Merchant Square and Waldorf Mansions up for sale - Singapore

Merchant Square and Waldorf Mansions up for sale - Singapore

By ARTHUR SIM

MERCHANT Square, a four-storey office building off Merchant Road, is up for sale with a guide price of $73 million.

Merchant Square: The four-storey office building is being sold with a guide price of $73 million 
With a total net lettable area (NLA) of about 50,262 square feet, the unit price works out to $1,450 psf of NLA.

The property, which was developed by carpet manufacturer Jackson Carpet and completed in 1996, sits on a land area of approximately 28,083 sq ft and has two levels of basement carparking for 76 vehicles.

CB Richard Ellis is marketing the 99-year leasehold building and its director (Investment Properties) Charles Hoon said the entry yield is about 2 per cent.

He added that while the average rental is $3.80 psf per month, new leases are being contracted at $6.50 - $7 psf per month.

The lease profile also shows that close to 50 per cent of the current leases will be expiring over the next two years.

‘Smallish mid-sized office buildings similar to Merchant Square present a good acquisition opportunity and remain sought-after amongst end-users in view of tight office space supply,’ Mr Hoon said.

The property is currently 96 per cent occupied and has as its anchor tenant cosmetics company Estee Lauder.

Waldorf Mansions at Balestier Road has also been put up for sale. The asking price is $21 million, or $659 per sq ft per plot ratio (psf ppr).

The freehold 11-storey block comprising 16 apartments has a site area of 11,384 sq ft, a plot ratio of 2.8, and maximum gross floor area of 31,876 sq ft.

The site is marketed by Realtorhub Real Estate (RH), whose executive director Daniel Ng said it can be redeveloped into a high-rise condominium with 26 units of about 1,200 sq ft each.

He added that the site is capable of being amalgamated with the two adjoining sites, Balestier Towers and Scenic Heights, to form a larger development.

Based on the asking price, Mr Ng said that the en bloc sellers will make a premium of about 33 per cent over the current market price for Waldorf Mansions.

In July last year, RH brokered the deal for nearby Ruby Plaza which was sold to Soilbuild Group for $69 million, or $582 psf ppr.

Source : Business Times  - 19 Feb 2008

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Modest weekend sales at Singapore Waterfront Waves

Modest weekend sales at Singapore Waterfront Waves

By KALPANA RASHIWALA

IN A bellwether post-Budget property launch, Frasers Centrepoint and Far East Organization sold 20 units at the weekend at their Waterfront Waves condo fronting Bedok Reservoir. The project was officially launched at the weekend with the start of an advertising campaign.
 
Post-Budget launch: Twenty units at the 99-year leasehold project, which fronts Bedok Reservoir, were sold over the weekend 
The sales brought the total sold so far at the 99-year leasehold project to 100 units, including 80 sold earlier after the condo was soft launched around mid-January. So far, 180 units at the 405-unit development have been released.

The average price currently for the entire development is $750 per square foot after discounts, with the spread ranging from around $650 psf to $930 psf. However, for the 100 units sold so far, the average achieved is $801 psf, as they are among the better-facing units. About 85 per cent of buyers of the 100 units are Singaporeans and 35 per cent have existing HDB addresses.

Property industry watchers were keeping an eye on Waterfront Waves for an indication of buying sentiment after Friday’s Budget.

Some developers hoped the Budget would boost buyer confidence, paving the way for them to go ahead with launches they had held back because of sentiment dented by the stock market plunge and sub-prime woes.

While the 20 sales at the weekend seem modest, Frasers Centrepoint assistant general manager (sales & marketing) Elson Poon said the result was ‘within our expectations in view of current market sentiment’.

‘People are still cautious when it comes to making big-ticket purchases,’ he added.

The project’s pricing may have been a factor, market watchers reckon.

Mr Poon confirmed that the $801 psf average price achieved for the 100 units is a new high for a condo launch in the Bedok Reservoir area. Three-bedroom units at Waterfront Waves cost between $880,000 and just over $1 million.

Giving his take on the outcome for the maiden launch post-Budget, CB Richard Ellis executive director (residential) Joseph Tan said: ‘The buying mood is still cautious. But if you’re expecting a price correction, it may not happen for a while. The bulk of unlaunched projects are held by mainstream developers. They have the capacity to hold and control prices.’

Another property consultant said: ‘If there’s any price drop it may be started by smaller developers, who usually try not to hold. As long as they can make money, they’ll let go.’
Source : Business Times  - 19 Feb 2008

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Amex signs up for Singapore Marina Bay Financial Centre

Amex signs up for Singapore Marina Bay Financial Centre

It is said to be taking 50,000 sq ft in Tower 2, in the project’s 1st phase
By KALPANA RASHIWALA
AMERICAN Express International is the latest new tenant at Marina Bay Financial Centre (MBFC), which means that slightly more than half of the total 2.9 million square feet of offices in the entire development has been taken up.
BT understands it will take about 50,000 sq ft or two floors in the 50-storey Tower 2, which is under MBFC’s first phase and slated for completion by early 2010. Amex will join British bank Barclays, Swiss private bank Pictet and UK-based stockbroking firm Icap as tenants in Tower 2.

Barclays is said to have agreed to lease about 100,000 sq ft or four floors in the tower, Icap is taking 35,000 sq ft and Pictet around 25,000 sq ft.

MBFC’s Tower 2 will have nearly one million sq ft of net lettable area (NLA).

The 33-storey Tower 1, also in the development’s first phase, has about 600,000 sq ft of NLA and is fully leased, mostly to Standard Chartered, which is taking 508,298 sq ft.

Smaller tenants in that tower include French corporate and investment bank Natixis, which is taking 65,000 sq ft, and Wellington International Management Co (21,000 sq ft).

DBS has leased about 700,000 sq ft in MBFC’s Tower 3 - which will be in the project’s second phase and slated for completion by early 2012.
 
Office leasing interest in Singapore since the start of the year does not seem to have been dented by sub-prime writedowns that have struck international banks. ‘Most banks still see Asia as a bright spot and will continue to invest in Asia,’ an executive with a major office landlord told BT.

CB Richard Ellis executive director (office services) Moray Armstrong, whose firm is the leasing agent for MBFC’s office space, declined to be drawn into speculating about the latest tenants at MBFC, when contacted by BT.

However, he said, there is a ‘healthy level of active leasing negotiations going on and further announcements are expected within the next three months’.

‘Generally, too, leasing momentum in the Singapore office market has carried forward from 2007. There has been relatively minor impact arising out of the external sub-prime crisis. There’s still plenty of activity and leasing negotiations in motion,’ he said.

CBRE data show that Grade A office rents in Singapore rose 96.5 per cent last year to hit $17.15 psf a month.

‘We expect a more modest rate of rental growth in the order of 15 to 20 per cent this year. Upside remains because of the severe shortage of available office space. But because rents have moved up so sharply, a more modest pace of growth is likely, combined with greater caution among occupiers, which is understandable. These twin factors will contribute to more moderate rental growth.’

American Express International Inc currently has operations at The Concourse while American Express Bank has operations at Hitachi Tower.

Source : Business Times  - 19 Feb 2008

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Singapore CPF to keep OA interest rate at 2.5% for Apr-June

Singapore CPF to keep OA interest rate at 2.5% for Apr-June
THE Central Provident Board said yesterday that it will continue to pay 2.5 per cent interest a year for members’ CPF savings in their Ordinary Account (OA) from April 1 to June 30.
The concessionary interest rate for HDB mortgage loan, which is pegged at 0.1 percentage point above the CPF interest rate for the OA, will remain unchanged at 2.6 per cent a year over the same period, the Housing Development Board (HDB) said in the joint statement.

Although the computed CPF interest rate derived from the major local banks’ interest rates for the three months between November and January works out to 0.74 per cent a year, the CPF Act provides for a minimum CPF interest rate of 2.5 per cent a year.

The prevailing CPF interest rate from January to March for the Special, Medisave and Retirement Accounts (SMRA) is 4 per cent. This was computed based on the 12-month average yield of the 10-year Singapore Government Security (10YSGS) plus one per cent under the new CPF reforms announced last year.

The SMRA interest rate for April to June will be announced in March after the average yield of the 10YSGS is computed. To help members adjust to this floating rate, the 4 per cent floor for the SMRA rate will be maintained for the first two years, as earlier announced.
 
An extra one per cent interest will also be paid on the first $60,000 of a member’s combined balances, with up to $20,000 from the OA. The extra interest from the OA will go into the member’s Special or Retirement Account to enhance his retirement savings.

The CPF interest rate will continue to be reviewed quarterly, the CPF said.

Source : Business Times  - 19 Feb 2008

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278 Singapore HDB flats swamped by 9,900 applications

278 Singapore HDB flats swamped by 9,900 applications

Unsuccessful buyers urged to consider build-to-order flats

THE Housing and Development Board received 9,900 applications for 278 flats offered in its February bi-monthly sale.
Most of the units offered are four-room flats, plus 64 five-room units and 20 executive flats in 13 estates.

There are 119 units in Toa Payoh and 39 in Tampines.

HDB said the strong demand was ‘because the flats offered are in established HDB towns which are popular with buyers, but the supply of new flats is tight as there is limited land available’.

HDB advised unsuccessful applicants to consider booking a flat under its build-to-order (BTO) scheme. About 4,500 flats will be launched under this scheme in the first half of the year.

More than 500 are still available from recent BTO launches at Punggol and Sengkang, such as Treelodge@Punggol, Fernvale Vista, Punggol Vista and Coral Spring.

HDB also suggested that buyers also consider resale flats, which it said still remain largely affordable. It said that in January, 25 per cent of resale transactions were completed at prices no more than $10,000 above valuation.
 
The recently closed sale is HDB’s fifth bi-monthly sale exercise for four-room and larger flats in the combined balloting/walk-in system. HDB is currently reviewing the scheme.
Source : Business Times  - 19 Feb 2008

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Financial irregularities at Singapore Ren Ci referred to CAD

Financial irregularities at Singapore Ren Ci referred to CAD

MOH to continue subsidies to hospital for its patient care services
By MICHELLE QUAH

THE Ministry of Health (MOH) has referred irregular financial transactions at Ren Ci Hospital and Medicare Centre to the Commercial Affairs Department.
Such irregularities had first been uncovered by public accounting firm Ernst & Young (EY) in November, in its general review of the corporate governance structures and internal controls of 12 charities.

EY had been commissioned to conduct a further three-month inquiry into Ren Ci’s gaps in corporate governance and ’some possible irregularities in certain financial transactions’.

MOH announced yesterday that ‘a few financial transactions could not be satisfactorily explained’, in the course of EY’s inquiry.

‘In order to seek greater clarity into these transactions, MOH has referred them to the Commercial Affairs Department (CAD), for its assistance. MOH will be seeking the cooperation of Ren Ci’s board and staff to assist in CAD’s investigation,’ the ministry said.

The charity had extended interest-free loans, amounting to millions of dollars, to several companies. EY’s review turned up discrepancies between the amount recorded by the charity as loaned out and that recorded by the companies as borrowed. Ren Ci’s honorary chief executive, the Venerable Shi Ming Yi, is also an owner of a company the charity lent money to.
 
MOH reiterated yesterday that it would continue its subsidies to Ren Ci for its patient care services to ensure that patients will continue to receive care and medical treatment.

‘We are confident that the Ren Ci board, helmed by Mr Chua Thian Poh who assumed chairmanship since September 2007, will ensure that Ren Ci’s current services and day-to-day operations remain intact and undisrupted,’ it said.

Ren Ci’s status as an Institution of a Public Character was not renewed when it expired on Nov 27. This means donations to Ren Ci after that date are not tax-deductible.
Source : Business Times  - 19 Feb 2008

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Analysts stay bullish on luxury watch Singapore retailers

Analysts stay bullish on luxury watch Singapore retailers

F1, IRs expected to draw in high rollers and further spur demand for top-end timepieces
By LYNETTE KHOO

THE growth of luxury watch retailers has been known to be closely tied to economic growth, and a bellwether of consumer confidence.
 
 
Despite worries about fears of a US and global recession, time - as captured by exquisite timepieces - is still money, at least for luxury watch retailers, on which analysts remain bullish. In particular, high-end timepieces - some define these as those valued above 3,000 Swiss francs (S$3,840) - are seen to be most resilient during an economic downturn.

‘Overall, the industry is still quite positive. If you look at the industry statistics, Swiss watch exports have been growing quite nicely - year-to-date is above 10 per cent year-on-year and momentum is picking up,’ says Kim Eng analyst Pauline Lee.

‘It seems sustainable because countries like Hong Kong and Singapore have emerged as one of the top Swiss watch exporters and the growing affluence in Asia will help to contribute to the growth.’

The big brand-name luxury timepieces, which are popular status symbols, have been riding the wave of growing affluence in Asia, which accounts for almost half of all Swiss watch exports in the world. According to the World Wealth Report 2007 by Merrill Lynch and Capgemini, the Asia-Pacific wealth market is estimated to grow 8.5 per cent a year to US$12.7 trillion by 2011.
‘It’s a good time to accumulate in terms of valuation. If you can find PE valuation below 10 times, it may be a good investment for the long-term.’
 
- Kim Eng analyst Pauline Lee 
 
 
 
 
Despite Singapore’s small size, it is ranked sixth in the global watch trade, with demand coming from locals, tourists and the region for re-exports, data from the Federation of Swiss Watch Industry shows. The distribution of Swiss watch exports in Singapore grew 26 per cent in 2007 from a year before to 66.1 million Swiss francs.

Analysts believe that the Formula One Grand Prix in September and the two upcoming integrated resorts, which will be a huge draw for the high rollers, will further spur demand for big-ticket items here, of which luxury watches form a key segment.

Retailers of luxury watches would be ‘a good proxy to the IR and booming tourist arrivals’, with some already securing stores near the IR, Ms Lee said.

Phillip Securities analyst Ng Chen Hao predicts that the growth of luxury watch retailers is expected to remain in positive territory, although there might be some easing from the current industry growth of some 10 per cent.

‘Cortina, The Hour Glass and Sincere Watch are targeting the very rich. If there is a US recession, I don’t think they will be affected as the extreme rich are more sheltered (from the slump),’ Mr Ng says.

For now, consumers in Asia appear insulated from a slowdown in the US economy, with sales of timepieces still growing in the main markets, a watch retail analyst at a local brokerage observes, noting that some watch retailers are still expanding aggressively at this point.

Among them, The Hour Glass is doubling the size of its boutique at Raffles Hotel Arcade here and launching a new 1,300 square foot Montblanc mono-brand boutique in Sydney by April. It is also opening South-east Asia’s first Hublot mono-brand boutique in Kuala Lumpur in May. China’s watch retailer Time Watch Investments has opened an additional 85 retail stores since mid-2007 for its ‘Tian Wang’ and ‘Balco’ brands across 35 cities.

Sincere Watch is also actively expanding, particularly in North Asia, where it has opened new Franck Muller boutiques in Ocean Terminal in Kowloon, Shin Kong Place in Beijing, Plaza 66 in Shanghai and at the Venetian Casino and Resort in Macau. Its existing flagship FM boutique in Central Hong Kong was considerably refurbished and enlarged.

Meanwhile, the recent market correction has uncovered value in these watch retailers, with some trading at a forward price-to-earnings (PE) ratio of less than 10 times.

‘It’s a good time to accumulate in terms of valuation. If you can find PE valuation below 10 times, it may be a good investment for the long-term,’ Ms Lee says.

Of these watch retailers, Mr Ng of Phillip Securities is most bullish about Sincere Watch, given its expansion plans in Macau, Hong Kong and China. He has a ‘buy’ call on the stock with a target price of $3.00, in anticipation of an upside from the takeover bid by Hong Kong-listed Peace Mark Holdings, which priced each share at $2.564.

After acquisition, Sincere will have a strong backing from Peace Mark and a broader retail network to seek distributorship for new Swiss brands and command better earnings margins, he said.

Ms Lee of Kim Eng is pegging her ‘hold’ call on Sincere Watch with a $2.56 target price, on the belief that its upside is capped by the takeover offer price. Uncertainty also clouds any potential synergy between Sincere’s luxury watch brands and Peace Mark’s predominantly mid-range watches, she said.

But once this takeover is approved and completed, Sincere shares would become less liquid and investors who still want to play the watch theme may find fewer options left. Analysts believe trading focus may shift to its rival The Hour Glass, which has a similar product offering but is trading at an undemanding valuation of 7.52 times forward PE versus Sincere Watch’s 18.75 times.

Analysts said they are not particularly intrigued by Time Watch Investments’ exposure in China as the company is largely seen as a volume play rather than a premium player.

Any uptick in sales triggered by the Beijing Olympics this year will likely be a one-off event, Mr Ng says.

Source : Business Times  - 19 Feb 2008

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RMG ‘happy to lose’ tender for Singapore Novena site

RMG ‘happy to lose’ tender for Singapore Novena site

By CHEN HUIFEN

RAFFLES Medical Group (RMG) executive chairman Loo Choon Yong says he is ‘happy to lose’ the tender for a hospital site at Novena, seeing the record bid of $1,600 psf per plot ratio (ppr) by Parkway Holdings makes the site one of the most expensive commercial land buys in recent times.
‘This is one tender we are quite happy to lose,’ said Dr Loo. ‘As you can see, it’s a different risk appraisal, I suppose.’
 
The tender for the Novena site closed last Friday. At $344.1 psf ppr, RMG’s bid fell a long way short of even the $694.5 psf ppr put in by second-highest bidder Napier Medical. The site was awarded to Parkway yesterday afternoon.

Although it missed out, RMG intends to keep looking for opportunities to grow locally. ‘We can of course move out backroom services,’ said Dr Loo. ‘We can move out even my office and use every square inch to serve patients.’

At the rate business is growing, it may not be long before that happens. RMG announced yesterday its full-year net profit more than doubled to $35.9 million, from $15.7 million in FY2006. This was helped by a 46.9 per cent or $9 million rise in operating profit to $28.2 million and a one-time gain of $12.5 million from its 50 per cent interest in Raffles Hospital Properties. The gain resulted from a revaluation of the Raffles Hospital building, which RMG previously co-owned with a CapitaLand unit.

Revenue for the 12 months ended Dec 31, 2007, jumped 25.6 per cent to $168.7 million. This was driven largely by hospital services which saw revenue surging 34.3 per cent to $106.3 million. The increasing complexity of cases resulted in more intensive use of facilities and higher value-added services.

According to Dr Loo, the hospital is operating at 40-60 per cent capacity, with some of the bed space making way for outpatient operations.

The healthcare services segment, which encompasses the clinics business, grew 14.4 per cent to $69.7 million. During the year, the group opened three new clinics - at Science Park, TechPark, TechPlace and a 24-hour medical centre in Terminal 3 of Changi Airport.

Basic earnings per share for the year went up to 7.36 cents, from a restated 3.50 cents the year before. Net asset value per share was 38.98 cents at Dec 31, up from 24.87 cents at end-2006. The group is proposing a final dividend of 1.5 cents a share, bringing the payout for the year to 2.5 cents a share.

Dr Loo is optimistic about the group’s prospects in 2008 but says the state of the global economy is important. ‘Because we are actually serving regional patients, if they do less well, they may be less inclined to come,’ he said. ‘Singaporeans will always have the option of going to government hospitals.’

More than one-third of RMG’s patients are from overseas, with the top sources being Indonesians, Malaysians and expatriates living in the region.
Source : Business  Times  - 19 Feb 2008

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Singapore Parkway dives 8.3% on record bid for site

Singapore Parkway dives 8.3% on record bid for site

Winning bid of $1,600 psf ppr for Novena hospital site is over twice the second highest offer
By UMA SHANKARI

SHARES of Parkway Holdings took a beating yesterday as concerns emerged that the healthcare provider might have overpaid for a hospital site at Novena.
 
 
Parkway’s stock slipped as much as 9.7 per cent yesterday following Friday’s news that the company had put in the top bid of $1.25 billion for a 1.7 ha site at Novena Terrace/Irrawaddy Road.

The stock ended the day down 30 cents, or 8.3 per cent, at $3.30. The Urban Redevelopment Authority (URA) officially awarded the site to Parkway yesterday.

Parkway’s bid, which works out to be about $1,600 per square foot per plot ratio (psf ppr) is a record price for land, and tops the previous record set by Australia’s Lend Lease, which paid $1,455 psf ppr for a commercial site above Somerset MRT station in August 2006.

The bullish bid was also more than twice the $540.9 million offered by second highest bidder, Napier Medical.

Analysts, who estimate that Parkway’s total development cost could be about $1.6 billion-$1.8 billion, said that Parkway had overpaid for the site.

‘We believe capacity constraints at Mount Elizabeth Hospital and Gleneagles Hospital have pressured Parkway Holdings to be overly aggressive to secure the site,’ said UOB-Kay Hian analyst Jonathan Koh. ‘Parkway also does not want a competitor to secure the hospital site.’

Mr Koh’s recommendation on Parkway is under review due to the massive bid. He previously had a ‘buy’ call on the stock.

Citigroup analyst Lim Jit Soon reiterated his ’sell’ call on the stock, pointing out that the project will stretch Parkway’s balance sheet.

‘Gearing could rise to 171 per cent even before development costs are factored in,’ Mr Lim said. ‘In a credit crunch environment, securing financing might be an issue.’

Mr Lim added that Parkway’s strategy could be to finance the development of the hospital by selling the medical suites to doctors at between $4,000 and $5,000 psf. But while this strategy could work, ‘the company will have to convince investors that it did not overpay for the site’, he said.

CIMB Research agreed that Parkway has overpaid, especially when looking at prices in the Novena area.

‘Compared to bids for land sites in the Novena area, (Parkway’s) bid is more than three times that of Far East Organization’s bid of $501.2 psf ppr for a hotel site at Sinaran Drive in January 2007 and Frasers Centrepoint’s bid of $506.9 psf ppr for a residential site at Sinaran Drive in July 2006,’ said analyst Tan Wei Ling.

Ms Tan cut Parkway’s target price to $4.19 from $4.53 due to rising risk aversion.

But she is maintaining Parkway’s ‘outperform’ rating for now due to the company’s growing regional franchise, good earnings prospects and relatively attractive dividend yields, she said.

Source : Business Times  - 19 Feb 2008

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Maybank’s Singapore home loan rate cut sets cat among pigeons

Maybank’s Singapore home loan rate cut sets cat among pigeons

Analysts divided on whether this will signal undercutting among the banks
By CHOW PENN NEE

(SINGAPORE) Maybank has fired a salvo that could shake up the home loan market here by slashing its rates. This has led to speculation that banks might start to undercut each other to drum up business. Meanwhile, the banks themselves are adopting a cautious stance in a falling interest rate environment that could change direction.
 
 
For a three-week period, Maybank is launching a promotional three-year fixed rate home loan package which is the lowest of all the banks surveyed.

Home-owners pay 1.68 per cent per annum for the first year, 2.68 per cent pa for second year and 3.38 per cent pa for the third year. The rates apply to both HDB and private home loans. Homeowners are subject to a three-year lock-in period and fees will apply in case of early redemption, prepayment and cancellation during that time.

Before this promotion, the Qualifying Full Bank’s rates stood at 3.58 per cent pa for all three years. Maybank’s new first-year interest rate is about 40 per cent lower than similar packages being offered in the market (see table). But it has a lock-in period of three years while other banks generally have a two-year lock-in.

Helen Neo, head, consumer banking, Maybank Singapore, explained that interbank rates have softened over the past few months. ‘However, we expect interest rates to rebound in view of rising inflation in Singapore,’ she said. ‘Against a backdrop of potential rising interest rates, home loan customers who take up this fixed rate package will enjoy the prevailing low rates and are protected from future interest rate increases for the next three years.’

Mortgage rates are affected by the Singapore interbank offer rate (Sibor) - the rate at which banks lend to one another. Sibor has been on a downward trajectory since late last year, after hovering around 2.5 per cent.

Yesterday, the three-month Sibor fell to 1.44 per cent, its lowest level since December 2004. Economists say it is expected to go even lower by mid-year, partly due to the US steadily cutting its key interest rate. Sibor takes its cue from interest rates in the US, and last month the US Federal Reserve slashed its key interest rate from 4.25 per cent to 3.5 per cent, and then to 3 per cent.

Maybank’s move to reduce rates is prompting speculation among mortgage consultants that banks could follow suit with foreign banks leading the way. ‘I’m not surprised that this round of interest rate reductions is led by foreign banks again,’ said Dennis Ng, spokesman for Mortgage Consultancy Portal www.HousingLoanSG. com. ‘From past experience, local banks have typically lagged behind foreign banks in adjusting interest rates down.’ This is because the three local banks have the lion’s share of the housing loan market. ‘If they reduce interest rates, they have more to lose,’ said Mr Ng. While cutting rates would let them gain some more business, the advantage would be neutralised if their existing clients start paying lower rates.

But with Sibor falling, other banks could follow suit in lowering their interest rates, Mr Ng said. The last time banks were seen aggressively undercutting each other on rates was in 2003-2004, where foreign banks actively led the charge in introducing lower rates.

Leong Sze Hian, president of the Society of Financial Service Professionals, agreed that banks would be nudged into lowering their rates. ‘Sibor rates are dropping and once Maybank lowers its rates, everyone will follow, otherwise customers will move,’ he said.

However, consultants like Tang Yin Fong, a mortgage advisor at wealth and investment outfit Providend, said local banks already have Sibor-linked packages which track the movement of Sibor, and do not need to lower rates to be competitive.

‘Such packages have been relatively attractive in the current lowered Sibor environment and have since been the main packages that the banks recommend to homeowners,’ she explained.

She also added that in the current situation where the Singapore property market still seems to be on the rise and more homeowners are seeking mortgage loans, banks may be less willing to lower their interest rates.

Meanwhile, DBS Bank said it has ‘no plans to adjust rates’ for now, while OCBC and United Overseas Bank both said they would monitor the situation before making a decision.

Foreign banks Citibank and Standard Chartered shied away from saying if they will review rates but pointed to their Sibor packages, which they say give customers control in repricing loan packages. Stuart Kamp, head of mortgages, Standard Chartered Bank, added, ‘We expect interest rates to trend down over the coming months.’
Source : Business Times  - 19 Feb 2008

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Singapore Temasek may sell small Merrill stake to Korean firm

Singapore Temasek may sell small Merrill stake to Korean firm 
 
SINGAPORE’S Temasek Holdings may sell a small stake in Merrill Lynch to South Korea’s Hana Financial Group, but a final decision is yet to be made, a source close to the deal said yesterday.
‘Hana is looking to buy a stake in Merrill from Temasek,’ said the Singapore-based source, who was briefed on the deal.

A Hana Financial spokesman said yesterday that it was considering buying shares in Merrill, but added that nothing in detail has been determined.

South Korea’s Maeil Business Newspaper reported yesterday that Hana Financial, the country’s No. 4 financial services company, will buy US$50 million (S$70.7 million) worth of Merrill shares through its banking unit.

Temasek, a Singapore state investment fund and a major shareholder in Hana Financial, declined to comment on the report.

Late last year, Temasek bought US$4.4 billion worth of Merrill shares at US$48 a share as the United States brokerage, hit by US sub- prime mortgage losses, sought to raise capital.

Temasek and Goldman Sachs are top shareholders in Hana Financial with a combined 19 per cent stake.

REUTERS
Source : Straits Times  - 19 Feb 2008

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Singapore Merchant Square on sale for $73m

Singapore Merchant Square on sale for $73m 

By Joyce Teo, Property Correspondent 
ON OFFER: The Merchant Square, in a quiet area opposite Riverside Point and Clark Quay, consists of a four-storey office tower and two blocks of conserved shophouses on a 28,083 sq ft plot. — PHOTO: CB RICHARD ELLIS
 
A MODEST office development with well-known cosmetics company Estee Lauder as its anchor tenant is up for sale at an indicative price of $73 million.
The price for the 99-year leasehold Merchant Square - located in Merchant Road, opposite Riverside Point - works out to $1,450 per sq ft (psf) of net lettable area.

The latest office property transaction in the vicinity involved the Apollo Centre, sold last December for $1,378 psf.

Merchant Square, completed in 1996, comprises a four-storey office tower integrated with two blocks of conserved shophouses.

CB Richard Ellis, which is marketing the property, said potential buyers can expect substantial rental appreciation in the short to medium term.

Nearly 50 per cent of the property’s leases will expire over the next two years.

Some of the leases were signed at rates as low as $3 to $4 psf, while others are at the current rates of $5 to $5.50 psf.

The Merchant Square vicinity is quiet - a far cry from the other side of the road where Riverside Point and Clarke Quay are located. It is currently 96 per cent occupied.

Estee Lauder takes up 1-1/2 floors, or about 15 per cent, of the space.

Merchant Square has a net lettable area of 50,262 sq ft and sits on a 28,083 sq ft plot. There are two basement carpark levels with 76 lots.

It was originally intended to be a retail project.

Back in 1995, however, owner Jackson International reportedly took advantage of the narrowing gap between office and retail rents to convert three of four shop floors in the development into offices.

Jackson owns one industrial building, but its main business is as a carpet and rugs distributor and manufacturer.

The tender for the property closes on March 12.
Source : Straits Times  - 19 Feb 2008

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Tan family’s final offer for Singapore Straits Trading: $6.70 a share

Tan family’s final offer for Singapore Straits Trading: $6.70 a share 

Tecity offer now puts a price of $2.18b on minerals, hotels and property company

By Lee Su Shyan, Assistant Money Editor 
 
THE battle for The Straits Trading Company went up another gear yesterday, with the family of the late Mr Tan Chin Tuan raising their bid yet again. This time, however, their offer is final.
Tecity, the family’s investment vehicle, lifted its offer from $6.50 to $6.70 per share and extended the acceptance period to March 6.

This came after its rival bidder - the Lee family, who are OCBC Bank’s main shareholders - raised their offer last Thursday.

The bidding war began in January, when Tecity offered $5.70 per share for Straits Trading, saying it wanted more control due to its historical ties with the firm.

Tecity, which has been a shareholder since the 1950s, now owns about 24 per cent of Straits Trading.

The Lee family own about 7 per cent of Straits Trading but control around 33 per cent through their shares in Great Eastern and OCBC, which are also Straits Trading shareholders.

Late last month, the Lee family countered Tecity by offering $5.76 per share. Tecity swiftly responded by raising its offer to $6.50, and the Lees returned serve last Thursday with an offer of $6.55.

Before the takeover tussle began, Straits Trading shares had an average price of about $4.70 over the last year, valuing it at $1.53 billion.

Tecity’s $6.70 offer now values the minerals, hotels and property company at $2.18 billion, an increase in its market capitalisation of more than $500 million in just a couple of months.

Tecity chief executive Chew Gek Khim, granddaughter of Mr Tan, a former OCBC chairman, said her group’s offer of $6.70 was final. Ms Chew said independent adviser CIMB had taken into account Straits Trading’s financial performance and volatility in the stock market.

CIMB has revalued Straits Trading’s assets at $6.52 per share.

Straits Trading announced last Saturday that for the year ended Dec 31, profits rose to $485 million from $194 million previously. The net asset value per share, which has not been revalued, works out to $5.62.

OCBC has said it will not sell its shares to either Tecity or the Lee family, while Great Eastern has yet to decide.

The question now is how the Lee family will respond.

They can opt to do nothing and hope the Tecity bid fails. Tecity needs about 27 per cent for its bid to cross the 50 per cent line and succeed.

If OCBC and Great Eastern do not sell their stocks, Tecity will have to rely on individual shareholders to shore up the numbers.

It remains to be seen if the Lee family will be willing to take the risk of sitting it out, given that they have clearly stated that they want to retain control.

However, if they trump Tecity’s offer, they may end up having to shell out anything up to $1.4 billion, assuming all remaining shareholders, including Tecity but not OCBC and possibly Great Eastern, accept their offer.

Straits Trading shares closed three cents up at $6.70 yesterday.

Source : Straits Times  - 19 Feb 2008

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Two more Singapore govt agencies to vacate downtown offices

Two more Singapore govt agencies to vacate downtown offices 

IDA, SLA making room for private businesses to ease office shortage

By Fiona Chan, Property Reporter 
 
MORE help is on the way to ease Singapore’s office shortage, which has led to soaring rents.
At least two government agencies will give up their downtown offices to make room for private businesses that need more space.

The Infocomm Development Authority (IDA) will relinquish about a third of its 11,300 sq m office in Suntec City by moving some divisions to the Mica building in Hill Street by the end of the year.

Although it will still be close to town, IDA plans to move again in a few years to a ‘more appropriate location outside the central business area’ that can accommodate all its headquarters staff.

The Singapore Land Authority (SLA) is also planning to give up its seven floors at 8 Shenton Way, formerly Temasek Tower, although it has yet to find a new home. This is a considerably larger office space than the one IDA is vacating this year.

Other state departments may follow suit.
Finance Minister Tharman Shanmugaratnam said on Friday that the Government would move several agencies out of the central area by the first quarter of next year.

This will free up 20,000 sq m of precious prime office space for the private sector - equivalent to about 20 floors of a Suntec City office tower, Mr Tharman said in his Budget speech.

Although office space in the Republic is still cheaper on average than in Hong Kong or Tokyo, he said, the rate at which rents have risen has been ‘rapid and unsettling for businesses’.

Prime office rents shot up by 78 per cent on average last year, catapulting Singapore into the world’s top 10 most expensive office markets for the first time. The Republic jumped 10 spots to seventh place in the latest rankings, according to a report last week.

The Government has taken several steps to address the situation, including releasing temporary office sites and state properties, but these have had little noticeable effect so far.

Meanwhile, surging rents are also acting as a push factor for agencies that are relocating, especially those whose leases will expire soon.

The Economic Development Board (EDB), for example, is said to be firming up plans to move to Fusionopolis when its lease at Raffles City Tower is up next year.

Asking rents at Raffles City, where the EDB has been since 1985, have doubled in the last 15 months to about $17 per sq ft per month.

But other statutory boards that have ongoing leases - such as IE Singapore in Bugis Junction, whose lease extends to 2011 - will stay put.

Experts said this latest move would help relieve some of the immediate supply crunch, ahead of a slew of building completions expected in 2010 and beyond.

In particular, it will make things easier for firms already located in Suntec City or 8 Shenton Way that are looking to expand, said Ms Tay Huey Ying, director of research and consultancy at property firm Colliers International.

She added more agencies could jump onto the bandwagon.

‘Even those who own their own buildings could move out and lease out the offices, thereby releasing some space for the market and, at the same time, earning rental returns,’ she said.

Government offices still located downtown include the Ministries of Finance, Law, and Trade and Industry, all within the Treasury building in Hill Street next to Funan DigitaLife Mall.

There is ‘no real need’ for some of these departments to be in the central business district, and they could free up space for other occupiers who need the location more, said Mr Chua Yang Liang, head of research (South Asia) at Jones Lang LaSalle.
Source : Straits Times  - 19 Feb 2008

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Asian carriers still can grow even if recession hits USA, say experts

Asian carriers still can grow even if recession hits USA, say experts 
 
WITH continued good growth in Asian air travel, airlines in the region will be spared the worst if, as many are predicting, a recession hits the United States this year.
In fact, Mr Giovanni Bisignani, director-general and chief executive officer of the International Air Transport Association (Iata) - which groups about 240 airlines - said traffic in Asia is expected to grow by about 6 per cent this year.

Driving this will be the twin engines of China and India with booming economies that are fuelling strong demand for air travel.

Speaking to reporters on the sidelines of the inaugural Singapore Airshow Aviation Leadership Summit, Mr Bisignani said American carriers will bear the brunt of a global slowdown, especially if domestic business travel in the US takes a hit.

Singapore Airlines (SIA) chief executive officer Chew Choon Seng agreed that Asian carriers will be largely spared. For instance, he said, SIA’s ‘good network to India and to China, as well as a buoyant situation around the South-east Asian region’ means it could be in a better position than some others to ride out a US downturn.

But the airline is not immune from global economic trends, Mr Chew said, and stressed that it was prepared for the worst. SIA’s contingency plan if economic prospects go south includes redeploying aircraft and capacity.

He did not elaborate, but experts suggest the airline could move US-bound capacity and beef up services to China and other strong markets to cushion itself against the impact of the slowdown.

Mr Chew and Mr Bisignani were among about 200 aviation experts representing airlines, airports and civil aviation organisations who were at the Raffles City Convention Centre for the inaugural summit, held as part of the first Singapore Airshow, which officially starts today.

Kicking off the proceedings yesterday, Transport Minister and Second Minister for Foreign Affairs Raymond Lim touched on three trends that will shape the industry going forward - liberalisation, airport development and expansion, and airline growth and innovation.

Meanwhile, in his address, Mr Bisignani urged Asia, which will be the key driver of growth going forward, to take a leadership role.

He said Asia should start with throwing out the bilateral system - the current arrangement that regulates where airlines can fly, how often, and how many people they can carry, which is based on agreements reached between the governments of the two points airlines fly between.

Calling for a ‘world without borders’ and consolidation among the more than 1,000 carriers that today criss-cross global skies, Mr Bisignani said the pace of liberalisation needs to be quickened.

To this end, the day’s third speaker, Roberto Kobeh Gonzalez, the president of the International Civil Aviation Organisation (Icao), reminded airlines to keep their eyes on the prize: The traveller.

Air travel is becoming ‘more and more difficult’ he noted, with ‘overcrowding and long line-ups that generate frustration and negative reactions’.

In an ideal world, stakeholders would ensure that they remain focused on being efficient, so passengers would find their way around airports more easily, security checks would proceed more smoothly and quickly and on-time performance would be the norm.

The result: ‘Passengers would be on their way home or to the beach, with all of their baggage, and perhaps a smile on their faces.’

Source : Straits Times  - 19 Feb 2008

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