Investors want financial advisers they can trust

Investors want financial advisers they can trust 

Honesty, reliability among other attributes they seek, study shows 

By Gabriel Chen 

INVESTORS will tolerate quite a few things, it seems, but breach of trust is not one of them. No wonder mis-selling has become the biggest issue among customers of Lehman-linked structured products.
That cautionary note emerged from a study by ipac financial planning that was conducted before United States investment bank Lehman Brothers collapsed in mid-September.

In results made public yesterday, consumers ranked trust as the most important attribute when dealing with financial advisers.

They also specified communication, honesty, credibility, sincerity and reliability as factors that would build trust in the long run.

The study - of residents in Singapore, Hong Kong and Taiwan - noted that trust issues topped the list that would influence consumers’ decision-making before they engage a financial adviser such as a private banker, insurance agent, wealth manager or planner.

Study participants were 35 to 55 years old, and earned about $80,000 a year.

The first phase of the study comprised six focus group discussions in the three countries.

The second involved an online survey with a sample size of about 300 participants for each country.

For instance, in the online survey, 49.4 per cent of those polled in Singapore indicated that they ‘have not met an adviser whom I am able to trust completely’.

About 68 per cent of respondents in Hong Kong said the same.

Findings from focus group participants shed more insight.

They said trust is somewhat influenced by their own or others’ bad experiences. That might include loss of money, insufficient returns, fraud cases, unqualified advisers and doubts over whether advisers put the client’s interest first.

‘It is apparent that recent incidents related to certain structured bonds and minibonds have tainted many investors’ feelings towards financial institutions,’ said Mr Greg Campbell, country manager of ipac Singapore.

Mr Campbell said that if the survey was done today - amid consumer anger over the alleged mis-selling of financial products such as Lehman Minibonds - more respondents would rate ‘trust’ as the top priority for financial planning.

For some consumers, once this element of trust is eroded, it might seem forever before it can be repaired. Just ask Singapore engineer V.H. Lee.

‘The next time I buy anything, I will scrutinise every detail and get the bank to explain where my money goes to,’ said Mr Lee, 35, who invested $10,000 in the Minibonds debacle.

Mr Lionel Lee, a director at private equity firm IBS, said consumers cannot trust their advisers blindly.

‘Customers must make the point to understand what they are buying. They cannot just trust their financial advisers, or whoever sold them these investments products, explicitly, without questioning,’ Mr Lee said.

Another crucial point raised in the study was that most participants preferred employers to provide access to financial advice as a company benefit.

And at least three-quarters of online survey participants from Singapore and Hong Kong agreed that they would prefer to have the services of a certified financial planner.
Source : Straits Times - 12 Dec 2008

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Singapore Laguna Park for en bloc sale?

Singapore Laguna Park for en bloc sale?

LAGUNA Park condominium along Marine Parade Road could be up for collective sale, with about 77 per cent of tenants so far agreeing to it, Channel NewsAsia reported.
The sales committee could expect a few more signatures in the coming days to cross the 80 per cent trigger point which will move the en bloc process forward. Channel NewsAsia understands that the asking price is about $1.2 billion. Each owner stands to pocket between $1.8 million and $2.1 million. It works out to about $633 per square foot of gross floor area, Channel NewsAsia said.

Nicholas Mak, director, consultancy and research, Knight Frank, said: ‘In today’s market, the owners will probably have to lower their expectation, easily by 20 per cent.’

Laguna Park condominium sits on 667,000 sq ft of land with a plot ratio of 2.8.

Source : Business Times - 12 Dec 2008

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Mindy Yong
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Singapore Property investment sales slow to a trickle

Singapore Property investment sales slow to a trickle

Players wary of big bang deals amid weaker sentiment, tighter financing
By KALPANA RASHIWALA

(SINGAPORE) The weak property market sentiment and tight financing have combined to compress the total investment sales of Singapore real estate to just $17.8 billion, year-to-date. This is a third of the record $54 billion achieved for the whole of last year, according to CB Richard Ellis data.
 
 
Just $290 million of investment sales have taken place in Q4 this year (up to Dec 9).

Investment sales are a gauge of developers’ and investors’ medium- to long-term confidence in the property sector.

CBRE defines such deals as transactions with a value of at least $5 million, comprising government and private sales of land and buildings (both strata and en bloc). It also includes change of ownership of real estate via share sales.

Market watchers are not upbeat about the investment sales climate in the near future. CBRE forecasts the tally for next year could come in at a modest $5-10 billion, a level last seen in 2004.

CBRE executive director Jeremy Lake says: ‘With market uncertainty and economic risks appearing to be on the downside, many investors will remain on the sidelines of the property market, waiting for signs of price stabilisation before investing. With the global economy likely to enter a protracted downturn on the back of the deepening financial crisis, transaction volumes in property are expected to remain low over the next few quarters.’

Agreeing, DTZ senior director Shaun Poh says: ‘I would not be surprised if we don’t see any major transactions for the next three to six months. Potential investors are waiting for property prices to come down. Even property funds that have raised money can’t make acquisitions because of the difficulty of raising the debt component to pay for the purchase - despite trying to source for financing in overseas markets like Hong Kong and London in some instances.’

CBRE’s Mr Lake too notes that ‘as credit market conditions worsen and lenders further reduce their risk appetite, capital available for property investment would become even scarcer’.

‘In addition, cheap investment opportunities may arise in other asset classes, diverting capital away from property,’ he added.

The property consultancy group’s quarterly breakdown of investment sales shows that they have been sliding since Q3 last year, when a whopping $16.5 billion of deals were sealed. The performance in each quarter of this year has been lower than the corresponding periods of 2007, sliding to $290 million this quarter.

While the residential sector still accounted for the lion’s share or 35 per cent of total investment sales deals so far this year, this was lower than the 61 per cent share last year. Also, the $6.25 billion transacted value of residential investment sales year-to-date (as of Dec 9) was 81 per cent below the full-year 2007 figure.

The collective sales market was dormant as developers remained mindful of the lukewarm response to new residential launches, rising construction costs and tighter credit measures, CBRE observed. Only seven collective sales worth a total $371 million have been sealed so far this year, against the record $12.4 billion from 111 transactions in 2007.

The Good Class Bungalow (GCB) market has also slowed considerably in 2008. A total of 48 GCB transactions worth $763.7 million have been done this year, down from $1.2 billion from 90 deals in 2007.

Office investment sales of $5.4 billion so far this year are 62 per cent below the $14.3 billion for full-year 2007. Ongoing turmoil in the global economy contributed to further deterioration in business sentiment, which subsequently had an impact on the office leasing market and capital flows in the local office sector.

‘This resulted in no major en bloc office transactions in the second half of 2008. Hence, the office investment market is expected to remain quiet in the next few months,’ CBRE said.

Sizeable office investment deals in the first half of this year included One George Street ($1.7 billion or $2,600 per square foot of net lettable area), Singapore Power Building ($1.01 billion or $1,836 psf), The Atrium @ Orchard ($839.8 million or $2,249 psf), Hitachi Tower ($811 million or $2,901 psf) and 71 Robinson Road ($743.75 million or $3,125 psf).

Bucking the trend was the industrial property sector which contributed $3.32 billion of investment sales deals this year, 66 per cent higher than last year and also the best showing since 2002. About half of the tally for this year was accounted for by JTC Corporation’s $1.7 billion divestment of its industrial portfolio to a joint venture involving Mapletree Investments, Arcapita and Mapletree Industrial Fund.

Source : Business Times - 12 Dec 2008

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Govt suspends industrial sites on Confirmed List

Govt suspends industrial sites on Confirmed List

For H1 next year, Reserve List will have 8 sites with a total of 15 hectares
By UMA SHANKARI
THE Ministry of Trade and Industry (MTI) yesterday said that it would be suspending the Confirmed List for its industrial government land sales (GLS) programme for the first half of 2009.
 
‘Looking at some of the recent government land sales, the bids that have been received have been quite low.’
 
- Nicholas Mak 
of Knight Frank 
 
 
 
To continue to meet potential demand for industrial land, sites will be made available on the Reserve List under the industrial GLS programme, MTI said.

For the first half of 2009, there is a total of eight sites under the Reserve List with a total site area of about 15 hectares.

Under the reserve list system, a site is only offered for public tender if the government receives an application from a developer who commits to bid for the site at a price which is deemed acceptable.

MTI’s announcement follows an October one by the Ministry of National Development (MND), which also said that it will suspend the sale of commercial, residential and hotel sites from the Confirmed List for the first half of next year.

In the light of this, MTI’s announcement yesterday was ‘not unexpected’, said Nicholas Mak, director of research and consultancy at Knight Frank.

‘Looking at some of the recent government land sales, the bids that have been received have been quite low,’ said Mr Mak. ‘So there might have been feedback that the Reserve List system would be better.’

 
 
Under the second half of 2008 industrial GLS programme, MTI placed a site on Tampines Industrial Avenue 4 on the Confirmed List. But in view of the current uncertainties, MTI will now transfer the site to the Reserve List, it said.

MTI also said that in October 2008, two Reserve List sites at Kallang Pudding Road and Ubi Avenue 4 were sold.

To continue to meet potential demand for industrial land, MTI would introduce two new sites - at Kaki Bukit Road 2 and at Woodlands Industrial Park E5/Woodlands Avenue 4 - to the Reserve List.

In addition to three sites mentioned above, another five sites are being carried over from the second half of 2008 Reserve List - making up a total of eight sites in all.

Source : Business Times - 11 Dec 2008

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Mindy Yong
(+65)91002985
mindy@mindyyong.com