One man’s panic is another’s bargain…

One man’s panic is another’s bargain…

CDL chief points to some good buys as panic-sellers offload, but he’s not alarmed
By KALPANA RASHIWALA
(SINGAPORE) City Developments Ltd (CDL) executive chairman Kwek Leng Beng yesterday acknowledged that there have been some cases of high-end property buyers resorting to panic-selling in the secondary market. These are people who’d bought their units during the early stages of the property boom

 
Mr Kwek: The high-end homes sector will pick up when credit mess is over 
‘It is not as alarming as what some people think. Just bear in mind, because of a couple of transactions, these few swallows do not make a summer,’ he told analysts and journalists at a briefing to announce CDL’s second quarter results.

In some cases, these desperate sellers are offloading their units at prices that may be 20-30 per cent below current market values, providing attractive bargains for astute property investors, Mr Kwek said.

‘There are what I call bargains because some buyers, towards Temporary Occupation Permit or even before TOP, just want to get out as long as they make $100 psf profit.

‘As an example, there were some projects launched at $2,200 psf. Then (the price) went up to $3,400-3,500 psf. Today there are some people who have gotten so frightened, they will sell off at $1,700 psf. That is the time, if you are smart enough, you can pick up (a bargain)! Buying property is not short term. Buying property is medium to longer term.’

High-end home prices are in a period of consolidation after a sharp escalation. ‘What has gone up in a straight line will also come down,’ as Mr Kwek put it.

‘My key advice to you is as long as you can service your instalment and with the (current) cost of construction so high, how can you be worse off than during the bad times in ‘96 and ‘97? If you are smart enough to pick up (a property) when some people want to commit suicide, you just pick (it) up cheap - keep it, rent it, stay - there’s your chance.’

Saying he was not too worried about the current consolidation, he added: ‘This is the time you should buy. This is not the time you should get out, unless of course circumstances dictate that you should get out.’

Regaling his audience with an anecdote, Mr Kwek said: ‘For example, The Sail @ Marina Bay, we started selling at $900 psf, and the price went up to $3,000 psf-plus. The other day, somebody told me that his friend, a broker, said there’s one unit, ninth floor, $1,800 psf. He asked me: ‘Do you want to buy?’ I said: ‘Which unit? I want to check. I am going for a meeting. When I come back, we’ll talk about it.’ By the time I came back, the whole thing was gone.’

The high-end residential sector will recover ‘when the sub-prime crisis is over and the integrated resorts are in operation’, Mr Kwek said. ‘You’ll have a lot of high rollers coming in. They come in, they like Singapore - very clean, things get done. We have a lot of (positive) attributes but we’re always taking them for granted.’

Mr Kwek, who is also chairman and managing director of Hong Leong Finance, said that although ‘we don’t have Freddie Mac and Frannie Mae’ here, Asia will be hit to some extent by the sub-prime crisis. ‘However, our banks are well capitalised. Monetary Authority of Singapore is monitoring closely.’

He also recalled Minister for National Development Mah Bow Tan’s comments that ‘they don’t want to see property prices going (up) in a straight line nor do they want to see it going down in a straight line. So I am confident they are monitoring the whole situation’.

Much of CDL’s land bank, even in the high-end, was acquired at relatively cheap cost. ‘As an example, for the Lucky Tower site (at Grange Road), if I were to launch my project tomorrow at $2,500-$2,600 psf, I can still make very healthy profit compared to Cliveden (nearby) which we sold at $3,750 psf. It’s a question of whether I want to let go at $2,500 psf or whether I should keep it.

‘Don’t forget if you go ahead and construct, you incur two sets of interest costs - on land and construction. By the time the market improves, the (unit) sizes and the design may be outdated, so you cannot maximise the profit from that. It’s better to keep the land and wait for a better opportunity before you sell.

‘I’m sure some (other) developers feel the same way. I will guarantee you many of these people will not go ahead with construction,’ Mr Kwek said.

CDL, in its results statement, also cited other reasons why a feared oversupply of new private home completions may not materialise. Tight bank financing is making developers more cautious in their land purchases. The sharp hike in construction costs means developers who delay their launches may hold back their construction plans as well. Given tight construction resources, contractors may continue to find it hard to complete projects on schedule.

 
Source : Business Times - 15 Aug 2008

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Focus on Sing$ with inflation in the air

Focus on Sing$ with inflation in the air

Some IMF directors want it stronger but others favour current policy mix
By ANNA TEO

(SINGAPORE) Tackling inflation should remain a policy priority for Singapore, says the International Monetary Fund (IMF).
But given the growth risks, it would be prudent to assess the impact of the monetary tightening already in the pipeline before adjusting the policy stance, the fund’s executive board says in its latest annual review of Singapore’s economic policies.

The report, published as a Public Information Notice on the IMF website, follows discussions in May between IMF staff and senior Monetary Authority of Singapore (MAS) officials and Singapore’s Finance Minister.

In their assessment, the IMF directors note that the pace of economic activity here is likely to decline in the near term given the challenging external environment, with inflation remaining elevated.

‘Against this background, ensuring that inflation expectations remain well anchored is a policy priority,’ they say.

Some IMF executive directors are of the view that this calls for a further ‘rebalancing’ of Singapore’s macro-economic policy mix towards a tighter monetary stance and looser fiscal policy. Specifically, they propose a ‘moderately faster’ pace of currency appreciation.

 
Most of the directors, however, favour maintaining Singapore’s current policy mix, ‘with the authorities remaining ready to modify the policy stance going forward if necessary’.

MAS makes its stand clear: While agreeing that policies need to be responsive to changing circumstances, it sees no pressing need to rebalance the policy mix.

Monetary withdrawal in the pipeline should anchor inflation expectations, while home-grown price pressures have in part been addressed through administrative steps to ease supply bottlenecks, it says. Further currency appreciation during times of economic uncertainty could increase downside risks and attract speculative capital inflows, it adds.

Here, some IMF directors concede that additional monetary tightening could be ‘difficult’ when the external environment is fragile, ‘but observe that the width of the exchange rate policy band could provide flexibility to cope with adverse shocks’.

In their view, a stronger Singapore dollar would fend off higher inflation, facilitate external adjustment and create room for targeted spending to help the poor cope with rising prices.

MAS also disagrees with IMF staffers’ assessment that the Singapore dollar is ‘weaker than the level implied by its longer-term fundamentals’, maintaining that the local currency is fairly valued.

IMF directors concede that the extent of exchange rate undervaluation is difficult to gauge.

They also maintain that, over the medium term, a ‘broader reorientation’ of Singapore’s policy mix is ‘desirable’.

Singapore’s ample fiscal reserves provide space for more spending on physical and social infrastructure once inflation risks abate, in line with the country’s medium-term priorities, they say.

The IMF review also notes the Singapore economy’s ’sizeable linkages’ to the United States.

A one percentage-point decline in US growth could lower growth in Singapore by about 0.9 of a point, directly and through other trading partners. This is about twice the impact 10 years ago.

Softer external demand will lower Singapore’s economic growth to 4.5 per cent this year and next, the IMF forecasts.

But it is ‘unlikely’ that sub-prime-related losses could trigger any systemic instability in Singapore, it says.

Source : Business Times - 15 Aug 2008

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Fugitive ex-Citiraya boss fled with US$51m

Fugitive ex-Citiraya boss fled with US$51m 
By K. C. Vijayan, Law Correspondent 
  
The Attorney-General is attempting to seize the former Citiraya CEO’s assets, including money from the sale of his freehold property at Binjai Park.
 

THREE years after Ng Teck Lee fled the country with money he pocketed while running waste recycling company Citiraya, it has now surfaced just how much he amassed and how he did it.
In all, investigators believe he skipped town with US$51 million (S$72 million), made from selling used computer chips which the recycler should have destroyed.
This makes the fraud one of Singapore’s biggest ever corporate scandals.

The Attorney-General is now trying to forfeit about $28 million worth of assets here - shares, bank accounts, insurance policies and proceeds from the sale of three houses - all traced to Ng’s ill-gotten gains.

Trying to block the Attorney-General’s attempts are former creditors of Citiraya and a relative of Ng’s, according to court documents filed.

Ng amassed the US$51 million over two years.

With the help of his brother Teck Boon, he swiped some 62 containers of electronic scrap between 2003 and 2004 and had them shipped to buyers in Hong Kong and Taiwan.

He placed the profits into two Hong Kong accounts and used them to buy shares, property and make other purchases.

It all ended in January 2005, when Taiwan police raided the premises of some firms there which bought the goods from Ng.

The authorities there were apparently alerted when scrap chips that belonged to one of Citiraya’s US-based clients surfaced in Taiwan when the items should have been crushed and recycled in Singapore.

Ng fled Singapore the same month.

He is currently on Interpol’s wanted list while his brother Teck Boon, who was Citiraya’s former assistant general manager, is currently serving an eight-year jail term after being convicted in 2005 for his part in the scam.

In going after Ng’s assets, the Attorney-General is applying to the High Court to seize his ill-gotten gains under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act.

It is believed that this is the first time the Act is being invoked for a case not linked to drugs or corruption offences.

But the intent is similar - to prevent Ng from getting his hands on assets purchased with money made from illegal acts, like in the case of a heroin trafficker’s drug money.

The Attorney-General will come up against Citiraya’s former judicial managers Ernst & Young, who are fighting the claim on behalf of the firm’s creditors.

They maintain that the money should go to them as the chips were originally owned by the firm.

Represented by lawyers from Allen & Gledhill, they add that Ng failed in his duties as CEO by committing fraud against the firm.

Among the assets being fought over are three bank accounts and 11 life insurance policies owned by Ng’s wife Thor Chwee Hwa, valued at some $1.19 million.

Ng is also understood to have transferred some $4.25 million from a Hong Kong account to his wife, a homemaker, in 2003.

The present whereabouts of Madam Thor are not known and she is believed to have left the country sometime after Ng fled.

The couple were also joint owners of two houses in Binjai Park and Paya Lebar Crescent valued at $15.6 million.

Resisting the Attorney-General’s move to seize Madam Thor’s 60 per cent share of a second Paya Lebar Crescent house is her brother Thor Beng Huat.

Through lawyer Kertar Singh, the businessman argues that he has a 40 per cent stake in the property and has paid the mortgage instalments for the past three years.

His mother and other siblings are presently living in the Paya Lebar unit, which is the family home.

Pre-trial hearings have been ongoing in the High Court and the next session is due early next month.
Citiraya’s troubled past
NG TECK LEE and his brother Raymond Ng founded Citiraya in 1988 to recycle waste from the semiconductor industry.
The brothers took Citiraya public in July 2002 and expanded its presence in 11 countries.

In April 2004, Mr Raymond Ng left the company and sold his stake to Teck Lee.

About a year later, in early 2005, the corruption scandal broke, after the firm acknowledged that it was being investigated by the authorities.

It later emerged that computer chips meant to be scrapped were diverted for sale overseas and the level of precious metal extracted from waste was falsely declared.

Citiraya notched up 1,554 suspect transactions in 2004, with about $161 million in fake sales created between 2003 and 2005.

The scam - allegedly masterminded by Teck Lee - involved bribes amounting to almost $1.82 million being given to Citiraya employees and the staff of its clients.

Teck Lee is on the run while 11 people - including a third brother Ng Teck Boon (above), Citiraya’s former assistant general manager - have been convicted and jailed so far for various charges.

Citiraya was subsequently placed under judicial management and rescued by a bailout plan.

It was renamed and now operates as Centillion Environment and Recycling.
Assets sought
$13.22 million held in 26 bank accounts variously held in the names of Ng Teck Lee, his wife and others.

$6.56 million held by the court from the sale of three properties in Binjai Park and Paya Lebar Crescent, worth $22.48 million. The homes were once owned by Ng, his wife and mother-in-law.

$910,700 from 19 insurance policies in the names of Ng, his wife and another

$3.5 million owed to Ng by former employee.

$4.4 million worth of shares in various firms.
Source : Straits Times - 15 Aug 2008

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Kwek Leng Beng: Property slowdown not widespread - Singapore

Kwek Leng Beng: Property slowdown not widespread  - Singapore

Lower prices may be due to panic-selling by a few owners, says CDL chief 

By Fiona Chan, Property Reporter 

CITY Developments (CDL) chief Kwek Leng Beng is not convinced that the property market slowdown is as widespread as it seems, despite the recent easing in home sales and prices.
The executive chairman of Singapore’s second-largest developer said the lower prices may just be the result of ‘panic-selling’ by a few owners who had bought their high-end homes cheap.

‘There is a bit of panic in the market, and what has gone up very high in a straight line will also come down,’ Mr Kwek said, referring to how property prices have soared in the last few years. But he added that a few lower-priced sales may not be representative of the overall high-end market.

‘Bear in mind, just because of a couple of low transactions, one swallow doesn’t make a summer,’ he said yesterday at the release of CDL’s second-quarter financial results. He added that few buyers so far have defaulted on their purchases.

Mr Kwek also brushed aside concerns about a looming oversupply of homes in the market. He cited higher land and building costs, pressure on the construction sector that may result in completion delays, as well as possible financing difficulties faced by developers who want to build new homes.

CDL yesterday posted a 15 per cent drop in net profit to $165.2 million for the three months to June 30. It said this was due to the absence of a one-off tax credit given last year, without which net profit would actually have risen 0.6 per cent. Revenue inched up 0.7 per cent to $780.8 million.

But Mr Kwek stressed that the current slowdown is ‘different from the Asian financial crisis of 1997′, saying CDL has ‘very little unsold residential stock, a healthy balance sheet and locked-in profits yet to be recognised from its pre-sold residential units’.

Between now and December, the group plans to launch phase 2 of Livia in Pasir Ris, as well as two new projects: The Arte in Thomson Road and The Quayside Collection at Sentosa Cove.

Earnings per share dropped to 17.5 cents in the second quarter, from 20.7 cents a year ago, CDL said. But group net asset value rose to $5.77 as at June 30, from $5.72 as at Dec 31 last year.

The group also said it has signed up all the anchor tenants for its City Square mall in Kitchener Road and is filling up the rest of the space steadily.

CDL’s new debt issue to tap Islamic sources
CITY Developments (CDL) is planning to raise funds through what will be Singapore’s first Islamic unsecured financing arrangement.
The developer said it will issue a $1 billion Islamic multi-currency medium-term notes programme. This will allow CDL to tap new markets and investors, including Islamic sources, for possible acquisitions in a slowing economy.

‘It is to keep ourselves liquid so we are ready to bottom-fish at any time,’ said CDL executive chairman Kwek Leng Beng.

The group said in a statement it is ‘optimistic that under this challenging economic situation lies tremendous opportunities’. This deal will give it a ‘diversified, alternative and non-traditional financing stream to further enhance its war chest.’

FIONA CHAN

Source : Straits Times - 15 Aug 2008

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Mindy Yong

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