HDB flat prices likely to rise if selected for lift upgrading

HDB flat prices likely to rise if selected for lift upgrading

By Jessica Yeo

SINGAPORE: Property agents said on Tuesday that flat prices in opposition-held wards, Hougang and Potong Pasir, are likely to rise if they are selected for lift upgrading.

Their views came in the wake of the government’s announcement on Monday that the two are among the 65 precincts in Singapore that are eligible for the programme this financial year.

Selected precincts will be announced in two to three months. Once their lifts are upgraded, realtors said flat owners would have more bargaining power to demand more cash over the valuation price.

They estimated that this cash amount over valuation could double from the current S$5,000 to S$10,000.

Hougang and Potong Pasir have a total of 120 blocks of flats that do not have lifts on every floor.

Some property agents whom Channel NewsAsia spoke to said flats in opposition wards currently sell for 10 to 15 per cent less than other flats. But with the lift upgrading in a year or two, the price gap would narrow.

David Poh, senior group district director, PropNex, said: “After they are upgraded, I think it’ll be good news to residents. Property prices will start to rise slightly, in the region of maybe 5 per cent.”

- CNA/so

Source : Channel NewsAsia - 15 July 2009

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Tender for collective sale of Dragon Mansion launched

Tender for collective sale of Dragon Mansion launched

By May Wong

SINGAPORE: The tender for the collective sale of Dragon Mansion has been launched, the first such sale this year.

The property is located at 18 Spottiswoode Park Road.

In a statement, CKS Property Consultants said it has obtained consent from more than 80 per cent of the owners to proceed with the sale.

The collective sale is expected to achieve in excess of S$120 million or S$1,020 per square foot per plot ratio. This includes the development charge of about S$400,000.

The redevelopment site has a land area of about 42,000 square feet and it is designated for residential use with a plot ratio of 2.8.

CKS Property Consultants said the new development could potentially build up to 36 storeys, accommodating some 120 units of 1,000-square foot apartments.

The tender will close on August 11 at 3pm. - CNA/vm

Source : Channel NewsAsia - 15 July 2009

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URA launch Kaki Bukit industrial site for sale by public tender

URA launch Kaki Bukit industrial site for sale by public tender

By Irene Chan

SINGAPORE: The government has launched an industrial site at Kaki Bukit Road for sale by public tender.

The land parcel was made available for sale through the reserve list system.

URA said it has received an application from a developer who has committed to bid at least S$5 million for the site.

The land parcel has a site area of about 1.07 hectare and a maximum gross plot ratio of 1 with a lease period of 30 years.

It can be developed for a range of clean, light and general industrial uses.

The tender will close on August 12.

The Urban and Redevelopment Authority (URA) said the selection of the successful bidder will be based on the tendered land price only.

URA said the minimum bid price for the site is S$5 million and no tender below this amount will be accepted. - 938LIVE/vm

Source : Channel NewsAsia - 15 July 2009

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Far East Organization launches scheme to help new retailers

Far East Organization launches scheme to help new retailers

By Yasmine Yahya

SINGAPORE: Property developer Far East Organization has launched a scheme to encourage start-ups at its shopping malls. Instead of paying rent, these tenants can issue preference shares to the developer for up to three years.

Tenants at six Far East Organization malls – including the new Orchard Central – can now pay rent in shares, instead of cash. The other participating malls are Central, Far East Square, Pacific Plaza, Square 2 and West Coast Plaza.

Eddie Yong, executive director, Investment Properties, Far East Organization, said: “We are fulfilling the market desire to have more variety of shops and tenants in Singapore shopping malls.

“With the opening of Orchard Central, we feel that we have a spread of malls across Singapore to offer our would-be tenants a choice of suitable spaces for them to consider setting up shop.”

Under the new Rental Space for Equity Programme, tenants will sign a two- or three-year lease with Far East. During this period, they will issue redeemable, convertible and cumulative preference shares instead of paying their monthly base rent.

Tenants can issue these shares up to a cap of 49 per cent of their paid-up capital or S$500,000, depending on which is lower. At the end of the lease period, they can buy back those shares by paying the full rent, plus 4 per cent interest.

Alternatively, they can ask Far East to be a partner in the business, in which case the developer will convert its preference shares into ordinary shares in the retailer’s firm.

Far East has set aside 5 per cent of the space in each of the six malls for the scheme – equivalent to about S$6 million of rental space annually.

The programme is open to first-time retailers as well as existing retailers who want to expand their presence.

- CNA/so

Source : Channel NewsAsia - 15 July 2009

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Google v Microsoft: All posing, no fight

Google v Microsoft: All posing, no fight

By Robert Cringely

LAST week, Google launched its Chrome Operating System - a direct attack on Microsoft Windows.

This isn’t the first salvo in a war that has already seen Google lob its Chrome Web browser against Microsoft’s Internet Explorer - Google had earlier launched its Android smart-phone operating system against Microsoft’s Windows Mobile, and Microsoft, in turn, has aimed its new search technology, Bing, against Google’s search engine.

In the end, none of this is likely to make a real difference for either company or, indeed, for consumers. It’s just intended to keep each company in check.

Microsoft makes most of its money from two products - Microsoft Windows and Microsoft Office. Nearly everything else it makes loses money, sometimes deliberately. Google makes most of its money from selling Internet ads next to search results. Nearly everything else it does loses money, too.

Neither company really cares because both make so much from their core products that it simply doesn’t matter. The vast majority of Google searches are, of course, done on PCs running Microsoft Windows and Internet Explorer. It is not in Google’s real interest to displace these products, which have facilitated so much of its success.

Chrome products are given away, so they bring in no revenue. So why does Google even bother? To keep Microsoft on its toes. What if, one day, the Google search engine suddenly doesn’t work on any Windows computers?

It would have to be deliberate sabotage on Microsoft’s part and blatantly illegal, but that doesn’t mean it couldn’t happen. Microsoft would claim ignorance and innocence and take days, weeks or months to reverse the effect, during which time Google would have lost billions of dollars.

So Google Chrome and Chrome OS and Android are all intended to keep Microsoft on the defensive and less likely to push its own Big Red Button. This makes even more sense given the recent advent of Microsoft’s Bing search technology, which performs precisely the same competitive control function against Google.

Bing hasn’t a hope of toppling Google as the premier search engine, and Microsoft knows it. To date, Bing’s success has actually been at the expense of Google’s competitors, not Google itself. But Bing has already accomplished its main purpose: reminding Google executives who they’re messing with.

The engineering teams for any of these products are, at most, 20 to 30 people - immaterial for Microsoft, which has 90,000 employees, and Google, which has 20,000. Nor are all of Google’s products even guaranteed to ship, being as they are in that semisolid technical state called beta test where they can be cancelled on a whim.

Yes, Google would love to get a toehold in the netbook and smart-phone markets, especially at Microsoft’s expense. The Chrome OS and Android are both ideal for pushing Google’s Net-centric view of computing.

But the company worries far more about protecting its current cash cow - search - and says as much when it is unwilling to claim that Android and the Chrome OS will be better for Web-based applications than the platforms they are intended to supplant - Windows.

The company that can defeat Microsoft has not been founded yet. Some company with a new idea and no legacy products will eventually arise to clean Microsoft’s clock. Or maybe Microsoft’s market will simply disappear as PCs are subsumed into cars and cellphones, possibly leaving Windows behind in the process.

Whatever happens, it won’t be Google’s doing, because Google is too busy defending its own turf to seriously encroach on Microsoft’s. Google engineers are allowed to spend 20 per cent of their time on new ideas. Of those thousands of ideas, the company can really invest in only a dozen per year. This leads to dissatisfaction and defections as the best nerds leave - maybe for the start-up that will finally topple Microsoft, or Google itself.

But until then, these companies will posture, spend a little money on R&D, and keep each other in check, while journalists pretend it matters.

NEW YORK TIMES SYNDICATE

Source : Straits Times - 15 July 2009

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Microsoft takes on Google in Office wars

Microsoft takes on Google in Office wars

(BOSTON) Microsoft Corp will release three versions of its dominant Office software that users can access over the Web, catching up with products that rival Google Inc launched three years ago.

The news helped send shares in the world’s largest software maker up up 2.7 per cent yesterday, more than double the gain in the Nasdaq Composite Index. It is the latest salvo in an intensifying war between Microsoft and Google. Google announced plans last week to challenge Windows with a free operating system.

Microsoft introduced a new search engine, Bing, last month.

‘Microsoft is finally making the conversion through the Web-based world. First, we saw that through Bing. Now we are seeing that through Office,’ said Jefferies & Co analyst Katherine Egbert.

Microsoft will offer for free to consumers Web-based versions of its Office suite of programs, including a word processor, spreadsheet, presentation software and a note-taking program.

Office 2010 is among a wave of upgrades to Microsoft programs planned over the next year. A new version of its ubiquitous Windows operating system is coming out in October and a new version of its widely used e-mail server is also in the works. — Reuters

Source : Business Times - 15 July 2009

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Facebook worth US$6.5b with share sale

Facebook worth US$6.5b with share sale

Russia’s Digital Sky Technologies says it will pay US$14.77 a share

(SAN FRANCISCO) Facebook netted a US$6.5 billion valuation for its common shares on Monday, further underscoring the fast- growing Internet social networking site’s high rank among technology and media industry heavyweights.

Russia’s Digital Sky Technologies (DST) said it will pay US$14.77 a share for Facebook common stock, boosting its stake to as much as 3.5 per cent and valuing Facebook at about US$6.5 billion.

While that is below the US$10 billion valuation set by Digital Sky’s May investment in Facebook, which was for preferred shares, investors have been valuing the social network’s common stock at less than US$5 billion in secondary markets in recent weeks.

The deal suggests that Facebook has a higher market value than many established media and tech companies which generate significantly more revenue than Facebook, including CBS Corp and Salesforce.com, as at least one blog pointed out on Monday.

CBS, which had US$13.95 billion in revenue last year, has a market capitalisation of US$4.06 billion and Salesforce.com had a US$4.72 billion market cap at Monday’s market close.

Facebook is expected to breach US$500 million in sales this year, according to board member Mark Andreessen. The company has said it expects revenue to grow 70 per cent this year.

At US$6.5 billion, DST is valuing Facebook common shares at 13 times expected 2009 revenue, noted JMP Securities analyst Sameet Sinha, well above the 2.2x multiple that is common for online advertising-based businesses and even the nearly 6x multiple of Google Inc, the No 1 Internet search engine in the US.

But Mr Sinha said Facebook’s lofty multiple was not completely out of line given the strong growth in sales and users that Facebook is generating amid a tough business environment.

‘Those are the things that are really driving the valuation,’ Mr Sinha said. ‘Essentially, people’s expectations that this could be the next Google.’

Facebook recently surpassed 200 million active users on its social network, up from 100 million users less than a year earlier, and vaulting it ahead of rival social network MySpace which is owned by News Corp.

Digital Sky, a Russian investment firm, bought US$200 million worth of preferred shares in Facebook in May and said it would buy another US$100 million worth of common shares from Facebook employees and ex-employees.

A source familiar with the matter told Reuters that Digital Sky will pay US$14.77 per common share. A representative for Digital Sky confirmed the terms, and said the tender offer begins on Monday and runs through August.

Digital Sky spokeswoman Jennifer Gill would not say whether Digital Sky would impose a cap on the amount of shares that participants can sell in the offer. The firm plans to buy up to US$100 million of Facebook common stock.

In a statement, Facebook CEO Mark Zuckerberg said he was pleased that the price that DST is offering is ‘much greater’ than the price his company originally considered last autumn in a similar programme to allow employees to cash out their shares.

Facebook put that plan on hold as the financial markets tanked last year. — Reuters

Source : Business Times - 15 July 2009

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Far East scheme helps new entrepreneurs

Far East scheme helps new entrepreneurs

Tenants pay for space in its malls with preference shares, not rent

By UMA SHANKARI

FAR East Organization has launched a scheme that allows budding entrepreneurs to pay for space in its malls with preference shares instead of regular rents.

A first for Singapore retail market: Far East Organization will allocate up to 5 per cent of rental space at six of its malls for the Rental Space for Equity Programme including Orchard Central (above)
Under the Rental Space for Equity Programme - a first for Singapore retail market - selected tenants will sign a two or three-year lease with Far East. To pay for space, the tenants will issue redeemable, convertible, cumulative, preference shares (RCCPS) to the company in lieu of monthly base rent. The shares come with a cumulative dividend of 4 per cent per year.

Tenants can choose to redeem the RCCPS after one or two years or at the end of the lease period. When redeeming the shares, they will pay all the rent they owe, as well as the 4 per cent a year interest they accumulated.

Alternatively, the RCCPS may be converted to ordinary shares, which means Far East will own a stake in the retail business. The choice will be left to tenants.

Far East will allocate up to 5 per cent of rental space at six of its malls for the scheme - Central, Far East Square, Orchard Central, Pacific Plaza, Square 2 and West Coast Plaza.

The programme aims to encourage the entry of new brands and retailers into the retail scene here.

Far East Organization’s executive director of investment properties Eddie Yong said the group has always supported businesses in its own way.

‘We always want the best for our tenants and to see them grow,’ he said. ‘That is why we are responding to the needs of the market with the Rental Space for Equity Programme. We see it as a pro-active partnership by lowering the entry barrier for prospective tenants who have exciting brands or concepts.’

Target participants include vendors with new brands, existing retailers who want to expand and budding entrepreneurs who want to get a headstart.

For first-time entrepreneurs, Far East has identified an audit firm to help them form their new company and will help defray these administrative expenses.

Source : Business Times - 15 July 2009

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This year’s first en bloc sale hits the market

This year’s first en bloc sale hits the market

Owners of 72-unit freehold property on Spottiswoode Park Road are hoping for $120m

By UMA SHANKARI

(SINGAPORE) Dragon Mansion on Spottiswoode Park Road has been put up for collective sale - the first development to be launched for en bloc sale this year.

The owners are hoping for $120 million - or $1,020 per square foot per plot ratio (psf ppr) - for the freehold project, including a development charge of about $400,000.

The en bloc market here has shown little sign of life since the onslaught of the global economic crisis. A total of 116 collective sales were completed at the height of the property boom in 2007, but the figure fell sharply to just eight last year. And no sites have been bought en bloc since the start of the year.

Analysts said that the owners of the 72-unit Dragon Mansion could have chosen to market their property now to ride on the current upswing in sentiment in the residential market.

‘As the outlook for the residential property market improves, land values will rise and sellers might find it viable to sell collectively to get a premium for their properties,’ said Karamjit Singh, managing director of Credo Real Estate.

If the sale of Dragon Mansion goes through, it will be the first property to be sold en bloc in 2009. However, market watchers said that the asking price is steep.

For comparison, said one market watcher, one can look at the June 2007 collective sale of nearby Oakswood Heights on Spottiswoode Park Road at the peak of the property boom. Then, UOL paid $132 million for the 63,700-sq-ft freehold site, which worked out to $740 per psf ppr.

Dragon Mansion has a land area of 41,874 sq ft and is designated for residential use with a plot ratio of 2.8. The new development could potentially yield a maximum gross floor area of 117,000 sq ft, which translates to an estimated 120 units of 1,000 sq ft each, said CKS Property Consultants, which is marketing the property.

Consent has been obtained from more than 80 per cent of the owners to proceed with the sale. The asking price is based on the ‘limited availability of such freehold residential land near the central business district’.

More projects could be launched for collective sale in the rest of the year, analysts said.

Credo’s Mr Singh said that owners of some projects are now checking to see if it is the right time to launch a collective sale: ‘They don’t want to start too early. They are hoping to time it right.’

En bloc transactions may return in a significant fashion when the unsold supply pipeline falls, said Credit Suisse in a June 19 note. This comes about as developers deplete their existing land banks and need to replenish them.

‘On a current run rate of 1,200 developer units sold per month, land bank replenishment may happen in the next three months,’ said Credit Suisse property analyst Tricia Song.

In 2006 and 2007, demolitions created an artificial vacuum in supply due to ‘en bloc fever’, resulting in a steep hike in rents and prices amid a population boom. In addition, owners of older properties with higher redevelopment density ratios get more on a per unit space basis, creating a wealth effect in the property market.

However, the caveat emptor this time could be oversupply of prime housing from previous years. Nevertheless, the trend bodes well for land prices and real estate owners, Ms Song added.

Source : Business Times - 15 July 2009

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The new normal

The new normal

By VIKRAM KHANNA

EVEN for a high-beta economy like Singapore, 20.4 per cent is an eye-popping number for quarter-on-quarter GDP growth - which is what we look to, for early signs of an economic turnaround.

So when the Ministry of Trade and Industry (MTI) yesterday revealed that this was the advance estimate of the Singapore economy’s performance in the second quarter - the best since the post-Sars bounce in 2003 - it triggered some euphoric responses, among them that the economy has ‘roared out of recession’ and is ‘back with a vengeance.’

To some extent, this is understandable. We have, after all, endured four consecutive quarters of contraction - a first in Singapore’s economic history. The 20.4 per cent pace is also way above what most economists were expecting, which was in the range of 13-15 per cent. Moreover, there is an expectation that the number from Singapore (the first Asian country to report second-quarter growth figures) will soon be followed by news of similar rebounds in other countries of the region, which will add credence to the view that global trade is normalising and Asia is bouncing back.

But in Singapore’s case, the reasons cited for the jump in growth do not give confidence as to its sustenance. As the MTI pointed out, much of the growth is the result of a dramatic improvement in the performance of manufacturing because of a spike from the notoriously volatile biomedical cluster and a jump in electronics output due to restocking. Both could be temporary phenomena. And especially if services growth remains subdued, it is by no means assured that Q3 growth will be even positive, quarter on quarter, let alone strong.

Credit markets

There are glimmers of hope, however. One is that the credit markets are in the process of normalising. Among the many surprises of the global crisis was the exaggerated extent to which credit flows impacted trade flows; when the credit markets seized up in the last quarter of 2008, exports from Asia collapsed spectacularly, by 20-50 per cent (depending on the exporting country) in year-on-year terms - far in excess of any decline in final demand. It stands to reason that as credit markets return to normal, trade flows will bounce back substantially - although not by as much as they had fallen because demand is softer. So, probably from Q4 2009, we should not be surprised to see double-digit growth in exports from several Asian countries - including Singapore - in year-on-year terms for a temporary period.

A second positive is that economic stimulus measures worth more than US$2 trillion in aggregate are in force throughout Asia, and in the United States. Although this expenditure only partially compensates for the credit withdrawn from the global economy since the second half of last year as a result of cutbacks in bank lending and the collapse of the shadow banking system, nobody doubts that the stimulus will have positive effects on economic activity. We don’t know for sure which parts of which economy will benefit and by how much, but as one fund manager put it, a big fiscal stimulus is like a shotgun - it’s going to hit something.

Third, monetary policies are easy across the region and in the world’s major economies, and will remain so for the foreseeable future, which will prevent economies from backsliding. The only question is how fast and how much banks will lend. As at now, they are not in a hurry.

Consumer demand

What matters ultimately is final demand. Only when that returns can we be certain that an economic recovery will be strong and sustained. And here, the story is not good. The US consumer - the single biggest source of global demand - is still reeling. Unemployment in the US (9.5 per cent) is high and rising. Even employed workers have taken wage cuts. Housing prices are still correcting, which impacts consumer wealth. European consumers are not faring much better. Even taken together, higher Asian consumption cannot compensate for the lost purchasing power of US and European consumers, fiscal stimulus notwithstanding.

Thus, other than for China and India, which can leverage their domestic demand, a return to high growth is not yet on the cards for any Asian economy. However, the Singapore economy is emerging from the long dark tunnel of negative growth. It is returning to normal, but which for the time being will be a ‘new normal’ of modest, sub-par growth. It is a time for relief, not euphoria.

Source : Business Times - 15 July 2009

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