Singapore Property behind 14% rise in F&N Q3 profit

Singapore Property behind 14% rise in F&N Q3 profit

APB Q3 net profit after exceptionals jumps 22% to $37.4 million

By EMILYN YAP

DEVELOPMENT property was the key bottom line driver for Fraser & Neave (F&N), which yesterday reported a 14 per cent rise in net profit after exceptionals to $110.3 million for its third quarter ended June 30, 2008.

Sterling performance: APB’s Indochina cluster continues to lead, with Vietnam, Cambodia and Laos together generating 37 per cent of revenue
This translates to earnings per share of 7.9 cents, against 7 cents a year ago. Without the exceptional items, net profit increased 20 per cent to $115.6 million.

Revenue fell 8 per cent from Q307 to $1.2 billion. The food & beverage (F&B) business was the largest contributor to revenue, at more than 60 per cent.

‘Properties benefited from healthy margins from previously launched residential projects, as well as higher rental and occupancy rates,’ said F&N chairman Lee Hsien Yang.

Property development contributed 60 per cent of the group’s net profit before exceptionals.

Besides properties and F&B, F&N has a printing & publishing (P&P) arm. ‘Our diversified businesses and wide footprint have helped shield F&N from the direct impact of the credit and liquidity crisis,’ Mr Lee said.

F&N announced a management revamp in June. As part of the change, the current CEO of Asia-Pacific Breweries (APB), Koh Poh Tiong, will become CEO of F&N’s F&B business on Oct 1. The CEOs of properties, F&B and P&P will report to F&N’s board.

‘This new management structure will give F&N sharper strategic and operational focus, while preserving its unique multi-sector, diversified status,’ Mr Lee said yesterday.

For the nine months ended June 30, F&N’s net profit after exceptionals rose 12 per cent year on year to $315.5 million. Revenue was 5 per cent higher at $3.7 billion.

‘Economic growth in the Asia-Pacific region is expected to be moderate for the next 12 months,’ F&N said in its financial statement. It expects its net profit before exceptionals this year to exceed last year’s.

F&N shares closed 11 cents lower at $4.23 yesterday. The counter was $5.80 at the start of the year.

F&N’s unit APB also reported notable results for the third quarter, with net profit after exceptionals jumping 22 per cent to $37.4 million from a year earlier. Based on this, earnings per share were 14.5 cents in Q3, 2.6 cents higher than a year earlier.

Excluding exceptionals, net profit was $42.5 million, or 34 per cent higher.

APB posted a 9.6 per cent increase in revenue to $472.9 million. Vietnam, Cambodia and Laos together generated 37 per cent of revenue.

For the nine months ended June 30, APB’s net profit after exceptionals rose 13 per cent to $123.7 million from a year earlier. Revenue was 12.6 per cent higher at $1.5 billion.

‘Very satisfactory results were achieved for the third quarter and nine-month period to June 30,’ said Mr Koh. ‘This positive trend is likely to flow into the remaining fourth quarter. Barring any unforeseen developments, we expect our full-year attributable profit (before exceptional items) to exceed that of last year.’

Source : Business Times - 08 Aug 2008

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Singapore Marina Bay Sands rises out of sight to stay on track

Singapore Marina Bay Sands rises out of sight to stay on track

40% of project is underground; shopping mall rents average $50 psf

By ARTHUR SIM

(SINGAPORE) The lay of the land may still look relatively flat over the Marina Bay Sands site but the integrated resort will open on time.

That is because - away from the limelight - almost 40 per cent of the development is underground and progressing well. Marina Bay Sands says the sub-structure works for the convention centre are well established while superstructure works are well underway and rising above ground.

Sub-structure basement slabs for the casino and theatre are also ‘progressing well’.

Earlier issues with the reclaimed land subsiding have been ironed out too. ‘Marina Bay Sands has the expertise to deal with such conditions based on our experience in Macau, which is also on reclaimed land. In Singapore, we overcame the challenging conditions of reclaimed land through special considerations and complex below-ground work such as long-length diaphragm walls,’ explained Marina Bay Sands general manager George Tanasijevich.

Of the three hotel towers, one has been built to the eighth storey with the other two already four storeys high.

Mr Tanasijevich added: ‘Admittedly, it is a very aggressive target, but our target remains and we are confident we can hit it for a December 2009 opening.’

The three hotel towers will have around 2,500 rooms and will be run by Marina Bay Sands.

The shopping mall - which is substantial at around 800,000 square feet - will be leased out. So far, about 280,000 sq ft has been leased.

‘We have spoken with over 1,000 brands. We have been talking to them for over two years and some have been interested even before we had a floor plan,’ Mr Tanasijevich said.

Average rents for units leased are currently at about $50 per square foot per month and Mr Tanasijevich said: ‘We do expect to have market-leading rents.’

While specific brands have not been named, Mr Tanasijevich said that it started by looking at luxury fashion, watch and jewellery brands. ‘We are in the process of determining what will be the best mix,’ he added.

Marina Bays Sands has employed about 300 people directly and its meetings, incentives, conventions and exhibitions (Mice) team is about nine-strong.

The Mice business is important to Marina Bay Sands. Mr Tanasijevich said: ‘We are deep in discussion with about 30 expos, and organisers of about 40 meetings and conferences for the opening year up to 2016.’

Speaking at the Las Vegas Sands Q2 2008 financial results briefing last week, chairman Sheldon Adelson was also bullish on the Singapore retail market.

Saying that he found the rents that retailers were willing to pay ‘extraordinary’, he added: ‘And they certainly indicate that they expect to do a high level of gross volume to justify these high minimum rents.’

‘We expect that our mall in Singapore, the Marina Bay Sands, will be considered probably the most successful, the most profitable mall ever,’ he added.

Mr Adelson was speaking from Macau, where the Venetian Macau will soon celebrate its first anniversary and also open the Four Seasons Macau together with its world premiere of Cirque du Soleil’s Zaia.

The integrated resort (IR) model with gaming and non-gaming offerings is still relatively new in Asia but Las Vegas Sands reported that its Asian entertainer performances - including headliners Jay Chou, Hacken Lee, Easton Chan and Aaron Kwok - have been drawing visitors, with some acts seeing over 100,000 visitors a day.

Source : Business Times - 08 Aug 2008

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Over 2,300 applications for Singapore AMK condo-style HDB flats

Over 2,300 applications for Singapore AMK condo-style HDB flats

By UMA SHANKARI

UPCOMING Design, Build and Sell Scheme (DBSS) project Park Central @ AMK received over 2,300 applications - or four times the 578 units on offer - when submissions closed at midnight on Tuesday, developer United Engineers (UE) said yesterday.

Maison Royale: Asking price for the 20-unit project is at least $50m. Some 40 units of about 1,000 sq ft each can be built on the condo site in Newton
But this does not mean that the project will definitely be fully sold, analysts said. For the previous DBSS project City View @ Boon Keng, some 3,500 applicants vied for 714 flats, but only 460 homes were sold after the first round.

Under the Housing Board’s DBSS scheme, the developer has flexibility in designing and pricing the flats.

The average selling price for units in Park Central @ AMK is $490-$500 per square foot (psf), said UE. Four-room flats will go for $433,000-$567,000, while five-room apartments will sell for $534,000-$689,000.

Park Central will fare better than City View as the pricing is more attractive, analysts said. ‘At City View @ Boon Keng, the majority of the flats were priced higher than $600,000, which was an obstacle for buyers,’ said Eugene Lim, assistant vice-president of property agency ERA Asia-Pacific. ‘At this price ($490-$500 psf) you should be able to sell.’

City View also faced the problem of applicants who in the end did not meet the required criteria to buy HDB flats.

But for Park Central, UE believes that most of the applicants are eligible buyers with genuine interest.

‘We have tried our best to minimise non-eligible applications that could distort application numbers and delay processing time,’ said David Liew, managing director of UE’s property development division. ‘However, how the applications will eventually translate into real sales figures greatly depends on the market conditions at the point where the selection process begins.’

Developers and analysts here are more upbeat about the HDB and mass market private home segments compared with the rest of the residential market.

Right now, the key seems to be pricing. Developers who price homes below their competitors’ and those willing to drop prices seem to be clearing units.

For example, local developer Roxy-Pacific Holdings on Tuesday said that it has launched six projects since Chinese New Year. To date, some 114 - out of a total 165 offered - have been sold.

‘The market is of course challenging,’ said Teo Hong Lim, chief executive of Roxy-Pacific. His company’s advantage, he said, was in the pricing. Apartments in the six projects were mostly sold for $800-$1,100 psf - even though they are located in the more central areas of Singapore. Roxy-Pacific hopes to push out another three developments by the end of this year.

Source : Straits Times - 07 Aug 2008

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Singapore Maison Royale put up for collective sale

Singapore Maison Royale put up for collective sale

By UMA SHANKARI

MAISON Royale, a freehold residential site in Newton, has been put up for collective sale.

Maison Royale: Asking price for the 20-unit project is at least $50m. Some 40 units of about 1,000 sq ft each can be built on the condo site in Newton
Owners of the 20-unit project are asking at least $50 million. Including an estimated $300,000 development charge (DC) and taking into account a plot ratio of 2.8, the price works out to $1,273 per square foot per plot ratio (psf ppr).

In contrast, nearby Lincoln Lodge was sold for $243 million, or $1449 psf ppr including an estimated DC of $413,000 in June last year at the height of the en bloc frenzy.

The project was bought by a consortium comprising Koh Brothers, Heeton Holdings, KSH Holdings and Lian Beng Group. Their offer was the highest of several bids then. The developers have yet to tear down Lincoln Lodge to put up a new development, and have instead allowed occupants to keep renting for at least six months from the sale completion date in July this year.

The comparatively lower price for Maison Royale is in line with current weaker market sentiment, said Charles Chua, head of investment sales at PropNex Realty, which marketing the project.

‘Maison Royale is priced at a level where developers can feel that it is still worthwhile for them to go in,’ he said.

Maison Royale is on 14,107 sq ft of land. It is located at the junction of Newton and Surrey roads, a three-minute walk from Novena MRT station. Some 40 units of about 1,000 sq ft each can be built on the site, PropNex said.

If the site is sold for $1,265 psf ppr, the breakeven cost will be around $1,665 psf, it said. The successful developer could launch the apartments in the new development at around $1,915 psf, the firm added.

The tender for Maison Royale closes on Sept 9.

Source : Straits Times - 07 Aug 2008

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Occupancy level of Singapore JTC ready built facilities hits new high

Occupancy level of Singapore JTC ready built facilities hits new high

Business park segment contributed to 51% of total RBF net allocation in Q2

By ARTHUR SIM

THE net allocation for JTC ready-built facilities (RBF) in Q2 2008 reached 84,100 sq m, 2.2 times higher than the 38,300 sq m in the previous quarter.

This boosted the occupancy level by one percentage point to a new JTC record level of 94.9 per cent.

JTC said the performance was supported by a strong gross allocation of 159,100 sq m, the highest level since 2004.

Of the total RBF net allocation, 50.8 per cent was contributed by the business park segment. Gross allocation increased from 5,800 sq m in Q1 ‘08 to 45,400 sq m in Q2 ‘08 due to the newly available business park space at Fusionpolis, which accounted for 93 per cent (42,116 sq m) of the gross allocation for business park space in Q2 ‘08.

For the business park segment, related and supporting services industries contributed to a gross allocation of 44,200 sq m.

As a result of new supply coming on-stream at Fusionpolis, the occupancy level for business park space declined marginally by 0.4 per cent from the last quarter to 94.3 per cent.

Termination at 2,700 sq m remained largely unchanged in Q2 ‘08.

Stack-up factory space contributed 31 per cent to RBF net allocation. However, termination level increased to 75,000 sq m in Q2 ‘08, higher than the 51,200 sq m in Q1 ‘08.

The demand for flatted factory space fell by 1 per cent quarter-on-quarter (qoq) to 1.22 million sq m in Q2 ‘08, with corresponding supply remaining unchanged at 1.399 million sq m.

JTC said that negative net allocation for flatted factory space in Q2 ‘08 of 6,900 sq m marked the first negative quarter since Q2 ‘07.

This was driven by a 15 per cent lower (qoq) gross allocation to 53,400 sq m and a 62 per cent higher (qoq) termination to 60,300 sq m in the quarter.

According to JTC’s report, the electronics sector accounted for the highest termination of flatted factory space at 33,100 sq m in Q2′ 08, up from 5,000 sq m in the previous quarter.

The net allocation of JTC prepared industrial land (PIL) fell to 34 ha in Q2′ 08 from 114.9 ha in the previous quarter.

Gross allocation of 64.1 ha in the quarter was lower compared with 120.4 ha registered in the previous quarter.

PIL also saw a higher termination level of 30.1 ha in Q2′ 08 compared with 5.5 ha in Q1′ 08.

The manufacturing sector accounted for 54 per cent of the Q2′ 08 total PIL allocation. Within the manufacturing sector, the biomedical manufacturing segment was the highest taker of PIL at 57 per cent.

The net allocation for the JTC generic land segment dropped to 26.7 ha in Q2 ‘08 from 81.8 ha in Q1 ‘08, a fall of 67 per cent.

The net allocation for JTC specialised parks declined to 7.3 ha in the quarter, an 80 per cent drop from 33.1 ha in the preceding quarter.

Source : Straits Times - 07 Aug 2008

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Ascott Raffles Place makes 50 units available first - Singapore

Ascott Raffles Place makes 50 units available first - Singapore

THE plush Ascott Raffles Place, the former Asia Insurance Building (AIB), had a soft opening yesterday, with its owner, the Ascott Group, making 50 units available.

National heritage building: The 146-unit premium serviced residence, the former Asia Insurance Building, will be officially launched in October
The remaining units of the 146-unit premium serviced residence project will be ready by its official launch set for October.

An Ascott press statement yesterday said the property, a national heritage building and South-east Asia’s tallest tower in the 1950s, was restored at a cost of $60 million.

It will be equipped with meeting rooms, WiFi connectivity, an infinity pool, jacuzzis, a fully equipped gymnasium, a fitness studio, a lounge bar and a fine-dining restaurant by award-winning Julien Bompard.

Ascott Raffles Place, situated within walking distance of the Raffles Place Mass Rapid Transit (MRT) station, is also close to a wide range of restaurants, cafes, pubs, shopping outlets and the upcoming Marina Bay Sands integrated resort.

The property is the latest addition to The Ascott Group’s seven serviced residences in Singapore, including Citadines Mount Sophia, which will open in 2009.

AIB was the first modern highrise office building erected in Singapore after World War II. It symbolised Singapore’s development as an important financial hub, and is one of the few remaining highrise buildings from the 1950s.

The property was designed by Dr Ng Keng Siang, the first Singaporean member of the Royal Institute of British Architects. The 52-year-old landmark was gazetted as a conservation building by the Urban Redevelopment Authority in April 2007.

Source : Straits Times - 07 Aug 2008

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Over 2,300 vie for 578 condo-like flats in Singapore AMK

Over 2,300 vie for 578 condo-like flats in Singapore AMK 

By Joyce Teo, Property Correspondent 
HOT PROPERTY: Park Central @ AMK, in Ang Mo Kio Street 52, is the HDB’s third Design, Build and Sell project.
 
MORE than 2,300 hopeful homebuyers have applied for one of the 578 condo-style units being built for the Housing Board in Ang Mo Kio.
The showflat was a hot ticket, with 23,000 visitors since the project’s mid-July launch, said developer United Engineers (UE) yesterday.

Applications have now closed for the estate, Park Central @ AMK, which is being developed under the HDB’s Design, Build and Sell Scheme (DBSS).

The four- and five-room units have condo-style fittings and finishes such as built-in wardrobes, kitchen cabinets and air-conditioning systems, and are priced from about $400,000 to just under $700,000, or $490 to $500 per sq ft.

Park Central @ AMK is the third DBSS project. Under the scheme, private developers set prices but are bound by HDB rules, including the key proviso that flats can be sold only to households earning no more than $8,000 a month.

Past launches had been plagued by applications from buyers who were not serious or overqualified but UE believes most of its applicants are eligible buyers who have a genuine interest in buying the units.

It said showflat visitors were asked to go through a simple questionnaire to determine their eligibility for public housing.

‘However, how the applications will eventually translate into real sales figures greatly depends on the market conditions (when) the selection process begins,’ said managing director David Liew of UE’s property development division.

A ballot will be held, with the selection process starting in the middle of next month.

The previous DBSS project, City View @ Boon Keng, attracted 3,500 applications for 714 flats early this year. But only 460 deals were sold right after the selection process in March. Some applicants were apparently overqualified.

The first project in Tampines saw nearly 6,000 applicants vying for 616 units in late 2006.

Source : Straits Times - 07 Aug 2008

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Singapore Housing agent fees: How low can they go ?

Singapore Housing agent fees: How low can they go ? 

With guidelines axed next month, rates will come under pressure but big fall unlikely, say experts

By Jessica Cheam 
 
PROPERTY experts expect agents to feel the pinch once fee guidelines are abolished next month, but the big question in the industry is just how low fees can go.
Real estate insiders concede that fees will come under pressure with buyers and sellers free to haggle, but dismiss the notion that rates could plummet to zero.

‘In a buyer’s market, perhaps, buyers can get away without paying. But agents also need their salaries and ultimately consumers will get the service they pay for,’ said PropNex chief executive Mohamed Ismail.

Agents spend about 40 per cent of their commission on the marketing, transport and operational costs of selling a flat. Active agents earn about $5,000 a month, said Mr Ismail, so how low rates go will depend on the individual.

Those who aim for a large turnover of properties might be willing to slash rates but this could be at the cost of service quality, he added.

Mr Eugene Lim, assistant vice-president at ERA Asia Pacific, does not see rates falling drastically as the current rate is one of the lowest in the region.

Fees will be negotiable next month, thanks to a decision by the Competition Commission of Singapore, which told the Institute of Estate Agents to axe its guidelines on commissions.

The 1999 guidelines were based on a 1974 Government Gazette that stipulated a 2 per cent fee payable to agents from sellers. In the past, when Housing Board prices were relatively low, agents began charging buyers a further 1 per cent.

The Consumers Association of Singapore is advising people not to be held to old guidelines and to avoid giving exclusive rights to agents. It also said agents should not collect fees from both buyers and sellers, due to conflict of interest.

The new playing field will offer plenty of scope for buyers, sellers and agents to negotiate, but agency boss Albert Lu of C&H Realty pointed out that the real estate market is ‘already very competitive’.

For private property sales, for example, agents are known to cut their commission charges from the recommended 2 per cent to 1 per cent for sellers.

‘It’s not in the interest of agencies to start price wars, as we end up hurting ourselves,’ said Mr Lu. But he suggested that agencies might devise ways to entice buyers and sellers, such as bundling home services.

Industry leaders do not rule out a ‘one-stop shop’ concept where agencies could offer agent and legal services along with loans, for example.

Analysts believe consumers will be quick to take advantage of the new system and start haggling, but given the slow market, it is unclear who has the upper hand. Prices have eased in favour of buyers but many sellers are not budging, so with volumes down, agents may see an incentive to give discounts.

Homebuyer Vivian Wong, 25, said she will bargain harder while agents vow to fight and justify commissions. HSR Property Group’s Mr William Tan, 43, said he was confident of retaining the 2 per cent commission.

‘In this new landscape, the better agents will survive because they will offer quality service consumers will pay for.’
 
Source : Straits Times - 07 Aug 2008

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Singapore HDB says residents under en bloc scheme generally satisfied

Singapore HDB says residents under en bloc scheme generally satisfied

By Lynda Hong,

SINGAPORE: The Housing and Development Board (HDB) said its latest survey showed that residents under the Selective En bloc Redevelopment Scheme (SERS) were satisfied with their new and improved living environment.

More than 1,000 households were interviewed in the 2007 survey. 96 per cent of the respondents said their present living arrangement was ideal because replacement sites were generally located close to their previous homes.

The survey also revealed that kinship and community ties built up over the years had been retained.

94 per cent of the residents said they felt a sense of belonging to their estates as they had lived there for a long time and were familiar with the area.

72 per cent of the respondents said relations with their neighbours had either improved or remained the same.

Between 2001 and 2006, 4,418 households had moved into replacement flats.
- CNA/so

Source : Channel NewsAsia - 06 Aug 2008

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Tough calls in next property DC revision

Tough calls in next property DC revision
Recent land sales point to cuts, but some disagree
By KALPANA RASHIWALA

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(SINGAPORE) The next revision of property development charge rates is barely a month away. So what can the market expect?
 
 
Recently a few 99-year leasehold condo sites at Woodleigh, West Coast and Choa Chu Kang were sold at prices below land values implied by current development charge (DC) rates, and this could provide evidence for a downward revision in DC rates come Sept 1.

But some property market watchers suggest that the government may leave DC rates largely unchanged for most use groups.

Any drastic cut in DC rates at this point may be seen as the government taking a bearish view on the Singapore property market and lead to a further nosedive in sentiment.

DC rates are payable for enhancing a site’s use or for building a bigger project on it. They are revised twice a year - on March 1 and Sept 1 - and are specified according to use groups and location. The revisions are made by the National Development Ministry in consultation with the Chief Valuer, who takes into account current market values.

In June, a condo plot at Woodleigh Close was sold at a state land tender for $270 psf per plot ratio. This is 43 per cent below the land value implied by the March 1, 2008, DC rate for non-landed residential use for that location. Two sites at West Coast Crescent and Choa Chu Kang Drive were also sold in March and May at $305 psf ppr and $203 psf ppr, 24 per cent below the respective land value implied by current DC rates.

However, Jones Lang LaSalle’s S-E Asia research head Chua Yang Liang argued that these instances are ‘not statistically significant’ compared to the entire market activity over the past six months and that neither a drop nor rise in DC rates is warranted.

Even in Woodleigh, West Coast and Choa Chu Kang where there is land sales evidence to justify a reduction in DC rates, the cuts are likely to be moderate, ‘possibly not more than 10 per cent as the accompanying message of a downward revision in DC rate is likely to cause a further dive in market confidence’, said Colliers International director of research and advisory Tay Huey Ying.

Agreeing, JLL’s Dr Chua said: ‘This round of DC revision is being watched closely by developers and other property players as it may provide a hint of the state’s view/confidence in the property market over the next nine to 12 months.’

DTZ executive director Ong Choon Fah, too, reckons that ‘where there is compelling evidence, they may trim DC rates. But where the evidence is not strong, they may say it’s an aberration and keep DC rates (unchanged) for six months before the next review’.

Another property consultant takes a different view as to why there may be no rush to reduce DC rates: ‘DC rates are a revenue-generating tool. They tend to go up quickly, but usually tend to come down more slowly.’

The government may also be reluctant to trim DC rates just yet as that may be read as a proxy for its assessment of land values, and could in turn create pressure for the state to accept lower land bids at state tenders in coming months. ‘That’s not too good for the coffers,’ an analyst quipped.

Offering a contrarian view, Knight Frank managing director Tan Tiong Cheng predicts DC rates will fall. ‘Selling prices of private homes have either stagnated or are slowly declining while construction costs are going up, so land values have come down, as seen in recent government land tender results.’

Mr Tan also disagreed with the view that any cut in DC rates would be confined to locations with sales evidence of low land prices. ‘After all, the Chief Valuer does not take into account just land sales but the property market in general,’ he reasoned.

He does not think that any drastic cuts in DC rates will send the wrong signal to the market and further depress sentiment. ‘The Chief Valuer has a duty to keep the public informed of reality,’ he said.

Colliers expects average DC rates to stay unchanged come Sept 1 for landed residential, commercial, industrial and hotel use but to be cut 0.5 to 1.5 per cent for non-landed residential use.

DTZ forecasts that average DC rates will generally remain unchanged except for industrial use, which may see an increase of a few per cent. For non-landed residential use, some areas in the prime districts may see a slight decrease in DC rates on the back of softer home prices in these locations.

JLL, too, expects DC rates for all use groups except industrial to remain flat. ‘A rise in industrial DC rates can be attributed to rising demand for cheaper office alternatives.’

Putting things into perspective, CB Richard Ellis executive director Jeremy Lake said: ‘Previously, DC rates were eagerly watched to gauge the impact on land values especially for collective sale sites with a significant DC component.

‘The collective sales market is so quiet now. There have been no private residential sites sold recently that will have exposure to DC. Most developers that have sites with DC exposure would already have locked in DC rates. And if they haven’t, they’ll find that DC rates probably won’t change much.’
Source : Straits Times - 06 Aug 2008

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Singapore Property fee guidelines must go, says watchdog

Singapore Property fee guidelines must go, says watchdog 

Move could foster competition and a price war among real estate agents

By Jessica Cheam 

HOME buyers and sellers will be able to haggle over the commission they pay property agents after a guideline on fees is axed next month.
The Competition Commission of Singapore (CCS) said yesterday that the guidelines adopted by the Institute of Estate Agents (IEA) in 1999 are uncompetitive and must go.

The surprise move could spark a price war among agents, say some experts.

Mr Seah Seng Choon, executive director of the Consumers Association of Singapore, believes buyers and sellers will be the winners: ‘Consumers should not accept agents who are harping on the old fee practices and should be free to bargain.’

At present, sellers of Housing Board flats generally pay the agent 2 per cent of the purchase price while the buyer pays 1 per cent. In private property transactions, only the seller pays 2 per cent.

The IEA guidelines have become standard practice, a point addressed by the competition watchdog yesterday.

It said that while the guidelines are not binding, ‘they provide a focal point for prices to converge. This will… dampen competition and facilitate price coordination.’

It also noted that they are stated as a ‘minimum fee’, which discourages any price competition below that rate.

‘Agents should not be constrained to offer the same price,’ said the CCS, which told the IEA on June 25 that the guidelines ‘are likely to infringe the Competition Act’.

IEA president Jeff Foo said the institute, which represents about 1,600 agents, will axe the guidelines by Sept 25.

Industry leaders had mixed reactions to yesterday’s news. Some say the impact will be minimal as agencies will keep the status quo but other experts forecast an agents’ price war, especially during market downturns.

‘This throws open negotiations between agents and sellers or buyers. Market conditions will determine who has the upper hand,’ said Mr Colin Tan of property firm Chesterton International.

In bad times, agencies could start under-cutting each other, or conversely, agents could demand higher commissions from desperate sellers and buyers, said Mr Tan.

Mr Chandran Pillay, senior vice-president of Global Real Estate Services, said smaller agencies like his cannot lower fees too much as they are already quite low and the costs of selling a property are high.

House-hunter Tania Goh, 24, welcomed the room for negotiation but she was concerned about agents who ‘can abuse this system when they know a buyer strongly desires a property’.

PropNex chief executive Mohamed Ismail said the removal of guidelines ‘may not be a bad thing’ if agents up their service quality to justify the commission they get. His agency will use the IEA fee guidelines as the basis for negotiations with its clients.

Mr Eugene Lim, assistant vice-president at ERA Asia Pacific, said the 2 per cent fee is lower than the 6 per cent norm in the US, for example.

IEA’s Mr Foo said consumers should get written agreements on agents’ fees before accepting any services.

Source : Straits Times - 06 Aug 2008

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Growth in Singapore office occupancy costs tapers off in Q2

Growth in Singapore office occupancy costs tapers off in Q2

Prime Raffles Place space up only 1.1% quarter on quarter: DTZ report

By UMA SHANKARI

GROWTH in office occupancy costs in Singapore has started to taper off after the meteoric rise last year, reflecting the increased resistance to higher occupancy costs, according to a new report.

Small rise: Average occupancy cost of prime office space in Raffles Place grew only 1.1 per cent in Q22008
‘Apart from Raffles Place, Shenton Way/ Robinson Road/Cecil Street and decentralised areas, growth in occupancy costs in other areas like Marina Centre and Orchard Road was flat in 2Q 2008,’ said DTZ in its second-quarter office market brief.

Average occupancy cost of prime office space in Raffles Place grew only 1.1 per cent quarter on quarter to $19 per square foot per month (psf pm) in the second quarter of 2008.

In the Shenton Way/Robinson Road/Cecil Street area, the average office occupancy cost rose by 2.6 per cent quarter on quarter to $11.80 psf pm, while office buildings in HarbourFront enjoyed a higher growth of 5.3 per cent to $10 psf pm.

By contrast, in the first quarter of 2008, occupancy costs continued to rise amid a dearth of supply. Prime occupancy cost in Raffles Place gained 13.9 per cent quarter on quarter to $18.80 psf pm in the first quarter of 2008, for example.

‘As more new supply come on stream, office occupancy is likely to ease and limit growth in occupancy costs in the CBD for the rest of 2008,’ said DTZ, referring to the Central Business District.

However, the report also said that the cautious business outlook and companies gravitating towards cheaper premises like decentralised office buildings, industrial properties, business parks and disused state properties are putting a downward pressure on office occupancies.

Islandwide, average occupancy eased by 0.2 percentage point quarter on quarter to 96.9 per cent in Q2 2008.

As a result of occupiers moving out to cheaper locations after lease expiration, office occupancies in Raffles Place and Marina Centre dropped by 0.3 percentage point to 97.4 per cent and 1.2 percentage points to 98.6 per cent respectively.

But over in decentralised areas like Novena and HarbourFront, occupancy levels rose by 0.4 percentage point to 99.0 per cent and 1.1 percentage points to 98.7 per cent respectively, supported by lower occupancy costs.

DTZ also released its Q2 2008 office report for Kuala Lumpur yesterday.

Gross occupancy costs for prime buildings in the Malaysian city rose 3.9 per cent quarter on quarter to RM6.32 (S$2.65) psf pm in the second quarter of this year, the property firm said.

But despite this, financial institutions with presence in Singapore are considering locating call centres in Kuala Lumpur because of cost differential and special tax breaks, DTZ said in response to a query from BT.

Source : Business Times - 05 Aug 2008

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Singapore Temasek shortlists 5 in sale of Senoko Power

Singapore Temasek shortlists 5 in sale of Senoko Power

HONG KONG - SINGAPORE investment company Temasek Holdings has shortlisted five bidders from preliminary bidding for its sale of Senoko Power, banking sources said.
France’s GDF Suez, Japan’s Marubeni, India’s Tata Power, Malaysia’s YTL Power and the OneEnergy tie-up between Hong Kong’s CLP Holdings and Japan’s Mitsubishi are the shortlisted bidders, bankers told Reuters Basis Point, in a deal that market players have said could fetch about US$3 billion (S$4 billion).

Other firms that were understood to have submitted non-binding expressions of interest last week included Bahrain investment bank Arcapita, Singapore’s Keppel Corp and Sembcorp Industries.

The shortlisted candidates will be allowed to conduct due diligence around September.

The Senoko sale, the second of three generating company divestments that Temasek plans by mid-2009, has sparked huge interest in the loan market with more than 10 banks earlier talking to would-be bidders about debt financing to back the acquisition.

With an electricity generating capacity of 3,300 megawatts (MW), Senoko is larger than Singapore’s 2,670 MW Tuas Power, which was sold to China’s Huaneng Group for $4.2 billion in March.

REUTERS

Source : Straits Times - 05 Aug 2008

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Stalemate threatens Singapore Thomson collective sale

Stalemate threatens Singapore Thomson collective sale

KSH Holdings seeking more time to close property deal, say sources

By Jessica Cheam

ROADBLOCK: KSH reportedly had to delay the purchase as it had trouble acquiring from the SLA part of a road that divides one development from the other four.

THE collective sale of five small estates near Thomson Road seems to have hit the rocks, with the owners of 88 units set to walk away - taking the $12 million deposit with them.
Unlike in recently aborted sales, where the developers appeared to have changed their minds because of the property slide, this deal may likely become a victim of a three-way stalemate among the buyers, sellers and the Singapore Land Authority (SLA).

The deal was inked last November, when a unit of listed developer KSH Holdings signed up to buy Norfolk Court, Mergui Lodge, Northern Mansion, Mergui Court and The Mergui for $120 million.

It also paid a 10 per cent deposit.

The buyers, however, have failed to close the sale despite a two-month extension.

One owner, who declined to be named, told The Straits Times yesterday that KSH offered to stump up $3 million as additional deposit if the sellers would agree to a further three-month extension.

It is understood the sellers are considering the offer.

KSH declined to comment yesterday, but sources said the deal hit problems when the firm tried to buy a 1,000sq m section of a road from the SLA.

The land is needed so the five estates near Rangoon and Moulmein roads can be combined and developed into one large project.

This will give a land area of 74,355 sq ft and a gross floor area of 208,196 sq ft. It will allow a high-rise block with about 142 luxury flats each measuring 1,250 sq ft on average.

Industry sources told The Straits Times that the SLA had priced the land at $16 million - double what KSH and industry experts expected.

The property firm has appealed to the SLA to review the price.

The deal now seems to hinge on whether the sellers and buyers can reach an agreement.

The owners are said to be considering the offer and have requested a specific date when the sale can be completed from the buyers.

If no consensus is reached - and the sellers reject the $3 million sweetener - the deal will be off, but the flat owners will keep the $12 million deposit. That works out to about $136,000 on average for each of the 88 units.

If the deal goes through, on the other hand, each unit stands to receive between $906,856 and $1,908,491.

There has been a string of failed collective sales since sentiment in the property market turned sour.

Bravo Building Construction withdrew from a series of purchases earlier this year.

It forfeited deposits of $1.6million for Makeway View, $25.8 million for Tulip Garden and $12 million for Pender Court rather than go ahead with the deals.

Property giants Far East Organization and Frasers Centrepoint walked away from a $405 million deal to buy Tampines Court when the Strata Titles Board dismissed their sale application.

Analysts said the failed deals could be indicative of the wider credit crunch, with developers finding it difficult to find financiers to complete their purchases.

‘Even if the developers can complete their projects, they will be wondering if they can achieve their desired prices in this market,’ said Mr Colin Tan, the head of research and consultancy at Chesterton International.

Savills Singapore’s director of business development and marketing, Mr Ku Swee Yong, agreed: ‘Buyers face quite high levels of risk now to go ahead with projects inked at last year’s prices.’

Source : Straits Times - 05 Aug 2008

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Singapore seen as global hub for luxury watches

Singapore seen as global hub for luxury watches

Market unaffected by rising prices and global slowdown, says industry chief

By Michelle Tay

SHOWCASE: Mr Tay is planning a big watch fair here next year. — PHOTO: ALAN LIM

THE boss of Sincere Watch believes Singapore can turn itself into a prime place where the world’s rich can buy fancy watches.
Mr Tay Liam Wee, who has just taken the helm at the Singapore Clock and Watch Trade Association (SCWTA), said Singapore is already Asia’s third-largest importer of watches and the world’s fourth-fastest growing market for Swiss watches.

He wants to capitalise on these positions to turn the country into ‘a global watch hub, where connoisseurs and enthusiasts alike will continue to be fascinated by this industry.’

Despite the steep prices - fine watches can cost $2,000 to $80,000 - and the slowing world economy, growth in the watch industry is not unwinding.

Far from it, in fact. Swiss watch imports in the first six months of the year grew 45 per cent from a year earlier.

Mr Tay, 49, said Singapore’s luxury timepiece sector had seen steady growth over the past five years and would continue ticking along for the next five years.

The watch industry turned over $2.9 billion last year, up from $2 billion in 2003.

Mr Tay said this growth was ‘in sync with that of the Swiss watch industry’ and ‘will continue at 10 per cent to 15 per cent year-on-year’.

He added that even as watches were getting more expensive, people were still buying them.

He attributed this trend to rising wealth in Asia and the increasing number of connoisseurs in the region.

And he plans to focus on growing the latter even more during his two-year term as president of SCWTA, which has 180 members, through a large-scale watch fair here next year.

‘What is important is the industry, as a whole, is able to hold something on a national scale and make it into an iconic, international show,’ he said.

He also spoke about the sale of Sincere to Hong Kong watch company Peace Mark Holdings in April.

In his first interview with The Straits Times since the takeover, Mr Tay said yesterday he backed the ‘full acquisition’ of Sincere because both companies had a common goal to break into the China market.

With groups like Swatch, Richemont and LVMH accounting for 85 per cent of Swiss watch exports, Mr Tay said ’size, as well as financial and marketing clout’, was needed to penetrate China in ‘a meaningful and significant way’.

The takeover was completed at $530 million, or $2.564 per share.

Peace Mark has obtained acceptances of more than 90 per cent and is in the final stages of delisting Sincere from the Singapore Exchange.

Mr Tay has retained his role as group managing director of Sincere while taking up new responsibilities to ‘look at the luxury sector within the Peace Mark group’.

This segment comprised about 30 per cent of total group revenue at Peace Mark last year, but the acquisition of Sincere meant that portion would grow to about 60 per cent and become the main driver of the group’s business.

As for the conglomerate’s strategy, Mr Tay revealed: ‘The reason we’re making all these strategic moves is to create the largest watch company coming out from Asia.

‘As the largest watch company emerging from Asia, we can be more effective and efficient in the way we penetrate new markets.’

Source : Straits Times - 04 Aug 2008

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