Singapore Hotel rates up, as visitor arrivals hit record

Singapore Hotel rates up, as visitor arrivals hit record 

Average January room rate reaches a high of $237, fuelling fears that budget travellers will keep away

By Natalie Soh
 
SINGAPORE tourism set two records last month - one good, one worrying.
First, the good bit: 883,000 visitors arrived, an all-time high for January, and up almost 7 per cent from a year ago.

That kept up a string of record-setting months for arrivals stretching all the way back to 2006.

The other record? The average hotel room rate hit an all-time high of $237, fuelling concerns among some industry players that Singapore risks pricing itself beyond the reach of more budget-conscious tourists from the region and China, who form a large part of visitors here.

National Association of Travel Agents Singapore chairman Robert Khoo said: ‘The risk is that people start getting the perception that Singapore is too expensive to come to, and that would be disastrous in the long run.’

Average room rates broke through the psychological $200 ceiling seven months ago, hitting $210 in June last year.

They went down a little in July, but have been on the up and up since then, fuelled by a shortage of rooms.

With the average rate at $237, four- and five-star hotels are pricing their rooms at between $300 and $400 - or more - a night.

Industry watchers, such as Dr Donald Han, managing director of property consultants Cushman & Wakefield, estimate that Singapore is short of between 1,000 and 1,500 rooms this year, and this could mean prices rising further.

Visitors last month collectively spent 3.5 million days here, 20 per cent more than in January last year.

Indonesians, mainland Chinese and Australians formed the top three groups.

January is traditionally a slow one for visitors, and the numbers usually start picking up in April and June.

With a full slate of exhibitions, conferences and events such as the world’s first Formula One night race, Singapore will continue to be a prime destination.

But high room rates are already putting off some travellers, said Berzurk.com’s CEO Martin Symes.

The website collates travel offers, and Mr Symes said he is seeing more potential visitors who are not making bookings after checking hotel prices here.

Today’s room rate situation is an almost complete reversal from that in 2000, when hotels were engaged in a cut-throat competition to fill rooms.

Most travel agents that The Straits Times spoke to said there was little they could do but wait out the room crunch.

But there is a silver lining, said Cushman & Wakefield’s Dr Han: Room rates here are still relatively lower than in other Asian cities such as Tokyo, Seoul or even Jakarta.

‘Their average rates are US$200 (S$280) plus, so there’s some room to move.’

Also, at least 10 hotels are scheduled to open soon. They include the Crowne Plaza Changi Airport Hotel, the Park Hotel Clarke Quay and Far East Organization’s Quincy Hotel off Orchard Road.

For the longer term, the Government has put up 12 sites for new hotels, in traditional tourist areas as well as off-the-beaten-path areas like Bukit Merah.
 

Source : Straits Times  - 27 Feb 2008

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Citibank opens branch for millionaires at Singapore Paragon

Citibank opens branch for millionaires at Singapore Paragon

The bank will be looking at Indonesia, Malaysia and Thailand next
By CHOW PENN NEE
THE number of millionaires here is set to grow despite recent market turmoil, says Citibank.
 
Mr Larsen: ‘Our emphasis on this segment and our investment in this centre demonstrate the growing sophistication of the Singapore market…’ 
‘There is no slowdown in client wealth,’ Salman Haider, head of investments for Citibank Singapore, said at a briefing yesterday. ‘The wealth effect is still strong.’

To add to the bank’s bullishness, a $3.5 million branch for millionaires was officially opened yesterday at Paragon Shopping Centre.

The 6,000 sq ft, 14-meeting room Citigold Select Centre serves clients with at least $1 million of investible assets, and is Citibank’s first such centre in South- east Asia.

The new centre complements an existing Citigold Centre on the 14th storey of Paragon. Citigold customers have investible assets of $250,000 and above, while Citigold Select clients have about $1 million to $14 million to invest.

An estimated 38,000 people in Singapore are in this category, and Citibank’s revenues from this group surged 50 per cent last year. Assets under management and customer base grew about 30 per cent.

This is the fastest-growing segment in South-east Asia, seeing annual growth of 18-20 per cent, said Jonathan Larsen, Citibank Singapore’s chief executive officer and head of the bank’s South-east Asia global consumer group.

‘Our emphasis on this segment and our investment in this centre demonstrate the growing sophistication of the Singapore market and the increasingly complex needs and expectations of this group of individuals,’ said Mr Larsen.

Citigold Select Centres are already in places like Hong Kong, Taiwan and Korea, and Mr Larsen said the bank will be looking at Indonesia, Malaysia and Thailand next.

In Singapore, three or four more centres may open in the next year or so.

Besides the usual suite of investment products in equities, commodities, and currencies, Citigold Select clients enjoy tailor-made products structured by the bank to meet individual client needs.

The Citigold Select Centre is staffed by about 20 people, 11 of them relationship managers, and the rest are product specialists and support staff.

The centre is wireless-ready and each room has a large plasma TV that interfaces with PCs, to project images on screen. Video-conferencing capabilities are enabled for clients who want to tap the bank’s global research teams for investment trends.

And cash is delivered directly to customers in meeting rooms, eliminating the plebeian need to stand and wait at a counter.
Source : Business Times  - 27 Feb 2008

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883,000 visitors to Singapore in January

883,000 visitors to Singapore in January
SINGAPORE welcomed 883,000 visitors last month, up 6.9 per cent year on year growth and a January record, according to figures released yesterday by the Singapore Tourism Board (STB).
 

Indonesia, China, Australia, India and Japan were the top five visitor-generating countries, contributing to 52 per cent of visitor arrivals. Among the top 15 visitor-generating markets, China, Australia and India registered the highest growth. Arrivals from China surged 42.3 per cent year on year to 108,000. Arrivals from Australia and India grew 21.3 and 11.3 per cent respectively. The robust economies in these markets, as well as strong promotional campaigns and increased air capacity, helped fuel growth.
 
Gazetted hotels in Singapore collected $175 million in room revenue in January, up 27.9 per cent from $137 million a year earlier. The average room rate for January 2008 hit an all-time high of $237, which represented 30.5 per cent year on year growth. But at 84 per cent, the average occupancy rate last month was 2.3 percentage points down from January 2007.

Source : Business Times  - 27 Feb 2008

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Singapore Tiong Bahru Plaza creates 19,000 sq ft retail space

Singapore Tiong Bahru Plaza creates 19,000 sq ft retail space

By KALPANA RASHIWALA

ASIAN Retail Mall Ltd (ARML) is giving up two floors of offices at Central Plaza and transferring the gross floor area to the next-door Tiong Bahru Plaza mall.
 
New space: Tiong Bahru Plaza’s total net lettable area will rise to 209,000 sq ft 
The two office floors - on Central Plaza’s third and 15th levels - will be converted to civic uses and leased to voluntary welfare organisations under the National Council of Social Services which will pay just a service charge for the use of the space, and not a rental.

It will cost about $18 million to create about 19,000 sq ft of new retail space on Tiong Bahru Plaza’s ground floor and basement 1 as well as to reconfigure some existing areas.

Work began in October last year and is slated for completion by Q3 this year. Some of the ground floor units have already been completed and handed over to tenants.

About 90 per cent of the 19,000 sq ft has been leased.

Tenants that signed up include a Japanese snack and convenience concept, Four Leaves, Ajisen, The Juice Company, Yoghurt Place, The Pasta House by Sakae Sushi and a fengshui store.

The new space will boost Tiong Bahru Plaza’s total net lettable area from 190,000 sq ft currently to 209,000 sq ft.

Besides Tiong Bahru Plaza and the 20-storey Central Plaza, ARML also owns White Sands mall in Pasir Ris, Century Square in Tampines and Hougang Mall.

Market watchers reckon ARML’s portfolio could be worth about $1.5 billion. ARML’s fund manager is Pramerica Real Estate Investors Asia, while the fund’s properties are managed by AsiaMalls Management Ltd.

Central Plaza and Tiong Bahru Plaza mall were developed by UOL Group, which later sold them in separate transactions.

ARML bought Central Plaza for $175 million in a deal announced in October 2006, while Tiong Bahru Plaza was sold for $195 million in January 2002.
Source : Business Times  - 27 Feb 2008

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GIC Real Estate buys five-star Tokyo hotel - Tokyo

GIC Real Estate buys five-star Tokyo hotel - Tokyo

(TOKYO) The Government of Singapore Investment Corp (GIC) bought the Westin Tokyo hotel from Morgan Stanley, the brokerage said yesterday.
GIC Real Estate, a unit of the Singapore sovereign fund, purchased the five- star hotel from a company owned by real estate funds managed by Morgan Stanley and Starwood Capital Group Global LLC, according to a joint e-mailed statement.

GIC paid about 80 billion yen (S$1.04 billion), a person with knowledge of the transaction said who declined to be identified.

The sale of the 438- room hotel allows Morgan Stanley, the third-largest US brokerage, and its partners to cash out on the investment at a profit. The amount is 60 per cent more than the 50.1 billion yen Morgan Stanley agreed to pay in 2004 for the Westin from Sapporo Holdings Ltd, which was one of its biggest property purchases in Japan at that time.

‘The transaction also demonstrates Morgan Stanley’s continued confidence in managing hotel investments,’ Sean Williams, a managing director at Morgan Stanley Capital KK, said in the statement. - Bloomberg
Source : Business Times  - 27 Feb 2008

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Tepid response to launch of Singapore HDB’s Punggol project

Tepid response to launch of Singapore HDB’s Punggol project

By ARTHUR SIM

THE Housing and Development Board (HDB) launched its first build-to-order (BTO) development for 2008 yesterday, and 278 applications were received for 494 flats on the first day.
Called Punggol Spring, the project has four-room flats priced at between $204,000 and $259,000.

The number of applications is, however, just a fraction of the 2,224 applications received on the first day for the 278 flats offered through HDB’s bi-monthly sales exercise for unsold flats earlier this month.

PropNex chief executive Mohamed Ismail believes the number of applications for Punggol Spring is not especially low, but added that many buyers, mainly young couples, do not want to wait for BTO flats to be built as this could take as long as three years.

Still, Mr Mohamed reckons that Punggol Springs could receive at least 2,000 applications eventually.

Recent BTO launches for Damai Grove in Punggol Town and Jade Spring @ Yishun in December last year saw a total of 1,888 and 1,908 applications respectively for the 1,122 flats offered.

Giving an insight into the high demand for HDB’s unsold flats, Mr Mohamed said that the applicants probably see these as being ‘good investments’, especially as many are in well-located mature estates where resale prices are rising.
 
Interestingly, data from HDB also reveals that in January, 75 per cent of resale flats were sold for more than $10,000 above valuation.

Chesterton International head of research Colin Tan notes that the rising prices of private property have also priced many potential upgraders out of the private market, leading to higher demand for HDB flats.

However, Mr Tan believes that these buyers, being price sensitive, may not be keen on areas like Punggol because of the higher cost of travel. ‘They may be concerned about the number of ERP gantries along their daily commute to work,’ he said.

With buyers in this segment being so price sensitive, the launch of the latest HDB executive condominium (EC) site at Yishun Avenue 11 yesterday could draw a mixed response from developers.

Mr Tan estimates that the 162,320 sq ft site with a plot ratio of 2.8 could fetch bids of around $80 million, which works out to about $176 psf per plot ratio. At this price, the EC could be launched at around $600 psf, but Mr Tan added: ‘Hopefully, the bids will be lower because this will be good for the buyer.’

Source : Business Times  - 27 Feb 2008

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$95m tag for 16 Singapore terrace houses up for collective sale

$95m tag for 16 Singapore terrace houses up for collective sale
FORT Terrace, a row of 16 terrace houses at Fort Road in the East Coast has been put up for collective sale with an indicative price of $95 million. The site, which is being marketed by Colliers International, has an area of 47,886 sq ft and a 2.1 plot ratio.
Colliers executive director (investment sales) Ho Eng Joo said the successful bidder has to take into consideration an estimated development charge of $23 million, as well as the cost to alienate some 10,964 sq ft state land, which would be about $6.4 million. With this, the site would cost $1,238 per sq ft based on potential gross floor area.

Mr Ho said collective sales of landed properties are rare. Unlike strata-titled apartments and condominiums, all the owners of the landed houses have to agree to any sale.

But Mr Ho added: ‘With 100 per cent owners’ consensus, the collective sale of Fort Terrace is not subject to the approval of the Strata Title Board, resulting in a possibly shorter time for sale completion.’

The site can be redeveloped to accommodate a high-rise condominium, with 67 units of 1,500 sq ft each. Based on the unit price of $1,238 psf per plot ratio, Mr Ho estimates the break-even price for future development at $1,718 psf.

He also pointed out that new developments nearby on Meyer Road are currently selling for between $2,100 and $2,200 psf.
 
The market price for the individual homes at Fort Terrace ranges between $2.1 million and $2.3 million. Mr Ho estimates that owners of the 16 terrace houses could each get $4.8 million per house if the houses are sold collectively.
Source : Business Times  - 27 Feb 2008

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More should be done for S’poreans

More should be done for S’poreans

Session was less fiery; more praise for Tharman
By CHUANG PECK MING

THE second day of the debate on the Budget Statement in Parliament covered much the same ground as when the debate started on Monday, but the comments made yesterday were more evenly spread among the issues raised.
Whereas most Members of Parliament who spoke on Monday homed in on rising business costs and inflation, these issues were confined to fewer MPs yesterday.

The 19 MPs who spoke yesterday gave nearly equal airing to the plight of vulnerable Singaporeans, education, brain drain and brain gain, public housing and innovation, among other issues. The tone was also less fiery, with less blame heaped on the government. And there was more praise for Finance Minister Tharman Shanmugaratnam in announcing a Budget that is generous towards the needy, yet overall prudent and visionary.

The only controversial point raised, perhaps, was that by Nominated MP Siew Kum Hong, who suggested that the gains of Singapore’s economic growth have gone largely to foreigners, both businesses and workers.

He said he would like to see the government show more care and do more for Singaporeans. ‘I want to live in a country that cares for its people, not a country that cares only about money and the GDP growth statistic,’ he said.
 
Josephine Teo (Bishan-Toa Payoh) countered, saying it was unproductive to engage in the exercise of determining who gains more. Instead, the focus should be on how to make the situation a win-win outcome. ‘There is no reason for us to deny a foreign worker or foreign workers the opportunity to gain from this if we ourselves are able to gain from this,’ she said.

‘I think we need not be foreign worker-centric in the way we look at this issue, we should really look at the issue and say, ‘Are we able to make the best use of the situation, enable our own Singaporeans to grow along with it?’ ‘

Except for this mild exchange, yesterday’s debate was rather tame. Even Non-Constituency MP Sylvia Lim of the Workers’ Party did not seem combative when she, in a business-like manner, pushed for the government to withdraw last year’s rise in the goods and services tax in view of its large surplus - which other MPs have also urged.

Ong Kian Min (Tampines) and Ahmad Magad (Pasir Ris-Punggol) raised the spectre of a rising number of homeless people in Singapore. Mr Ong reported an increasing number of people who face eviction in his ward, because they fail to pay their monthly loan instalments to the HDB.

Dr Ahmad noted the odd situation that there were no homeless people in the past, when Singapore was less prosperous.

Source : Business Times  - 27 Feb 2008

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Jan output rises 6.9% on 59.8% biomed surge - Singapore

Jan output rises 6.9% on 59.8% biomed surge - Singapore

Electronics output shrinks 6.7%, the first contraction in eight months
By OH BOON PING

SINGAPORE’S factory output expanded 6.9 per cent year on year in January, thanks to a production surge in the biomedical cluster, the latest figures show.

The Economic Development Board (EDB) said the month on month index was up 5.1 per cent on a seasonally adjusted basis, while the three-month moving average index rose 1.4 per cent year on year.

Last month, the biomedical manufacturing cluster shot up by 59.8 per cent year on year, due to a 63.1 per cent jump in the pharmaceuticals segment. Also, the medical technology segment output went up 32.6 per cent due to increased sales of a variety of medical technology products to US, Europe and Japan.
In a note, UOB economist Ho Woei Chen said the ‘pharmaceutical segment will continue to fluctuate widely due to the lumpiness of output and the early stage of development in Singapore means that the industry is dominated by relatively small number of players’.

Output of the chemicals cluster grew 4.3 per cent, as higher output was seen in all segments.

For example, production of petrochemicals and specialty chemicals rose 5.1 per cent and 9.9 per cent respectively, while the petroleum segment inched up 0.1 per cent as there were some maintenance shutdowns in refineries.

Precision engineering production expanded 1.3 per cent, helped by a strong performance by machinery & systems. Output rose 9.5 per cent as manufacturers produced more machinery such as industrial process control equipment, generators, engines, switchboards, switchgears and transformers for export.

Due to lower production of metal and plastic precision components and other things, the precision modules & components segment shrank 3.8 per cent.

Similarly, the electronics cluster shrank 6.7 per cent, even though computer peripherals expanded 14.1 per cent.

This resulted from contractions in other segments, like chips, where output dropped 10.1 per cent, and data storage, whose output fell by 6.3 per cent. Likewise, the infocomms & consumer electronics and other electronic modules & components segments contracted by 8.7 per cent and 9.6 per cent respectively.

Noting that this was the first electronics contraction in eight months, Ms Ho said this ‘probably suggested that the weakening external demand could start to bite the domestic manufacturing sector’.

She was also concerned about the transport engineering cluster, which contracted by 10.3 per cent in January, led by the 17.3 per cent drop in marine & offshore engineering output.

The EDB said this came about due to ‘very high output in January last year and lower value of work done for ship repairing and shipbuilding this January’.

In contrast, land transport grew 39.9 per cent with demand from the European Union and Asia driving up output of land vehicle components. The aerospace segment grew 1.6 per cent with higher production of aircraft parts.

The general manufacturing industries grew 11.6 per cent in January, led by a 16.5 per cent surge in output of food, beverages and tobacco products.

The printing industries increased their production of printed media by 5.6 per cent.

‘Overall, we expect the manufacturing sector to register similar growth pace of 5.5 per cent in 2008, compared with 5.8 per cent in 2007,’ said Ms Ho. ‘This will be led by the biomedical cluster as the correlation between the biomedical manufacturing and the economic cycle is likely to be much less than that with the electronics manufacturing which will likely maintain a moderate growth pace this year.’
Source : Business Times  - 27 Feb 2008

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CapitaLand’s strategy hints at outlook for Singapore residential market

CapitaLand’s strategy hints at outlook for Singapore residential market

By ARTHUR SIM

THE property market is getting round to the idea that there won’t be much good news in the first half of 2008. However, while many property developers including CapitaLand are content to say that they are cautiously optimistic about the second half of the year, actions seem to tell a different story.
 
CapitaLand did say at a recent press briefing it’s not de-emphasising its residential business
 
 
 
CapitaLand, one of Asia’s biggest real estate developers, kicked off the year with several interesting moves that suggest it is looking for other sources of revenue, rather than depend on its main income generator - residential sales.

The first was its $990 million offer for the 33.5 per cent stake in Ascott that it did not already hold.

While M&A activity is quite common in periods of market volatility, with many companies trading below NAV, CapitaLand’s offer for Ascott, which will result in it being taken private, can only mean one thing - that it intends to grow its serviced residence business much more aggressively, and perhaps in more frontier markets like Russia and Kazakhstan.

Ascott is already the biggest operator of serviced residences in Europe and Asia, providing stable recurring income for the group. And CapitaLand’s serviced residence unit did grow its business in 2007, with Ebit for FY07 jumping 66.5 per cent to $337.2 million year on year.

Some analysts have even suggested that CapitaLand could park some of its China properties in Ascott. How this will work, given that most of CapitaLand’s pipeline is in residential properties, and China’s increasingly stringent property guidelines, will need to be figured out first though. Still, it does suggest that some analysts feel CapitaLand may somehow have to deal with its huge residential landbank in China.

To date, CapitaLand’s pipeline of residential projects in China is around 35,000 homes. Tellingly, it only expects to launch 2,000 units in 2008.

China’s booming economy has been a boon to CapitaLand’s coffers in the past years, but the Chinese government’s efforts to cool the property market - the more recent being the implementation of property tax - appear to have had some effect.

While it is difficult to read the Chinese property market, a Citigroup report notes that recent government directives suggest that the housing demand of the low-income group is to be satisfied by public rental housing and some economic housing, while the demand of the middle-income group is to be satisfied by capped-price projects and economic rental housing, with housing for the higher-income group left to the market.

Even in Singapore, where residential sales have helped CapitaLand achieve record profits in 2007, robust home sales are no longer a certainty, a fact underscored by the number of units it expects to launch this year (800-1,000) compared to the number of units it has in the pipeline (3,500-4,000).

To be sure, CapitaLand did say at a recent press briefing that it was not ‘de-emphasising’ its residential business. But it did choose to announce that it would establish a new unit to generate more business in the Asian industrial and logistics sector at the same time.

The move is prudent, given that the logistics sector in India and China is set to grow, even if the global economy slows down - thanks to the growing appetite of consumers there. So while exports from China to the West may slow down, internal exports within India and China will drive the need for internal logistics facilities.

Again, a stable source of recurring rental income seems to be the objective here. And coupled with the possibility of a pan-Asian industrial and logistics Reit, there could also be more manager’s fees to collect.

For good measure, Reits were also given a plug as a logical ‘defensive’ play in volatile times at the press briefing.

All this, plus CapitaLand’s recent bond issue of $1.3 billion - which cannot possibly be for the purposes of building its residential landbank - does seem to suggest that CapitaLand is planning to nimbly sidestep any possible downturn in the residential sector.

This in itself does not say much except reinforce the standing of the company’s business acumen - unless, of course, if you are thinking of buying a home yourself. In which case, you should probably be cautious too.

Source : Business Times  - 27 Feb 2008

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