Over S$27.5b invested in Marina Bay from private and public sectors

Over S$27.5b invested in Marina Bay from private and public sectors

By Pearl Forss,

SINGAPORE: More than S$27.5 billion has been invested so far in the new business and financial district in Marina Bay and the government is planning to pump in a further S$1 billion in infrastructure works there over the next 10 to 15 years.

Singapore’s National Development Minister Mah Bow Tan announced this at the topping out ceremony for the construction of the Marina Bay Financial Centre on Wednesday morning.

He also said there are some signs of speculation in the recent frenzy in the property market.

The government announced in April that Marina Bay had attracted total investments of over S$22 billion, of which S$5.7 billion was from the government and S$16.5 billion was from the private sector.

And just three months later, that figure, which includes government and private sector investments, has risen to over S$27.5 billion.

The Urban Redevelopment Authority said the increase of S$1.8 billion in government investment is largely due to higher construction costs for the Marina Coastal Expressway.

It said more funds are also being pumped in by various developers for their projects which have seen private investments grow by over S$3.5 billion.

The new financial district is expected to generate quality office space to rival those in Tokyo, New York and London.

And the manager of the Marina Bay Financial Centre said more companies have been expressing interest in leasing office space in the area despite the recession.

Wilson Kwong, general manager, Raffles Quay Asset Management, said: “At the moment, phases 1 and 2, for the office section, it is 61 per cent pre-committed.

“Anchor tenants at the Marina Bay Financial Centre include Standard Chartered Bank, which is taking up 500,000 square feet, and DBS, which is taking up 700, 000 square feet. All in all, the Marina Bay Financial Centre will offer nearly 3 million square feet of office space.”

Speaking to reporters at the topping out ceremony for the centre, Singapore’s National Development Minister, Mah Bow Tan, also commented on the recent property market frenzy. He said it is unclear what is driving the demand.

According to figures published by the Urban Redevelopment Authority, about 7,000 uncompleted private residential units were sold by developers in the first half of this year. That already surpasses the roughly 4,200 units sold for the whole of last year.

Mr Mah said: “It’s a bit early to say whether there is a speculative bubble or property bubble building up. Obviously, it is not in everybody’s interest for such a bubble to form because if it does, and when the bubble bursts, which it inevitably must, then a lot of people will get hurt.

Mr Mah said he is unsure whether the current demand is sustainable as Singapore’s economy is still expected to contract this year.

He said: “For a market to be healthy, the demand must be based on certain economic fundamentals, so if you look at the economic fundamentals today, you will see that there is still uncertainty.”

Mr Mah stressed that there is sufficient supply and he urges buyers to study the figures carefully before making any decisions. There are currently 38,000 unsold residential units in Singapore and there is going to be more coming onstream. And this number is not inclusive of public housing.

The government will be putting out more information through the Urban Redevelopment Authority website to help buyers make informed choices.

Mr Mah also said the government is prepared to inject more supply through the government land sales programme if necessary.

The government will be studying the land sales programme for 2010 in the months ahead. For this half of the year, the figure is already fixed.

Mr Mah also said that the government is prepared to bring back the Confirmed List on the government land sales programme in future if there is a need to increase supply.

Earlier in June, it was announced that Singapore will suspend the Confirmed List of the Government Land Sales programme for another six months due to the market downturn.

But it is not just private property that is seeing a demand surge, sales of five-room HDB flats also rose 80 per cent to 2,713 units over the first quarter of this year.

When asked about this sales figure, Mr Mah said he is unsure if it is long-term demand for bigger flats. He said sales of larger flats were actually low for many years and what is happening now could be a rightful correction.

Mr Mah added there will be more 4-room than 5-room HDB flats put up for sale in the next build-to-order project. - CNA/vm

Source : Channel NewsAsia - 30 July 2009

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New financial centre reaches a milestone

New financial centre reaches a milestone

The topping out of the first tower at the marina Bay Financial Centre yesterday is a key step for the giant project, planned as an extension of the Central Business District. The tower will be complete next year and much of its office space has been pre-leased. — ST PHOTO: ALPHONSUS CHERN

THE first of three towers at the Marina Bay Financial Centre (MBFC) was topped out yesterday, marking a key step in the giant project’s progress.

Topping out occurs when the last steel beam is placed at the top of a building - an event that often calls for a celebration.

Yesterday’s ceremony involved a 1.3-tonne beam bearing signatures of the major players - including key tenants, the joint venture partners and National Development Minister Mah Bow Tan - hoisted to the 33rd floor.

Mr Mah, who was the guest of honour, said the occasion was a milestone in realising Singapore’s vision for Marina Bay.

He said the project will add to the critical mass of the area and enhance Singapore’s skyline.

The 5.33ha MBFC will have three office towers of almost three million sq ft of Grade A office space in total, two residential towers of 649 luxury apartments, as well as 176,000 sq ft of retail space.

General manager Wilson Kwong of Raffles Quay Asset Management, which manages the centre, said 61 per cent of the total office space has been pre-leased.

The first tower, which has Standard Chartered bank as its anchor tenant, will be completed by next year.

Mr Kwong said the development is on track and is ‘primed to leverage the economic upturn’ and capitalise on the shift by corporate businesses towards Marina Bay.

Marina Bay was planned to be a seamless extension of the Central Business District. It has attracted over $20 billion of private real estate investments from local and international players, said Mr Mah.

The Government will invest a further $1 billion in infrastructure works over the next 10 years to 15 years, on top of the $7.5 billion already invested to further the area’s growth.

The MBFC is being developed by a joint venture comprising Cheung Kong Holdings/Hutchison Whampoa, Hongkong Land and Keppel Land.

JESSICA CHEAM

Source :Straits Times - 30 July 2009

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Mah sounds warning on property buzz

Mah sounds warning on property buzz

Government will take action if excessive speculation develops

By Jessica Cheam

THE Government will take ‘whatever action necessary’ to prevent excessive speculation in the property market, said National Development Minister Mah Bow Tan yesterday.

Mr Mah’s note of caution comes amid a buying frenzy that has gripped the real estate sector in recent months.

He told the media on the sidelines of an industry event: ‘I wouldn’t say there is excessive speculation at the moment, but there is some element of speculation involved.

‘Some of the practices and habits that you saw in the last property boom are beginning to come back, so I think we’ll have to be careful.’

He also warned about a property bubble forming. ‘Obviously it is not in our interest for such a bubble to form, because when it does, and bursts, which it inevitably must, then I think a lot of people will get hurt,’ said the minister, adding that all parties concerned must ensure that such a bubble does not materialise.

‘A little bit of speculation is inevitable in every market, but when it becomes excessive, then it is something that we should try to avoid.’

There are certainly signs of a red-hot market, including queues forming days before the launch of a new project.

Suburban condo Optima, next to the Tanah Merah MRT, drew lines snaking outside the showflat on Monday, though the unit does not open until tomorrow.

Real estate agents were also in the queues with blank cheques from clients.

Buyers at Ang Mo Kio were equally keen to put their money down at the 329-unit Centro Residences, reportedly paying $1,150 per sq ft, a price level typically seen in central districts.

Mr Mah said the Government was monitoring the market but added that it was uncertain if the activity is due to pent-up demand or generated by buyers responding to lower prices or low interest rates.

‘It is in all our interest that the market is a healthy, sustainable one,’ he said.

Property veteran Nicholas Mak, former head of research at Knight Frank, agreed that the key is sustainability of demand: ‘Although now it seems it’s a bit too much and too fast, with buying volume growing at an unsustainable rate.’

Speculation is on the rise, with the number of subsales in the second quarter at 940 compared with 412 in the first quarter of this year, he noted.

Mr Mah yesterday called on buyers to do their homework: Research prices, study information on upcoming supply and check data from the Urban Redevelopment Authority’s website. ‘Don’t commit right up to the hilt…think about what if interest rates rise in the future, would you still be able to afford it?’ he said.

He emphasised that there was plenty of supply in the pipeline: Of 62,350 uncompleted units of private homes, about 38,482 units remain.

The minister also announced that the confirmed list of sites in the Government’s land sales programme could be reinstated if supply is needed.

The Real Estate Developers Association of Singapore backed up Mr Mah’s comments that a bubble should not form.

It pointed out last night that not all the property launches have been snapped up. Only a select few have been highly successful for various reasons. This could also be a result of pent-up demand.

Source :Straits Times - 30 July 2009

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Temasek to explore public co-investment

Temasek to explore public co-investment

The aim: Expand pool of stakeholders, improve performance discipline

By Alvin Foo

TEMASEK Holdings may allow retail investors to co-invest with it as part of long-term plans to expand its stakeholder pool and enhance discipline for its performance.

This proposal was mentioned yesterday by Temasek chief executive Ho Ching, who was making her first key remarks since last week’s shock announcement that she would be staying on as CEO.

Ms Ho told an Institute of Policy Studies lunch: ‘A broad base of stakeholders will be part of our ecology for discipline and performance in the decades ahead.’

Temasek, which celebrated its 35th anniversary last month, hopes to start this process with sophisticated co-investors first.

‘It is important to test this over at least one market cycle during the next five to eight years,’ added Ms Ho. ‘If this pilot is successful, we may then consider a co-investment platform for retail investors in perhaps eight to 10 years’ time.’

Such a platform would involve participants with a long-term view, she said, adding: ‘We are not thinking in terms of a mutual fund or any other short-term vehicles.’

But it is unclear now exactly what this would involve or how it would work. ‘We are still thinking through…We may become clearer over the next six to 12 months,’ she said.

Fund managers told The Straits Times that it could involve Temasek investing, for example, $1 billion in a company with perhaps part of that stake coming from a Temasek fund that the public invests in. This would allow retail investors to participate alongside the agency.

If implemented, the step would add another layer to Temasek’s stakeholder base, which already includes shareholders, bondholders, its boards and staff and portfolio companies.

Temasek already has three sets of public markers as part of its measures to instil discipline. It has an annual Temasek Review, which began in 2004, credit ratings with two leading international agencies and a bond issue.

Ms Ho said: ‘They are like the 18th hole in a long game of golf, our credit ratings the tripwires or OB markers, and our bond spreads the singing canary - they signpost the no-go zones and outline the broad perimeter of our playing field.’

She also reiterated Temasek’s position as a long-term investor, noting that it will act to enhance long-term value and not divest for divestment’s sake.

‘We don’t intend to raid the larder, nor sell the family jewels, for short-term gains.

‘We will jealously guard our interests, and will invest; rationalise, consolidate or divest where it makes sense, and where we can achieve clear sustainable value.’

Building long-term value is also reflected in Temasek’s pay structure, which is geared ‘towards a strong alignment with long-term shareholder value’, she said.

The Straits Times understands that a portion of each Temasek staff member’s bonus goes into a pool to be paid over several years.

If the company betters an internal performance benchmark, money from the pool is paid to staff.

If it does not do so, either no money is paid from the pool or the value of the pool diminishes.

Temasek will remain focused on Asian investments due to the region’s robust growth prospects.

Said Ms Ho: ‘We can expect bumps along the way, but the longer-term potential remains strong. By longer term, we mean 20, 30 years.’

Its portfolio mix includes 30 per cent in Singapore with 40 per cent in the rest of Asia, 20 per cent in industrialised countries and up to 10 per cent for markets such as Latin America and Africa.

She also touched on the speculation surrounding last week’s sudden announcement regarding Mr Charles ‘Chip’ Goodyear.

‘We look at that speculation sometimes with irritation and sometimes with amusement because all of it is very far away from the truth.’

Source :Straits Times - 30 July 2009

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Property developers celebrate Tower One topping out

Property developers celebrate Tower One topping out

KEPPEL Land, Cheung Kong (Holdings) and Hongkong Land jointly celebrated the topping out of Tower One at Marina Bay Financial Centre (MBFC) yesterday. National Development Minister Mah Bow Tan was guest of honour at the event.

Popping the confetti: Standard Chartered is an anchor tenant and will be taking up 500,000 sq ft. The building will obtain temporary occupation permit next year
Tower One achieved a 100 per cent pre-commitment rate when it was launched in 2007. Standard Chartered Bank is an anchor tenant and will be taking up 500,000 sq ft of office space. The 33-storey building will obtain its temporary occupation permit next year.

Towers Two and Three have secured pre-commitment rates of around 45 per cent and 55 per cent respectively. This translates to a pre-commitment rate of 61 per cent for the first two phases of MBFC.

Together, the three office towers will offer about three million sq ft of prime Grade A office space. MBFC also comprises retail space and two residential towers.

There has been an increase in leasing enquiries for space at MBFC in the past few months, said Raffles Quay Asset Management general manager Wilson Kwong.

Marina Bay has attracted investments of more than $27.5 billion from both the private and public sectors so far.

Source : Business Times - 30 July 2009

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Microsoft and Yahoo embrace in search deal

Microsoft and Yahoo embrace in search deal

Yahoo gets revenue, Microsoft gets wider search audience

(SAN FRANCISCO) Microsoft Corp has finally roped Yahoo Inc into an Internet search partnership, capping a convoluted pursuit that dragged on for years and finally setting the stage for the rivals to make an all-out assault on Google Inc’s dominance.

The 10-year deal announced yesterday gives Microsoft access to the Internet’s second-largest search engine audience, adding a potentially potent weapon to the software maker’s Internet arsenal as it tries to better confront Google, the leader in online search and advertising.

Combined, Microsoft and Yahoo have a 28 per cent share of the Internet search market in the United States, well behind Google’s 65 per cent, according to online measurement firm comScore Inc.

Google is even more dominant in the rest of the world, with a global share of 67 per cent compared to a combined 11 per cent for Microsoft and Yahoo.

The extended reach will allow Microsoft to introduce its recently upgraded search engine, called Bing, to more people.

The Redmond, Washington-based software maker believes Bing is just as good, if not better, than Google’s search engine. Taking over the search responsibilities on Yahoo’s highly trafficked site gives Microsoft a better chance to convert Web surfers who had been using Google by force of habit.

‘Microsoft and Yahoo know there’s so much more that search could be,’ said Microsoft chief executive Steve Ballmer. ‘This agreement gives us the scale and resources to create the future of search.’

In return for turning over the keys to its search engine, Yahoo will get to keep 88 per cent of the revenue from all search ad sales on its site for the first five years of the deal, and will have the right to sell ads on some Microsoft sites.

Yahoo estimated the deal - which the companies hope to close next year - will boost its annual operating profit by US$500 million and save the Sunnyvale, California-based company about US$275 million on capital expenditures a year because it won’t have to invest in its own search technology.

In pre-market activity, shares of Yahoo slid US$1.19, or 6.9 per cent, to US$16.03. Microsoft shares advanced 13 cents to US$23.60.

Assuming it can pass antitrust scrutiny, the alliance could give Yahoo a chance to recoup some of the money squandered in May 2008, when it turned down a chance to sell the entire company to Microsoft for US$47.5 billion.

Yahoo’s market value currently stands at about US$24 billion. Yahoo just came off a tough quarter in search advertising, with its revenue in that niche falling 15 per cent in the April-June period.

The two rivals began talking about a possible alliance as far back as 2005 before Microsoft intensified the courtship with last year’s attempt to buy Yahoo.

It took Yahoo’s current chief executive, Carol Bartz, just six months to strike a deal with Microsoft - something that neither of her predecessors, Terry Semel and Yahoo co-founder Jerry Yang, seemed interested in doing.

Ms Bartz took the job at Yahoo in January, replacing Mr Yang, who had rankled investors by rejecting Microsoft’s buyout offer.

In lieu of a Microsoft deal, Mr Yang pursued a failed ad partnership with Mountain View, California-based Google.

That deal fell apart in November after the US government threatened to challenge the agreement.

Under the agreement, Yahoo will have limited access to the data on users’ searches - which yield insights that can be used to pick out ads more likely to pique a person’s interest. The value of that information is why Microsoft wants to process more search requests.

Like Yahoo, Microsoft has invested billions in its search technology during the past decade, yet remained a distant third in market share while its online losses piled up.

The company’s Internet services division lost US$2.3 billion in the fiscal year ending in June, nearly doubling from the previous year. — AP, Bloomberg

Source : Business Times - 30 July 2009

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Speculation creeping back into market: Mah

Speculation creeping back into market: Mah

Govt will act if housing market overheats; supply pipeline is strong

By EMILYN YAP

(SINGAPORE) Speculation is trickling back into the property market and the government is watching the situation closely, National Development Minister Mah Bow Tan said yesterday.

The authorities will take action should the market overheat but home seekers should also be careful about making purchases, he underlined.

‘I wouldn’t say that there is excessive speculation at the moment but there is some element of speculation involved,’ Mr Mah told the press after the topping-out ceremony for Tower One at Marina Bay Financial Centre (MBFC).

‘Some of the practices and habits that you saw in the last property boom are beginning to come back.’

Queues have started forming outside some showflats and property agents are reportedly armed with blank cheques from clients.

Median prices have also gone up at some launches - by up to 7 per cent a month in a handful of cases. This has stemmed the fall in private home prices, with the Urban Redevelopment Authority’s (URA) price index sliding 4.7 per cent in Q2 from a quarter ago - much less than the 14.1 per cent tumble it took in Q1.

The question, though, is why a buying wave is forming when economic waters remain tepid. The slowdown has moderated but a contraction is still on Singapore’s books, Mr Mah said.

The official forecast now points to the economy shrinking 4-6 per cent this year.

It is therefore unclear if the buying momentum is sustainable, he said. ‘I’m not so sure whether the demand is due to pent-up demand, or whether it is due to buyers responding to lower prices by developers or even to the current low interest rates.’

While it is premature to call it the start of a property bubble, the government is monitoring the market closely and will take ‘whatever action is necessary’, Mr Mah said.

He also urged home seekers to research the property market thoroughly and seek affordable units.

‘Don’t panic - because there is a lot of supply in the market.’

According to URA, there were 62,350 uncompleted private homes from projects in the pipeline at the end of Q2. Of these, 38,482 units were still unsold.

The government can also inject supply through the Government Land Sales (GLS) programme, Mr Mah said. It is considering whether it should reintroduce the confirmed list (suspended last October) for the first half of 2010.

Responding to Mr Mah’s comments, the Real Estate Developers Association of Singapore (Redas) said that developers share a ‘common desire to see a steady growth, for greater stability and sustainability in the property market’.

It also highlighted that not all property launches have been snapped up.

‘Only a selected few launches have been highly successful for various reasons. This could also be a result of pent-up demand.’

Industry watchers saw Mr Mah’s message as a signal against excess exuberance in the market. The move could have contributed to a fall among major property counters yesterday: City Developments lost 10 cents to close at $9.94, while CapitaLand shed six cents to $4.00.

Colliers International’s research and advisory director Tay Huey Ying felt that there is ‘genuine concern’ about the sustainability of current demand. Some buying has been driven by accumulated wealth from the boom years and when the funds dry up, it will take strong economic fundamentals to generate new demand, she said.

But she also believes that the government will ‘tread cautiously’ when it comes to tempering market sentiment, because the pick-up has only begun and is fragile.

Developer sales of private homes started to recover in February - interest first poured into mass-market projects and gradually filtered into mid- and high-end ones.

Over the last month, for example, KOP Group sold 11 units at its luxury site The Hamilton Scotts, at prices ranging from $2,500 to $3,000 psf.

Across liquidity-flush Asia, several economists have flagged the risk of property bubbles forming. However, many do not believe that policymakers will aggressively tighten measures when economic recovery remains nascent.

Source : Business Times - 30 July 2009

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