About 14,500 new homes expected to be sold in 2009: CBRE

About 14,500 new homes expected to be sold in 2009: CBRE

By Yasmine Yahya

SINGAPORE : As many as 14,500 new homes are expected to be sold in the whole of 2009, second only to the record of 14,811 units in 2007.

Despite the high volume of sales, property consultancy CB Richard Ellis (CBRE) said the caveats lodged to date showed that the total selling price paid for new homes in 2009 was 58 per cent of that in 2007.

CBRE said this was likely due to the dominance of mass market and mid-tier homes that were sold in 2009 compared to 2007, when high-end homes stole the limelight.

The strong take-up in the mid-tier segment only filtered upwards to the prime segment in the second half of 2009.

As a result, the number of units sold from the mass market and mid-tier segments made up about 60 per cent of the total sales quantum in 2009.

In contrast, back in 2007, it was the high-end projects in the Core Central Region or prime areas that made up over 64 per cent of the total sales quantum.

CBRE said the first half of 2010 will see a wider spread of project launches from the mass market to city fringe and to prime locations.

For mass market and city fringe 99-year leasehold projects, CBRE said prices are likely to cross the S$1,000 per square foot barrier because of their near-city location or if they are near an MRT station. - CNA/ms

Source : Channel NewsAsia - 15 December 2009

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Sunshine sells assets to bolster cash position

Sunshine sells assets to bolster cash position

By Gabriel Chen

BELEAGUERED real estate firm Sunshine Holdings yesterday announced it was selling a number of assets to help pay off debts.

The disposal, which will yield a total 521.76 million yuan (S$106million), will bolster the Chinese firm’s overall cash position.

The firm - whose controlling shareholder is chairman Guo Yinghui - indicated in September it must fork out $93.28million in cash and shares as settlement with its seven lenders and a bondholder.This was after the company and subsidiary Elegant Jade Enterprises failed to make interest payments on a US$120million (S$167million) loan facility.

It later said it was looking to sell as many as 11 properties and land parcels to raise cash.

Explaining details of this particular ‘asset monetisation’ exercise in a filing to the Singapore Exchange yesterday, Sunshine said the disposal involved the sale of the Ke Shu Project and its entire equity interest in Henan JinJiang - amounting to 456.76 million yuan.

It will also receive cash refunds of about 65 million yuan relating to certain transactions.

In total, the firm will receive 521.76 million yuan - of which 389.16 million or about 75per cent is expected to be received by Dec31. The remainder will be transferred to the firm next year.

Sunshine said the disposal would raise net tangible asset per share of the group by about 7.7per cent, from 13 cents each to 14 cents. It would reduce loss per share from 6.92 cents each to 6.01 cents. Sunshine shares closed unchanged at 4.5 cents yesterday.

Source : Straits Times - 15 December 2009

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New home sales come close to 2007 levels

New home sales come close to 2007 levels

But with more mass market deals, total value is at 58% of that in 2007

By Joyce Teo, Property Correspondent

WITH the year nearly over, it is clear that nearly as many homes will be sold this year as in the boom year of 2007.

CB Richard Ellis (CBRE) predicted yesterday that as many as 14,500 new homes may be sold once the final tally is in for this year - second only to 2007’s record take-up of 14,811 units.

But caveats lodged from Jan 1 to Dec 11 showed that the total value of property sales this year is running at only 58 per cent of that in 2007, said CBRE.

It said this was because mass market and mid-tier homes dominated the market this year, unlike in 2007 when high-end homes stole the limelight.

Also noteworthy: the fast-rising popularity of small-format apartments of 500 sq ft and below. So far this year, 540 of these apartments have been sold, more than double the 221 units sold in 2007.

Most projects with small units were sold out within a few days of their launch as each unit was ‘very affordable’ at between $300,000 and $600,000.

‘As developers whet the appetites of enthusiastic home buyers by supplying nearly 12,000 new homes for sale in the first nine months of the year, they ran short of supply of mass market projects by the fourth quarter,’ said CBRE.

In the fourth quarter, most launches were prime ones, pricing out buyers with smaller budgets. The Government’s warning that the recovery might not be sustainable also cooled buying fever, CBRE said.

With a fortnight left in the year, CBRE estimates total fourth quarter sales of new private homes at 1,700 units, putting combined sales for November and December at 889 units as October sales were 811 units, down from the 1,143 sold in September.

With no major launches to drive up November and December sales, this period was always expected to be slower.

Earlier, some consultants had tipped a new record this year. This now looks unlikely as the market has slowed markedly in the fourth quarter, said Knight Frank’s executive director for residential, Mr Peter Ow. ‘We may not breach 2007’s record but it is still a spectacular number as the sales were achieved mostly in a seven- month period from March to September.’

Nevertheless, there is growing market confidence, particularly with next year’s opening of the two integrated resorts, experts said.

The first half of next year will see a wider spread of project launches, from the mass market ones to the city-fringe projects and prime ones, said CBRE executive director for residential Joseph Tan.

‘For mass market and city-fringe 99-year leasehold projects, prices are likely to cross the $1,000 psf barrier because of their near-city location or if they are near an MRT station.’

Prime projects in the pipeline include Ardmore 3 and those on collective sale sites of Grangeford and Hillcourt, said CBRE. It expects 8,000 to 10,000 sales, with prices rising by 5 per cent to 10 per cent.

Source : Straits Times - 15 December 2009

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S’pore 4th best place for expat posting: Poll

S’pore 4th best place for expat posting: Poll

Thumbs up for logistics, health care, transport in HSBC global survey

By Alvin Foo

SINGAPORE is the fourth most attractive posting globally for expatriates, according to a new survey from HSBC.

The bank’s report, which assesses the expatriate experience provided by 26 key locations, puts the Lion City behind Canada, Australia and Thailand but ahead of Bahrain, South Africa, France and the US.

Some 3,146 expatriates from 50 economies were polled for the survey, which ranks Singapore highly for logistics such as the setting up of utilities and transport, but lowly in terms of softer issues such as making local friends and hobbies.

Mr Sebastian Arcuri, HSBC Singapore’s head of personal financial services, said it was not surprising expatriates ranked Singapore highly.

‘Our expat clients have shared with us many anecdotes praising the efficiency of Singapore’s infrastructure and the high standard of living here,’ he said.

Singapore got the thumbs up for quality of transport, education, childcare and health care.

The Republic emerged top for the setting up of utilities, with 82per cent of expatriates stating that the experience was fuss-free. By contrast, two-thirds of expatriates in the United Arab Emirates found the same process tough.

Singapore came fourth for transport, with the quality of this system making it easier to get to work.

Two-thirds of those polled noted an increase in the ease of travelling to work after moving to their new base, compared with 44per cent globally. And 72per cent said the general quality of travel was better than that available in their home countries.

Hong Kong came two places ahead of Singapore in this area, with expatriates finding the commute to work easier and noticing an improvement in transport generally.

Singapore excelled in education and childcare, coming in second behind Malaysia for organising schooling for expatriate children. Some 37per cent of expatriates here reported an increase in the quality of education and childcare after moving to Singapore, compared to only 18per cent globally.

But Singapore ranked a lowly 18th in terms of the ease of making local friends, and 24th for joining a local community group.

Mr Phillip Overmyer, an American and chief executive of the Singapore International Chamber of Commerce, said this could be due to housing and the presence of international schools and clubs.

He noted: ‘Most Singaporeans live in HDB flats, which are not yet popular as a housing choice for expats, who tend to live in private apartments. There are also strongly established networks among expat communities here.’

The major findings of the survey were supported by business chambers and expatriate communities.

Singapore Indian Chamber of Commerce and Industry chief executive Predeep Menon said: ‘Singapore’s been building up the buzz, which was known to be lacking a decade ago. Now it’s a more ‘happening’ place.’

Some aspects of the survey did not ring true with everyone though.

British Chamber of Commerce president Terry O’Connor said his members were very happy socially.

‘We have a thriving business networking scene. Singapore is an easy place for people to assimilate,’ he said.

A recent study conducted by the American Chamber showed that expatriates were most satisfied with the lack of corruption, Singapore’s laws and regulations, stable government and personal security. However, for the third year in a row, the survey cited housing costs and office lease costs as areas of concern.

Singapore service standards and cost of living are also negatives, said Mr Overmyer. ‘There are serious problems with the standards of service in the F&B, retail and hotel sectors. We’re getting wealthier people living here who are used to higher standards of service elsewhere, but are getting a lower standard of service here. We’re losing ground in this area relative to other countries in the region,’ he said.

Source : Straits Times - 15 December 2009

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STC appoints Eric Teng as CEO of property division

STC appoints Eric Teng as CEO of property division

STRAITS Trading Company (STC) has appointed Eric Teng chief executive officer of its property division from Jan 1, 2010.

Mr Teng: With the new appointment, he will give up his CEO post at Tan Chin Tuan Foundation
Mr Teng is currently STC’s executive vice president for property and has played an active role in leasing out the newly redeveloped Straits Trading Building at Raffles Place. BT reported in August that more than 80 per cent of the building had been let.

Mr Teng has also managed STC’s completed non-core residential properties.

‘Eric’s creative insights and keen marketing acumen are key qualities needed to take Straits Trading’s property division to the next level of growth, as we explore and execute new and exciting development opportunities in Singapore and the immediate region,’ said STC executive chairman Chew Gek Khim.

Mr Teng was seconded from Tecity Group to STC in February.

With the new appointment, he will relinquish his post as chief executive officer of the Tan Chin Tuan Foundation but remain as adviser to the foundation and Tecity.

Mr Teng worked in the advertising and communications industry before joining Tecity in 2005.

Source : Business Times - 15 December 2009

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14,500 new private home sales seen

14,500 new private home sales seen

This is 98% of 2007 record but value of sales this year may be far below 2007’s

By EMILYN YAP

CB Richard Ellis (CBRE) has tipped the number of new private homes which could be sold this year at 14,500 - which is 98 per cent of the record 14,811 snapped up in 2007.

But the value of transactions this year is likely to fall far below that of 2007. Just $13.4 billion worth of apartments have been sold to-date - 58 per cent of the $23.1 billion in 2007.

According to the property consultancy, mass-market and mid-tier launches dominated the property market this year, leading to the lower transaction value.

The number of new units sold from these two market segments made up about 60 per cent of the total this year. Popular projects included Caspian at Lakeside, Trevista at Toa Payoh and Meadows@Pierce at Upper Thomson.

In contrast, pricier high-end homes had been the flavour of 2007 - new units sold from the core central region had accounted for 64.2 per cent of the total then.

Not only have more mass-market and mid-tier developments entered the market this year, more small-format apartments have also been released.

CBRE found that in the year-to-date, buyers have lodged 540 caveats for homes measuring 500 sq ft or less, in projects such as The Alexis and Suites@Guillemard. This number was just 221 for the whole of 2007.

As at December, prices of new residential projects in all segments were back at 2008 levels, CBRE said. It cited data from the Urban Redevelopment Authority, which put the median prices of luxury and prime projects at $2,900 psf and $1,660 psf respectively.

Median prices for freehold and 99-year leasehold projects stood at $960 psf and $800 psf in the rest of the island.

CBRE expects private home take-up next year to moderate to 8,000-10,000 units, and home prices to rise by 5-10 per cent.

‘The first half of 2010 will see a wider spread of project launches from mass-market, to city-fringe and to prime locations,’ said CBRE residential executive director Joseph Tan. Prime projects in the pipeline include Ardmore 3 and those on the collective sale sites of Farrer Court, Grangeford, Hillcourt and Parisian.

‘For mass-market and city-fringe 99-year leasehold projects, prices are likely to cross the $1,000 psf barrier because of their near-city location or if they are near an MRT station,’ he added.

In a report last Thursday, DBS Vickers predicted that developers would sell 8,000-10,000 units next year, and property prices would rise 10 per cent on the whole.

‘We believe that this price increase will be skewed to the high-end … prices in the mass-market segment are expected to remain relatively flat, compared to the high-end segment, where we expect a 10-15 per cent year-on-year price appreciation alongside a year-on-year pick-up in transaction volumes,’ said analysts Adrian Chua and Lock Mun Yee.

Source : Business Times - 15 December 2009

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Expats rate Singapore highly: HSBC poll

Expats rate Singapore highly: HSBC poll

S’pore is fourth out of 26 economies, ahead of US, UK, HK

By FELDA CHAY

SOME people want to leave Singapore for greener pastures. But the city-state has some of the greenest around, according to expats surveyed by HSBC Bank International.

The survey quizzed 3,146 expats across 50 countries about their experience when integrating into local society and quality of life compared with that in their home country. And Singapore was ranked a respectable fourth out of 26 economies - ahead of the US, UK and Hong Kong.

Only places with at least 30 respondents were ranked to provide a more accurate indication of views and trends in each place.

Within the Asia-Pacific, Singapore was ranked third after Australia and Thailand, which snagged the top two spots.

Canada was ranked first among all countries in the survey.

Sebastian Arcuri, head of personal financial services at HSBC Singapore, said: ‘It is not surprising that expats ranked Singapore highly in the survey. Our expat clients from HSBC Premier have shared with us many anecdotes praising the efficiency of Singapore’s infrastructure and the high standard of living here.’

On individual components that made up the survey - such as quality of accommodation, health care, food, education and the like - Singapore was ranked in tops for setting up utilities, with 82 per cent of respondents saying this was fuss-free.

On transport, seven out of 10 respondents said travelling here easier than in their home country, putting the island in fourth place.

For health care, Singapore was ranked sixth, with over half of respondents here saying they think Singapore’s health services are better here than those in their home country.

On schooling for expat children, Singapore was ranked second after Malaysia, with 37 per cent of respondents here saying education and child care are better than at home.

But expats living here seem to find it difficult to make local friends - Singapore was ranked 18th out of 26.

And even more interestingly, Singapore was ranked a relatively lowly 12th for food, with only 43 per cent of respondents saying food is better here than in their home country.

Still, this was higher than the global average of 36 per cent.

The survey was conducted by third-party research firm FreshMinds from Feb to April this year.

Source : Business Times - 15 December 2009

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Rental gap between office, high-tech shrinks

Rental gap between office, high-tech shrinks

This pares incentive to relocate, curbs flight from CBD Core

By KALPANA RASHIWALA

(SINGAPORE) The rental gap between office and high-tech industrial space has narrowed over the past year due to a bigger correction in office rents than in high-tech rents.

This has reduced the need for companies to adopt the ‘decentralisation strategy’ which was popular in the 2006-2008 period when office rents were soaring.

Back then, occupiers that satisfied industrial usage guidelines decided to move out qualifying operations from office buildings in the CBD to business park/high-tech buildings in the suburbs to trim occupation costs.

For instance, financial institutions opted for high-tech space for their back-end data processing centres and data back-up and disaster recovery centres while continuing to maintain city offices for their frontline sales/marketing functions.

Jones Lang LaSalle figures show that the gap in monthly gross effective average rents between CBD Core office space and high-tech space is now at about $3.35 per square foot - compared with a $9.25 psf difference when the gap was at its widest in Q2 last year. In Q4 last year, the difference was $7.30 psf.

At its narrowest, in the third quarter of 2003, the gap was $1.80 psf.

‘We expect this gap to continue to compress in 2010 as the office market is likely to continue to experience larger correction than high-tech space,’ said Chris Archibold, Jones Lang LaSalle regional director and head of markets.

‘As the gap narrows, the incentive to relocate from office to high-tech industrial space diminishes. In fact, the recent outward flight from the CBD Core office market has ceased and this is likely to maintain in 2010.’

Mr Archibold reckons that a reversal of trend is plausible but not likely, given tenants’ concern that office rents could spike again in the future.

Angela Tan, DTZ South East Asian head of occupational and development markets, observes too that ‘the previous trend of companies decentralising or splitting back and front offices to reduce cost, has also slowed as the rental gap between city and suburban locations has narrowed’.

JLL’s CBD Core office basket covers Raffles Place, Shenton Way and Tanjong Pagar.

The average monthly rental value in this basket stood at $5.90 psf as at Q4 2009 based on preliminary estimates, a decline of 46.6 per cent from $11.05 psf in Q4 last year.

This decrease outpaced a 32 per cent drop in high-tech rentals over the same period, resulting in a narrowing of the rental gap between the two types of space.

The average monthly rental for high-tech space stood at $2.55 psf in Q4 2009, compared with $3.75 psf in Q4 last year.

Source : Business Times - 15 December 2009

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Industrial rents may tip-toe downward more softly

Industrial rents may tip-toe downward more softly

Sector not expected to recover fully in 2010, but it may get healthier

By EMILYN YAP

(SINGAPORE) Production lines may be running again but market watchers do not expect the industrial property sector to bounce back next year.

Economic uncertainty, relocation to offices and a greater supply of industrial space could cause rents to fall further, though at a more moderate pace than in 2009.

‘As the economy recovers and performance in the manufacturing sector improves, demand for industrial space may improve in 2010 although it is expected to remain weak,’ says DTZ South-east Asia research head Chua Chor Hoon.

Conventional industrial space could see greater take-up as manufacturers ramp up production, but doubts linger over whether the growth can be sustained. For the large part of this year, factory and warehouse rents suffered as external demand for goods shrank. According to the Urban Redevelopment Authority (URA), the median monthly rent for multiple-user warehouses fell 12.4 per cent to $1.38 per square foot (psf) between the first and third quarters. The industrial space rental index also lost 8.5 points over the same period.

But landlords may soon have some reason to relax a little. Colliers International research and advisory director Tay Huey Ying says that ‘as the manufacturing sector returns to growth’, rents of conventional industrial space could ‘hold firm’ next year.

Jones Lang LaSalle (JLL) head of South-east Asia research Chua Yang Liang believes that these rents could hold steady or slip at a more modest pace, by up to 5 per cent.

Sentiments have improved slightly as the economy climbs out of a recession. The GDP could even grow by 5.5 per cent next year, going by the median forecast from 20 economists polled in the Monetary Authority of Singapore’s latest survey.

What’s reining in expectations is uncertainty. Without a convincing recovery in demand from Singapore’s export markets, some observers are reluctant to predict a smooth rebound in the economy and hence, industrial rents.

The coming year could also be tough for high-tech space and business parks, which saw huge demand from companies in 2007 and early 2008 as office rents soared. In fact, DTZ’s Ms Chua expects these properties ‘to fare worst’ in terms of occupancies and rents, compared with other types of industrial space.

For one thing, high-tech space and business parks are losing tenants which have gone back to leasing commercial space. With office rents plunging and new buildings entering the market, it has become possible for companies to pay much less for good quality space elsewhere.

As CIMB analyst Janice Ding wrote in a Dec 2 report: ‘Sharply lower office rents in the central business district has reduced the attractiveness of pseudo-office space in business parks’.

JLL’s Dr Chua also notes: ‘Given the large high-tech industrial supply that is expected to come onstream, rentals are likely to continue sliding’.

JLL data shows that monthly high-tech space and business park rents fell 28 per cent to $2.70 psf from January to September. Dr Chua expects to see 4-9 per cent declines in these rents next year.

Falling rents aside, the mood in the industrial property market is improving. For instance, industrial sites put up for sale by URA in the last few months has seen healthy demand - the latest tender of a plot at Pioneer Road North drew eight bids.

The industrial market ‘may see a turnaround next year with rents bottoming at end-2010′, says DTZ’s Ms Chua.

Source : Business Times - 15 December 2009

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Abu Dhabi throws US$10b lifeline, Dubai grabs it

Abu Dhabi throws US$10b lifeline, Dubai grabs it

Reprieve will allow Dubai World to repay US$4.1b on maturing Nakheel bond; markets rise

By LEE U-WEN

(SINGAPORE) Debt-laden Dubai has received a precious lifeline from oil-rich neighbour Abu Dhabi, which announced yesterday that it would not let the struggling emirate sink in its financial quagmire.

Still a-flutter: Dubai says that it would use the rest of the money to pay trade creditors and contractors
Abu Dhabi pledged help in the form of a US$10 billion emergency fund to help Dubai World meet its obligations.

The aid is a shot in the arm for Dubai’s state- owned holding company which desperately needed US$4.1 billion to repay an Islamic bond - or sukuk - that matured yesterday for its property subsidiary, Nakheel. The bond is designed to be compliant with Islamic law that prohibits interest payments.

In a statement yesterday, the Dubai government said that it would use the rest of the money to pay trade creditors and contractors, as well as meet ‘interest expenses and company working capital through April 30, 2010 . . . conditioned on the company being successful in negotiating a standstill as previously announced’.

The bailout by Abu Dhabi raised a few eyebrows given that the wealthy United Arab Emirates (UAE) capital had previously said that it would not issue a blank cheque to assist Dubai, but that it would ‘pick and choose’ how it would render help.

It was just three weeks ago on Nov 25 when the emirate stunned global financial markets by announcing a request for a standstill on a staggering US$59 billion in liabilities after being badly hit by the financial crisis that crippled its overleveraged property sector.

Of that amount, Dubai World said on Dec 1 that it was seeking to restructure US$26 billion of debt.

Dubai’s creditors - which include Standard Chartered, HSBC, Lloyds and Royal Bank of Scotland - have until Dec 28 to agree to the standstill, which is the day that the Nakheel bond’s grace period ends.

News of the bailout provided an immediate and timely boost to share markets in the UAE.

Dubai’s benchmark stock index led a surge on regional markets, jumping over 10 per cent, while Abu Dhabi rose 7.4 per cent in early trading. HSBC Holdings and Standard Chartered climbed 1.6 per cent, while Samsung C&T Corp, builder of the world’s tallest tower in Dubai, surged 3.3 per cent.

Hong Kong’s Hang Seng rose 183.64 points, or 0.8 per cent, to 22,085.75. South Korea’s Kospi rose 7.87 points, or 0.5 per cent, to 1,664.77. Australia’s benchmark added 0.4 per cent, China’s Shanghai index was up 1.7 per cent and Taiwan’s market gained 0.3 per cent.

In the US, Dow futures were up 46 points, or 0.4 per cent, at 10,530 and S&P futures rose six points, or 0.5 per cent, to 1,108.00.

Meanwhile, the Dubai government held a conference call yesterday to discuss the bailout with an unnamed government source taking questions from the media.

‘Abu Dhabi and Dubai are clearly working as partners here to find a good, fair solution to the Dubai World situation. The key part is buying time to allow Dubai World and creditors the opportunity to come together on consensual restructuring,’ said the source.

‘There are no conditions. This is a government-to-government fund, the terms of that fund are internal to the government of Abu Dhabi and Dubai.

‘These funds are specifically for Dubai World. I won’t go into specifics. There is no conditionality. Abu Dhabi has made it clear it is there to support Dubai, Dubai World and I won’t go into specifics of how the money is being handed. What’s important is we have two partners that will help each other and help the UAE.’

In the earlier statement, the chairman of Dubai’s Supreme Fiscal Committee, Sheikh Ahmed bin Saaed al-Maktoum announced the implementation of a new bankruptcy law, which will be available should Dubai World and its subsidiaries ‘be unable to achieve an acceptable restructuring of its remaining obligations’.

The framework would be transparent and fair to all parties, he said.

‘The current UAE bankruptcy laws are largely untested and their administration by Dubai courts poses certain challenges and problems for a large and complex bankruptcy of this size,’ he said.

‘These new laws should allow Dubai World, should it choose it to use the laws to achieve its restructuring and remaining obligations should it not find a consensual restructuring with its creditors.’ - With contributions from wire agencies

Source : Business Times - 15 December 2009

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