Representatives of sovereign funds meet in S’pore to prepare guidelines

Representatives of sovereign funds meet in S’pore to prepare guidelines

SINGAPORE: Representatives of the world’s sovereign wealth funds began a closed-door meeting in Singapore on Wednesday as part of efforts to prepare voluntary guidelines for the funds, an official said.

Sovereign wealth funds (SWFs) are government-created investment vehicles which have emerged as a potent force on global markets, leading to concerns over a lack of transparency and national security in recipient countries.

In a bid to develop generally accepted principles and practices for the funds, the International Monetary Fund (IMF) gathered 25 of its member states with SWFs on May 1 to form the International Working Group.

“This is the first meeting of this group,” a working group official, who asked not to be named, told AFP. He said the Singapore gathering was one of a series to be held around the world.

The group, co-chaired by the IMF and the Abu Dhabi Investment Authority (ADIA), aims to finish its work by October.

Almost all 25 members were present at the Singapore meeting, the official said. Asia Pacific members of the working group are Australia, China, New Zealand, South Korea, Timor Leste, Singapore and Vietnam.

Sovereign wealth funds today manage between two and three trillion US dollars in investments, according to the IMF, an amount that is projected to grow to up to 10 trillion US dollars in the next five years.

ADIA, of the United Arab Emirates, is the world’s largest sovereign wealth fund, while Singapore’s investment firm Temasek Holdings, and the Government of Singapore Investment Corporation (GIC), are among the largest sovereign wealth funds in the world.

They recently made multi-billion-dollar investments in global financial houses battered by a US housing slump.
- AFP/so

Source : Channel Newsasia - 10 July 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

Singapore Goldhill Centre up for tender

Singapore Goldhill Centre up for tender
AFTER 13 years in the making, the collective sale of Goldhill Centre - a three- storey walk-up building of shop and office units next to Goldhill Plaza and United Square in the Novena area - has finally been put up for tender.
 
On the block: The site can be redeveloped into a new project with a maximum gross floor area of 210,531 sq ft 
The asking price is $315 million, which works out to $1,496 per square foot of potential gross floor area.

Jones Lang LaSalle (JLL), which is marketing the collective sale, says no development charge is payable because of the high historical development baseline for the 70,177 sq ft freehold site.

The plot is zoned for commercial use with a 3.0 plot ratio (ratio of maximum gross floor area to land area) under both the 2003 and 2008 (Draft) Master Plans.

This means the site can be redeveloped into a new project with a maximum gross floor area (GFA) of 210,531 sq ft, which would surpass the property’s existing GFA, estimated at 112,283 sq ft.

‘With provision for a basement connection to the Novena MRT station and nestled in an established residential estate, the site offers excellent opportunity for retail development,’ JLL said. The tender for Goldhill Centre closes on Aug 19.

JLL’s associate director (investments), David Batchelor, said some owners of strata units in Goldhill Centre have been trying to do a collective sale since 1995, but issues relating to titles of some of the units had held up the sale.

This was ironed out under an amendment to the Land Titles (Strata) Act passed last year.

Most of the units in Goldhill Centre have 999-year leases but the original developer (Goldhill Properties) retained the title certificates.

So, owners of such units could do an en bloc sale only with the unanimous consent and approval of the original developer, which owned the reversionary interest in the property, under the old rules.

But with the new amendment that took effect last year, such owners can now proceed with an en bloc sale by majority consent.

The original developer’s consent will not be required, because if the Strata Titles Board approves an en bloc sale, it will lose all rights to the land.

Another factor that has held back Goldhill Centre’s en bloc sale is that owners had been trying to seek a higher plot ratio for the site in line with those for surrounding commercial sites, Mr Batchelor explained. But these efforts were unsuccessful.

Owners controlling 80 per cent of share values as well as strata area in Goldhill Centre have consented to a collective sale, thus achieving the mandatory minimum consensus under the revised legislation.

Goldhill Centre comprises three blocks of walk-up buildings with a total of 87 units.

These comprise 29 shops ranging from 1,066 sq ft to 1,109 sq ft and 58 office units between 1,206 sq ft and 1,668 sq ft. Based on the $315 million asking price, owners will receive about $3.4 million to $3.9 million per unit.

Goldhill Centre is part of a bigger complex originally developed by companies in the Goldhill group.

Goldhill Centre was developed in 1969, Goldhill Plaza in 1973 and Goldhill Square (now known as United Square and owned by UOL Group), in 1982.

Seah Kim Bee, chairman of the sales committee of Goldhill Centre’s en bloc sale, recounted: ‘We were very close to getting the 80 per cent approval level under the old en bloc rules when the amended Act took effect on Oct 4 last year. So we had to start all over again. We held an extraordinary general meeting in November 2007 where the sales committee was set up and the members elected, as required under the new rules.’

The 79-year-old, a chartered town planner, has also been chairman of Goldhill Centre’s management council for nearly 10 years.

Source : Business Times - 10 July 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

Investment sales fall in Q2 but foreign funds still looking - Singapore

Investment sales fall in Q2 but foreign funds still looking - Singapore

Residential sector continued to soften, contributing 13% to the total
By ARTHUR SIM

PROPERTY investment sales in Q2 2008 saw a significant decline due to increasing cautiousness from investors and tightening of credit.
 
Transactions in the industrial and commercial sector amounted to $2.4 billion, 45 per cent of total investment in the quarter.
 
 
 
 
 
 
In a report, DTZ Research also noted that in the quarter, total transactions fell 37 per cent quarter-on-quarter (QOQ) to about $5.2 billion.

Total sales for H108 amounted to $13.5 billion, 33 per cent of 2007’s total sales and 54 per cent of 2006’s total sales.

However, DTZ said that since 2007 was an exceptionally active year for property investment, ‘$13.5 billion is not a low figure compared with sales in 2006 which was the second most active year in the last decade’.

The residential sector continued to soften, contributing only 13 per cent to total investment sales, mostly from government sale of sites.

Transactions in the industrial and commercial sector amounted to $2.4 billion, 45 per cent of total investment in the quarter.

Of note were the transactions by foreign investors, including Commerz Real AG which acquired 71 Robinson Road and Morley Fund Management which acquired Commerce Point.

Boustead Hub at Ubi Avenue 1 was also sold to a unit of SEB Asset Management.

 
 
Shaun Poh, DTZ’s senior director (investment advisory services and auction), said: ‘Although pressure on Reits has made them less active purchasers, investor interest especially from private equity funds remains strong as the property market is supported by economic growth and occupier market fundamentals.’

DTZ’s Investor Intention Survey also revealed that overall, investors expect to increase funds allocated to property investments by an average 4 per cent, with a comparable figure for Asia- Pacific investors of 10 per cent.

DTZ added that US investors are intending to shift asset allocation significantly away to Asia-Pacific while European pension funds are also waking up to the investment possibilities of the region.

Although European pension funds’ exposure in the Asia-Pacific is minimal at the moment, DTZ estimated that as pension funds begin to target the region, they could allocate as much as 20-30 per cent of their real estate portfolios to the region.

DTZ said, however, that the survey does suggest that within Asia-Pacific, China remains the primary area of interest, while there appears to be some shift in focus away from Japan, Australia and Singapore in favour of emerging markets such as Vietnam and Indonesia.

CB Richard Ellis (CBRE) believes that Singapore’s long-term prospects as a financial hub and popular business destination for MNCs will see Singapore continue to attract both local and foreign investors’ interest.

In a recent report, CBRE said: ‘The more active investors in the short to medium term would be the core and core-plus investors who have a lower risk appetite and are able to fund their acquisitions largely with equity.’

Future new office supply has threatened to undermine occupier fundamentals.

However, CBRE added: ‘At face value, potential confirmed supply seems abundant, but it should be viewed in context with a strong take-up. Some 22 per cent of known supply from 3Q08-2012 is pre-committed, with around 9 per cent under offer.’

Source : Business Times - 10 July 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

Singapore SingPost HQ up for sale with $850m tag

Singapore SingPost HQ up for sale with $850m tag

Terms of any leaseback deal could determine price it fetches: observers
By KALPANA RASHIWALA

THE buzz created by recently unveiled plans to develop the Paya Lebar area into a commercial hub may get a boost from Singapore Post’s planned sale of its landmark headquarters building next to Paya Lebar MRT Station.
 
Paya Lebar landmark: Potential investors could seek to convert it to full commercial use 
BT understands the listed group has launched an expression of interest for the 14-storey building and the price tag is said to be around $850 million based on the existing use of Singapore Post Centre.

SingPost is expected to lease back the space it currently occupies - which is roughly half the building’s one million sq ft net lettable area - for both its corporate office and operations, including the mail processing centre.

The rest of the property is leased to a mix of retail and office tenants, including NTUC FairPrice, Kopitiam, Barang Barang, This Fashion, HSBC Insurance, Northwest Airlines and Symantec Corporation.

CB Richard Ellis is understood to be handling the sale of SingPost Centre.

The current approved use for the site is around 60 per cent industrial and 40 per cent commercial, based on an earlier report.

However, potential investors may seek the authorities’ approval to convert the use to full commercial, to optimise the site’s commercial zoning under both the 2003 and 2008 (draft) Master Plans.

A differential premium would have to be paid to the state in exchange for realising the enhancement in use.

SingPost Centre’s existing gross floor area of 1.48 million sq ft has already tapped the 4.2 maximum plot ratio allowed under the two Master Plans.

The property is on a 352,389 sq ft site with a remaining lease of about 73 years. The 14-storey building, which also has three basement levels (mostly for retail), has 587 carpark lots.

Industry observers say the terms of SingPost’s leaseback arrangement with the potential buyer will be a critical factor in determining the price the building fetches.

Banks have also tightened lending for property acquisitions but core funds and core-plus funds, which rely less on debt and more on their own equity when making property purchases, are still interested in making acquisitions.

BT also reported recently that some of the big overseas funds which have been buying office properties in Singapore in the past few years are now also looking at industrial, logistics and business park assets, which offer higher yields.

Against this backdrop, SingPost Centre’s potential buyer may well continue with the existing industrial/commercial use of the property.

SingPost has also been selling some of its smaller properties, for instance, at Clementi Central, Boon Lay, Marine Parade and Hougang South. The group is still left with a dozen properties, including two in the prime districts - Tanglin and Killiney Road post offices.

Source : Business Times - 10 July 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

Singapore World govts can bring down oil prices: MM Lee

Singapore World govts can bring down oil prices: MM Lee

Firm action to reduce future oil use will cut oil prices today
By CONRAD TAN

(SINGAPORE) Oil prices can be brought down from current record high levels if world governments act decisively to reduce future consumption, said Minister Mentor Lee Kuan Yew yesterday.
 
Mr Lee: The ‘real test’ is whether govts are serious about energy independence 
That could include passing laws to make half of all cars in the US and Europe hybrid-powered or fully electric by 2020, he said.

Such firm targets, made certain by legislation, would immediately lower expectations of future demand for oil, prompting major oil-producing countries to sell more of their existing supplies at current high prices. That would in turn reduce the price of oil now, he said.

‘Really, it is within our capabilities to bring the price of oil to a more reasonable level,’ Mr Lee said.

But as long as people still buy SUVs and drive around, oil-producing countries will expect prices to continue to rise, prompting them to hold on to their existing supplies, he added.

Mr Lee was speaking at this year’s Nomura Asia Equity Forum, in a dialogue session chaired by another guest speaker, Takatoshi Ito, a professor at the University of Tokyo.

During the discussion, Mr Lee cited a recent article written by Martin Feldstein, an economics professor at Harvard University and former chief economic adviser to US president Ronald Reagan in 1982-84.

In the opinion piece, which was published in the Wall Street Journal on July 1, Mr Feldstein stressed that an expected change in the future price of oil would have an immediate impact on its current price.

Referring to Mr Feldstein’s arguments, Mr Lee said: ‘The price of oil will depend on what we do and how it will affect future consumption. If an oil country with oil in the ground believes that oil will become more valuable five or 10 years later, then he will not sell it - he will hold it to get that higher price.

‘But if he sees a change in human behaviour, either brought about by government action or otherwise, that will reduce the demand for oil and the price of oil will go down, he’ll begin to sell.’

Hedge funds and other oil speculators are of ‘marginal influence’ in determining the current price of oil, said Mr Lee.

The ‘real test’ is whether governments around the world - especially in the largest oil-consuming countries such as the US - are serious about becoming energy-independent, he added.

Asked what he thought the likely impact of the global economic and financial market uncertainty triggered by falling US house prices would be on Asia, Mr Lee said that the region would likely fare better than it did during the Asian financial crisis in 1997-98.

‘If the US slows down grievously, it does not follow that China and India will slow down.

‘There are now new economies that are interlinked, which are growing independently of the American economy.

‘This time, when the US goes down, we will be down, but we will pick ourselves up again - not at the same pace as when the US was up, but not flat out on the ground as before.’

Source : Business Times - 10 July 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

Bay window loophole slammed shut by Singapore URA

Bay window loophole slammed shut by Singapore URA

Developers will now have to include planter boxes, bay windows in GFA
By KALPANA RASHIWALA

(SINGAPORE) Here’s some bad news for developers: a loophole that helped them sell in excess of the gross floor area (GFA) has been plugged.
 
The view changes: Till now, developers had been charging buyers for bay windows and planter boxes, even though these features were exempted from GFA calculations 
Till now, bay windows and planter boxes, which often make up around 5 per cent of a condo’s saleable area, had been exempted from GFA calculations. But in providing them to buyers, developers had been charging buyers for them.

This exemption will no longer apply from Oct 7, according to a circular issued by the Urban Redevelopment Authority (URA) on Monday.

The exemption has led to ‘unintended and undesirable consequences’ and ‘unwittingly shifted market behaviours and negated the objective of the GFA exemptions for these building features’, URA said in explaining why bay windows and planter boxes will no longer be exempted from GFA.

Explaining the impact of the new rules on residential developers, a property industry player said: ‘Developers’ profit margins will be reduced because they will no longer enjoy this benefit of not counting bay windows and planter boxes as part of their GFA and yet selling this space to home buyers. If the developers want to have these features, they will have to pay the full price since these will be included as GFA.’
The new rules apply to all residential developments - landed and non- landed - and are expected to lead to a rush of new development applications, especially from developers who have bought land recently.

URA said bay windows have been ‘found to have contributed significantly to the building bulk, affect the design of buildings and generally do not encourage energy efficiency’. ‘Often the provision of bay windows is intended mainly to increase the saleable strata area,’ it noted.

Planter boxes were introduced to provide ‘vertical greenery’ in condos and create ‘visual relief to our high-density living environment’. However, feedback and URA’s investigations have revealed extensive unauthorised conversions of planter boxes within residential units for use as a balcony space or an extension of the living room instead. The planning authority said it has also received feedback that condo owners are unhappy that they are not allowed to convert planter boxes - which are part of their strata space and which they paid for when they bought their unit - to other uses.

‘URA will leave it to the developers and building owners to decide if they wish to continue to provide bay windows and planter boxes for their residential developments so long as these building features are counted as GFA. The industry will have a free hand to design and provide these building features based on their commercial considerations as there will no longer be restrictions on the size of bay windows and planter boxes,’ URA said.

Planter boxes within non-residential developments (like hotels and business parks), as well as those located within the common areas of residential developments like sky terraces, will continue to be exempted from GFA as these areas are typically well-planted and maintained by the management corporation for the benefit of all occupants in a development.

Only formal development applications (which exclude outline applications) with a valid provisional permission issued before Oct 7 will continue to be evaluated under the old GFA guidelines. For approved developments, bay windows and planters will remain GFA-exempted until the buildings are redeveloped, URA added.

Knight Frank managing director Tan Tiong Cheng had an alternative suggestion for URA. ‘Instead of just removing GFA exemption for bay windows and planters, URA could have let the exemption continue but require developers to specify and identify these features in their sales brochures so that buyers know exactly how much of their strata area is taken up by bay windows and planter boxes. Buyers can then decide whether these features are as attractive to them.’

DTZ executive director Ong Choon Fah observed that bay windows can be a useable area - for sitting, keeping books or displaying photo frames, for instance. ‘Planter boxes, on the other hand, often end up not being used for the purpose they were meant for,’ she added.

Summing up the change, a seasoned industry observer said: ‘This closes one loophole for developers. They’ve had a good run on it.’

Source : Business Times - 10 July 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

Singapore Prime rents poised to ease further

Singapore Prime rents poised to ease further 

JLL sees more falls over next half year but rest of market should stay stable

By Joyce Teo, Property Correspondent 
DECLINE: The drop in prime rentals in projects such as Tanglin Park is due to new units on the market and a slowing economy. — BT FILE PHOTO
 
THE surging rents in prime areas that have had expatriates screaming for the best part of a year look to be easing, with some condos already registering falls of up to 12 per cent.
The declines are expected to intensify over the next three to six months, reversing a trend that saw some rents double or treble during the property peak last year.

Consultant Jones Lang LaSalle (JLL) said increased supply from newly built condominiums and a weakening economy are behind the projected prime rent slide, although rents in other parts of Singapore should stay largely stable.

Expats have also been voting with their feet and abandoning pricey prime areas and moving to fringe locations - and nudging rents there up a little in the process, said Dr Chua Yang Liang, the firm’s head of research (South-East Asia).

Rents in the East Coast area, for example, rose 1.4 per cent in the first quarter but are now tipped to grow at a slower pace or even stay unchanged.

This is in contrast to prime areas, where landlords are feeling the chill of the new economic headwinds.

For instance, at Cuscaden Residences in the Tanglin area, rentals have fallen 12 per cent, from $6.20 per sq ft (psf) a month in the fourth quarter of last year to $5.46 psf in the first quarter of this year, said JLL.

A 1,485 sq ft unit will now fetch about $8,100, down from $9,200 at the end of last year.

Over at Tanglin Park, rentals have fallen 3.1 per cent from $5.21 psf to $5.05 psf.

Islandwide, supply started creeping up from the third quarter of last year, said Dr Chua.

But not all owners are yet willing to lower their expectations, said market watchers.

‘The rental market is a lot slower than last year,’ said Ms Kavita Borglin, an agent with Premiere Realty, who said rents in prime areas will be hit by new supply, particularly smaller units.

‘The availability of one- to three-bedroom apartments has increased so rents have softened,’ she said.

At Robertson 100 in Robertson Quay, at least 10 two-bedroom flats are on the market but the owners were all reluctant to lower their asking rents of $5,000 to $6,000, she said.

Ms Borglin’s client, an expat with a rental budget of $4,500, eventually settled for a Newton area apartment.

She added that owners with large apartments of four bedrooms or more could still keep the same rents, as such large flats are still hard to come by.

JLL said Singapore’s rating as the 13th most expensive Asian city for expats, coupled with a slower hiring pace in the coming months, may lead to fewer leasing deals over the remainder of the year.

A lacklustre collective sale market and weakening housing prices will continue to hit sentiment in the non-landed rental home market, said Dr Chua.

Meanwhile, JLL said in a statement yesterday that it has put Goldhill Centre near Novena MRT station up for sale. The indicative price for the freehold commercial site is $315 million.
 

Source : Straits Times - 10 July 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

1st drop in pump prices in 18 months - SIngapore

1st drop in pump prices in 18 months  - SIngapore

Drop in retail rates should have been more, say industry watchers, who doubt fuel prices will stay down for long

By Christopher Tan, Senior Correspondent 
 
PETROL pump prices have fallen for the first time in 18 months, but industry watchers say it is too early to celebrate.
Yesterday, Shell, ExxonMobil, Caltex and Singapore Petroleum Co reduced petrol prices by four cents a litre, after an unabated series of price increases dating back more than a year.

The adjustment brings 98-octane fuel to $2.32 a litre, 95-octane to $2.246 and 92-octane to $2.213. So-called ultra-premium petrols Caltex Platinum and Shell V-Power are now retailing at $2.436 and $2.439 a litre respectively. Diesel remains unchanged at $2.033 a litre.

The reduction in petrol rates follows a sharp drop in crude oil prices since last Friday - the date of the last pump price hike here - due partly to the easing of tensions between Iran and Israel. More importantly, wholesale fuel prices have also fallen by about US$5 (S$7) a barrel since.

Chevron Singapore retail manager John Sam, who is responsible for the Caltex brand here, said: ‘This is the right thing to do, as crude and wholesale prices have come down by quite a bit.”

Crude oil fell from more than US$146 a barrel last week to US$136 on Tuesday. Some industry watchers say the corresponding price drop for drivers could have been bigger.

Oil industry consultant Ong Eng Tong, for example, said that going by the drop in crude prices, pump rates here ’should have fallen by 10 cents, not four”. He added that while diesel prices should also have fallen as well, the worldwide demand for this fuel of commerce seems currently stronger than petrol.

Commenting on the price drop, Consumers Association of Singapore president Yeo Guat Kwang said: ‘It is a good move. The oil companies are more responsive to change and market conditions. I hope they will keep this up.’

He added that as a motorist, however, ‘I am still not too hopeful. Oil prices are still high, and the market is still turbulent.’

Mr Ng Weng Hoong, editor of EnergyAsia.com, a Singapore-based news portal on the energy industry, noted that the prevalent high oil prices had pushed the cost of doing business all round. This applied to pump operators too.

While yesterday’s reduction would be a respite for drivers and businesses, experts are not optimistic about its sustainability.

In fact, crude prices started climbing again yesterday, after news broke that Iran had successfully tested new long-range missiles.

 
Source : Straits Times - 10 July 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com