Tenants torn between two ‘landlords’

Tenants torn between two ‘landlords’

Firms dispute property; residents await deposit returns, move-out date
By Tan Weizhen

A Grangeford tenant, who wished to be known only as Joy, expressing her frustrations at a meeting held last night with property owners Cove Developments.

THE owner and master tenant of an illegally refurbished condominium are now tussling over who the rightful landlord is of the property, leaving 200 residents wondering when they have to move out and what will become of their security deposits.
At separate meetings with residents yesterday, both parties gave them different dates to move out of The Grangeford in Leonie Hill.

The master tenant, Ideal Accommodation, which had carried out the renovations and rented out the rooms, said they could move out by the end of this month, while property owner Cove Development has given them till June 14.

Tenants do not know who to believe, but noted that they have a legal contract with Ideal, and not with Cove.

They were asked to go after the Urban Redevelopment Authority (URA) discovered that Ideal had illegally partitioned apartments in the condo - sold en bloc in 2007 - to create 600 sub-units from 140 units.

URA told Ideal on April 29 to tear down the partitions by Wednesday, but most tenants were told only on Sunday, giving them three days to clear out.

On Wednesday, Cove Development, a unit of Overseas Union Enterprise (OUE), terminated Ideal’s two-year lease and gained an extension from the URA till July 27 to remove the partitions.

But yesterday, in its first meeting with tenants in a week, Ideal said that its contracts with tenants still stand, and so does its lease agreement with Cove.

A representative, who identified himself as Mr Lee, said to the crowd: ‘We don’t care what Cove says.’

In response, Mr Steven Ngai, company secretary for OUE, told The Straits Times: ‘If the tenants want to listen to Ideal and get cheated, don’t blame Cove.’

One tenant, Australian Mr Ken Williamson said: ‘Both parties clearly have a communication problem. Just address our main concern - how to get our money back.’

Ideal has told tenants, most of whom have about $1,800 deposited in security and agent fees, that the rent can be used to offset the deposits if they stayed till the end of the month. But tenants pay only $900 in rent per month, and many say they have already paid this month’s.

Mr Williamson, a computer games designer, said: ‘Just let us stay till the value of our deposits runs out.’

Some residents prefer Ideal’s offer of end June to Cove’s, which said residents can stay till the deadline of June 14, or it can arrange short-term accommodation with selected hotels.

They found it hard to believe that Cove did not know Ideal had installed the illegal partitions.

One asked at the meeting: ‘You’re the property owner, you have an office here, you approve Ideal’s building plans, don’t tell me you were not aware at all?’

Cove said that Ideal did not submit plans for renovation works despite repeated chasing, and that it found out only through the URA.

Residents questioned if Cove had the right to make them move out by June 14.

Asked about the dispute, one property lawyer, Mr Eben Ong, said: ‘It depends on the terms of the contract. But most contracts would not allow illegal sub-letting. If so, Cove may have a case to terminate and take over.’

Source : Straits Times - 5 June 2009

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Obama reaches out to Muslims

Obama reaches out to Muslims

President sets new tone in a wide-ranging landmark Cairo speech

By Bhagyashree Garekar, US Correspondent

US President Barack Obama delivering his much-anticipated message to the Muslim world from Cairo yesterday. — PHOTO: AGENCE FRANE-PRESSE

WASHINGTON: President Barack Obama yesterday made a broad and honest attempt to ’seek a new beginning between the United States and Muslims around the world’, saying the two need not be in competition.
In a speech notable more for candour than his trademark rhetoric, Mr Obama plunged into the Palestinian issue, often pinpointed as the No. 1 cause of bad blood between the West and the world’s 1.5 billion Muslims, unequivocally supporting the two-state solution eschewed by Israel.

In the highly anticipated speech translated into 13 languages, webcast live and distributed over online social networks, he drew upon his heritage as the Christian son of a Kenyan Muslim who lived part of his childhood in Indonesia to seek a connection and credibility with his audience. He referred to the Quran as well as the Bible and the Jewish Torah as he sought to ’speak the truth’ about US relations with the Muslim world.

‘We must say openly the things we hold in our hearts, and that too often are said only behind closed doors,’ he declared in Cairo’s famed Al-Azhar University on the second day of his trip through the Middle East and Europe.

He visited the seven major ’sources of tension’ in the relationship ranging from violent extremism, the wars in Iraq and Afghanistan, the Israeli-Palestinian conflict and nuclear arms to democracy, freedom of religion, women’s rights and economic opportunity.

It was a speech laying out the intellectual background to forthcoming policies, sweeping enough to lead some observers to compare it to former president Ronald Reagan’s ‘Mr Gorbachev, tear down this wall’ call at the height of the Cold War.

Mr Obama made the case for common cause: ‘When one nation pursues a nuclear weapon, the risk of nuclear attack rises for all nations. When violent extremists operate in one stretch of mountains, people are endangered across an ocean.’

He also tried to step beyond the increased mistrust and stereotyping after the 9/11 terror attacks. ‘Partnership between America and Islam must be based on what Islam is, not what it isn’t. And I consider it part of my responsibility as President to fight against negative stereotypes of Islam wherever they appear.

‘But that same principle must apply to Muslim perceptions of America. Just as Muslims do not fit a crude stereotype, America is not the crude stereotype of a self-interested empire.’

To the satisfaction of many in the Arab world, he attempted to inject a sense of balance in American involvement in the Middle East. While he called his nation’s bonds with Israel ‘unbreakable’ he also pledged not to ‘turn our backs on the legitimate Palestinian aspiration for dignity, opportunity, and a state of their own’.

‘Just as Israel’s right to exist cannot be denied, neither can Palestine’s,’ he said, underlining his commitment to the two-state solution not acceded to by Israel’s new hawkish leadership.

He also explained his strategy for the hot spots in Asia where the majority of the world’s Muslims live and where Al-Qaeda chief Osama bin Laden is believed to be hiding. ‘We know that military power alone is not going to solve the problems in Afghanistan and Pakistan,’ he said, stressing his commitment to more aid for the region even as he prepares to send an additional 21,000 troops to Afghanistan where Taleban insurgents are increasing attacks and challenging the US-backed government.

He addressed Iran, the quixotic regional giant with whom the US, Arabs and the Israelis alike have uneasy relations. He acknowledged the ‘tumultuous history’ with Iran, re-stating his willingness to talk without pre-conditions but drawing the line at Teheran’s nuclear ambitions ‘that could lead this region and the world down a hugely dangerous path’.

In a sign of the vast chasm that remains to be crossed before the scenario sketched out by Mr Obama can be realised, many sceptics said the speech was all slogans and no action.

At home, the 55-minute speech being billed historic sparked debate on whether his words would be taken for weakness when he conceded that America had erred in some of its actions in the past.

Source : Straits Times - 5 June 2009

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Ripples in developer sales lift secondary market

Ripples in developer sales lift secondary market

817 resale units change hands in April, compared to 853 in Q12009

By KALPANA RASHIWALA

THE recovery in private home purchases in the primary market (developer sales) has rippled over to the secondary market.

The number of resale private apartments and condominium units that changed hands in April this year alone was 817, almost the same as the 853 resale units sold in the first three months of this year.

Subsale transactions of non-landed private homes also gained momentum with 275 caveats in April, nearly 70 per cent of the Q1 2009 volume of 404 units, according to DTZ’s analysis of URA Realis caveats information as at May 29.

The Q1 caveats for condos/apartments bought in the subsale and resale markets already represented quarter-on-quarter increases of 52 per cent and 20 per cent respectively.

Subsales and resales are secondary-market transactions. Subsales involve projects that have yet to obtain Certificate of Statutory Completion (CSC) while resales relate to projects that have received CSC. Typically, a project obtains CSC three to 12 months after it receives Temporary Occupation Permit (TOP).

Putting things in perspective, DTZ’s head of SEA research Chua Chor Hoon recalled that the pick-up in primary-market transactions began with the launches of Caspian and Alexis condos in February. By April, the action had spilled over to the secondary market, where buyers have prospects of picking up a completed property for immediate occupation or for leasing.

Says DTZ executive director Ong Choon Fah: ‘During the initial stages of the volume recovery, individual sellers were not that aggressive in pricing. It’s only when the buying momentum developed that they got bolder in asking prices.

‘For some owners, if they don’t get their price, they’ll probably lease out the apartments for now.’

Knight Frank executive director (residential) Peter Ow reckons that if owners jack up prices too fast, buyers may pull back and this could lead to slower activity again in the secondary market. Potential buyers may then prefer to shop for homes in the primary market.

‘Developers generally do not increase their prices too much for their project launches, as they have more stock to sell, compared with individual owners trying to offload one or two units in the secondary market,’ he added.

But market psychology may be hard to predict and some potential buyers may sense an urgency to buy for fear of missing the boat again, he added.

DTZ’s data showed that median subsale price of City Square Residences, One Amber and The Centris eased 2 to 5 per cent in Q1 over the preceding quarter, smaller declines compared with drops of 3 to 14 per cent in Q4.

However, for upper mid-tier projects, there were double-digit quarter-on-quarter declines in prices. Median prices of The Sail @ Marina Bay and Rivergate both slipped 15 per cent to $1,321 per square foot (psf) and $1,200 psf in Q1. In Q4, median subsale price of The Sail slipped 9 per cent while that of Rivergate, which is near the Singapore River, appreciated one per cent.

Resale prices of private homes in the prime districts were more resilient, with an average price fall of 3 to 4 per cent in Q1 2009.

DTZ’s analysis also showed that subsales accounted for 14 per cent of non-landed private residential deals in Q1 2009, down from 18 per cent in the preceding quarter and the lowest subsale share since Q1 2007. The fall in subsale proportion in January to March 2009 was due to a bigger quarter-on-quarter jump - in fact a tripling - in caveats lodged for apartments/condos bought in the primary market in Q1.

The highest subsale activities were registered for projects that had been granted TOP since Q3 last year or are likely to obtain TOP this year. There were 43 subsale deals for City Square Residences at Kitchener Road from January to March 2009, making it the top subsale project in the period, followed by The Centris in Jurong with 40 subsales, One Amber in Katong (23 deals), and the The Esta and The Sail @ Marina Bay (19 units each).

Looking ahead, CB Richard Ellis executive director Joseph Tan said Rivergate is likely to top the subsale charts in Q2, when about 100 units owned by entities linked to Ferrel Asset Management were put on the market at about $1,300 to $1,600 psf. The units are said to have been substantially sold.

DTZ’s Ms Chua reckons that interest in the subsale market will continue given that about 11,000 new private homes are slated for completion this year according to government data.

‘Investors who don’t want to be tied down with financial commitments upon TOP of the projects, especially those who bought on Deferred Payment Scheme, will choose to sell their units as the flagging rental market will further weaken their holding power,’ she added.

Source : Business Times - 5 June 2009

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Hedge funds find a winning strategy

Hedge funds find a winning strategy

Having a long-short equity long-bias focus pays off best

By OH BOON PING

HEDGE funds with a long-short equity long-bias focus took top spot in terms of fund performance for the the first five months this year, a Bloomberg check shows.

Since the start of the year, the Lyxor index on this strategy has appreciated by some 12.8 per cent to close at 856.812 points on May 22 - up from 759.871 points some five months back.

It not only significantly outperformed the minus 5 per cent on the S&P 500 index over the same period, but this is also slightly higher than the 12 per cent jump seen in the long-short credit index, and the 11.8 per cent delivered by fixed income arbitrage strategies.

Other strategies such as events-driven and convertible bonds arbitrage also outperformed the equity markets with positive returns, except for the long-short equity short-bias funds which posted sharper losses of 10 per cent.

The outperformance came despite the lower confidence in alternative strategies after the sector was hit by painful deleveraging last year.

That drove some 15 per cent of managers out of business, while the assets under management nearly halved to US$1 trillion over the last two quarters.

However, Lyxor Asset Management, which developed the indices, thinks that managers in the long-short equity space will continue to experience a tough time, and is underweight on the long-short equity long bias.

Instead, it maintained a slight overweight on market neutral funds and upgraded its call on equity long-short variable bias to ’slight overweight’.

‘0verall, we have seen equity-oriented managers remain relatively defensive, with respect to net market exposure since the start of the year . . . Net exposure to some sectors such as energy and communications has been ratcheted down, and exposure to some sectors such as consumer cyclicals has even gone negative.’

Also, it maintains an overweight on volatility arbitrage but ’suggest enough diversification in that space to withstand idiosyncratic flow disturbances’.

Broadly speaking, Lyxor believes there is less systemic risk in the market now, as the likelihood of a Lehman-style collapse is low. ‘It is now clear that containing systemic risk is a top priority for the Central Bank/Treasury policy mix. This leaves room for significant normalisation opportunities in the hedge fund universe as liquidity conditions progressively improve and counterparty risk mildly recedes.’

Although volatility remains elevated, this is now sharply lower than the crisis levels, and the analysts see a normalising trading environment.

As there are fewer players in the hedge fund industry, it ‘mechanically equates to more arbitrage opportunities’.

The house’s other recommendations include overweights on long-short credit variable bias, merger arbitrage and high-frequency commodity trading advisors.

Source : Business Times - 5 June 2009

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HDB upgraders have their say in muted market

HDB upgraders have their say in muted market

They comprised more than half of those who bought private homes in Q1

By KALPANA RASHIWALA

(SINGAPORE) The first quarter of this year saw a major trend reversal. HDB upgraders bought more private homes than those already living in private properties.

Fifty-six per cent of caveats for private home purchases in Q1 were lodged by buyers with HDB addresses, up from a 43 per cent share in the previous quarter. The last time this figure breached 50 per cent was in Q3 2002, when it was 52 per cent.

Market watchers note that the pick-up in HDB upgraders’ share in Q1 came amidst the launch of mass-market projects like Caspian near Jurong Lake and Double Bay Residences in Simei as well as the relaunch of The Quartz in Buangkok. Such entry-level 99-year leasehold condos cater to HDB upgraders.

Property consultancy DTZ highlighted this trend in its analysis of caveats from URA Realis as at May 29. The reason behind this could be the pent-up demand from this segment of buyers who had been priced out of the private residential property market during the bull run in 2007.

Another important factor was the narrowing price gap between public and private homes, which resulted in private properties becoming increasingly within reach of HDB upgraders. ‘With cash proceeds from the sale of existing HDB flats, the upgrader needs to borrow only about 50-60 per cent of the value of the new private property,’ estimates DTZ’s head of SEA research Chua Chor Hoon.

Knight Frank executive director (residential) Peter Ow also credited the rise in proportion of HDB upgraders to developers offering a combination of attractive pricing and interest absorption schemes (IAS) for projects. ‘IAS helps tide these buyers until their new condo is completed and when they can sell their existing HDB flat,’ he explained.

‘At Double Bay, which we marketed, we saw many buyers in their 40s currently living in HDB flats nearby,’ Mr Ow added.

DTZ’s analysis showed that the highest proportion of buying (in URA Realis’s 14-year caveats database) by HDB upgraders was in Q2 2002, at 81 per cent.

Generally, HDB upgraders’ share of private home purchases tends to be higher when private residential prices are falling and come within their reach. And when property prices are shooting up, their share of purchases ebbs.

During the 1998 Asian Crisis, for instance, HDB upgraders’ share hovered between 51 and 65 per cent per quarter, against a much lower share of 33-40 per cent in 1995 when prices were spiralling up.

Again, during the recent property bull run in 2007, their share was pretty low at 21-23 per cent, before starting to rise again last year when the property slump began.

DTZ also compared some buying preferences of HDB dwellers and private property owners who bought private homes in Q1. Some 88 per cent of total purchases by those with HDB addresses were under $1 million. In contrast, 40 per cent of buyers with private addresses invested in homes that cost $1 million and above. HDB upgraders also bought mostly smaller apartments.

Some 92 per cent of private homes that HDB dwellers bought in Q1 were outside prime districts 9, 10 and 11. And for those HDB dwellers who did pick up private properties in prime districts, 68 per cent were for units below 1,000 sq ft. Based on caveats lodged in Q1, the most popular projects for those with HDB addresses include The Caspian, The Quartz, Alexis and Double Bay Residences.

HDB dwellers accounted for 57 per cent of the total 227 caveats lodged for Alexis and for 75 per cent of the total 458 caveats for Caspian.

DTZ’s Ms Chua reckons HDB dwellers’ share of private home purchases may ease in Q2, when sales activity permeated to the mid/upper-mid segments where more buyers have private addresses.

Knight Frank’s Mr Ow said the proportion of HDB upgrader buying will vary depending on the profile of property launches or relaunches in the months ahead.

Source : Business Times - 5 June 2009

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Reality check casts shadow on stocks

Reality check casts shadow on stocks

Signals that more pain lies ahead may also spell strain for the labour market

By CONRAD TAN AND TEH SHI NING

(SINGAPORE) Stocks here fell yesterday after more officials warned of a lengthy slog to recovery in the global economy, prompting concerns among some investors that the recent market rally is in danger of fizzling out.

The suggestion of a prolonged downturn ahead could also lead organisations to take a hard look at their headcount.

Yesterday, the benchmark Straits Times Index (STI) finished 21.08 points or 0.9 per cent lower at 2,362.74. The broader MSCI Asia Pacific Index fell 1.6 per cent, ending four straight days of gains, as other major equity markets in the region including Japan, Hong Kong, Australia and South Korea also declined.

Speaking at the Asean-South Korea Commemorative Summit in Jeju on Tuesday, Prime Minister Lee Hsien Loong said that ‘we should not be too hasty to pronounce that the recession has bottomed or that things are getting better’, as he urged Asian governments to cooperate closely in the face of the global slump.

While ‘confidence is slowly being restored’, there is still a ‘long haul ahead’ for the global economy as it suffers from structural problems that will take ‘considerable efforts and considerable time’ to overcome, he said.

On Wednesday, National Wages Council chairman Lim Pin said that Singapore was ‘nowhere near an upturn’ and urged workers here to be prepared for the possibility of a prolonged downturn.

Terence Wong, head of research at DMG & Partners Securities, said that some of the official remarks are ‘most certainly’ putting a dampener on the recent stock market rally. ‘It’s probably too premature to sound the trumpet and say that it’s all blue skies.’

Among businesses, the outlook for earnings ‘is still very clouded’, he added. ‘For a lot of firms, this quarter is great compared to the previous quarters, but looking ahead, the visibility for orders is still not there.’

One dealer here said that yesterday’s market decline was likely also due to some investors cashing in gains on the recent rally. Since March 9, the STI has risen more than 60 per cent.

‘Even some of the retail investors who just joined the game in the last couple of weeks are quite happy with the profits. It’s probably some profit-taking,’ the dealer said.

But he doesn’t expect the STI to fall too far even if the rally loses steam. ‘People on the Street here are looking for support around the 2,200 level,’ he added.

Economists BT spoke to said that even as economic activity picks up again, more job losses are still likely in the months ahead as businesses struggle to cope with lower consumer demand in the world’s biggest economies such as the US and Europe.

Also, current government measures to support employment, such as SPUR and the Jobs Credit scheme, are temporary and designed for two years and one year respectively. This means that companies which don’t see a turnaround may rethink staffing.

‘Though I think that the worst is over in terms of economic growth, the labour market is still going to be strained, as there tends to be a lag in employment response,’ said David Cohen, director of Asian economic forecasting at Action Economics here. ‘So that’s why the note of caution is being sounded - worry that the labour market will respond with a time lag.’

At Phillip Securities Research, ‘we don’t really believe the whole ‘green shoots’ story’, said economist Joshua Tan.

‘The main reason is that consumption in the US is definitely headed for a downtrend, even though it’s quite well supported by the fiscal stimulus. That will definitely weigh on markets because consumption is 70 per cent of the US economy and has to adjust after 30 years of global imbalance.’

In Singapore, ‘we think the economy will do a double-dip - there is going to be some rebound maybe in the second and third quarters but it’ll turn negative again in the fourth quarter’.

So what’s propelled the recent surge in equity prices, and will it continue?

‘We believe the recent stock market rally has factored in the initial turnaround in global business activity,’ said UOB Kay Hian’s research team in a strategy report. ‘Sustainability of the rally will depend on the recovery in final demand.’

Brandon Ng, deputy head of research at Phillips Securities said that ‘fundamentally, things don’t look so good, but the rally’s been driven strongly by the liquidity in the market and the strong balance sheets of investors in the Asian markets’.

‘Singaporeans’ balance sheets are much better now compared to the Asian financial crisis, so they have excess cash to plow into the market,’ he added.

Citigroup economist Kit Wei Zheng said that ‘there is a chance that retrenchments may be near their peak, though net job losses may still climb as retrenched workers may not be rehired as quickly as before as vacancies dry up’.

DMG’s Mr Wong said that economic activity here and elsewhere has ‘definitely improved quite tremendously’ from the first quarter for a variety of reasons - ‘there’s restocking in manufacturing inventories and the stimulus packages are coming through’.

‘But beyond this restocking activity for manufacturing firms, we still need to see end-demand for consumers coming through, and the jobs situation would have to improve tremendously for that to happen,’ he added. ‘I do think it will happen, but not as quickly as some of the optimists think.’

Source : Business Times - 5 June 2009

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