No lack of natural gas for Singapore

No lack of natural gas for Singapore 
 
SINGAPORE will not have a shortage of liquefied natural gas (LNG) for many years, given its long-term contracts with Indonesia and Malaysia, said Foreign Minister George Yeo yesterday.
And for the long haul, there is also the upcoming LNG terminal.

Mr Yeo was responding to media queries on how political instability in neighbouring countries would affect Singapore’s natural gas supply.

He was speaking at a community event in Hougang Stadium to promote social harmony, which was attended by about 2,000 residents from Aljunied and Hougang.

The billion-dollar LNG terminal will be ready to supply a third of the country’s gas demand by 2012.

At yesterday’s event, which included a walk, telematches and performances, Mr Yeo also touched on the Youth Olympic Games that Singapore is hosting in 2010, which he said would have grassroots’ support.

‘There are many things that need to be done, from critical infrastructure to systems management to security, to making sure we have enough guides, hosts and hostesses,’ he said.

Representatives such as community leaders, schoolchildren and undergraduates would be mobilised to help in the national effort, he added.

LIAW WY-CIN

Source : Straits Times - 14 July 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

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Prices of Singapore good class bungalows still going up, but volume falls

Prices of Singapore good class bungalows still going up, but volume falls

25 deals done in H1 worth $440.65m, against 87 deals for 2007 worth $1.15b
By ARTHUR SIM

THE volume of transactions of good class bungalows (GCBs) may have fallen along with other property sectors but values have not.

 
A GCB is one that sits on designated land no smaller than 15,000 sq ft. And according to an analysis by CB Richard Ellis (CBRE), there were 25 GCB transaction in the first half of 2008.

While this may be a fraction of the 87 transactions in 2007, the total value for H1 2008 is already $440.65 million, almost 40 per cent of the total value for the whole of 2007 which saw $1.15 billion worth of deals.

There are several explanations for this, including the possibility that bigger GCBs were sold this year, but it also seems clear that prices have risen.

Upon closer analysis, CBRE found that some of the GCBs sold in 2008 had already changed hands once before in 2007. For instance, a house at Fifth Avenue was sold for $17.4 million in June 2007 and then sold again for $19.7 million in March this year - representing a gain of about 13 per cent.

Another house in Cluny Hill was sold in January 2007 for $15 million, re-sold six months later for $20.2 million and then sold again in May this year for $21.5 million.

CBRE director (luxury homes) Douglas Wong says: ‘There is still buying interest in the GCB market as it is always regarded as an attractive investment in the long term and/or for owner-occupation.’

This certainly seems to be supported by the fact that CBRE and Mr Wong handled possibly the biggest GCB deal ever done here - a house in Leedon Park which sold for $43.2 million in May, bought by a Singaporean.

That locals make up the bulk of GCB buyers is interesting as foreigners have been very much credited with bolstering the luxury non-landed sector. Mr Wong also believes that of the estimated 2,400 GCBs in Singapore, these are owned by a small pool of about 1,000 wealthy individuals, suggesting that many own more than one GCB.

In tracking GCB transactions, CBRE found that there were two recent ‘peaks’ in the sector. (CBRE defines ‘peak’ in terms of volume rather than price).

The first peak occurred in 1999, when 77 transactions were recorded after the property market bottomed out during the Asian financial crisis.

The second peak occurred in 2006 with 119 deals done following a protracted period of market stagnation from 2000 to 2004.

In 2006, the 119 GCBs were sold with transacted value totalling $1.225 billion, double the value in 1999.

On average, each GCB cost $9 million to $10 million. In comparison, at the bottom of the market in 2002, the average price of a GCB was $6 million to $7 million.

Of the 25 GCBs sold in H1 2008, about half were sold for over $15 million. Of these, six were sold for more than $20 million.

And as CBRE notes, luxury properties are often seen as a barometer of the health of the overall market. When there are signs of the market turning, GCBs and luxury apartments will reflect this first and post bigger gains ahead of the broader residential market.

So it is good news then that for the rest of the year, CBRE expects GCB prices to remain firm or even see a marginal upside.

Source : Business Times - 14 July 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com

Giant property IPO if Mapletree decides to list

Giant property IPO if Mapletree decides to list

Temasek unit ramping up property funds to lay base for consistently high ROE model
By KALPANA RASHIWALA
(SINGAPORE) An initial public offering for Mapletree Investments Pte Ltd, a fully-owned subsidiary of Temasek Holdings, could take place in the near future, The Business Times understands.

Based on recent valuations, the entity could have a market cap of over $5 billion.

When contacted, a Mapletree spokeswoman said: ‘We are ready for an IPO in terms of our business profile and track record. However, the decision to IPO the company will rest with our board and shareholders.’

‘Over the last few years, we have put in place processes and governance similar to that of a listed company, to ready ourselves for an eventual IPO. What will drive the IPO decision, however, will be the readiness and attractiveness of our business model and strategy as a real estate capital management company.’

A key internal threshold the group has to cross to be IPO-ready is that the ratio of assets under management (AUM) to assets owned by Mapletree must exceed 1.0. ‘As at March 31, 2008, our AUM to owned assets was 0.5 and the ratio currently is about 0.8, including the recently completed acquisition of the $1.7 billion JTC portfolio by a private trust led and sponsored by Mapletree. We expect the ratio to exceed 1.0 by March 2009,’ the spokeswoman added. The next target will be to grow this ratio to 3.0 within three to five years.

AUM refers to assets held in Mapletree-managed private and listed funds with third-party investors.

Growing the AUM business will enable Mapletree to earn more fee income from managing property funds as well as managing the properties owned by these funds.

‘Strong recurring fee income will be the bedrock of our strategy for delivering consistently high returns on equity (ROE) of above 10 per cent to shareholders,’ Mapletree’s spokeswoman added.

Fees collected from managing funds and the properties held by these funds generally tend to be more stable than the property development and ownership business, which is more cyclical and considered more risky from an investment point of view.

‘Our fee income made up about 10 per cent of total revenue for financial year ended March 2008 and we hope to grow this to 50 per cent in three to five years.’

One event that could help Mapletree reach the target of a 3.0 ratio for AUM to owned assets sooner is the much-anticipated flotation of Mapletree Commercial Trust, which will hold about $3 billion of assets including Vivocity, St James Power Station, Harbourfront Centre and some nearby office blocks.

This trust was to have been floated by April this year but has been held back because of adverse stockmarket conditions.

The investment proposition of a potential IPO for Mapletree Investment would be that ‘we offer a strong real estate capital management platform with an Asian focus for investors’, Mapletree’s spokeswoman said.

‘However, investors who want a more targeted approach, for example, India or China, can invest directly in our funds. So we offer a whole suite of investment opportunities,’ she added.

For the year ended March 31, 2008, Mapletree posted a 3 per cent dip in net earnings to $1.04 billion due to a lower net revaluation gain and higher net finance cost. Operating profit, however, rose 35 per cent to $146.9 million, on the back of first full-year contributions from VivoCity and St James Power Station and maiden contribution from The Beacon, a residential project at Cantonment Road.

Mapletree’s revenue jumped 69 per cent to $365.6 million.

Shareholder funds increased 28 per cent year-on-year to $4.4 billion as at March 31, 2008.

That could potentially translate to a market cap of more than $5 billion, assuming that Mapletree shares hypothetically trade at a 23 per cent premium to its net asset value. The 23 per cent premium was the peer mean based on the July 11 closing share prices of CapitaLand, City Developments (after taking into account investment properties at valuation), Keppel Land and Singapore Land.

Mapletree Investments manages six property funds, including the listed Mapletree Logistics Trust. The group had $3.1 billion of AUM as at end-March 2008, a 94 per cent jump year on year, while Mapletree’s owned assets rose at a slower pace of 45 per cent to $5.7 billion.

Recently, the group formed a joint-venture private fund with Arcapita Bank to hold the $1.7 billion portfolio of properties acquired from JTC Corp. In April, Mapletree launched an India-China fund that has so far bought $600 million of assets. These initiatives will drive fee income revenue, which increased nearly 50 per cent to $29 million in the latest financial year.

 
Source : Straits Times - 14 July 2008

Singapore Property - Buy, Sell, Rent, Invest

Mindy Yong

(+65)91002985

mindy@mindyyong.com