HDB suffers S$2b deficit

HDB suffers S$2b deficit

By Joanne Chan

SINGAPORE: The Housing and Development Board (HDB) has reported a S$2 billion deficit before government grants in its latest annual report. The figure is more than double the loss reported in the previous financial year.

HDB said the huge deficit for the financial year ending March was due mainly to more flats being sold. These flats are highly subsidised by the government.

Higher construction costs also led to the large deficit. Other reasons that contributed to HDB’s loss included upgrading works for lifts and rental flats.

Between April last year and March this year, HDB pushed out 8,000 flats under its Build-To-Order Scheme. That was 2,000 more than what it supplied the year before.

At a media briefing on its latest annual report, HDB also gave an update on the Lease Buyback Scheme which allows low-income elderly Singaporeans to get a portion of cash upfront while HDB buys back the tail-end of the lease of their flat.

HDB has received more than 400 applications since the scheme was launched earlier this year. Some 25,000 households are eligible for the scheme, but the elderly have other options to monetise their flats.

HDB’s CEO, Tay Kim Poh, said: “Some of them will sublet their entire flat, and the rental for even a three-room flat is very good nowadays. They can easily get S$1,500 per month from the rental and they (then) move in to stay with their children.”

Despite the global downturn, HDB said the mortgage arrears rate has dropped 0.4 percentage point to 7.5 per cent.

Market watchers said this may be due to the high resale prices of HDB flats.

Eugene Lim, associate director of ERA Asia Pacific, said: “There was an upswing in the market since the beginning of this year. And what happens is that those households in arrears probably made use of this opportunity to sell their flat and downgrade to a flat that they can afford.”

Moving forward, HDB said it will focus on improving community relations. A new department has been set up within the housing board to look at strengthening social cohesion and integrating newcomers.

- CNA/ir

Source : Business Times - 04 November 2009

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KSH clinches new S$36m deal for construction of Watten Residences

KSH clinches new S$36m deal for construction of Watten Residences

By Irene Chan

SINGAPORE: Construction and property development firm, KSH Holdings, has clinched a new contract worth S$36 million.

It is for the construction of Watten Residences, a luxury 59-unit freehold development in the Bukit Timah area.

Under the terms, the company will start construction works next week and it is expected to complete the project within 25 months.

With the contract, KSH said its existing order book now stands at around S$383 million.

Going forward, the firm said it will continue to maintain a good mix of construction projects across different industry segments.

These include high-end luxury residential projects as well as projects in the public commercial and industrial segments.

- CNA/ir

Source : Channel NewsAsia - 03 November 2009

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Drop in HDB home loan arrears

Drop in HDB home loan arrears

Defaults stemmed by slew of measures, says HDB in annual report

By Jessica Cheam

DESPITE the recession, the number of HDB home loan arrears fell from 33,670 in September last year to 30,770 during the same month this year.

The drop follows the Housing Board’s introduction of a raft of measures at the outset of the financial crisis to aid owners at risk of defaulting on their home loans.

The measures, announced in February, included a mix of short- and long-term initiatives such as deferring payments, counselling and - as a last resort - compulsory acquisition.

The HDB also introduced the new concept of ‘interim housing’, intended for those who may need to urgently downgrade, but have bought a new flat that has yet to be completed.

Departing from its usual practice, the HDB started extending second concessionary loans to downgraders on a case-by-case basis.

Taken together, the measures led to a decline in the default rate from 7.9 per cent of 426,270 loans in September last year, to 7.5 per cent of 409,470 loans for the same month this year.

The HDB’s annual report, released yesterday, also showed that the number of applications for rental flats fell 24 per cent - from 4,550 in February to 3,465 by the end of September.

This shaved eight months off waiting times as of end-September compared with a year ago, bringing the wait down to 13 months for those in need of heavily subsidised rental flats.

HDB moved in February to tighten the eligibility criteria for such flats, meant for low-income households, after burgeoning queues became a cause for concern. The stiffer criteria included assessing not just a tenant’s income, but also assets like savings and whether family members owned private property.

At a press briefing last Friday, HDB chief executive Tay Kim Poh said the past year had been one ‘of uncertainty…as the fallout of the financial crisis loomed large’.

He added that HDB’s efforts centred on helping groups hit by the downturn. This included boosting the additional housing grant scheme by raising the income ceiling from $4,000 to $5,000 and the maximum grant from $30,000 to $40,000.

Since its launch in March 2006, the HDB has spent $286 million on the scheme, with 18,000 households benefiting.

The building of smaller flats, which slowed in recent years due to falling demand, was ramped up during the year with 1,074 two- and three-roomers launched for sale under the build-to-order (BTO) scheme in order to help households downgrade.

Mr Teo Ser Luck, MP for Pasir Ris-Punggol GRC, said the new measures have helped: ‘On the ground, I am seeing fewer cases of residents appealing for rental flats.’

And to help elderly folk monetise their HDB flats, the board launched the Lease Buyback Scheme in March, which pays out a monthly income.

It attracted 425 applications by the end of September, compared with 137 at the end of March. The HDB has approved about 100 so far.

The number of new flats booked reflected the uncertain economic climate, falling to 9,870 for the year ended March 31 from 12,580 the previous year.

But the economy has since brightened and HDB is seeing a pick-up in new flat demand. It recently ramped up its supply of BTO flats and will launch another 4,000 new flats before the end of the year, bringing the total supply of flats to 13,500 units for this year.

Figures at a glance

Dip in mortgage arrears

There were 33,670 cases in arrears, or 7.9 per cent out of 426,270 outstanding home loans, in September last year, but only 30,770 cases in arrears, or 7.5 per cent of 409,470 loans, this September.

Lease Buyback Scheme

There were 425 applications by the end of September, compared to 137 at the end of March, and the HDB has approved about 100 so far.

Additional housing grant scheme

The income ceiling was raised from $4,000 to $5,000, and the maximum grant was increased from $30,000 to $40,000 for the buying of both new and resale flats.

Since the scheme was launched in March 2006, more than 18,000 households have benefited and about $286 million has been disbursed as of this September.

More smaller flats

For the year ended March 31, 1,074 units of two- and three-room flats were launched under the build-to-order scheme.

More rental flats

The rental stock will increase from 42,000 to 50,000 units by 2012. So far, 1,567 converted and new rental flats have been completed.

Tightened eligibility rules for rental flats

The number of applicants fell from 4,550 in February to 3,465. The waiting time fell from 21 months a year ago to 13 months as of September.

Lift Upgrading Programme

Good progress has been made, with more than 80 per cent of 5,300 eligible blocks selected.

Home Improvement Programme (HIP), Neighbourhood Renewal Programme (NRP)

As of September, 14,000 flats have been offered HIP and 33,000 offered NRP. Both programmes received strong support level averaging 90 per cent.

Source : Straits Times - 03 November 2009

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Unsold HDB flats largely cleared: CEO

Unsold HDB flats largely cleared: CEO

Remainder is reason for Sale of Balance Flats exercise, launched last month

By EMILYN YAP

(SINGAPORE) Facing steady demand for public housing, the Housing and Development Board (HDB) has almost cleared its stock of unsold flats. The agency also offered more units in the last financial year, incurring a larger deficit in the process.

Mr Tay: HDB will monitor demand for BTO flats and plans to release more DBSS sites
‘We have largely cleared our unsold stock,’ said HDB chief executive Tay Kim Poh at a briefing on the board’s annual report for FY08/09 ended March. ‘We still have some balance units here and there . . . the number is a very small number.’

Based on past reports, HDB held about 1,500 completed units last year, and some 3,500 units in 2007.

According to Mr Tay, the few unsold flats left was a reason why HDB introduced the Sale of Balance Flats exercise last month. Under the scheme, the agency will offer flats from repurchases, previous build-to-order (BTO) exercises and selective en-bloc redevelopment schemes - once it has accumulated a sufficient number of them.

HDB launched 2,132 flats under this scheme and received 20,691 applications - almost 10 bids for every flat available.

HDB offered more flats in FY08/09, awarding 14,754 residential units - up 46 per cent from the previous year. This caused sale and development costs, together with the amount of CPF housing grants given out to rise. The deficit incurred by home ownership activities grew 54 per cent to $1.55 billion.

Upgrading activities also posted a higher deficit as more precincts took part in lift upgrading and interim upgrading plus programmes. The loss deepened 35 per cent to $696 million.

The upgrading of rental flats also widened the deficit for rental flat activities by 95 per cent to $150 million.

All in, net expenditure had increased 23 per cent year-on-year to $5.15 billion in FY08/09. HDB’s deficit almost doubled from the previous year, from $1.08 billion to $2.12 billion.

In the financial year, HDB launched 12 BTO projects comprising 8,057 units, and one balloting exercise for 992 surplus flats. There were also two design, build & sell scheme (DBSS) developments offering 1,058 units.

HDB has not decided on the supply of new BTO flats for 2010. ‘We will monitor the demand,’ Mr Tay said. He added that HDB also plans to release more DBSS sites.

HDB also provided more help to home buyers, owners and the needy as the economic downturn unfolded. For instance, it gave out the additional CPF housing grant to 6,076 households in the financial year - 69 per cent more than a year ago.

Since the grant was made available in March 2006, more than 18,000 households have received some $285.8 million as at September.

There are also specially trained counsellors to help home owners with their loans. The number of flat owners in arrears of three months or longer fell to 30,770 in September from 33,670 a year ago. This means that the mortgage arrears rate slipped from 7.9 per cent to 7.5 per cent.

The lease buyback scheme, launched in March to allow low-income elderly Singaporeans to draw a lifelong income from the value of their flats, saw 425 applications as at September, up from 137 six months ago.

HDB has identified a few challenges for the coming year. One is to develop programmes that will help new residents integrate into the public housing community and boost social cohesion.

Another is to upgrade and rejuvenate older housing estates - more flats will turn 40 to 50 years old in the next 10 years.

HDB will be celebrating its 50th anniversary next year. To commemorate 50 years of public housing, it will be organising an international housing conference on housing development and urban solutions in January.

Source : Business Times - 03 November 2009

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Allgreen more than doubles Q3 net to $74m

Allgreen more than doubles Q3 net to $74m

Higher contribution from property development led to strong showing

By KALPANA RASHIWALA

MALAYSIAN tycoon Robert Kuok’s Singapore-listed property and hotel group Allgreen Properties has posted a surge in third-quarter earnings on the back of contributions from its One Devonshire and Viva condominium projects in Singapore.

Selling well: Sales at One Devonshire helped in Allgreen’s profit surge

Allgreen reported net earnings of $74 million for the third quarter ended Sept 30, 2009, more than double the $31.2 million net profit in Q3 last year. Revenue jumped from about $113.4 million to $293.1 million.

Allgreen credited its strong Q3 earnings chiefly to higher contribution from its property development business.

For the first nine months of this year, Allgreen achieved a 92.4 per cent year-on-year increase in net profit to about $126.7 million on the back of a 66.5 per cent increase in revenue to $458.5 million.

The revenue improvement was again due largely to increases in revenue from development properties.

The period saw a weaker performance of the hotel and serviced apartments businesses as a result of drops in both occupancy and room rates amid a sluggish economy.

For its investment properties, Allgreen said that Great World City mall and Tanglin Mall enjoyed higher occupancy and rental rates.

The occupancy rate for offices at Great World City was slightly lower but higher rental rates were achieved.

Allgreen’s Great World City complex at Kim Seng Road comprises offices, shop space and serviced residences; the group also has stakes in Tanglin Mall, Tanglin Place and the Traders Hotel near Orchard Road.

Cash and cash equivalents rose from $125.2 million as at end-September 2008 to $170.1 million as at end-September 2009, due largely to proceeds received from sales of units at One Devonshire and Viva, which is located at Suffolk Walk near Novena MRT Station.

According to official data, 227 of Viva’s total 235 units were sold as at the end of last month. As for One Devonshire, 150 of the total 152 units were sold as of the same date.

Allgreen has three launch-ready projects in Singapore - RV Residences in the River Valley area, Holland Residences near Holland Village and Suites at Orchard at Handy Road.

As at end-September 2009, the group had net borrowings of about $1.06 billion and gearing of 0.4 time, a reduction from 0.45 time and $1.14 billion as at end-December 2008.

Allgreen’s earnings per share rose from 1.96 cents in Q3 2008 to 4.65 cents in Q3 2009.

Net asset value per share stood at $1.47, up six cents from end-December 2008.

On the stock market yesterday, Allgreen closed two cents lower at $1.13.

Source : Business Times - 03 November 2009

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Warehousing, too, may go underground

Warehousing, too, may go underground

Study to examine feasibility of centre at Tanjong Kling

By RONNIE LIM

(SINGAPORE) The push for underground is gathering momentum.

A feasibility study will be carried out into an underground warehousing, logistics and data centre at Tanjong Kling in Jurong. This comes soon after the government disclosed plans to build an underground science city (USC) at Kent Ridge.

‘Both projects could be undertaken concurrently if the studies prove feasible,’ a Jurong Town Corporation (JTC) spokeswoman said yesterday.

On Friday, the government called for a consultant to carry out ‘geological investigation and ground characterisation’ studies at Tanjong Kling. This is expected to take up to five months.

The move comes after a July tender was closed for a consultant to carry out feasibility studies into the Kent Ridge project. JTC is still evaluating the tender bids.

The appointed USC consultant - working to a 14-month deadline - will assess the maximum-size cavern complex that can be built there, as well as its impact on the environment and working population at Kent Ridge. It will also have to provide ballpark cost estimates for the project.

The studies on the two underground projects follow the recent start of construction work on the $1 billion first phase of the Jurong Rock Cavern (JRC) to store oil and petrochemicals on Jurong Island.

The move towards underground facilities comes as industrial land here is fast running out.

On Jurong Island proper, for instance, 75 per cent of the island’s 3,000ha has already been taken up or reserved by petrochemical investors.

‘The latest Tanjong Kling project would free up 45ha of land for other uses,’ the JTC spokeswoman said.

The other advantages of going underground for a warehousing, logistics and data centre are that ‘it would be shielded from heat and temperature humidity, have low background radiation and less disturbance from vibration’.

The Tanjong Kling area was chosen as a potential site after earlier studies of geological conditions, the JTC spokeswoman said. It could provide cavern space of more than 1.1 million square metres.

The site comprises Tanjong Kling and Jurong Hill and is bounded by four roads - Jalan Ahmad Ibrahim, Jurong Pier Road, Jalan Buroh and Pioneer Road.

The USC project at Kent Ridge spans 20ha below science parks 1,2 and 3 and Kent Ridge Park.

The area is near one-north, the National University of Singapore and National University Hospital, where research and development activities are pursued.

The JRC, USC and Tanjong Kling projects are part of a wide-ranging, 10-use underground rock cavern feasibility study called by the government in May last year.

The other possible uses are for incineration plants, water reclamation plants and wafer fabs.

Source : Business Times - 03 November 2009

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CapLand retail unit spin-off may raise up to $2.78b

CapLand retail unit spin-off may raise up to $2.78b

It could be S’pore’s largest IPO since SingTel; pricing aggressive, but take-up may be healthy

By UMA SHANKARI

(SINGAPORE) CapitaLand is seeking up to $2.78 billion from the listing of its retail arm CapitaMalls Asia (CMA). Some 1.165 billion shares are being offered at $1.98 to $2.39 apiece, according to e-mails sent to potential investors seen by BT.

This means that CapitaLand could raise between $2.31 billion and $2.78 billion. The developer intends to float 30 per cent of CMA.

If the pricing is achieved, CMA’s initial public offering (IPO) will be the largest so far this year. According to data tracked by Bloomberg, the 17 share sales in Singapore this year have raised an average $17.3 million.

In fact, if the offering is priced at the top end of the range, the share sale may well be the largest IPO in Singapore since SingTel’s initial offering in 1993, which raised more than $4 billion - a record that has yet to be broken.

CMA’s listing will give investors access to a company that manages 86 retail properties across Asia including Ion Orchard. The company’s net asset value is estimated to be about $5.3 billion.

CMA’s prospectus, which was filed with the Monetary Authority of Singapore yesterday, did not give details on the IPO’s size and pricing. In response to media reports quoting the price range and number of shares being floated, CapitaLand reiterated late yesterday that its decision to proceed with the IPO (as well as the size and pricing) will be subject to ‘investor demand and prevailing capital market conditions’, among other things.

Analysts said that the IPO was pricey, but expected take-up to be strong despite that.

The IPO pricing values CMA at $7.69 billion to $9.28 billion. Using the estimated net asset value of $5.3 billion, this means that the IPO is being priced at 1.45 times to 1.75 times the book value.

‘I know that it (CMA) is CapitaLand’s crown jewel, but the pricing is very aggressive,’ said an analyst with a foreign research house here.

But the CapitaLand ‘franchise’ is still a compelling story for investors, he added. The developer has sponsored and listed five property trusts since 2002, including the retail trusts CapitaMall Trust and CapitaRetail China Trust.

‘Investors have seen CapitaLand’s success in spinning off its property trusts, and fund managers wanting exposure to the China consumption story will be interested,’ Najeeb Jarhom, an analyst at AmFraser Securities, told Bloomberg. More than half of CMA’s malls are in China, which is expected to provide the engine of growth for the company.

Market watchers also expect CapitaLand to get strong support from its existing investors for CMA’s listing.

CapitaLand has gained 15.3 per cent since it announced plans to list the retail unit on October 5. By contrast, the benchmark Straits Times Index has added 1.6 per cent over the same period. CapitaLand’s stock gained 9 cents, or 2.2 per cent, to close at $4.23 yesterday.

CMA said in its prospectus that its strong financial position and capital structure will provide the company with the financial flexibility to fund its growth and expansion.

‘These opportunities include acquisitions of land for greenfield projects, brownfield projects and completed malls, asset enhancement initiatives and other merger and acquisition opportunities in Asia,’ the company said.

Investor roadshows, which began yesterday, will go on until Nov 16, according to the e-mails. Pricing for the offering is due on Nov 16.

The Singapore public offer period is between Nov 17 and Nov 23. Listing and trading will likely take place on Nov 25, according to the e-mails.

JPMorgan is the sole financial adviser for the listing, and is also the issue manager together with DBS Bank. The two banks are also bookrunners with Deutsche Bank and Credit Suisse.

Source : Business Times - 03 November 2009

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