some of the departments,’ said Swissotel’s Mr McAuley.

Said Marina Mandarin: ‘In the next few years, we will start to face a shortage of manpower in the hospitality industry, fuelled by the integrated resorts coming on stream.’

With other hotels reporting the same problems, high up on hoteliers’ wish-list for 2008 is government action to allow more foreign workers to be hired in the service sector - such as extending the Work Permit scheme to non-traditional sources including China and Indonesia.

Source : Business Times - 11 Jan 2008

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Phoenix site to rise again as hotel-retail complex - Singapore

Phoenix site to rise again as hotel-retail complex - Singapore

Straits Trading in talks to redevelop site; new complex to roll out in 2011
By UMA SHANKARI
(SINGAPORE) A new 580-room hotel and a retail complex with a net lettable area of about 150,800 square feet is slated to come up on the Specialists’ Shopping Centre and Hotel Phoenix site in 2011.
OCBC Bank, which owns the land parcel, told BT yesterday that work on the site is likely to start in the second half of 2008 and will take about three years to complete.

The upcoming hotel will occupy about 60 per cent of the complex’s gross floor area and the remaining 40 per cent will be taken up by retail shops. The complex will have about 262 parking lots, OCBC said. Right now, the complex has a gross floor area of about 539,000 sq ft.

OCBC was responding to queries from BT after Straits Trading Company said in a filing to the Singapore Exchange that it is in ‘advanced negotiations’ with the bank to be appointed to develop a hotel and retail complex at the Specialists’ Shopping Centre and Hotel Phoenix site.

Under the deal, a wholly owned special-purpose vehicle (SPV) of Straits Trading will fund and build the complex based on a maximum development cost, which will be agreed on between Straits Trading and OCBC.
Once the complex is completed, Straits Trading will then sell the SPV to OCBC and at the same time lease the complex for a period of three years - with an option to renew for a further three years at an agreed fixed annual rent. The terms of the arrangement are currently being discussed and negotiated, Straits Trading said.

Structuring the deal this way minimises development risk for OCBC. ‘As a bank, we believe that it is inappropriate for us to assume development risk,’ said Koh Ching Ching, head of group corporate communications for OCBC Bank.

OCBC appears to be going ahead with its plans to develop its Specialists’ Shopping Centre and Hotel Phoenix complex - rather than working with its insurance subsidiary Great Eastern Holdings, which owns shopping mall Orchard Emerald just across the road.

OCBC and Great Eastern seemed poised to redevelop the Specialists’ Shopping Centre and Hotel Phoenix complex together with Orchard Emerald just a few months ago, judging by the two companies’ submissions to the Urban Redevelopment Authority (URA).

Data released by URA last October showed that provisional permission for the development of the two properties was given in August 2007.

But yesterday, OCBC said: ‘Orchard Emerald is held by the Great Eastern Group and we believe that Great Eastern is at a very preliminary stage with regard to this potential redevelopment.’

Straits Trading, one of Singapore’s oldest companies, is now seeing a buyout offer from Tecity Group, an investment firm owned by several members of the family that have stakes in OCBC.

Tecity offered on Sunday to buy all Straits Trading shares it did not already own for $5.70 a share - valuing the company at some $1.86 billion.

OCBC, which has direct and indirect interests totalling 26 per cent of the shares in Straits Trading, said on Monday that it has not decided whether to accept the buyout offer. About 20 per cent of the shares are held by Great Eastern.

Analysts said that OCBC’s plan to launch a new hotel in place of the ageing Hotel Phoenix is timely as Singapore will continue to see a shortage of hotel rooms over the next few years due to increasing visitor numbers.

OCBC’s shares shed 14 cents to close at $8.10 yesterday, while shares of Straits Trading rose one cent to close at a one-year high of $5.67.
Source : Business Times - 11 Jan 2008

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Singapore CityVibe put up for sale at $140m

Singapore CityVibe put up for sale at $140m

By KALPANA RASHIWALA
CITYVIBE, a new three-storey retail and entertainment complex opposite Clementi station and next to the future Clementi Central Hub, is for sale through an expression of interest exercise at an asking price said to be $140 million.

CityVibe: The retail and entertainment complex in Clementi will be built between February and November
This could work out to a 5-5.25 per cent net yield for the property, which will have a net lettable area of 26,581 sq ft, sources say.

Developer Grandview has obtained official approval to redevelop the existing property on the site - a two-storey building that used to house a theatre - into the new complex.

Using construction methods that involve more steel and less concrete, CityVibe will be built between February and November this year, according to Jones Lang LaSalle, which is handling the sale of the property on a completed basis.

JLL is also the marketing agent for leasing of the units in the new building.

Grandview’s shareholders are Victor Boh See Fook, Eric Cheng Kwee Kiang and Woon Yong Thai.

CityVibe will be developed on a site with a remaining lease of about 70 years. Grandview is believed to have bought the asset a few years ago.

Asked about potential competition that retailers at CityVibe will face from the adjacent Clementi Central Hub when it is completed in 2010, JLL’s regional director and head of investments Lui Seng Fatt said: ‘Clementi Central Hub will be a magnet for the whole area and benefit CityVibe as well.

‘In any case, the location has a very strong catchment not only from the surrounding HDB estate but also from nearby tertiary institutions such as National University of Singapore, Singapore Polytechnic, Ngee Ann Polytechnic and Singapore Institute of Management.’

JLL expects the expression of interest exercise for CityVibe, which closes on Feb 1, to attract local and foreign investors because it offers an investment-grade retail property in the HDB heartland.

The site is zoned for commercial use with a 40:60 split between retail/F&B and entertainment/office use. CityVibe has been exempted from providing carpark lots because there is sufficient parking nearby, JLL said.
Source : Business Times - 11 Jan 2008

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Goldman Sachs report adds to fears of US recession

Goldman Sachs report adds to fears of US recession

FRANKFURT - SIGNS that the United States is facing a hard landing from a serious housing industry crisis multiplied on Wednesday, as forecasters at a prominent bank said the world’s largest economy was in or near a recession.
‘Recession has now arrived or will very shortly,’ Mr Jan Hatzius, the chief US economist for investment bank Goldman Sachs, wrote in a report.

Goldman is forecasting a ‘mild’ recession contraction lasting two to three quarters.

Sentiment has grown markedly in the last month that the US economy is in more serious trouble than thought previously.

These fears have taken on new significance politically, as presidential candidates on the campaign trail hear voters express mounting concerns about the health of the economy.

Mindful of the political reality, President George W.Bush this week also acknowledged that the US economy had weakened considerably.

The Federal Reserve, which has acted with major central banks around the world in recent months to stabilise volatile financial markets, is expected to cut borrowing costs for the third time since September when it next meets on Jan 29 to 30.

To be sure, the view that the US will tumble into recession is still held by a minority of economists and has not been endorsed officially by the Fed or the US government.

But for Goldman Sachs and some other forecasters, a recent report showing that employment growth in the US had largely stalled was a signal that the broader economy had creaked to a halt as well.

Job creation has long underpinned US growth, which is driven largely by consumer spending.

In another sign that the crisis has not abated, US bond insurer MBIA announced an emergency plan to secure its gild-edged credit rating.

The company’s rating, a vital part of its business of guaranteeing payment of municipal bonds in the US, has been scrutinised in recent months because of its exposure to securities linked to the deteriorating US mortgage market.

Europe is also facing the increasingly serious question of whether it can keep up the pace of exports, as the US flirts with recession.

Most economists have been sanguine about European growth amid weaker US activity, but an economic contraction is another matter.

Source : Straits Times - 11 Jan 2008

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Singapore Clementi shopping mall put up for sale

Singapore Clementi shopping mall put up for sale

A SHOPPING mall directly opposite the Clementi MRT Station has been put on the market by property firm Jones Lang LaSalle (JLL).
JLL is inviting expressions of interest for CityVibe, a retail and entertainment building known for a McDonald’s fast-food outlet on the first floor and a cinema that used to be upstairs. The cinema has since been replaced by a Party World KTV branch.

The whole building will undergo reconstruction after the Chinese New Year.

But the owner - Mr Victor Boh of Grandview, linked to Wint Thai Trading - is seeking buyers for the three-storey mall, even as it is being upgraded.

The reconstruction was ‘planned some time back but approval was granted only last year’, explained Mr Derek Wong, the senior manager of investments at JLL.

Mr Boh decided to go ahead with the upgrading, expected to be completed in November, but was ’serious about selling if it can fetch a good price’, added Mr Wong.

Although JLL would not disclose an indicative price, experts said the property could fetch more than $130 million, or over $3,000 per sq ft of gross floor area.

This would give a rental yield of at least 5 per cent, based on JLL’s projection of $8.4 million in gross annual rental income.

The mall, which has about 70 years left on its lease, has a site area of 15,597 sq ft and a net lettable area of about 26,581 sq ft. It is to be rebuilt into a three-storey complex with a rooftop terrace.

‘It is a very good location in the sense that it is directly opposite the MRT station, and everyone that comes down from the station will walk past this building,’ said Mr Wong.

The property is located next to the future Clementi central hub and Clementi bus interchange.
Source : Straits Times - 11 Jan 2008

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Singapore River Valley High to get $79m campus in Jurong

Singapore River Valley High to get $79m campus in Jurong

To be ready in 2010, it will be one of the largest and most expensive govt schools

By Jane Ng
RIVER Valley High’s new $79 million campus in Jurong - boasting full facilities for its six-year integrated programme - will be one of the largest and most expensive government schools.
The 7.64ha campus, at the junction of Jalan Boon Lay and Boon Lay Avenue, will welcome its first batch of students in 2010.

It will cater to 2,500 students from Secondary 1 to Junior College Year 2.

River Valley High, which will offer a six-year integrated programme, now has 1,600 students from Secondary 1 to Secondary 4 at its current location in Malan Road, off Alexandra Road.

The new campus will include a hostel for 500 students (below, artist’s impression) for its upcoming boarding programme.

Principal Ek Soo Ben expects all students to stay in the hostel at some point in their six years there.

She also wants to open it to their foreign partner schools as part of learning exchanges.

‘With a hostel, we can have learning symposiums for foreign partner schools and their students can work on meaningful projects together with our students,’ she said.

Apart from standard facilities like 50 classrooms, two lecture theatres, an indoor sports hall and a big canteen, the school will also have non-standard ones like a performing arts theatre and special science laboratories.

The school will have to raise about $1.2 million to $1.5 million for these non-standard facilities.

As the school is the West Zone Centre of Excellence for Science and Technology, its six special science labs will have up-to-date facilities for photonics, mechatronics, analytical chemistry and molecular biology.

Being a Special Assistance Plan school with a strong Chinese tradition, the new building’s design will take in elements of Chinese heritage.

This motif will, for instance, be incorporated into the ‘meandering walkways and six courtyards’, each with a different theme, such as science, design and performance.

The design will also have learning and social interaction spaces. For instance, the science courtyard will have an eco-trail and the performance courtyard will encourage music jam sessions and outdoor performances.

Students said they were excited about the prospect of moving to a new campus.

Secondary 4 student Lim Ze Ming, 16, who is a 400m runner, said: ‘Now, we can only do strength training in the gym when it rains. An indoor sports hall will allow for training regardless of the weather.’
Source : Straits Times - 11 Jan 2008

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