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Saturday, November 14, 2009

Live the high life on Holland Hill

(Abstract from TodayOnline 14th Nov, 2009 by Tan Hui Leng)

MCL Land and Ho Bee will launch the 12-storey freehold Parvis condo over the weekend. Located at Holland Hill, Parvis is a 248-unit development located near the Farrer and Holland MRT stations along the Circle Line. There are two-, three- and four-bedroom apartments, as well as penthouses with sizes ranging from 990 to 3,229 square feet. The average price is $1,480 per sq ft.

Copyright 2009 MediaCorp Pte Ltd | All Rights Reserved

Parvis at Holland Hill







Smooth out all cycles... and not just the commercial ones

(Abstract from TodayOnline 14th Nov, 2009 by Colin Tan)

Asset inflation and property cycles hogged the news again this week. On Tuesday, Finance Minister Tharman Shanmugaratnam spoke about the need to manage the property cycle while the Finance, Trade and Industry GPC stated that businesses want predictability to minimise volatility and to remain cost-competitive. It felt there is room for the Government, particularly in the industrial and commercial arenas, to manage externalities and reduce waste.

Today, the problem of economic waste cannot be over- emphasised. Recent third-quarter data show that the office vacancy rate has risen to 12.2 per cent. As at the end of September, there are an estimated 9 million sq feet of empty office space. This translates to about four years' worth of annual supply.

At the same time, those tenants who have signed new leases 18 months ago or earlier are packed like sardines to cope with the then-high rents. Imagine how much more efficient these firms could have been with more space?

But managing cycles in the residential arena is just as important, if not more so, as it concerns every Singaporean from the very top to the bottom.

Should we have "managed" the sharp rise in prices in the upper-end of the private housing market in 2007 ? Or as one columnist in a business paper suggested: Having high luxury-home prices is good. Besides bringing big-spending wealthy investors, it helps generate real-estate-related jobs.

On hindsight, we should have. This is because the economic rent earned by developers in the upper segment lead to the re-assignment of resources from the mid- and mass-segment to the upper-end. It was thus no surprise that supply at the lower end in 2007 was thin. This eventually led to rising prices this year.

But another negative impact of price volatility is that it encourages anyone wishing to enter the market to "time" their purchases. This is because if you got your timing right, you could potentially "save" or "earn" a lot. So, we have a situation where buying is based not on need but on sentiment. Households who should be buying are not, while those who should not are doing so.

Some will delay their purchase in the hope that prices will correct later. Others will buy ahead of their needs because they are afraid prices may rise beyond their reach.

Yet others will speculate. The higher the volatility, the greater the opportunities for speculation. Housing demand then becomes very distorted and difficult to understand or predict. It is no wonder then the relevant policy-makers took such a long time to decide what to do.

And when potential buyers get their timing wrong, as many probably did, they were "forced" into the cheaper HDB resale market. By adopting a market-based approach to pricing new flats, the HDB was also caught out by the market distortion in the private market which had spilled over into the public segment.

For months, it insisted that applicants were very fussy even though demand for new flats remained low even after it introduced new rules to weed out frivolous applicants. Marketers will tell you that if you reduce the price of an unpopular unit enough, there will be takers. That's what private developers do with their remaining units.

Property is also about location. Even though prices are the cheapest in the outlying areas, it does not mean that the less well-off will automatically buy them. Although priced higher, resale flats may offer better value overall in terms of amenities, social networks, travelling time and fewer ERP gantries. ¢

The writer is the head of research and consultancy at Chesterton Suntec International. The opinions expressed here are his own.

Copyright 2009 MediaCorp Pte Ltd | All Rights Reserved

UOL Q3 profit up 44 per cent

(Abstract from Business Times 14th Nov, 2009 by Kalpana Rashiwala)

Increase due to gains from Nassim Park Residences, associate UIC

UOL Group's third-quarter net profit has risen 44 per cent year on year to $105.6 million. Revenue increased 21 per cent to $323.9 million, thanks to progressive recognition of revenue from development properties.

UOL's bottom line received a fillip from a tripling in share of profits of associated companies to $48.2 million from $15.1 million for Q3 2008.

This was on the back of higher contributions from the progressive completion of Nassim Park Residences (in which UOL has a half share) and UOL's 31.9 per cent share of the profit of United Industrial Corporation, which became an associated company this year.

Revenue from property development rose 49 per cent to $203.5 million, accounting for nearly two-thirds of total group revenue. Among the projects that contributed to UOL's Q3 report card were two new launches this year - Double Bay Residences and Meadows@Peirce, which have sold a total of 937 units to date.

Rental income from investment properties rose 9 per cent on the back of higher occupancy and rental reversions for most of the group's investment properties. However, revenue from hotel operations fell 13 per cent amid the decline in tourism markets.

UOL group chief executive Gwee Lian Kheng said: 'Our development profit showed a significant increase, attributed to our timely launches and locking in and controlling of construction costs.'

In the first nine months of 2009, UOL's net profit rose 60 per cent to $417.2 million. Revenue increased 15 per cent to $734.3 million. Shareholder funds rose 19 per cent to $4.04 billion as at Sept 30, 2009 - on the back of fair-value gains on available-for-sale financial assets, the group's operating profits for the first nine months of this year, and recognition of negative goodwill and capital reserves arising from the acquisition of additional interest in UIC. Consequently, net tangible asset backing per share rose to $5.11, from $4.22 at end-2008. UOL's gearing ratio improved to 0.39 from 0.42 over the same period.

UOL's hotel arm, Pan Pacific Hotels Group (formerly known as Hotel Plaza), posted a 25 per cent year-on-year drop in Q3 net earnings to $10.1 million on a 6 per cent dip in revenue to $72.8 million.

Nine-month net profit slid 39 per cent to almost $27 million. Revenue fell 12 per cent to $205.1 million. Pan Pacific said that it expects the business climate to remain challenging.

In the stock market yesterday, UOL closed unchanged at $3.29 yesterday while Pan Pacific Hotels ended one cent higher at $1.35.

Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.

Occupancy at ready-built JTC facilities dip

(Abstract from Business Times 14th Nov,2009 by Uma Shankari)

Net allocation remains in negative territory in Q3 2009 at negative 10,300 sq m against Q2's negative 7,800 sq m

JTC Corp yesterday reported that the occupancy level at its ready-built facilities (RBF) fell slightly in Q3, by 0.3 percentage points to 97.1 per cent. In Q2, the occupancy level was stable at 97.4 per cent.

The industrial landlord also said in its quarterly facilities report that net allocation of its RBF remained in negative territory in Q3 2009 at negative 10,300 square metres, which was weaker than the negative 7,800 sq m recorded in the previous quarter.

On a year-on-year basis, the negative net allocation of RBF saw a steeper fall, from the negative 500 sq m recorded in Q3 2008. The decrease in net allocation came as termination rose by 3 per cent to 26,200 sq m from 25,600 sq m in Q2 2009. However, this is a slowdown from the 30 per cent rise in termination seen in Q2 over Q1.

The top three industry segments that contributed to the RBF termination in Q3 2009 were electronics (which accounted for 34 per cent of termination), chemicals (21 per cent) and precision engineering (21 per cent). A large proportion (some 33 per cent) of companies that terminated said that 'consolidation of operations' was their primary reason. But for JTC's prepared industrial land (PIL), the net allocation bounced back into positive territory, achieving 14.7 hectares in Q3 2009 from negative 32.8 ha in the previous quarter.

JTC said that the swing into positive territory was caused mainly by a manufacturing-related company that took up 12 ha of land during the quarter.

Gross allocation in Q3 climbed to 25.7 ha, compared to 5.4 ha in Q2 2009. Termination registered a 71 per cent fall from the previous quarter to 11 ha in the third quarter. However, on a year-on-year basis, net allocation declined by 66 per cent from 43.5 ha in Q3 2008.

During the quarter, a larger proportion (83 per cent) of the gross allocation of PIL went to manufacturing related and supporting sector. The main segment contributing to the PIL termination was the construction industry, which accounted for 65 per cent of termination.

JTC also said that Fusionopolis phase 2A is currently under construction and is expected to be completed by 2014. The project will have a gross floor area of 103,630 sq m.



Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.

Wheelock reports 59.1% fall in Q3 earnings

(Abstract from Business Times 14th Nov, 2009 by Kalpana Rashiwala)

WHEELOCK Properties (Singapore) posted a 59.1 per cent year-on-year fall in third-quarter net earnings to $54.26 million. Revenue slipped 42 per cent to $133.1 million for the quarter ended Sept 30, 2009.

For the first nine months, net earnings decreased 43.6 per cent from 9M 2008 to almost $93 million. Revenue was 22.4 per cent lower at $296.5 million.

The group attributed lower revenue for Q3 and 9M 2009 chiefly to lower revenue recognition from Scotts Square based on the progress of construction works.

As well, the completion of The Sea View and The Cosmopolitan condos in Q2 and Q3 last year resulted in lower revenue in the latest period.

However, this was partly offset by higher revenue booked from Ardmore II based on the progress of construction works and revenue recognised from Orchard View, on which profit recognition began in Q3.

Wheelock had $337.4 million of investments in its balance sheet at Sept 30, 2009, an increase of $195 million from the figure at Dec 31, 2008.

The increase was due chiefly to a rise in market value of the group's investments in listed Hotel Properties Ltd (HPL) and SC Global Developments.

An impairment loss of $23 million was charged to the income statement in the first quarter ended March 31, 2009. And a subsequent increase in market value of $218 million from April 1 to Sept 30, 2009, was credited to the fair-value reserve under Financial Reporting Standard 39. As a result, shareholders' equity rose to $2.3 billion at end-September 2009, from $2.1 billion at end-2008.

The group's borrowings fell from $392 million at end-2008 to $232 million at end-September 2009 - largely due to repayment of an unsecured loan and part pre-payment of a secured loan from sales proceeds in the current financial period. The debt- to-equity ratio decreased from 19.1 per cent to 10.1 per cent over the same period.

Wheelock said return on shareholders' equity for 9M 2009 was 4.1 per cent, down from 7.5 per cent a year back.

Cash and cash equivalents fell from $756.7 million at end-2008 to $732.98 million at end-September 2009 - due to repayment of loans and dividend payouts. However, the group said it expects to strengthen its cash position with the completion of Ardmore II, which is fully sold, in the first half of 2010. 'We are in good stead to confidently pursue all good investments and development opportunities,' it said.

Wheelock's net asset value per share rose from $1.72 at end-2008 to $1.92 at end-September 2009. On the stock market yesterday, the counter closed a cent higher at $1.74.

Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved

Pre-development Land Investing

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