Lian Beng wins $78m Far East condo contract

Lian Beng wins $78m Far East condo contract

CONSTRUCTION player Lian Beng Group has won a $78 million contract from Far East Group to build Centro Residences, with completion expected by January 2013.

Mr Ong: Delighted to be able to work with Far East Group on another project
The deal - the second in two weeks for Lian Beng - is for a 34-storey residential tower, multi-storey carpark, clubhouse, swimming pool, playground and ancillary facilities at Far East’s condominium development opposite Ang Mo Kio MRT Station. Work is expected to start this month.

Just last week, Lian Beng said it would be building a condominium at Dakota Crescent for $144 million. Taken together, the two contracts will add $222 million to the group’s order book, lifting it to $820 million.

‘As a group, we have been fairly successful in leveraging our internal resources to provide more value-added activities for our customers,’ said managing director Ong Pang Aik. ‘We are delighted to be able to work with Far East Group on another of its distinctive projects.’

Lian Beng enjoys good control over some key cost components - through ownership of its equipment fleet and ready-mix concrete facilities, in-house civil engineering expertise and an accredited training centre in Bangladesh.

As Singapore’s construction sector continues to see the return of previously deferred public and private projects, Lian Beng believes its experience of handling major projects should place it in a good position.

The group holds A1 accreditation from the Building and Construction Authority (BCA), which allows it to tender for general building contracts of unlimited value.

Lian Beng shares closed unchanged at 29.5 cents yesterday.

Source : Business Times - 17 March 2010

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S’pore falls sharply in global ranking of industrial rents

S’pore falls sharply in global ranking of industrial rents

By EMILYN YAP

(SINGAPORE) It became much cheaper for industries to rent a space in Singapore last year than in cities such as Tokyo, Hong Kong or Sydney.

In Cushman & Wakefield’s global ranking of industrial space occupancy cost, Singapore fell sharply to 18th from fifth place in the previous year. Industrial rents on the island had slipped more than in several other cities as demand for space from the trade and manufacturing sectors weakened from the downturn.

According to the property consultancy, the annual industrial occupancy cost here was 88.48 euros per square metre (S$169 psm) last year. Rents were down about 16 per cent year-on-year.

The drop ‘places Singapore in a more favourable position to attract new demands with its greater cost competitiveness and availability of quality space,’ said Cushman & Wakefield Singapore’s managing director Donald Han. Many other regions in the world also suffered drops in industrial rents. Cushman & Wakefield noted that globally, rents fell by an average of 5.5 per cent in 2009.

Nonetheless, industrial rents in London’s Heathrow stayed relatively constant and the area kept its position on top of the list with the most expensive industrial space. The occupancy cost there was 200.28 euro psm per year.

In second place was Tokyo, with an annual cost of 151.73 euro psm. Hong Kong rose six spots to third on the table, with an annual cost of 145.89 euro psm.

Apart from Tokyo and Hong Kong, the only other Asia-Pacific city to make it to the top ten was Sydney, where the annual occupancy cost was 92.83 euro psm.

As global economic conditions stabilise, Cushman & Wakefield expects to see industrial rents increase towards the end of this year, ‘the extent of which will be driven by the speed in recovery of global export activity’.

But Singapore may not see rents rise until the second half at the earliest, the consultancy said.

Colliers International industrial director Tan Boon Leong shared similar views - he believes industrial rents here may increase sometime in the second half.

He has seen rental activity pick up in the last few months, but that mainly involved companies moving to other premises, he said. The emergence of new demand for space would give an indication of rents firming up, he added.

Source : Business Times - 17 March 2010

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More feathers for firms to grow second wing

More feathers for firms to grow second wing
IE S’pore to boost support, sharpen assistance to SMEs expanding abroad

By TEH SHI NING

(SINGAPORE) International Enterprise (IE) Singapore has its sights trained on non-traditional markets and sectors as it seeks new ways for Singapore companies to grow globally.

Assistance to small and medium-sized enterprises (SME) will be ramped up too, the agency said yesterday, unveiling its five-year plan to grow Singapore’s external wing of trade and investments.

From April, a new SME Market Access Programme (MAP) will lower entry barriers for small companies venturing abroad (whether via exports, franchising, joint ventures, M&As or organic growth) by funding half their third-party costs. This will help defray costs such as those incurred in finding distributors and partners, drafting legal documents and product listing, up to an annual cap of $100,000 a company.

IE Singapore chief executive Chong Lit Cheong said that the SME MAP will reach about 100 companies a year, and that these will be expected to generate about $3 million in overseas sales over a three-year period.

This focus on ’sharpening assistance’ to local SMEs comes as more of them grow via overseas expansion. 69 per cent reported overseas ventures last year, up from 65 per cent in 2008. And a third of those which generated more revenue overseas than at home saw strong revenue growth in excess of 10 per cent.

But the broader thrust of IE’s five-year plans, Mr Chong said yesterday, is to ensure that large and small companies alike can capture and not miss crucial market and sector opportunities.

Fleshing out the internationalising of local companies - a recurrent theme of the past months’ Economic Strategies Committee reports and Budget debates - IE plans to deepen engagement with fast-growing China, India, Indonesia and Vietnam.

Beyond existing links, it may set up offices in the central China provinces of Henan, Hubei and Hunan, and second and third-tier cities like Chongqing and Xian. In Asean too, trade and investment promotion outside of Hanoi, Ho Chi Minh and Jakarta will be stepped up.

IE also hopes for more local companies to explore non-traditional emerging markets such as Brazil, Russia and the Middle East. This will all help grow Singapore’s trade and investments with the BRIC (Brazil, Russia, India and China) countries by more than 40 per cent in the next five years. Exports of goods to BRIC are projected to double to $108 billion by 2014, while services exports to BRIC markets are expected to more than double to $25 billion, says IE.

It has identified townships and housing, transportation, environment and water, energy management, healthcare services and food as six focus sectors in which companies can best ride the global trends of rising urbanisation, growing Asian consumerism and a green economy push.

In terms of approach, IE intends to do more to facilitate ‘platform’ projects, such as the Integrated Ports and Logistics Zone in Mekong Delta, rather than company-specific ones. This means brokering deals involving multiple local companies, each offering a part of an entire value-chain of products, services or solutions.

Mr Chong said his agency will also help local trade associations and chambers set up offices abroad. ‘Their way of helping members is quite different. IE is still a government face; the trade associations have more flexibility in how they can help companies,’ he said.

Already, the Singapore Chinese Chamber of Commerce and Industry intends to set up an office this year in Shanghai, where the Singapore Furniture Industries Council already has a branch. The Singapore Indian Chamber of Commerce and Industry too has had a representative office in New Delhi since 2008, but hopes for a presence in Mumbai and other Indian cities with IE’s help. Singapore Manufacturers’ Federation president Renny Yeo too said SMa has been considering a presence in the second and third-tier cities of China, Vietnam and certain parts of the Middle East, mirroring IE Singapore’s sharpened emerging-market focus.

The Singapore Business Federation might look into a ‘Singapore Inc’ approach of getting trade associations to band together when setting up offices overseas to take advantage of economies of scale, chief operating officer Victor Tay said.

Globalising companies aside, IE’s five-year plan has a final prong which focuses on capturing trade flows here by growing trade-related services like risk management and price discovery, so as to transform Singapore from a regional into a global trading hub.

Source : Business Times - 17 March 2010

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Low-interest carrots to tempt home buyers

Low-interest carrots to tempt home buyers

Latest home-loan skirmish also sees banks speeding up their approvals

By GENEVIEVE CUA

(SINGAPORE) A skirmish of sorts has broken out on the home loans front with banks pushing down their interest rates a notch or two over the past week or so. The first volley was fired by DBS Bank and the others have responded.

This is welcome news for home owners and investors who are looking to re-price or refinance their home loans. The rates also provide a positive backdrop to the upturn in the property market. But advisers are telling clients to be prudent and watch their debt servicing ratios.

To date, it appears that Maybank is offering the most attractive loan rates in terms of variable rate loans - and not just for the first ‘honeymoon’ year. Maybank’s package, which is based on an internal board rate, starts from 1.18 per cent for the first year and edges up to 2.28 per cent in the third year.

For those who prefer a more transparent benchmark rate - typically Sibor (Singapore interbank offered rate) or SOR (Singapore swap offer rate) - the spread over the benchmarks has plunged to 0.5 per cent. DBS uses Sibor and OCBC uses SOR.

As always, there is no free lunch. Lower rates usually come with shorter lock-in periods. Borrowers who want certainty in the rate they pay over a longer period should be prepared to pay more and be locked in for two to three years.

The big question is the direction of interest rates. The widespread expectation among home owners is that rates will head up at some point in the next year or two. Rates are currently close to their all-time lows over 10 years. Between March 2000 and 2009, the lowest points for Sibor and SOR were 0.56 and 0.54 per cent, respectively, in 2003. Today Sibor and SOR are not much higher at 0.66 and 0.42 per cent, respectively.

Alvin Liew, economist at Standard Chartered Bank, says the 3 month Sibor rate could stay below one per cent over the next two years, in line with the bank’s expectations for USD Libor.

‘Moderate loan demand and ample SGD liquidity will also help to keep rates low. While we believe there is a possibility that the Fed would increase further the discount rate spread over the Federal Funds Target Rate (FFTR), this should be viewed as a continuation of financial market normalisation, and not signalling any change in the FFTR until late 2011.’

OCBC’s head of treasury research and strategy Selena Ling says any upward rate movement is likely to be ‘quite gradual’. ‘The liquidity story is still intact, and none of the central banks are really talking about aggressive tightening.’

Sibor reflects the interest rate that a bank charges another for the excess SGD it does not need. It is influenced by US interest rates and domestic loan demand, says Mr Liew.

SOR, on the other hand, includes bank funding costs. It is typically slightly higher than Sibor; but the last few months have seen SOR fall below Sibor. While most banks peg their benchmark rates to 3 or 12 month rates, Citi is even giving customers a choice of one month Sibor.

Mortgage adviser Patrick Tan of Morgan Mortgage International is advising home owners not to leap too quickly into a long fixed rate contract as the differential in servicing costs between a floating and fixed package can be substantial. ‘Even if the variable Sibor or SOR rate does move up, it will not move up too much or too quickly unless we see an inflationary scenario in our economy.’

Fixed rate packages start at about 1.25 per cent for Stanchart, but only for one year. The second year moves to a Sibor-plus rate. OCBC and Citi’s two-year fixed rate are currently at 1.88 per cent per annum, with a two-year lock-in.

DBS says its fixed rate packages remain ‘very popular’ with about 60 per cent of customers opting for them. Says a spokesman: ‘The response is not surprising as they were designed specifically to give home owners both the certainty in repayments over three years, and the flexibility to make partial repayments. The flexibility is usually not found in fixed rate packages.’

Dennis Khoo, Stanchart’s general manager (retail banking products) says: ‘We continue to see a balanced demand for both fixed and floating rate (packages).’

Citi said it continues to offer an interest offset feature where deposits in the offset account earn an interest which can be offset by up to 70 per cent against the loan rate. Says Vibha Coburn, Citi business director for secured finance: ‘Our packages are tailored to our customers’ needs… and we advise customers to take a long term perspective when planning their home loans, rather than go for the lowest price points.

Meanwhile, banks have also speeded up loan approvals. DBS says more than 50 per cent of loan clients get their loans approved with an offer letter within the same day.

Stanchart says it offers ‘approval in principle’ within 15 minutes at showflats, which it says is a first. A spokesman says: ‘This way customers know how much they can afford to borrow without over-leveraging.’ In-principle approval is based on basic information such as monthly ncome and other financial commitments. Final approval is subject to necessary documentation.

Providend’s head of financial planning Eddy Cheong is advising clients to follow the prudent path. ‘For a start, do your budgeting and know your limits. Don’t assume interest rates will stay this low. Make sure you can still afford the loan if interest rates go up to 3 to 4 per cent.’ The annual debt repayment over annual salary ratio should ideally be less than 35 per cent. Anything above 45 per cent is seen as excessive, he says.

Source : Business Times - 17 March 2010

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HDB launches 2 BTO projects in Sengkang and Sembawang

HDB launches 2 BTO projects in Sengkang and Sembawang

By Mustafa Shafawi

SINGAPORE: The Housing and Development Board (HDB) has launched two new Build-To-Order (BTO) projects - Fernvale Ridge in Sengkang and Sembawang RiverLodge in Sembawang.

Close to 830 flats will be offered in total, most of which are four-room units. HDB said 95 per cent of the flats will be set aside for first-timers.

Flats in Fernvale Ridge range in price from S$128,000 for a three-room unit to S$352,000 for a five-room flat.

At Sembawang RiverLodge, three-room units start from S$128,000. Four-room units cost between S$212,000 and S$268,000 each. Sembawang RiverLodge will also have 126 two-room flats.

HDB said they will not be offered for sale at this time, but will be set aside to meet the housing needs of lower-income families at a later date.

Next month, HDB will launch another 1,200 BTO flats in Punggol. These launches are part of its plan to offer at least 12,000 new BTO flats this year, or more if there is demand.

- CNA/sc

Source : Channel Newsasia - 17 March 2010

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Estate agencies need Professional Indemnity insurance to renew accreditation

Estate agencies need Professional Indemnity insurance to renew accreditation

By Sharon See

SINGAPORE: From April 1, estate agencies must have a valid Professional Indemnity (PI) insurance to renew their accreditation status with the Singapore Accredited Estate Agencies (SAEA).

The SAEA recommends a minimum limit of indemnity of S$500,000.

SAEA said the move is designed to strengthen consumer confidence in estate agents who are believed to handle eight out of 10 real estate transactions.

Having a Professional Indemnity insurance is akin to good risk management for estate agencies, said SAEA, adding that the insurance also offers consumer some protection in case of dispute.

More details are expected at a seminar co-organised by SAEA and two other insurance companies on March 25. - CNA/vm

Source : Channel Newsasia - 17 March 2010

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Sim Lian puts in top bid of S$302m for leasehold site at Tampines

Sim Lian puts in top bid of S$302m for leasehold site at Tampines

By Wong Siew Ying

SINGAPORE: Developer Sim Lian Land placed the top bid of S$302 million for the residential site at Tampines Avenue 1 & Avenue 10.

The tender for the 3.2 hectare site with a lease of 99 years attracted a total of eight bids.

The second highest bid of nearly S$288.99 million came from a joint venture of Far East Organisation and Frasers Centrepoint.

That’s followed by MCL Land’s bid of about S$278.3 million.

According to the Urban Redevelopment Authority, the remaining bids range between S$168 million and S$252 million.

Real Estate consultancy CB Richard Ellis said the tender for the condominium site further demonstrates developers’ interest in the mass market segment.

It added that the top bid of S$302 million translates to S$421 per square foot per plot ratio.

Based on that, CBRE said the new project will break-even at around S$700 psf.

It expects the homes to be priced around S$700 to S$850 psf or higher, comparable to projects in the Bedok Reservoir area.

The tender will be awarded after the bids have been evaluated. - CNA/vm

Source : Channel Newsasia - 17 March 2010

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Lian Beng wins S$78m deal to build Centro Residences condo

Lian Beng wins S$78m deal to build Centro Residences condo

By Jonathan Peeris

SINGAPORE : Homegrown developer Lian Beng Group has secured a S$78 million construction deal to build Centro Residences, a condominium development located just opposite Ang Mo Kio MRT Station.

The contract was awarded by the Far East Group and covers the construction of a 34-storey residential tower with a multi-storey carpark, clubhouse, swimming pool and playground.

Work on the development is expected to start in March and will be completed by January 2013.

Just last week, Lian Beng announced that it would be constructing a condominium development at Dakota Crescent for S$144 million.

Combined, the two contracts will add some S$222 million to the group’s order book.

With the addition of the Centro Residences contract, Lian Beng’s order book now stands at S$820 million. - CNA/ms

Source : Channel Newsasia - 17 March 2010

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Analysts expect strong interest in executive condo developments

Analysts expect strong interest in executive condo developments

By Hoe Yeen Nie

SINGAPORE : Executive condominiums (ECs) are back in the spotlight, amid a buoyant property market. They come with finishes similar to a private condominium, but are priced more affordably.

Analysts expect strong interest for two new developments to be launched at the end of the year. But they also caution buyers against being too hasty.

When the Eastvale executive condominium in Pasir Ris was launched, units were going for about S$400 per square foot. A recent sale went for S$600 per square foot, comparable to similar private properties in the area.

Executive condominiums were launched in the mid-1990s, and Eastvale was one of the first projects. They cater to the needs of the “sandwiched” class - buyers who could not afford private properties, but whose household incomes exceed the income ceiling set by the Housing and Development Board (HDB).

Now 15 years on, calls by the “sandwiched” class for more affordable housing are growing, and housing authorities said executive condominiums will form 10 per cent of new flats built this year.

For first-time home buyers, they can apply for a S$30,000 housing grant, as long as monthly combined incomes do not exceed S$10,000. And after a period of 10 years, they can sell them in the private property market.

In line with HDB rules, these units are first subject to a five-year Minimum Occupation Period, after which they can be sold only to Singaporeans and Permanent Residents (PRs).

With interest rates remaining low, it sounds like a good deal. But with a economy recovering, analysts cautioned that interest rates could head higher.

Colin Tan, head of Research & Consultancy at Chesterton Suntec International, said: “Because of all the various government stimulus spending, interest rates have been kept artificially low for quite a long time.

“With a low interest rate environment, it’s easy to put money down and meet the mortgage instalments. But when interest rates double or triple, you expect your mortgage to be doubling or tripling. So the question is, are you able to sustain that.”

Analyst Mohamed Ismail of Propnex said that while such developments perform well in the resale market during boom times, resale prices tend to go down much faster than similar private properties when the market hits a snag.

Tan agreed, saying it is hard for ECs to shake off their image as the “poorer cousin” of private condominiums. One reason is because developers may compromise on the quality of finishes in order to meet the budgets of buyers.

So if the private property market is subdued, as it was in the post-SARS years, then between an executive condominium and a private one, buyers would be more willing to fork out for the latter.

Chua Yang Liang, head of Research (Southeast Asia) of Jones Lang LaSalle, said the increase in executive condominium projects may not impact greatly on the private property market as EC buyers are a select group of buyers, most likely the “sandwiched” class.

He said entry-level mass market private home prices have averaged S$800 per square foot in recent months, and the executive condominiums will have to be priced lower.

“Going by the recent transactions, it’s averaging about S$550 to S$650 psf, so pricing in that market would be around that region - S$550, S$650, and S$750 psf, that kind of range,” said Chua.

- CNA /ls

Source : Channel Newsasia - 16 March 2010

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Private home sales down 19% on-month to 1,196 units in Feb

Private home sales down 19% on-month to 1,196 units in Feb

By Wong Siew Ying

SINGAPORE: Private home sales kept up their momentum in February, with 1,196 units changing hands.

This is down by some 280 units or 19 per cent from January, where the spike in transaction volumes prompted the government to introduce more anti-speculative measures.

But February’s figure is still above market expectations. Analysts had earlier projected sales to range between 800 and 1,000 units.

Analysts said demand for new homes remains strong, despite more government measures to cool the market last month.

Data released by the Urban Redevelopment Authority (URA) showed that new private homes in the city continue to be popular.

The Altez at Tanjong Pagar was a star performer last month, with 150 units sold at a median price of over S$1,800 per square foot. Another project that did well was Waterscape at Cavenagh Road with 82 units transacted.

All in, new homes in the prime district accounted for 521 units of total sales.

Mass market projects were also popular, with over 560 deals done in February.

“We’ve seen demand in that area - outside core central region - increase on a month-on-month basis of about 31 per cent, so that is quite an unexpected phenomenon. A large part of the demand came from The Estuary and that’s about over 300 units sold out of 400 units being launched,” said Chua Yang Liang, head of Research (Southeast Asia) at Jones Lang LaSalle.

Market watchers said the buying sentiment remains strong despite the anti-speculative measures introduced by the government recently.

They said that is because home buyers are still confident about the economic prospects of Singapore, job security and the positive spin offs from the new two integrated resorts.

Some analysts said March could see sales volumes above 1,000 units. That could bring first quarter sales to about 4,000 units. This is on the back of brisk take-up for new projects like The Vision at West Coast and upcoming launches at Sentosa Cove.

Higher-value projects could also lift home prices ahead.

Tay Huey Ying, director of Research & Advisory at Colliers International, said “Of late, we have seen how people continue to snap up properties even at record prices.

“I think if this continues to persist, we could potentially be looking at a property bubble forming because home prices appear to be running ahead of economic fundamentals. And I think the government should continue more demand side measures.”

These includes fine tuning current measures or introducing a capital gains tax.

Last month, developers placed 1,161 units for sale. And analysts said more could be on the way because of strong demand and to pre-empt more market cooling measures.

- CNA/sc/ls

Source : Channel Newsasia - 16 March 2010

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