Arrears drop, despite recession

(Abstract from Today 3rd Nov, 2009 by Esther Ng)

~Shorter wait for rental flats; number of applicants fall~

SINGAPORE - Contrary to expectations, the Housing Development Board's (HDB) mortgage arrears rate dropped during the recession - to 7.5 per cent in September this year, from 7.9 per cent a year earlier.
The HDB said that this was partly due to the introduction of trained housing counsellors to help families find long-term solutions such as loans to downgrade to a smaller flat, and in some instances, to find the owner a rental flat so that he could sell off his existing flat.
However, Ngee Ann Polytechnic real estate lecturer Nicholas Mak said: "Arrears usually increase in a recession, but the HDB resale market was buoyant and these households could have benefited from this by selling their flat to pay off their debt and then moving in with relatives or to a smaller flat."
He pointed out that the economy only nosedived in the later half of the financial year. Since arrears take some time to build up, these could have contributed to the marginal improvement of HDB's mortgage arrears rate when its financial year ended in March.
Also noteworthy in HDB's annual report for FY2008-09 was the waiting time for rental flats, which fell to 13 months from 21 months a year ago.
Tighter eligibility rules introduced in February have seen the number of applicants fall to 3,465 in September from 4,550 in February.
Chief executive officer Tay Kim Poh said HDB's plans to increase rental stock from 42,000 to 50,000 units by 2012 is "progressing well" and there are now 1,567 converted and new rental flats.
Also, 425 elderly home-owners have taken up the Lease Buyback Scheme (LBS), up by 288 applications since it was launched in March. The plan allows low-income elderly Singaporeans to get a portion of cash upfront while HDB buys back the tail-end of the lease of their flat.
Asked if the figure is low when 20,000 seniors are eligible to apply for the scheme, Mr Tay said: "The LBS is just one option for the elderly to monetise their flat ... we don't expect it to be a very high number as they do have other options."
These include downgrading to a smaller flat and subletting out a room or the whole flat.
HDB's deficit almost doubled to $2.119 billion this financial year from $1.081 billion in the previous year. The biggest contributor was the increase in the number of flats offered for sale ($1.553 million) and higher construction cost, said Mr Tay. This was followed by upgrading activity ($696 million) and rental flat activity ($150 million).
Three projects will be completed next year: The Pinnacle@Duxton, Punggol Waterway, Treelodge@Punggol; as well as more new two-room and rental flats. Meanwhile, work on the 4.2km Punggol Waterway has started and the results of the housing design competition will be announced in two weeks' time.
HDB will also look into identifying towns for estate rejuvenation, especially since nearly one-third of flats were built before the 1980s.
A new department - the Building Research Institute - will look into sustainable development and green building technology.
Copyright 2009 MediaCorp Pte Ltd All Rights Reserved

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

(Abstract from Business Times - 3rd Nov, 2009 by UMA SHANKARI)


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


(SINGAPORE) CapitaLand is seeking up to $2.78 billion from the listing of its retail arm CapitaMalls Asia (CMA). Some 1.165 billion shares are being offered at $1.98 to $2.39 apiece, according to e-mails sent to potential investors seen by BT.
This means that CapitaLand could raise between $2.31 billion and $2.78 billion. The developer intends to float 30 per cent of CMA.
If the pricing is achieved, CMA's initial public offering (IPO) will be the largest so far this year. According to data tracked by Bloomberg, the 17 share sales in Singapore this year have raised an average $17.3 million.
In fact, if the offering is priced at the top end of the range, the share sale may well be the largest IPO in Singapore since SingTel's initial offering in 1993, which raised more than $4 billion - a record that has yet to be broken.
CMA's listing will give investors access to a company that manages 86 retail properties across Asia including Ion Orchard. The company's net asset value is estimated to be about $5.3 billion.
CMA's prospectus, which was filed with the Monetary Authority of Singapore yesterday, did not give details on the IPO's size and pricing. In response to media reports quoting the price range and number of shares being floated, CapitaLand reiterated late yesterday that its decision to proceed with the IPO (as well as the size and pricing) will be subject to 'investor demand and prevailing capital market conditions', among other things.
Analysts said that the IPO was pricey, but expected take-up to be strong despite that.
The IPO pricing values CMA at $7.69 billion to $9.28 billion. Using the estimated net asset value of $5.3 billion, this means that the IPO is being priced at 1.45 times to 1.75 times the book value.
'I know that it (CMA) is CapitaLand's crown jewel, but the pricing is very aggressive,' said an analyst with a foreign research house here.
But the CapitaLand 'franchise' is still a compelling story for investors, he added. The developer has sponsored and listed five property trusts since 2002, including the retail trusts CapitaMall Trust and CapitaRetail China Trust.
'Investors have seen CapitaLand's success in spinning off its property trusts, and fund managers wanting exposure to the China consumption story will be interested,' Najeeb Jarhom, an analyst at AmFraser Securities, told Bloomberg. More than half of CMA's malls are in China, which is expected to provide the engine of growth for the company.
Market watchers also expect CapitaLand to get strong support from its existing investors for CMA's listing.
CapitaLand has gained 15.3 per cent since it announced plans to list the retail unit on October 5. By contrast, the benchmark Straits Times Index has added 1.6 per cent over the same period. CapitaLand's stock gained 9 cents, or 2.2 per cent, to close at $4.23 yesterday.
CMA said in its prospectus that its strong financial position and capital structure will provide the company with the financial flexibility to fund its growth and expansion.
'These opportunities include acquisitions of land for greenfield projects, brownfield projects and completed malls, asset enhancement initiatives and other merger and acquisition opportunities in Asia,' the company said.
Investor roadshows, which began yesterday, will go on until Nov 16, according to the e-mails. Pricing for the offering is due on Nov 16.
The Singapore public offer period is between Nov 17 and Nov 23. Listing and trading will likely take place on Nov 25, according to the e-mails.
JPMorgan is the sole financial adviser for the listing, and is also the issue manager together with DBS Bank. The two banks are also bookrunners with Deutsche Bank and Credit Suisse.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.

Drop in HDB home loan arrears

(Abstract from Straits Times on 3rd Nov, 2009 by Jessica Cheam)


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

DESPITE the recession, the number of HDB home loan arrears fell from 33,670 in September last year to 30,770 during the same month this year.
The drop follows the Housing Board's introduction of a raft of measures at the outset of the financial crisis to aid owners at risk of defaulting on their home loans.
The measures, announced in February, included a mix of short- and long-term initiatives such as deferring payments, counselling and - as a last resort - compulsory acquisition.
The HDB also introduced the new concept of 'interim housing', intended for those who may need to urgently downgrade, but have bought a new flat that has yet to be completed.
Departing from its usual practice, the HDB started extending second concessionary loans to downgraders on a case-by-case basis.
Taken together, the measures led to a decline in the default rate from 7.9 per cent of 426,270 loans in September last year, to 7.5 per cent of 409,470 loans for the same month this year.
The HDB's annual report, released yesterday, also showed that the number of applications for rental flats fell 24 per cent - from 4,550 in February to 3,465 by the end of September.
This shaved eight months off waiting times as of end-September compared with a year ago, bringing the wait down to 13 months for those in need of heavily subsidised rental flats.
HDB moved in February to tighten the eligibility criteria for such flats, meant for low-income households, after burgeoning queues became a cause for concern. The stiffer criteria included assessing not just a tenant's income, but also assets like savings and whether family members owned private property.
At a press briefing last Friday, HDB chief executive Tay Kim Poh said the past year had been one 'of uncertainty...as the fallout of the financial crisis loomed large'.
He added that HDB's efforts centred on helping groups hit by the downturn. This included boosting the additional housing grant scheme by raising the income ceiling from $4,000 to $5,000 and the maximum grant from $30,000 to $40,000.
Since its launch in March 2006, the HDB has spent $286 million on the scheme, with 18,000 households benefiting.
The building of smaller flats, which slowed in recent years due to falling demand, was ramped up during the year with 1,074 two- and three-roomers launched for sale under the build-to-order (BTO) scheme in order to help households downgrade.
Mr Teo Ser Luck, MP for Pasir Ris-Punggol GRC, said the new measures have helped: 'On the ground, I am seeing fewer cases of residents appealing for rental flats.'
And to help elderly folk monetise their HDB flats, the board launched the Lease Buyback Scheme in March, which pays out a monthly income.
It attracted 425 applications by the end of September, compared with 137 at the end of March. The HDB has approved about 100 so far.
The number of new flats booked reflected the uncertain economic climate, falling to 9,870 for the year ended March 31 from 12,580 the previous year.
But the economy has since brightened and HDB is seeing a pick-up in new flat demand. It recently ramped up its supply of BTO flats and will launch another 4,000 new flats before the end of the year, bringing the total supply of flats to 13,500 units for this year.
*************************************************************************************
Figures at a glance

· Dip in mortgage arrears
There were 33,670 cases in arrears, or 7.9 per cent out of 426,270 outstanding home loans, in September last year, but only 30,770 cases in arrears, or 7.5 per cent of 409,470 loans, this September.
· Lease Buyback Scheme
There were 425 applications by the end of September, compared to 137 at the end of March, and the HDB has approved about 100 so far.
· Additional housing grant scheme
The income ceiling was raised from $4,000 to $5,000, and the maximum grant was increased from $30,000 to $40,000 for the buying of both new and resale flats.
Since the scheme was launched in March 2006, more than 18,000 households have benefited and about $286 million has been disbursed as of this September.
· More smaller flats
For the year ended March 31, 1,074 units of two- and three-room flats were launched under the build-to-order scheme.
· More rental flats
The rental stock will increase from 42,000 to 50,000 units by 2012. So far, 1,567 converted and new rental flats have been completed.
· Tightened eligibility rules for rental flats
The number of applicants fell from 4,550 in February to 3,465. The waiting time fell from 21 months a year ago to 13 months as of September.
· Lift Upgrading Programme
Good progress has been made, with more than 80 per cent of 5,300 eligible blocks selected.
· Home Improvement Programme (HIP), Neighbourhood Renewal Programme (NRP)
As of September, 14,000 flats have been offered HIP and 33,000 offered NRP. Both programmes received strong support level averaging 90 per cent.

HDB turns community builder

(Abstract from TODAY 3rd Nov, 2009 by Esther Ng)



SINGAPORE - From familiar squabbles among neighbours, to a new source of tension as more immigrants populate the heartlands - such issues will be tackled by the Housing and Development Board (HDB) as it moves beyond its main role as provider of affordable public housing.
Set up two months ago, its Community Relations Department aims to enhance social cohesion and integrate newcomers. "One of the challenges for HDB is to develop strategies and programmes that will help enhance residents' sense of community responsibility and ownership - from owning their flat to ownership of their community," said HDB chief executive Tay Kim Poh.
The unit was unveiled along with HDB's annual report. While observers welcomed HDB's intentions, some wondered how the department would fit into a landscape already occupied by the National Integration Council and grassroots organisations that plan activities for newcomers.
"It's fine if it's to guide (people) to be socially responsible dwellers, otherwise it's a duplication of resources," said Aljunied MP Cynthia Phua.
Some complaints MPs receive include rubbish on the landing and noise. "Some (residents) pound chilli at 5am and don't realise HDB's walls are very thin, so it would be good if HDB could hand out a welcome kit listing the dos and don'ts of HDB living as well as a contact list of grassroots groups for the newbies," said Sembawang MP Dr Lim Wee Kiak.
One benefit of the unit is complaints could be directed to a dedicated department, possibly unburdening MPs from day-to-day issues, analysts told MediaCorp. It would also have the resources and organisational capacity to connect Singaporeans and newcomers, said Associate Professor Ho Khai Leong of the Nanyang Technological University.

The downside is if this is seen as another top-down approach, garnering a less receptive response from Singaporeans, said analysts.
Singapore Management University law lecturer Eugene Tan suggested the department be tasked to gather data and recommend policy. "Since 80 per cent of Singaporeans live in HDB, the potential for increased understanding or misunderstanding is there, should a large group of newcomers (move in). The HDB could be scanning the horizon before it becomes a big issue."
Copyright 2009 MediaCorp Pte Ltd All Rights Reserved