Social enterprises no different from normal businesses & must be viable

Social enterprises no different from normal businesses & must be viable

By Evelyn Choo,

SINGAPORE: A new association was launched on Tuesday evening to support businesses that help the disadvantaged and needy.

At the ceremony, the Minister for Community Development, Youth and Sports, Vivian Balakrishnan, said the Social Enterprise Association will provide opportunities for networking and mentorship to develop the sector. Dr Balakrishnan said this is important to help it succeed.

His ministry has committed S$5.5 million to fund 73 social enterprises since 2003. But of these, one-third are no longer active.

Dr Balakrishnan said social enterprises must be viable businesses and urged the public not to treat them as charities.

He added: “We’re not asking for special favours. Don’t give the contract simply because it’s a social enterprise. But be open-minded, look at what they’re offering, if they offer good value for money, give them a chance. That’s all we’re asking.”

Some 130 businesses, entrepreneurs and organisations have joined the new association. The association was formed following recommendations made by a government-appointed Social Enterprise committee in 2007.

Social enterprise Bridge Learning runs an education centre for children with learning disabilities. It sets aside funds to subsidise the programme fees of children from low-income families.

Bridge Learning executive director, Areena Loo, said: “It can be a pretty lonely journey as a social entrepreneur. It’s the less-travelled path, whereby people don’t understand why you are so crazy. What makes you want to do that? Why do you earn money and then you give it away? It’s not something everybody can understand.”

The business was started in 2003 with seed funding from the government. But it was self-sustaining after its first year and has grown at an average rate of 150 per cent yearly.

It currently enrols about 220 students a year and has assessed more than 3,000 students since inception in 2003. - CNA/vm

Source : Channel NewsAsia - 21 October 2009

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Novena condo to offer smaller units at soft launch

Novena condo to offer smaller units at soft launch

An artist’s impression of Lincoln Suites at night. The average price of a unit is $1,680 per sq ft.

AN UPMARKET freehold condo in the Novena area, that has been adapted to create smaller units than first planned, will have a soft launch tomorrow.

Lincoln Suites is being developed by a consortium comprising Koh Brothers Group, Heeton Holdings, KSH Holdings and Lian Beng Group.

The first phase consists of 56 units located on the 6th to 12th floors at an average price of $1,680 per sq ft. Most of the lower floors are for the project’s 190 car park lots.

As with many developments these days, Lincoln Suites was reconfigured to fit a number of small units - 44 studio units and 22 one-bedders. Prices start at over $800,000 for a small unit.

‘When we got the site, the trend was for big units. We had to come up with something that the market wants because the market has changed,’ said Koh Brothers’ CEO and managing director Francis Koh at a media briefing yesterday.

The development, of 175 units, is on Khiang Guan Avenue, next to United Square Shopping Mall.

Its ‘upcoming debut’ was flagged by Koh Brothers as early as September last year but the market was not in its favour.

The consortium bought the site back in 2007 and made the headlines for reaching a record price of nearly $1,450 psf per plot ratio for the Newton area.

But yesterday, Mr Koh said they had a better baseline than thought, which resulted in a lower land cost of $1,280 psf per plot ratio. It will continue to lease out Lincoln Lodge - the building now on the Lincoln Suites sites - until May next year.

Lincoln Suites will boast a gym sitting on the sky bridge that connects its twin towers on the 24th level. One tower will have three and four-bedders, each with a private lift while the other tower will have smaller units.

Other launches planned for this weekend include the 33-unit Wembley Residences at Yio Chu Kang Road and the freehold 278-unit Cyan in Bukit Timah Road, which is understood to have started its preview. The 248-unit Parvis at Holland Hill is set to be released for sale in the next month.

Many developers have taken advantage of the momentum in the past two quarters and are not rushing to launch their existing units or new projects, if any, said Mr Mohamed Ismail, chief executive of PropNex, one of two marketing agents of Lincoln Suites.

Some developers feel there is no need to rush as their landbank is running low, he added.

JOYCE TEO

Source : Straits Times - 21 October 2009

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Dragon Mansion en bloc sale sees lower offer

Dragon Mansion en bloc sale sees lower offer

Roxy-Pacific’s $101m offer is below the $120m that owners are asking

By Joyce Teo

THE first significant collective sale in Singapore this year is on the cards - if the condominium’s owners will agree to a price that is lower than what they are hoping to achieve.

Boutique developer Roxy-Pacific has agreed to acquire a site at Spottiswoode Park, but at a price that is below the estate’s original reserve price.

In an announcement to the Singapore Exchange yesterday, the developer said it has offered to buy the freehold condominium site of Dragon Mansion for $100.8 million, or $860 per sq ft (psf) per plot ratio.

The asking price for the site, with land of about 3,890 sq m and a maximum plot ratio of 2.8, is $120 million, or $1,020 psf per plot ratio. As the price is below the reserve, a fresh set of signatures is needed, so the deal is subject to obtaining the consent of at least 80 per cent of the owners. After that, a sale order from the Strata Titles Board may be necessary, said a Roxy-Pacific statement.

When Dragon Mansion became the first en bloc site to be launched for sale in July this year, market watchers said the asking price was more suitable to the boom times.

They said developers might not be prepared yet to pay at that level. The price of $1,020 psf per plot ratio is significantly higher than the transacted collective sale prices in the area during the 2007 boom.

Even at $860 psf per plot ratio, it is still above the area’s boom-time prices, said Ngee Ann Polytechnic lecturer Nicholas Mak. The break-even price is about $1,300 to $1,400 psf, he added.

Yesterday, CKS Property Consultants, the site’s marketing agent, would only say it was working towards closing the deal.

A few collective sale sites have been launched since Dragon Mansion came on the market, but there have been no sales yet. Last week, the collective sale tender for the 528-unit Laguna Park closed unsuccessfully. It had two offers, but neither bore fruit. Its reserve price of $1.2 billion works out to $844 psf per plot ratio.

Roxy-Pacific said the purchase would be fully funded through its initial public offering proceeds, internal funds and/or bank borrowings.

Its managing director Chris Teo said the company needs to replenish its landbank. If Roxy-Pacific manages to close a deal, Dragon Mansion will be its third land site. The other two sites were acquired just last month. One is a 910.8 sq m freehold site in Tembeling Road, while the other is a freehold site of 1,055.5 sq m in Joo Chiat Place.

Source : Straits Times - 21 October 2009

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Asset markets rally despite risks

Asset markets rally despite risks

The bulls are betting that the global economic recovery is going to surprise the market on the upside

By LIM SAY BOON

GLOBAL asset markets have gone - in six months - from trading on a ‘fear discount’ to a premium on expectations of robust growth. Credit markets have normalised, Economies around the world are in recovery, and asset markets - from stocks to corporate debt to commodities - are back on their feet.

But watch ‘Mr Market’s’ mood swings. Legendary Wall Street analyst Benjamin Graham once characterised the market - he personalises ‘him’ with the name ‘Mr Market’ - as a manic depressive with wide mood swings.

Early this year, Mr Market was talking and pricing in a new Great Depression. Now, Mr Market is putting a premium on assets on a bet on a ‘V-shaped recovery’.

Somewhere between those extremes, there is, to us, a more sensible story of deep discounts driven by fear, massive government intervention breaking the gridlock in credit markets, the washing out of the fear discount from the market driving prices higher, global economic recovery, ultra cheap money further fuelling asset price recovery, and a dramatic reversal of risk appetite. And it is this final factor - risk appetite - that is now dominant. All the other factors appear to be in the price.

The rally in global asset markets - and it extends beyond equities - can be broadly divided into three stages. The first leg was driven by relief that money and credit markets had stabilised and the world was unlikely to go into another Great Depression. The second stage of the rally was driven by relatively low stock valuations and anticipation of global economic recovery. The third stage - which we are now in - is being driven by anticipation of a ‘V-shaped’ economic and earnings recovery.

The bulls are betting that the global economic recovery is going to surprise the market on the upside. A lot of optimism is now in the price of a range of assets. And with that, risks are rising and gains are likely to be hard-fought going forward. We are mindful that structural economic problems continue to overhang the markets. The most important of these is the role of the US consumer as a driver of global economic growth. In this environment, the third stage of the asset market rally is likely to be characterised by violent swings as the ‘believers’ and the sceptics face off on opposite sides of the long/short trade.

Government spending and inventory re-stocking have been the key drivers of the recovery. We have concerns over the pace of growth after the fiscal stimulus fades and inventories are rebuilt. Nevertheless, for now, asset markets remain in a ’sweet spot’ - economic and earnings recoveries are here but interest rate hikes are still some time away. Credit markets have long since stabilised, the global recession is over and earnings are rebounding. But fiscal and monetary stimulus continues to wash through the system, there is plenty of liquidity and money is ultra cheap, making the holding of cash unattractive.

Rate hikes in the US, UK, Eurozone, and Japan are unlikely over the next 9-12 months. Meanwhile, rate hikes in the more robust, emerging market economies are likely to be gradual. Sidelined cash - sitting in money market funds and bank deposits - remains substantial and investors remain eager to jump in on price corrections (see chart). Emerging markets - in particular, Asia ex-Japan - have been quickest ‘off the block’ with their economic recoveries and they are likely to continue out-performing. With the notable exception of emerging Europe, most emerging market economies did not suffer the systemic financial problems in the West.

Nevertheless, the risk aversion that accompanied the global financial crisis resulted in massive capital outflows that put considerable pressure on even relatively healthy economies. Reflecting the stabilisation in credit markets around the world - with credit spreads back to pre-Lehman levels - Asia ex-Japan financial markets have also returned to pre-crisis conditions. And with that, fund flows have reversed dramatically over the past six or seven months. As risk appetites move higher - assuming continued near zero policy rates in the US - fund managers are likely to use the US dollar as a funding currency in search of higher rates of return in commodity and emerging market economies, most notably Asia ex-Japan and Australia.

The same pattern of behaviour was evident during the bull market of 2002-2007, when both Asia ex-Japan equities and currencies gained relative to US equities and against the Greenback respectively. We expect Asia ex-Japan currencies to make more gains against the US dollar in the current fourth quarter, possibly extending into 2010 (see chart).

The Asian ex-Japan economies have led the global economic recovery, with some of the most robust economies of the world in this region - China, India, Indonesia, Korea. And interest rate differentials are likely to widen in favour of Asia ex-Japan currencies as we move into 2010, with regional central banks likely to raise rates ahead of the Federal Reserve in the US.

Commodities have over the past one or two years generally traded in line with emerging market equities. But in recent months, while emerging market equities have pushed higher, commodities have lagged. As confidence grows on the global economic recovery and end-user demand, commodities should narrow the ‘gap’. Oil in particular should head higher on a stronger economy and a weaker greenback over coming months.

The recent move by gold above the US$1,000 an ounce psychological barrier appears to be pre-empting - and hence pricing in - another round of accelerated US dollar weakness, dragging the dollar to 2008 lows. Gold could take a breather from the recent gains. But the long-term uptrend for the yellow metal remains intact, and as the US dollar sags further - beyond the 2008 lows - gold is likely to make even higher ground (see chart).

The writer is the chief investment strategist for Standard Chartered Group Wealth Management and Private Bank

Source : Business Times - 21 October 2009

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Roxy-Pacific to buy Dragon Mansion in en bloc deal

Roxy-Pacific to buy Dragon Mansion in en bloc deal

By UMA SHANKARI

ROXY-PACIFIC Holdings has signed an agreement to buy Dragon Mansion for $100.8 million via a collective sale - some 16 per cent below the owners’ previous asking price of $120 million when the property was first put up for sale in July.

However, the deal is conditional upon obtaining agreement from an 80 per cent majority of the owners on the purchase price. BT understands that a fresh round of agreements have to be obtained as the price offered by Roxy-Pacific is below the owners’ reserve price in the collective sale agreement.

When the tender for the collective sale of Dragon Mansion was launched in July, it marked the first collective sale offering of the year. If Roxy-Pacific buys the freehold site for $100.8 million, it will be paying $863 per square foot per plot ratio (psf ppr) including an estimated development charge of about $400,000. The owners’ original asking price, on the other hand, translated to about $1,020 psf ppr including the development charge.

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

Roxy-Pacific chief executive Teo Hong Lim said that the company inked the deal to buy the site as he ‘found the price reasonable’.

The developer, which was listed on the Singapore Exchange (SGX) in 2008, is looking to replenish its land bank after launching a number of projects over the past year. It recently acquired two freehold sites - one at Joo Chiat Place and the other at Tembeling Road. Said Mr Teo: ‘We are constantly on the lookout for new sites, but the price and location have to be right.’

The company took part in recent government tenders for the sale of state land, but it was ‘too competitive’, Mr Teo said. Recent tenders for government residential land sites have drawn 12-15 bids each.

The acquisition will be fully funded through proceeds from the company’s initial public offering (IPO), internal funds and/or bank borrowings, Roxy-Pacific said in a statement. The acquisition is not expected to have any material effect on the net tangible assets per share or earnings per share of the company for the current financial year.

Source : Business Times - 21 October 2009

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Sentosa theme park ticket sales put at $315m a year

Sentosa theme park ticket sales put at $315m a year

Universal Studios aims to draw 4.5m visitors; 20 rides to open next year

By ARTHUR SIM

AT around S$70 per entry to Universal Studios Singapore (USS), Genting Singapore, which invested more than S$1 billion in the theme park could reap around S$315 million a year in ticket sales alone.

Speaking at a news conference yesterday, Douglas Trueblood, general manager (sales & marketing) for Universal Parks and Resorts, said the target is to attract 4.5 million visitors a year to the theme park at Resorts World at Sentosa (RWS), which is owned by Genting Singapore.

Assuming USS sells 4.5 million tickets at S$70 apiece, ticket sales could hit S$315 million.

Mr Trueblood did not reveal ticket prices, but Genting Singapore chairman and CEO Lim Kok Thay has said they will be lower than those at other Universal Studios theme parks.

Earlier estimates by analysts put the entry price at around S$80, compared with about US$70 in the US and 5,800 yen in Japan.

Analysts at Morgan Stanley Research (Asia-Pacific) expect entry prices to USS to be even lower at around S$70.

In a recent Morgan Stanley Research report, it was also estimated that USS could register total revenue of S$388 million for 2010, S$491 million for 2011 and S$545 million for 2012. This includes revenue from merchandising and F&B.

Interestingly, Morgan Stanley Research said Genting Singapore can offer cheaper entry tickets because of the lower construction cost of USS at about US$1 billion, which it said is about half the cost of Universal Studios Japan.

Morgan Stanley Research noted that no details have been made public on the USS franchise fee, but said it is likely that RWS will have to pay an upfront fee as well as a share of gross profit to Universal Studios once the theme park is operating.

Giving an update on USS which is in the final stages of construction, Mr Trueblood said that of the park’s 24 rides, 20 will open next year, with 18 of them original or adapted for Singapore.

Universal Parks & Resorts chairman and CEO Tom Williams said: ‘Universal Studios Singapore will be a unique experience and family destination with many new rides, shows and themes that can’t be found at other Universal Studios parks.’

USS will consist of seven themed zones that surround a man-made lagoon. The zones are: The Lost World; Ancient Egypt; Sci-Fi City; New York; Hollywood; Madagascar; and Far Far Away. Rides including the Jurassic Park Rapids Adventure, WaterWorld and Revenge of the Mummy will be located within these zones.

Mr Trueblood revealed that a Transformers attraction will open in 2011 and other new attractions will be added in turn. ‘Over the years, we will evolve,’ he said.

Source : Business Times - 21 October 2009

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Asia pulling world out of crisis: Fed chief

Asia pulling world out of crisis: Fed chief

But US needs to reduce its deficit, while Asia needs to rely less on exports

(SANTA BARBARA, California) Ben Bernanke, the chairman of the Federal Reserve, said on Monday that Asian nations were pulling the global economy out of its downturn.

Mr Bernanke: ‘Admittedly, just as increasing private saving in the US is challenging, promoting consumption in a high-saving country is not necessarily straightforward.’
Speaking at a conference on Asia hosted by the Federal Reserve Bank of San Francisco, Mr Bernanke said that Asian countries had bounced back from the global recession faster than the rest of the world and had reported ‘impressive’ growth.

‘Asia appears to be leading the global economic recovery,’ the Fed chairman said, noting that the region as a whole expanded at an annual rate of 9 per cent during the second quarter and that some countries, including China, grew at rates of more than 10 per cent.

But Mr Bernanke also warned that huge trade imbalances between the US and the rest of the world had played a central role in the global economic crisis and that they could do so again.

‘We were smug,’ Mr Bernanke said of the US in a question-and-answer session, referring to the attitude of US policy makers towards the large inflows of cheap money from countries such as China that were running huge trade surpluses. The flood of foreign money might not have been a major problem, he said, but the US financial regulatory system was ‘inadequate’ in preventing a surge of reckless lending that aggravated the bubble in housing prices.

Mr Bernanke’s comments represented a sobering contrast to his assertions before the housing collapse that the main reason for the US’s soaring foreign debt had less to do with American tendencies to spend too much than with a ‘global savings glut’ in the rest of the world.

Echoing the declarations last month by leaders from the Group of 20 industrialised and large emerging nations, Mr Bernanke said that the US needed to get its fiscal house in order while Asian countries needed to rely less on exports for their growth.

‘The United States must increase its national saving rate,’ he said. ‘The most effective way to accomplish this goal is by establishing a sustainable fiscal trajectory, anchored by a clear commitment to substantially reduce federal deficits over time.’

The federal deficit for the 2009 fiscal year soared to US$1.4 trillion, almost triple the deficit in 2008, and budget analysts predict that budget deficits will average almost US$1 trillion a year over the next decade.

By the same token, he said, Asian countries needed to rely less on exports and more on their consumption at home for their economic growth. One way to increase Asian household consumption, he said, would be for countries such as China to increase their social safety net programmes and reduce the uncertainty that currently hangs over many consumers.

Mr Bernanke noted that global trade and financial imbalances had narrowed considerably since the crisis began, largely because the volume of international trade contracted by 20 per cent from its peak before the crisis.

But he cautioned that the imbalances could widen again as economic growth revived.

‘Admittedly, just as increasing private saving in the US is challenging, promoting consumption in a high-saving country is not necessarily straightforward,’ Mr Bernanke conceded.

Indeed, analysts and investors in Asia have become increasingly worried about the danger of new bubbles in Asian asset prices, fostered by aggressive stimulus policies in China and by renewed attempts by policy makers in Asia to prop up the value of the dollar.

Mr Bernanke avoided what was in many ways the elephant in the room: The value of the US dollar. The dollar has dropped sharply in recent weeks against the euro and the Japanese yen, a move that has helped increase US exports by making them cheaper in some foreign markets.

But the US dollar has not budged in more than a year against China’s renminbi, which the Chinese continue to tightly manage and which many economists say remains greatly undervalued. — NYT

Source : Business Times - 21 October 2009

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