Business Times - 29 Apr 2010
High demand for US home loans but refinancing falls
(NEW YORK) US mortgage applications fell last week as a drop in home refinancing volume outweighed the highest demand for home purchase loans in six months, data from an industry group showed yesterday.
A modest rise in mortgage rates weighed on demand for home refinancing loans, while the imminent expiration of federal home buyer tax credits likely drove consumers to lock in rates, which remain historically low and are widely expected to move higher as the economy recovers.
The Mortgage Bankers Association said that its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, decreased 2.9 per cent for the week ended April 23.
The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was down 3.1 per cent.
The MBA's seasonally adjusted purchase index, a tentative early indicator of home sales, increased 7.4 per cent, reaching its highest level since the week ended Oct 16.
'Purchase activity continues to increase as we approach the end of the homebuyer tax credit programme,' Michael Fratantoni, MBA's vice-president of research and economics, said in a statement.
'Purchase applications were up almost 9 per cent from a month ago, with a disproportionate share of the increase due to government purchase applications. Government applications for purchasing a home accounted for almost 49 per cent of all purchase applications last week,' he said.
To qualify for tax credits of US$8,000 for first-time home buyers and US$6,500 for home owners buying a new residence, eligible borrowers must sign contracts by April 30 and close loans by June 30.
Recent data on sales of new and existing home sales indicate a strong benefit from the tax credits. Government data showed sales of newly built US single-family homes touched their highest level in eight months in March, while industry data showed sales of previously owned homes also gained in March.
James Mallozzi, chairman and chief executive officer of Prudential Real Estate and Relocation Services, said that while home buyer tax credits have helped both first-time home buyers and the US housing market overall, their expiration should not deter home purchasing activity.
'When it comes to home sales, the absolute level of home prices ranks first in importance, the level of mortgage rates ranks second, while the home buyer tax credits ranks a distant third,' he said.
The MBA said that borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.08 per cent, up 0.04 percentage point from the previous week. Interest rates were also above the year-ago level of 4.62 per cent. An all-time low of 4.61 per cent was set in the week ended March 27, 2009, based on a survey that dates to 1990.
Mortgage rates could head towards 5.50 per cent or 6 per cent later this year, Mr Mallozzi said.
'This could dampen demand and I foresee a slow housing recovery,' he said.
The MBA said that fixed 15-year mortgage rates averaged 4.38 per cent, up from 4.34 per cent the previous week. Rates on one-year adjustable-rate mortgages, or ARMs, increased to 7.03 per cent from 6.95 per cent\. \-- Reuters
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Thursday, April 29, 2010
BT : Sitting on a pot of 'collective' gold
Business Times - 29 Apr 2010
Sitting on a pot of 'collective' gold
Developers who snagged en bloc sites earlier have reason to smile
By KALPANA RASHIWALA
(SINGAPORE) While the market mulls over the impact that rule changes will have on collective sales, the spotlight has fallen on developers sitting on prime sites acquired during the previous en bloc boom in 2006-2007.
If the proposed changes make it tougher for prime freehold residential sites to make their way to the market, that will be good news to developers who are already holding such sites acquired earlier.
A compilation by property consultant CB Richard Ellis shows that developers currently have 26 sites in prime districts 9, 10 and 11 snapped up in collective sales in 2006 and 2007 where new projects are still to be launched.
These sites are planned for redevelopment into nearly 4,300 new homes. Outside the prime districts, developers could build a further 4,700 homes on 16 sites purchased through collective sales in 2006-2007
CapitaLand, City Developments Ltd (CDL), Wing Tai, GuocoLand and Overseas Union Enterprise are among the developers who bought prime district en bloc sale plots earlier. For instance, CapitaLand, together with its partners, acquired the Farrer Court plot and is planning a 1,715-unit redevelopment project. Hong Leong Group (including CDL) has exposure to six sites slated for development into over 600 units in locations like Leonie Hill, Anderson and Thomson roads.
These sites and projects will become more precious to developers and they will want to time their launch more judiciously if it gets tougher to replenish landbank in this segment through en bloc sales, say industry observers.
CB Richard Ellis executive director Jeremy Lake says: 'The proposed amendments are unlikely to facilitate the en bloc process significantly and as such, the number of collective sales coming to the market is likely to remain relatively limited.
'From a developer's point of view, it will be more difficult to replace landbank in prime areas so those who have such sites may think more carefully about the timing of launch of new projects on these sites as it will not be easy to find replacement land.'
Giving a more pessimistic take, a developer said: 'I don't think anyone would be too far wrong to say that en bloc sales are just about the only source of supply for prime district freehold sites. The proposed amendments to the Land Titles (Strata) Act will put the 'last nail in the coffin' for en bloc sales in the near future, and the market will be completely dried up for freehold District 9, 10, 11 land supply.'
This will create upward pressure on land prices, he added.
Putting things in perspective, DTZ senior director (investment sales) Shaun Poh says: 'En bloc sales in many developments have already been activated and these are unlikely to be affected by the proposed amendments. The supply from this source should be enough for the market for the time being.
'However, the future pipeline of en bloc sales will be affected.'
On Monday, the Ministry of Law released proposed amendments that will among other things make it harder to restart a collective sale within two years of a failed attempt. Any attempts to convene EGMs to appoint a sales committee during this period will require higher requisition levels from owners - 50 per cent by share value or total number of owners for the first re-try and 80 per cent for any subsequent attempts.
'Already it's not easy to secure requisitions for EGMs based on existing thresholds of 20 per cent by share value or 25 per cent of number of owners,' says DTZ's Mr Poh.
'Now that they're proposing to raise the threshold for restarting previously failed en bloc attempts, it's going to be more difficult for those who want to have another shot when, say, the market suddenly turns hot.'
On a more positive note, Credo Real Estate managing director Karamjit Singh notes that the instances of failed attempts that will be affected by the two-year restriction do not cover cases where owners' 80 or 90 per cent majority consent was secured but the Collective Sales Agreement (CSA) expired because a buyer could not be found in time.
'The projects that may be affected are likely to be those that had attempted an en bloc sale when they should not have, either owing to the project not being fundamentally 'enblocable' or the market was not on their side to an extent that the majority owners rejected the proposal,' he said.
MinLaw hopes its proposal will discourage repeated attempts at en bloc sales where there isn't enough support from owners.
Industry players lauded MinLaw's proposal to streamline the number of EGMs, which should speed up the process. 'We expect to see further en-bloc activity this year,' said Chris Fossick, managing director Singapore and South East Asia for Jones Lang LaSalle.
Others, however, complain that the the ministry is not doing anything to mitigate bottlenecks caused by the need to have lawyers witness signing of the CSA.
This has also jacked up legal costs. Some have suggested doing away with this requirement since those who sign are given a five-day cooling-off period.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Hot asset: Developers of prime sites like Farrer Court (above) will time their project launches more carefully
Sitting on a pot of 'collective' gold
Developers who snagged en bloc sites earlier have reason to smile
By KALPANA RASHIWALA
(SINGAPORE) While the market mulls over the impact that rule changes will have on collective sales, the spotlight has fallen on developers sitting on prime sites acquired during the previous en bloc boom in 2006-2007.
If the proposed changes make it tougher for prime freehold residential sites to make their way to the market, that will be good news to developers who are already holding such sites acquired earlier.
A compilation by property consultant CB Richard Ellis shows that developers currently have 26 sites in prime districts 9, 10 and 11 snapped up in collective sales in 2006 and 2007 where new projects are still to be launched.
These sites are planned for redevelopment into nearly 4,300 new homes. Outside the prime districts, developers could build a further 4,700 homes on 16 sites purchased through collective sales in 2006-2007
CapitaLand, City Developments Ltd (CDL), Wing Tai, GuocoLand and Overseas Union Enterprise are among the developers who bought prime district en bloc sale plots earlier. For instance, CapitaLand, together with its partners, acquired the Farrer Court plot and is planning a 1,715-unit redevelopment project. Hong Leong Group (including CDL) has exposure to six sites slated for development into over 600 units in locations like Leonie Hill, Anderson and Thomson roads.
These sites and projects will become more precious to developers and they will want to time their launch more judiciously if it gets tougher to replenish landbank in this segment through en bloc sales, say industry observers.
CB Richard Ellis executive director Jeremy Lake says: 'The proposed amendments are unlikely to facilitate the en bloc process significantly and as such, the number of collective sales coming to the market is likely to remain relatively limited.
'From a developer's point of view, it will be more difficult to replace landbank in prime areas so those who have such sites may think more carefully about the timing of launch of new projects on these sites as it will not be easy to find replacement land.'
Giving a more pessimistic take, a developer said: 'I don't think anyone would be too far wrong to say that en bloc sales are just about the only source of supply for prime district freehold sites. The proposed amendments to the Land Titles (Strata) Act will put the 'last nail in the coffin' for en bloc sales in the near future, and the market will be completely dried up for freehold District 9, 10, 11 land supply.'
This will create upward pressure on land prices, he added.
Putting things in perspective, DTZ senior director (investment sales) Shaun Poh says: 'En bloc sales in many developments have already been activated and these are unlikely to be affected by the proposed amendments. The supply from this source should be enough for the market for the time being.
'However, the future pipeline of en bloc sales will be affected.'
On Monday, the Ministry of Law released proposed amendments that will among other things make it harder to restart a collective sale within two years of a failed attempt. Any attempts to convene EGMs to appoint a sales committee during this period will require higher requisition levels from owners - 50 per cent by share value or total number of owners for the first re-try and 80 per cent for any subsequent attempts.
'Already it's not easy to secure requisitions for EGMs based on existing thresholds of 20 per cent by share value or 25 per cent of number of owners,' says DTZ's Mr Poh.
'Now that they're proposing to raise the threshold for restarting previously failed en bloc attempts, it's going to be more difficult for those who want to have another shot when, say, the market suddenly turns hot.'
On a more positive note, Credo Real Estate managing director Karamjit Singh notes that the instances of failed attempts that will be affected by the two-year restriction do not cover cases where owners' 80 or 90 per cent majority consent was secured but the Collective Sales Agreement (CSA) expired because a buyer could not be found in time.
'The projects that may be affected are likely to be those that had attempted an en bloc sale when they should not have, either owing to the project not being fundamentally 'enblocable' or the market was not on their side to an extent that the majority owners rejected the proposal,' he said.
MinLaw hopes its proposal will discourage repeated attempts at en bloc sales where there isn't enough support from owners.
Industry players lauded MinLaw's proposal to streamline the number of EGMs, which should speed up the process. 'We expect to see further en-bloc activity this year,' said Chris Fossick, managing director Singapore and South East Asia for Jones Lang LaSalle.
Others, however, complain that the the ministry is not doing anything to mitigate bottlenecks caused by the need to have lawyers witness signing of the CSA.
This has also jacked up legal costs. Some have suggested doing away with this requirement since those who sign are given a five-day cooling-off period.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Hot asset: Developers of prime sites like Farrer Court (above) will time their project launches more carefully
TODAY ONLINE : Office market is 'bottoming out'
Office market is 'bottoming out'
Raffles Place not losing lustre yet, says CCT's CEO
05:55 AM Apr 29, 2010
SINGAPORE - Raffles Place is not likely to lose its lustre as a business district, said Ms Lynette Leong, chief executive officer of CapitaCommercial Trust (CCT), which has three office properties in the area.
Despite some financial institutions moving to Marina Bay, she is seeing interest from existing tenants and potential tenants for more office space in the Trust's Raffles Place properties, which include One George Street, HSBC Building and Six Battery Road.
"We believe the enlargement of the Central Business District by the extension of its boundaries ... to encompass Marina Bay is well planned to meet this anticipated growing office demand," said Ms Leong.
CCT, which held its AGM yesterday, assured the 230-odd unitholders present that the office market is bottoming out and CCT intends to ride the upside of the recovery through its "well-located properties and financial flexibility".
"If the property has reached an optimal stage of its life cycle, then we will divest the asset and reinvest the sale proceeds into assets which have got better potential for upside," said Ms Leong of CCT's portfolio reconstitution strategy.
Under this strategy, CCT recently sold one of its assets, Robinson Point, to a private fund run by AEW Asia for $203.25 million.
Besides its properties in Raffles Place, CCT also counts Wilkie Edge, Bugis Village, Starhub Centre, Raffles City, Golden Shoe Car Park, Market Street Car Park and Capital Tower in its Singapore portfolio.
However, Ms Leong said with 4.5 million sq ft of office space coming on stream in the next two years, there was uncertainty clouding the recovery of office rentals.
CCT also told unitholders that as of the end of last month, the trust had tenants committed to renew close to 8 per cent of the leases due, leaving a balance of about 16 per cent of leases unrenewed. Distribution per unit for Q1 rose to 1.93 cents per unit from 1.62 cents in the corresponding period last year.
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
Raffles Place not losing lustre yet, says CCT's CEO
05:55 AM Apr 29, 2010
SINGAPORE - Raffles Place is not likely to lose its lustre as a business district, said Ms Lynette Leong, chief executive officer of CapitaCommercial Trust (CCT), which has three office properties in the area.
Despite some financial institutions moving to Marina Bay, she is seeing interest from existing tenants and potential tenants for more office space in the Trust's Raffles Place properties, which include One George Street, HSBC Building and Six Battery Road.
"We believe the enlargement of the Central Business District by the extension of its boundaries ... to encompass Marina Bay is well planned to meet this anticipated growing office demand," said Ms Leong.
CCT, which held its AGM yesterday, assured the 230-odd unitholders present that the office market is bottoming out and CCT intends to ride the upside of the recovery through its "well-located properties and financial flexibility".
"If the property has reached an optimal stage of its life cycle, then we will divest the asset and reinvest the sale proceeds into assets which have got better potential for upside," said Ms Leong of CCT's portfolio reconstitution strategy.
Under this strategy, CCT recently sold one of its assets, Robinson Point, to a private fund run by AEW Asia for $203.25 million.
Besides its properties in Raffles Place, CCT also counts Wilkie Edge, Bugis Village, Starhub Centre, Raffles City, Golden Shoe Car Park, Market Street Car Park and Capital Tower in its Singapore portfolio.
However, Ms Leong said with 4.5 million sq ft of office space coming on stream in the next two years, there was uncertainty clouding the recovery of office rentals.
CCT also told unitholders that as of the end of last month, the trust had tenants committed to renew close to 8 per cent of the leases due, leaving a balance of about 16 per cent of leases unrenewed. Distribution per unit for Q1 rose to 1.93 cents per unit from 1.62 cents in the corresponding period last year.
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
TODAY ONLINE: Two prime freehold commercial sites up for public tender
Two prime freehold commercial sites up for public tender
05:55 AM Apr 29, 2010
SINGAPORE - The red-hot property market has prompted the sale of two prime freehold commercial buildings.
One is a four-storey building at 23 and 25 Kampong Bahru Road, opposite the Singapore General Hospital. The price is $16 million, or $1,421 per square foot of gross floor area. The site area is about 3,402 sq ft, with a total strata area of some 11,259 sq ft.
The boutique building has been set aside for commercial use, but the vendor is seeking approval to convert it to hotel use.
Another building up for sale is another four-storey building at 213 Upper Thomson Road. It is set amid an established, affluent private residential enclave near the Singapore Island Country Club.
The asking price for the building is $5.5 million, which works out to $823 per square foot of gross floor area. This building has a site area of approximately 2,446 sq ft and a gross floor area of about 6,679 sq ft.
The proposed developments for the property are corporate offices, showroom space and F&B businesses.
CB Richard Ellis is the marketing agent for this public tender, which closes on May 20. Ephraim Seow
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
05:55 AM Apr 29, 2010
SINGAPORE - The red-hot property market has prompted the sale of two prime freehold commercial buildings.
One is a four-storey building at 23 and 25 Kampong Bahru Road, opposite the Singapore General Hospital. The price is $16 million, or $1,421 per square foot of gross floor area. The site area is about 3,402 sq ft, with a total strata area of some 11,259 sq ft.
The boutique building has been set aside for commercial use, but the vendor is seeking approval to convert it to hotel use.
Another building up for sale is another four-storey building at 213 Upper Thomson Road. It is set amid an established, affluent private residential enclave near the Singapore Island Country Club.
The asking price for the building is $5.5 million, which works out to $823 per square foot of gross floor area. This building has a site area of approximately 2,446 sq ft and a gross floor area of about 6,679 sq ft.
The proposed developments for the property are corporate offices, showroom space and F&B businesses.
CB Richard Ellis is the marketing agent for this public tender, which closes on May 20. Ephraim Seow
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
ST : Bid too high, so Beijing cancels land auction
Apr 29, 2010
Bid too high, so Beijing cancels land auction
BEIJING: A land auction in Beijing was cancelled after bidding exceeded a price ceiling set for the lot, as the Chinese government expands efforts to rein in the nation's property market.
The highest price bid for the Beijing lot, zoned for residential development, at the auction on Monday was 4,718 yuan (S$950) per sq m, exceeding the 4,700 yuan per sq m limit set by the government, the Ministry of Land and Resources said on its website yesterday.
The ministry's Beijing branch said it began setting limits on the price of land this month on a trial basis.
'Imagine a seller refuses your business because he thinks you are paying too much for his products,' Bank of America-Merrill Lynch analysts wrote in a report distributed yesterday.
'It demonstrates the type of pressure the central government is putting on local officials to get the property market right this time; this increases the risk of potential overshooting in the property market crackdown.'
China began requiring developers to pay higher deposits for land purchases last month, and banned banks from lending to developers found to be hoarding land, as Premier Wen Jiabao pledged to crack down on real estate speculation and keep housing affordable.
Property prices in 70 Chinese cities gained a record 11.7 per cent last month compared with prices a year earlier.
The average price of land in 105 Chinese cities rose 8.1 per cent in the first quarter from the price a year earlier, to 2,700 yuan per sq m.
The ministry's Beijing branch this month began limiting how much land developers may buy.
Videos will also be taken of land auctions, notary personnel will observe the bidding, and contracts between Beijing's land bureau and developers for purchases of lots will be made public, according to the statement.
China's property stocks have plunged 20 per cent this year, making them the worst performers among
major industry groups after Beijing began clamping down on the property market.
China will place a moratorium on capital raising by real estate firms as part of a broader campaign to rein in property price rises, state media reported yesterday.
The move could stand in the way of about 110 billion yuan in share issues planned by 45 companies, unnamed sources close to the China Securities Regulatory Commission told the China Daily.
The suspension will allow the Ministry of Land and Resources to examine whether companies have used illegal methods to manipulate market prices, the newspaper said.
BLOOMBERG, REUTERS
Bid too high, so Beijing cancels land auction
BEIJING: A land auction in Beijing was cancelled after bidding exceeded a price ceiling set for the lot, as the Chinese government expands efforts to rein in the nation's property market.
The highest price bid for the Beijing lot, zoned for residential development, at the auction on Monday was 4,718 yuan (S$950) per sq m, exceeding the 4,700 yuan per sq m limit set by the government, the Ministry of Land and Resources said on its website yesterday.
The ministry's Beijing branch said it began setting limits on the price of land this month on a trial basis.
'Imagine a seller refuses your business because he thinks you are paying too much for his products,' Bank of America-Merrill Lynch analysts wrote in a report distributed yesterday.
'It demonstrates the type of pressure the central government is putting on local officials to get the property market right this time; this increases the risk of potential overshooting in the property market crackdown.'
China began requiring developers to pay higher deposits for land purchases last month, and banned banks from lending to developers found to be hoarding land, as Premier Wen Jiabao pledged to crack down on real estate speculation and keep housing affordable.
Property prices in 70 Chinese cities gained a record 11.7 per cent last month compared with prices a year earlier.
The average price of land in 105 Chinese cities rose 8.1 per cent in the first quarter from the price a year earlier, to 2,700 yuan per sq m.
The ministry's Beijing branch this month began limiting how much land developers may buy.
Videos will also be taken of land auctions, notary personnel will observe the bidding, and contracts between Beijing's land bureau and developers for purchases of lots will be made public, according to the statement.
China's property stocks have plunged 20 per cent this year, making them the worst performers among
major industry groups after Beijing began clamping down on the property market.
China will place a moratorium on capital raising by real estate firms as part of a broader campaign to rein in property price rises, state media reported yesterday.
The move could stand in the way of about 110 billion yuan in share issues planned by 45 companies, unnamed sources close to the China Securities Regulatory Commission told the China Daily.
The suspension will allow the Ministry of Land and Resources to examine whether companies have used illegal methods to manipulate market prices, the newspaper said.
BLOOMBERG, REUTERS
BT : Beijing land sale scrapped as bid tops set ceiling
Business Times - 29 Apr 2010
Beijing land sale scrapped as bid tops set ceiling
(SHANGHAI) An auction of land in Beijing was cancelled after bidding exceeded a price ceiling set for the lot as the Chinese government expands efforts to rein in the nation's property market.
The highest price bid for the Beijing lot, zoned for residential development, at the auction on Monday was 4,718 yuan (S$945) per square metre, exceeding the 4,700 yuan per square metre limit set by the government, the Ministry of Land and Resources said on its website yesterday.
The ministry's Beijing branch said it began setting limits on the price of land this month on a trial basis.
'Imagine a seller refuses your business because he thinks you are paying too much for his products?' Bank of America-Merrill Lynch analysts led by David Cui wrote in a report distributed yesterday. 'It demonstrates the type of pressure the central government is putting on local officials to get the property market right this time; this increases the risk of potential overshooting in the property market crackdown.'
China began requiring developers pay higher deposits for land purchases last month and banned banks from lending to developers found to be hoarding land as Premier Wen Jiabao pledged to crack down on real-estate speculation and keep housing affordable. Property prices in 70 Chinese cities gained a record 11.7 per cent in March from a year earlier.
The Beijing branch of the land ministry this month began limiting how much land developers may buy, according to a statement posted to its website on April 21. Video will also be taken of land auctions, notary personnel will observe the bidding, and contracts between Beijing's land bureau and developers for purchases of lots will be made public, according to the statement.
Separately, the land ministry's Shanghai bureau said on Tuesday it had postponed the auctioning of four land plots previously scheduled for yesterday to May 7, citing a 'technical hitch.' The average price of land in 105 Chinese cities rose 8.1 per cent in the first quarter from a year earlier to 2,700 yuan per square metre, Minister of Land and Resources Xu Shaoshi said last week.
China's property stocks have plunged 20 per cent this year, making them the worst performers among major industry groups. China Vanke, the nation's biggest publicly traded developer, has fallen 28 per cent this year compared with a 12 per cent drop in the benchmark Shanghai Composite Index.
Regulators have halted share sales by property developers to give the Ministry of Land and Resources the chance to investigate if companies manipulated market prices, the China Daily reported yesterday, citing an unidentified source close to the China Securities Regulatory Commission.
Beijing will be issuing policies limiting how many homes residents of the city are allowed to buy, the Shanghai Securities News reported yesterday. The city will also 'basically' stop loans for the purchase of third homes. - Bloomberg
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Beijing land sale scrapped as bid tops set ceiling
(SHANGHAI) An auction of land in Beijing was cancelled after bidding exceeded a price ceiling set for the lot as the Chinese government expands efforts to rein in the nation's property market.
The highest price bid for the Beijing lot, zoned for residential development, at the auction on Monday was 4,718 yuan (S$945) per square metre, exceeding the 4,700 yuan per square metre limit set by the government, the Ministry of Land and Resources said on its website yesterday.
The ministry's Beijing branch said it began setting limits on the price of land this month on a trial basis.
'Imagine a seller refuses your business because he thinks you are paying too much for his products?' Bank of America-Merrill Lynch analysts led by David Cui wrote in a report distributed yesterday. 'It demonstrates the type of pressure the central government is putting on local officials to get the property market right this time; this increases the risk of potential overshooting in the property market crackdown.'
China began requiring developers pay higher deposits for land purchases last month and banned banks from lending to developers found to be hoarding land as Premier Wen Jiabao pledged to crack down on real-estate speculation and keep housing affordable. Property prices in 70 Chinese cities gained a record 11.7 per cent in March from a year earlier.
The Beijing branch of the land ministry this month began limiting how much land developers may buy, according to a statement posted to its website on April 21. Video will also be taken of land auctions, notary personnel will observe the bidding, and contracts between Beijing's land bureau and developers for purchases of lots will be made public, according to the statement.
Separately, the land ministry's Shanghai bureau said on Tuesday it had postponed the auctioning of four land plots previously scheduled for yesterday to May 7, citing a 'technical hitch.' The average price of land in 105 Chinese cities rose 8.1 per cent in the first quarter from a year earlier to 2,700 yuan per square metre, Minister of Land and Resources Xu Shaoshi said last week.
China's property stocks have plunged 20 per cent this year, making them the worst performers among major industry groups. China Vanke, the nation's biggest publicly traded developer, has fallen 28 per cent this year compared with a 12 per cent drop in the benchmark Shanghai Composite Index.
Regulators have halted share sales by property developers to give the Ministry of Land and Resources the chance to investigate if companies manipulated market prices, the China Daily reported yesterday, citing an unidentified source close to the China Securities Regulatory Commission.
Beijing will be issuing policies limiting how many homes residents of the city are allowed to buy, the Shanghai Securities News reported yesterday. The city will also 'basically' stop loans for the purchase of third homes. - Bloomberg
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Non-central home prices outpace prime areas
Business Times - 29 Apr 2010
Non-central home prices outpace prime areas
NUS index shows they climbed 1.2% in March while central region home prices dipped
By UMA SHANKARI
(SINGAPORE) Prices of non-landed private homes outside Singapore's prime districts are now growing at a faster rate than prices in the prime districts, according to a new index compiled by the National University of Singapore (NUS).
Flash estimates for March released yesterday show that 'non-central' home prices climbed 1.2 per cent last month, taking the first-quarter rise to 4.4 per cent.
In contrast, prices in the central region - postal districts 1-4 and 9-11 - dipped 0.07 per cent in March. For Q1, they rose 1.7 per cent.
NUS's Singapore Residential Price Index also shows that overall home prices rose 0.3 per cent last month and 2.8 per cent in Q1.
This puts the overall current value of the index just 0.1 per cent below the peak in November 2007. Prices in the central region are now 9.3 per cent below that peak, while prices in non-central areas are 6.4 per cent above the previous peak in January 2008.
'The rate of price growth in the central area has slowed, but for the non-central region, we have not seen an obvious decline in the rate of growth yet,' said Associate Professor Lum Sau Kim, who leads the group that compiles the index.
In 2009, price growth in the central region outpaced that in non-central areas. Home prices grew 27.3 per cent in the central region and 19.5 per cent in non-central areas. The overall index rose 22.2 per cent.
Analysts say that the moderation in the growth of prices - seen in both the NUS index and official Urban Redevelopment Authority index - is a sign that government measures to cool the market, implemented in September 2009 and February 2010, have reined in runaway price increases.
Official data released by URA last week showed that prices of non-landed properties increased 4.9 per cent in Q1, down from 7.2 per cent in the preceding quarter.
URA's index also showed that prices in the 'core central region', which roughly correlates to the central region classification used by the NUS index, rose 4.4 per cent in Q1 - faster than home prices in the 'outside central region', which rose 4.3 per cent.
URA's index showed that prices in the mid-level 'rest of central region' rose 7.9 per cent in Q1.
The numbers from URA and NUS differ because the two indices use different methods to track prices.
NUS's index, which is compiled by the Institute of Real Estate Studies, was launched in March to serve as a resource for developing property derivatives in Singapore.
It is computed using the market values of a basket of completed properties. Uncompleted projects are not included in the basket as price movements for such projects can be different from those in the rest of the market.
But the impact of new launches on the prices of completed properties in the vicinity is factored in.
The URA index, on the other hand, includes transactions at new launches and sub-sales. The differences mean that the two indices can throw up different numbers, market watchers have said.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Slowing down: Analysts say that the moderation in the growth of prices is a sign that government measures to cool the market have reined in runaway price increases
Non-central home prices outpace prime areas
NUS index shows they climbed 1.2% in March while central region home prices dipped
By UMA SHANKARI
(SINGAPORE) Prices of non-landed private homes outside Singapore's prime districts are now growing at a faster rate than prices in the prime districts, according to a new index compiled by the National University of Singapore (NUS).
Flash estimates for March released yesterday show that 'non-central' home prices climbed 1.2 per cent last month, taking the first-quarter rise to 4.4 per cent.
In contrast, prices in the central region - postal districts 1-4 and 9-11 - dipped 0.07 per cent in March. For Q1, they rose 1.7 per cent.
NUS's Singapore Residential Price Index also shows that overall home prices rose 0.3 per cent last month and 2.8 per cent in Q1.
This puts the overall current value of the index just 0.1 per cent below the peak in November 2007. Prices in the central region are now 9.3 per cent below that peak, while prices in non-central areas are 6.4 per cent above the previous peak in January 2008.
'The rate of price growth in the central area has slowed, but for the non-central region, we have not seen an obvious decline in the rate of growth yet,' said Associate Professor Lum Sau Kim, who leads the group that compiles the index.
In 2009, price growth in the central region outpaced that in non-central areas. Home prices grew 27.3 per cent in the central region and 19.5 per cent in non-central areas. The overall index rose 22.2 per cent.
Analysts say that the moderation in the growth of prices - seen in both the NUS index and official Urban Redevelopment Authority index - is a sign that government measures to cool the market, implemented in September 2009 and February 2010, have reined in runaway price increases.
Official data released by URA last week showed that prices of non-landed properties increased 4.9 per cent in Q1, down from 7.2 per cent in the preceding quarter.
URA's index also showed that prices in the 'core central region', which roughly correlates to the central region classification used by the NUS index, rose 4.4 per cent in Q1 - faster than home prices in the 'outside central region', which rose 4.3 per cent.
URA's index showed that prices in the mid-level 'rest of central region' rose 7.9 per cent in Q1.
The numbers from URA and NUS differ because the two indices use different methods to track prices.
NUS's index, which is compiled by the Institute of Real Estate Studies, was launched in March to serve as a resource for developing property derivatives in Singapore.
It is computed using the market values of a basket of completed properties. Uncompleted projects are not included in the basket as price movements for such projects can be different from those in the rest of the market.
But the impact of new launches on the prices of completed properties in the vicinity is factored in.
The URA index, on the other hand, includes transactions at new launches and sub-sales. The differences mean that the two indices can throw up different numbers, market watchers have said.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Slowing down: Analysts say that the moderation in the growth of prices is a sign that government measures to cool the market have reined in runaway price increases
BT : China suspends capital raising by property firms
Business Times - 29 Apr 2010
China suspends capital raising by property firms
Moratorium may block 110b yuan in share issues planned by 45 companies
(BEIJING) China will place a moratorium on capital raising by real estate firms as part of a broader campaign to rein in property price rises, state media reported yesterday.
The move could stand in the way of about 110 billion yuan (S$22 billion) in share issues planned by 45 companies, unnamed sources close to the China Securities Regulatory Commission told the China Daily.
The suspension will allow the authorities to examine whether companies have used illegal methods to manipulate market prices, the newspaper said.
Beijing, wary about the risks of an asset bubble, has been trying to cool the real estate market, raising mortgage rates and down payment requirements for second homes and pushing local governments to control speculative buying.
Those steps complement general efforts to prevent the economy from overheating as it fully regained its momentum with the help of booming credit and grew nearly 11.9 per cent in the first quarter from a year earlier, the fastest since 2007.
China's banking regulator has also issued new guidelines to make it harder for property developers to obtain funding from trust companies, the 21st Century Business Herald quoted an unnamed executive at a trust company as saying.
Real estate firms seeking loans from trust firms must meet the minimum capital requirement and provide proof of their qualifications for developing a project, the newspaper said.
This would represent a clarification and tightening of rules governing the financing relationship between trust firms and property developers. Real estate firms have been turning to trust companies because they have looser capital requirements than banks.
Share prices of Chinese property firms have tumbled over the past week, dragging down the main stock index in Shanghai to its lowest level in more than half a year.
But the formation of a property bubble in China has become one of the major risks to sustainable economic growth, the Development Research Centre, a think-tank under the State Council, said yesterday.
In its report, published in the China Economic Times, it said that steps taken in recent months by the government had not yet succeeded in tamping down on surging property prices.
'If the controls are not forceful, with our country's growth and development clearly outstripping that of other countries, hot money inflows will quicken and excessive domestic liquidity will increase, progressively inflating asset bubbles,' it said. -- Reuters
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Towering prices: Beijing, wary about the risks of an asset bubble, has been trying to cool the real estate market, raising mortgage rates and down payment requirements for second homes and pushing local governments to control speculative buying
China suspends capital raising by property firms
Moratorium may block 110b yuan in share issues planned by 45 companies
(BEIJING) China will place a moratorium on capital raising by real estate firms as part of a broader campaign to rein in property price rises, state media reported yesterday.
The move could stand in the way of about 110 billion yuan (S$22 billion) in share issues planned by 45 companies, unnamed sources close to the China Securities Regulatory Commission told the China Daily.
The suspension will allow the authorities to examine whether companies have used illegal methods to manipulate market prices, the newspaper said.
Beijing, wary about the risks of an asset bubble, has been trying to cool the real estate market, raising mortgage rates and down payment requirements for second homes and pushing local governments to control speculative buying.
Those steps complement general efforts to prevent the economy from overheating as it fully regained its momentum with the help of booming credit and grew nearly 11.9 per cent in the first quarter from a year earlier, the fastest since 2007.
China's banking regulator has also issued new guidelines to make it harder for property developers to obtain funding from trust companies, the 21st Century Business Herald quoted an unnamed executive at a trust company as saying.
Real estate firms seeking loans from trust firms must meet the minimum capital requirement and provide proof of their qualifications for developing a project, the newspaper said.
This would represent a clarification and tightening of rules governing the financing relationship between trust firms and property developers. Real estate firms have been turning to trust companies because they have looser capital requirements than banks.
Share prices of Chinese property firms have tumbled over the past week, dragging down the main stock index in Shanghai to its lowest level in more than half a year.
But the formation of a property bubble in China has become one of the major risks to sustainable economic growth, the Development Research Centre, a think-tank under the State Council, said yesterday.
In its report, published in the China Economic Times, it said that steps taken in recent months by the government had not yet succeeded in tamping down on surging property prices.
'If the controls are not forceful, with our country's growth and development clearly outstripping that of other countries, hot money inflows will quicken and excessive domestic liquidity will increase, progressively inflating asset bubbles,' it said. -- Reuters
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Towering prices: Beijing, wary about the risks of an asset bubble, has been trying to cool the real estate market, raising mortgage rates and down payment requirements for second homes and pushing local governments to control speculative buying
BT : Sands eyes US$12 billion from sale of Macau assets
Business Times - 29 Apr 2010
Sands eyes US$12 billion from sale of Macau assets
CEO raises Marina Bay Sands forecast, investment to be recouped in 5 years
(SINGAPORE) Las Vegas Sands Corp chairman Sheldon Adelson said that the planned sale of the casino operator's Macau malls and apartments may raise as much as US$12 billion and recoup their construction costs.
'It will be like US$12 billion if we add up all the apartments and all the retail in
Macau,' including those in buildings still under construction, Mr Adelson, the founder and chief executive officer of Las Vegas Sands, said in an interview in Singapore on Tuesday. The company may start selling the Macau assets within 21/2 years, he said.
Sands, which Adelson describes as 'an Asian company with a presence in Las Vegas and the US', gets 73 per cent of its revenue from Macau, the world's largest gambling market. He was in Singapore on Tuesday to open the first phase of Marina Bay Sands, and raised his earnings forecast for the resort, saying that the US$5.5 billion invested in it will be recouped in five years.
Sands' casino resort on Tuesday opened 963 of its 2,560 hotel rooms, the casino, the meeting and convention facilities, parts of its shopping mall and some restaurants. A grand opening party will be held on June 23 when the second phase is unveiled, including a sky park, additional shops and more restaurants.
Asia will contribute 85 per cent of revenue once the Singapore casino 'ramps up', said Mr Adelson. Last year's sales totalled US$4.56 billion, with 27 per cent coming from Las Vegas, where the company is based.
Macau assets that Sands may sell include the Four Seasons apartments and shopping areas in the Venetian Macau casino resort and in the Four Seasons hotel, Mr Adelson said. The plan also includes selling condominiums at the St Regis, where construction is resuming.
'That is our fundamental business model - we get our money back from the sale of non-core business assets,' he said.
Still, Jonathan Galaviz, an independent strategist who follows travel and leisure in Asia, said that apartments and malls in Macau may be a tough sell to investors, given that the city isn't a proven place for housing investment, and that a huge asset bubble may be developing in Asian real estate.
'Second-home buyers in Asia tend to have an affinity for beach and costal destinations, so Macau's proposition will need to be unique in order to compete,' Mr Galaviz said in an e-mail. As for malls, 'the average length of stay for Macau's average tourist - around one night - doesn't yet lend itself to a strong and dynamic retail opportunity'.
Sands fell US$1.51, or 5.8 per cent, to close at US$24.69 on the New York Stock Exchange composite trading on Tuesday. The stock has gained 65 per cent this year.
Mr Adelson, who is Sands' controlling shareholder, said in December that selling the retail areas at the Four Seasons and the Venetian would raise enough money to pay Sands' debt. The company has US$12.2 billion of bonds and loans due from next year to 2015, according to data compiled by Bloomberg.
The billionaire, who previously said that the Singapore project would add more than US$1 billion in annual earnings before interest, tax, depreciation and amortisation, didn't provide a new figure apart from saying that he was raising his forecast. The return period compares with four years for the Macau project, which cost about half as much to build, Mr Adelson said.
The Marina Bay Sands in Singapore will be a 'grand slam home run', Mr Adelson said. 'Asian people just love to gamble.'
Singapore aims to lure 17 million visitors and triple annual tourism revenue to S$30 billion (US$22 billion) by 2015, helped by two casino resorts, Marina Bay Sands and Genting Bhd's Resorts World Sentosa.
The Marina Bay Sands casino, which makes up about 3 per cent of the 15,000 sq m resort, has about 600 table games and more than 1,500 slot machines.
Asia has room for five to 10 cities like Las Vegas, Mr Adelson said. The most likely countries to approve casinos in the region are Japan and Taiwan, he said. -- Bloomberg
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Rowing away: Sands may sell the Four Seasons apartments and shopping areas in the Venetian Macau (above) and in the Four Seasons hotel, Mr Adelson says
Sands eyes US$12 billion from sale of Macau assets
CEO raises Marina Bay Sands forecast, investment to be recouped in 5 years
(SINGAPORE) Las Vegas Sands Corp chairman Sheldon Adelson said that the planned sale of the casino operator's Macau malls and apartments may raise as much as US$12 billion and recoup their construction costs.
'It will be like US$12 billion if we add up all the apartments and all the retail in
Macau,' including those in buildings still under construction, Mr Adelson, the founder and chief executive officer of Las Vegas Sands, said in an interview in Singapore on Tuesday. The company may start selling the Macau assets within 21/2 years, he said.
Sands, which Adelson describes as 'an Asian company with a presence in Las Vegas and the US', gets 73 per cent of its revenue from Macau, the world's largest gambling market. He was in Singapore on Tuesday to open the first phase of Marina Bay Sands, and raised his earnings forecast for the resort, saying that the US$5.5 billion invested in it will be recouped in five years.
Sands' casino resort on Tuesday opened 963 of its 2,560 hotel rooms, the casino, the meeting and convention facilities, parts of its shopping mall and some restaurants. A grand opening party will be held on June 23 when the second phase is unveiled, including a sky park, additional shops and more restaurants.
Asia will contribute 85 per cent of revenue once the Singapore casino 'ramps up', said Mr Adelson. Last year's sales totalled US$4.56 billion, with 27 per cent coming from Las Vegas, where the company is based.
Macau assets that Sands may sell include the Four Seasons apartments and shopping areas in the Venetian Macau casino resort and in the Four Seasons hotel, Mr Adelson said. The plan also includes selling condominiums at the St Regis, where construction is resuming.
'That is our fundamental business model - we get our money back from the sale of non-core business assets,' he said.
Still, Jonathan Galaviz, an independent strategist who follows travel and leisure in Asia, said that apartments and malls in Macau may be a tough sell to investors, given that the city isn't a proven place for housing investment, and that a huge asset bubble may be developing in Asian real estate.
'Second-home buyers in Asia tend to have an affinity for beach and costal destinations, so Macau's proposition will need to be unique in order to compete,' Mr Galaviz said in an e-mail. As for malls, 'the average length of stay for Macau's average tourist - around one night - doesn't yet lend itself to a strong and dynamic retail opportunity'.
Sands fell US$1.51, or 5.8 per cent, to close at US$24.69 on the New York Stock Exchange composite trading on Tuesday. The stock has gained 65 per cent this year.
Mr Adelson, who is Sands' controlling shareholder, said in December that selling the retail areas at the Four Seasons and the Venetian would raise enough money to pay Sands' debt. The company has US$12.2 billion of bonds and loans due from next year to 2015, according to data compiled by Bloomberg.
The billionaire, who previously said that the Singapore project would add more than US$1 billion in annual earnings before interest, tax, depreciation and amortisation, didn't provide a new figure apart from saying that he was raising his forecast. The return period compares with four years for the Macau project, which cost about half as much to build, Mr Adelson said.
The Marina Bay Sands in Singapore will be a 'grand slam home run', Mr Adelson said. 'Asian people just love to gamble.'
Singapore aims to lure 17 million visitors and triple annual tourism revenue to S$30 billion (US$22 billion) by 2015, helped by two casino resorts, Marina Bay Sands and Genting Bhd's Resorts World Sentosa.
The Marina Bay Sands casino, which makes up about 3 per cent of the 15,000 sq m resort, has about 600 table games and more than 1,500 slot machines.
Asia has room for five to 10 cities like Las Vegas, Mr Adelson said. The most likely countries to approve casinos in the region are Japan and Taiwan, he said. -- Bloomberg
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Rowing away: Sands may sell the Four Seasons apartments and shopping areas in the Venetian Macau (above) and in the Four Seasons hotel, Mr Adelson says
Wednesday, April 28, 2010
TODAY ONLINE : S'pore vs HK: A high-flying rivalry
S'pore vs HK: A high-flying rivalry
Hong Kong may still be the dominant regional banking centre but Singapore is an ever more favoured location
05:55 AM Apr 28, 2010
by Kevin Brown and Sundeep Tucker
When Thomas McMahon and his Indian backers were deciding where to locate an Asian commodities exchange, they turned initially to Hong Kong - attracted by its proximity to China and the mainland's booming, commodity-hungry economy.
Three years later, the exchange, a subsidiary of India's Financial Technologies group, is about to open - not in Hong Kong but nearly four hours' flying time to the south in Singapore.
"We looked at Hong Kong with a view to being able to serve the China market, but we decided that we couldn't run a viable independent commodities exchange from there - the business environment just wasn't right," said Mr McMahon, a former director of Nymex Asia.
"Inversely, Singapore was very welcoming. The authorities were completely happy with the concept of an independent foreign-owned exchange competing with the existing exchange and the view seemed to be there should be a totally competitive environment, which is just what we wanted."
The city state's enthusiasm for what will be called the Singapore Mercantile Exchange, and its willingness to countenance potential collateral damage to the locally-listed incumbent, the Singapore Exchange, neatly illustrates the business-friendly approach that is helping the island to emerge as a strong competitor to Hong Kong in the battle to be Asia's 21st-century international business capital.
Others put it more graphically. "You walk into Changi Airport and they practically give you a hedge fund start-up kit," Mr James de Castro, one of the founders of Hong Kong-based Asia Alternative Asset Management, told a recent conference on the island's financial centre.
The prize is huge.
Rapid economic growth around Asia is creating all sorts of opportunities, dragging in large numbers of bankers, traders, lawyers and other professionals. More big companies in Europe, North America and India are deciding they need a regional headquarters - and the demand for English and reliable communications means the choice is usually between Hong Kong and Singapore.
Japan remains the world's second-largest economy and Tokyo the second-biggest stock market. But it is not really in the game as it is almost entirely domestically focused. For example, as a consequence of regulatory and language barriers, the Tokyo Stock Exchange has attracted fewer than 10 overseas listings since 2004, compared with hundreds bagged by Hong Kong and Singapore.
JOURNEY TO THE EAST
Nor is anyone writing off Hong Kong, an indispensable entrepot for China and the regional home for most global investment and commercial banks, private equity funds, large investment institutions and international legal and accountancy firms.
The self-governing Chinese territory is a big player in the capital markets, hosting a succession of blockbuster initial public offerings of Chinese companies and preparing this summer to co-host (with Shanghai) the IPO of Agricultural Bank of China, which at up to US$29 billion ($40 billion) is expected to be the world's biggest listing.
Underlining its importance, Mr Michael Geoghegan, HSBC chief executive, recently relocated from London to Hong Kong and JPMorgan moved the head of its international private banking unit there from New York to focus on regional opportunities.
Mr Anthony Bolton, star stock picker at United Kingdom-based Fidelity International, has scrapped his retirement and decamped to Hong Kong to launch a China equities fund.
The latest ranking of global financial centres, published last month by the City of London Corporation, shows Hong Kong has narrowed the gap with London and New York to its smallest since the study was introduced five years ago, with fast-improving Singapore just behind in fourth place.
The advance of both cities is clearly worrying Western competitors. "We cannot afford to be complacent in the face of growing competition across the world, not just in the United States but also increasingly Asia," said Mr Stuart Fraser, City of London policy chairman. "There is a danger that new regulation could accelerate this shift in the financial centre of gravity towards fast-developing markets."
At the same time, though, Hong Kong has developed serious problems. Official pollution readings last month soared to record levels - five times the usual high - forcing schools to ban outdoor activity. Air quality reached "dangerous" levels on one day in eight last year.
"There are air quality issues in Hong Kong, which affect companies' ability to attract staff, and international business groups have made representations on this issue to the relevant authorities," said Ms Deborah Biber, head of the Australian Chamber of Commerce in Hong Kong.
Those willing to breathe the air must pay property prices that are up to three times higher than Singapore.
A 1,600 sq ft apartment typically costs upwards of US$10,000 a month to rent.
In leafy Singapore, a house and garden several times the size can be had for less than US$4,000.
Potentially most damaging, Hong Kong appears increasingly inward-looking, with its politics and business focus becoming ever more fixated on China just as the rest of the region becomes more globalised.
While Singapore plots how to dominate Asian commodity trading or take a chunk of the Islamic finance market from Malaysia, Hong Kongers contemplate how to handle political interference from Beijing.
Singapore, sitting near the equator at the centre of Asia's trade lanes, suddenly looks both more central and more cosmopolitan.
As a result, Singapore is emerging as not only a leading Asian centre for the commodities industry, trading both physical goods and futures, but also as a regional headquarters location for non-financial businesses, especially in information technology, pharmaceuticals, electronics and manufacturing. Other big companies use it as a base for their operations in the sub-region of South-east Asia, itself an area with nearly 600 million people and an economy bigger than India's.
In finance, many institutions run divisions from Singapore, including Standard Chartered, Deutsche Bank and Barclays.
In a sign of the times, Britain's Prudential announced on Friday that it was adding a secondary listing in Singapore to its proposed dual primary Hong Kong listing as part of a US$21-billion capital raising linked to its plan to acquire the Asian assets of America's AIG.
The decision to add Singapore, said Mr Magnus Bocker, chief executive of the Singapore Exchange, reflects the city state's greater strength in fund management - its US$1,250 billion of assets under management are about twice Hong Kong's. "There is an attractiveness for them in reaching out to the Singapore-based institutional market," said Mr Bocker.
'SINGAPORE THE CLEANEST CITY IN INDIA'
Importantly, the island state is also better placed than Hong Kong to benefit from India's rise, which is prompting businesses in the subcontinent to find ways of expanding abroad. Wipro and Tata Consultancy Services, the information technology and outsourcing businesses, both have their headquarters for Asia in Singapore, and as many as 2,500 other Indian companies also have bases there, according to the India Business Forum.
"We could have had our HQ in India, Sydney, Hong Kong or Singapore," said Mr Girija Pande, head of Asia-Pacific for Tata Consultancy Services.
"(We came to Singapore because) we have a reasonable business in Singapore, which is larger than in Hong Kong, (and because) Singapore has very strong air links and connections to India, far more than Hong Kong. A lot of technology companies with whom we work ... are headquartered here as well, so this is a kind of tech hub."
Many Indian expatriates say they feel more at home in Singapore than elsewhere in Asia outside their own country, in part because Singapore has a prominent Indian community of its own - the finance and law ministers are both Singaporean Indians, for example.
The Republic is India's second-largest foreign investor and attracted more Indian foreign direct investment than anywhere else in Asia in 2008-2009.
"Every large Indian company is seriously looking at Singapore" as a potential international Asian hub, said Mr Pande.
"Indians are in a lot of places here - industry, government, technology, banks; Indians are very comfortable here. We call it sometimes the cleanest city in India."
The close relationship is not an accident.
"There are a few (Indian) companies in Hong Kong, but since 1991 (when New Delhi began liberalising its economy) this has been one of the main countries that Singapore has concentrated on (winning investment from)," said Dr K N Raghavan, first secretary at the Indian High Commission in Singapore.
MORE OPEN, MORE COSMOPOLITAN
Underlying these strategic developments, Singapore is also undergoing a gentle social transformation designed to alter its international image from sanitised nanny state to cutting-edge icon by injecting a dash of the edginess for which Hong Kong is famous throughout Asia, in sharp contrast to Singapore.
The most dramatic example is the construction of two casino resorts, together costing about US$10 billion.
The second, built by Las Vegas Sands, opened its doors yesterday, giving the state that once banned (the sale of) chewing gum two of Asia's biggest gambling operations.
The Government has also found other ways to make the city a more relaxed place, for example by reducing artistic censorship - cuts to films and plays are now largely restricted to contentious religious issues - and introducing a "don't ask, don't tell" approach to homosexual relationships, which remain illegal but are increasingly tolerated.
It has built facilities such as a world-class concert hall and taken initiatives such as the annual Formula 1 Grand Prix.
Some things have not changed, however. In contrast to Hong Kong's robust and vibrant free press, Singapore's media is partly State-owned and entirely State-supervised.
The country has regular elections, but the Government is always formed by the same People's Action Party.
That will almost certainly remain true after a poll due by next year, although provision is being made for more defeated opposition candidates to sit in Parliament under a "best losers" scheme.
None of that cuts much ice with international business, which is more interested in political stability and the rule of law than in opportunities for opposition politics.
Hong Kong is not a full democracy either. But the gradual social liberalisation that is occurring in Singapore does reinforce its business proposition by making it a more interesting, more open and more cosmopolitan place for people of many different backgrounds to live.
Mr Ronald Arculli, chairman of Hong Kong Exchanges and Clearing, said the city is confident it will maintain its edge as the region's leading financial centre and has taken steps to broaden its focus away from just China. It is attracting increasing numbers of listings from global companies.
Rusal, an aluminium producer, in January became the first Russian company to list in Hong Kong. L'Occitane, the beauty products retailer, is this month scheduled to become the first French company to list in Hong Kong, as part of plans to boost sales across Asia. "We are more than just a gateway to China," said Mr Arculli. "Trading volumes are far higher than before and we have launched new products also."
In Singapore, though, the authorities remain confident that the momentum in this battle is with them.
"I think Hong Kong wants to be open, but it is becoming a more Chinese city in composition, in instincts and in governance," said a senior Singapore official. "That's not a bad future for Hong Kong, because southern China has a great future.
"But we're thinking about Asia and the world - there's Shanghai, there's Bangalore, there's Hyderabad, there are key Western cities that are not going to stay still. That's the way we think of our world. Hong Kong is not in the middle of the radar screen at all." The Financial Times
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
Hong Kong may still be the dominant regional banking centre but Singapore is an ever more favoured location
05:55 AM Apr 28, 2010
by Kevin Brown and Sundeep Tucker
When Thomas McMahon and his Indian backers were deciding where to locate an Asian commodities exchange, they turned initially to Hong Kong - attracted by its proximity to China and the mainland's booming, commodity-hungry economy.
Three years later, the exchange, a subsidiary of India's Financial Technologies group, is about to open - not in Hong Kong but nearly four hours' flying time to the south in Singapore.
"We looked at Hong Kong with a view to being able to serve the China market, but we decided that we couldn't run a viable independent commodities exchange from there - the business environment just wasn't right," said Mr McMahon, a former director of Nymex Asia.
"Inversely, Singapore was very welcoming. The authorities were completely happy with the concept of an independent foreign-owned exchange competing with the existing exchange and the view seemed to be there should be a totally competitive environment, which is just what we wanted."
The city state's enthusiasm for what will be called the Singapore Mercantile Exchange, and its willingness to countenance potential collateral damage to the locally-listed incumbent, the Singapore Exchange, neatly illustrates the business-friendly approach that is helping the island to emerge as a strong competitor to Hong Kong in the battle to be Asia's 21st-century international business capital.
Others put it more graphically. "You walk into Changi Airport and they practically give you a hedge fund start-up kit," Mr James de Castro, one of the founders of Hong Kong-based Asia Alternative Asset Management, told a recent conference on the island's financial centre.
The prize is huge.
Rapid economic growth around Asia is creating all sorts of opportunities, dragging in large numbers of bankers, traders, lawyers and other professionals. More big companies in Europe, North America and India are deciding they need a regional headquarters - and the demand for English and reliable communications means the choice is usually between Hong Kong and Singapore.
Japan remains the world's second-largest economy and Tokyo the second-biggest stock market. But it is not really in the game as it is almost entirely domestically focused. For example, as a consequence of regulatory and language barriers, the Tokyo Stock Exchange has attracted fewer than 10 overseas listings since 2004, compared with hundreds bagged by Hong Kong and Singapore.
JOURNEY TO THE EAST
Nor is anyone writing off Hong Kong, an indispensable entrepot for China and the regional home for most global investment and commercial banks, private equity funds, large investment institutions and international legal and accountancy firms.
The self-governing Chinese territory is a big player in the capital markets, hosting a succession of blockbuster initial public offerings of Chinese companies and preparing this summer to co-host (with Shanghai) the IPO of Agricultural Bank of China, which at up to US$29 billion ($40 billion) is expected to be the world's biggest listing.
Underlining its importance, Mr Michael Geoghegan, HSBC chief executive, recently relocated from London to Hong Kong and JPMorgan moved the head of its international private banking unit there from New York to focus on regional opportunities.
Mr Anthony Bolton, star stock picker at United Kingdom-based Fidelity International, has scrapped his retirement and decamped to Hong Kong to launch a China equities fund.
The latest ranking of global financial centres, published last month by the City of London Corporation, shows Hong Kong has narrowed the gap with London and New York to its smallest since the study was introduced five years ago, with fast-improving Singapore just behind in fourth place.
The advance of both cities is clearly worrying Western competitors. "We cannot afford to be complacent in the face of growing competition across the world, not just in the United States but also increasingly Asia," said Mr Stuart Fraser, City of London policy chairman. "There is a danger that new regulation could accelerate this shift in the financial centre of gravity towards fast-developing markets."
At the same time, though, Hong Kong has developed serious problems. Official pollution readings last month soared to record levels - five times the usual high - forcing schools to ban outdoor activity. Air quality reached "dangerous" levels on one day in eight last year.
"There are air quality issues in Hong Kong, which affect companies' ability to attract staff, and international business groups have made representations on this issue to the relevant authorities," said Ms Deborah Biber, head of the Australian Chamber of Commerce in Hong Kong.
Those willing to breathe the air must pay property prices that are up to three times higher than Singapore.
A 1,600 sq ft apartment typically costs upwards of US$10,000 a month to rent.
In leafy Singapore, a house and garden several times the size can be had for less than US$4,000.
Potentially most damaging, Hong Kong appears increasingly inward-looking, with its politics and business focus becoming ever more fixated on China just as the rest of the region becomes more globalised.
While Singapore plots how to dominate Asian commodity trading or take a chunk of the Islamic finance market from Malaysia, Hong Kongers contemplate how to handle political interference from Beijing.
Singapore, sitting near the equator at the centre of Asia's trade lanes, suddenly looks both more central and more cosmopolitan.
As a result, Singapore is emerging as not only a leading Asian centre for the commodities industry, trading both physical goods and futures, but also as a regional headquarters location for non-financial businesses, especially in information technology, pharmaceuticals, electronics and manufacturing. Other big companies use it as a base for their operations in the sub-region of South-east Asia, itself an area with nearly 600 million people and an economy bigger than India's.
In finance, many institutions run divisions from Singapore, including Standard Chartered, Deutsche Bank and Barclays.
In a sign of the times, Britain's Prudential announced on Friday that it was adding a secondary listing in Singapore to its proposed dual primary Hong Kong listing as part of a US$21-billion capital raising linked to its plan to acquire the Asian assets of America's AIG.
The decision to add Singapore, said Mr Magnus Bocker, chief executive of the Singapore Exchange, reflects the city state's greater strength in fund management - its US$1,250 billion of assets under management are about twice Hong Kong's. "There is an attractiveness for them in reaching out to the Singapore-based institutional market," said Mr Bocker.
'SINGAPORE THE CLEANEST CITY IN INDIA'
Importantly, the island state is also better placed than Hong Kong to benefit from India's rise, which is prompting businesses in the subcontinent to find ways of expanding abroad. Wipro and Tata Consultancy Services, the information technology and outsourcing businesses, both have their headquarters for Asia in Singapore, and as many as 2,500 other Indian companies also have bases there, according to the India Business Forum.
"We could have had our HQ in India, Sydney, Hong Kong or Singapore," said Mr Girija Pande, head of Asia-Pacific for Tata Consultancy Services.
"(We came to Singapore because) we have a reasonable business in Singapore, which is larger than in Hong Kong, (and because) Singapore has very strong air links and connections to India, far more than Hong Kong. A lot of technology companies with whom we work ... are headquartered here as well, so this is a kind of tech hub."
Many Indian expatriates say they feel more at home in Singapore than elsewhere in Asia outside their own country, in part because Singapore has a prominent Indian community of its own - the finance and law ministers are both Singaporean Indians, for example.
The Republic is India's second-largest foreign investor and attracted more Indian foreign direct investment than anywhere else in Asia in 2008-2009.
"Every large Indian company is seriously looking at Singapore" as a potential international Asian hub, said Mr Pande.
"Indians are in a lot of places here - industry, government, technology, banks; Indians are very comfortable here. We call it sometimes the cleanest city in India."
The close relationship is not an accident.
"There are a few (Indian) companies in Hong Kong, but since 1991 (when New Delhi began liberalising its economy) this has been one of the main countries that Singapore has concentrated on (winning investment from)," said Dr K N Raghavan, first secretary at the Indian High Commission in Singapore.
MORE OPEN, MORE COSMOPOLITAN
Underlying these strategic developments, Singapore is also undergoing a gentle social transformation designed to alter its international image from sanitised nanny state to cutting-edge icon by injecting a dash of the edginess for which Hong Kong is famous throughout Asia, in sharp contrast to Singapore.
The most dramatic example is the construction of two casino resorts, together costing about US$10 billion.
The second, built by Las Vegas Sands, opened its doors yesterday, giving the state that once banned (the sale of) chewing gum two of Asia's biggest gambling operations.
The Government has also found other ways to make the city a more relaxed place, for example by reducing artistic censorship - cuts to films and plays are now largely restricted to contentious religious issues - and introducing a "don't ask, don't tell" approach to homosexual relationships, which remain illegal but are increasingly tolerated.
It has built facilities such as a world-class concert hall and taken initiatives such as the annual Formula 1 Grand Prix.
Some things have not changed, however. In contrast to Hong Kong's robust and vibrant free press, Singapore's media is partly State-owned and entirely State-supervised.
The country has regular elections, but the Government is always formed by the same People's Action Party.
That will almost certainly remain true after a poll due by next year, although provision is being made for more defeated opposition candidates to sit in Parliament under a "best losers" scheme.
None of that cuts much ice with international business, which is more interested in political stability and the rule of law than in opportunities for opposition politics.
Hong Kong is not a full democracy either. But the gradual social liberalisation that is occurring in Singapore does reinforce its business proposition by making it a more interesting, more open and more cosmopolitan place for people of many different backgrounds to live.
Mr Ronald Arculli, chairman of Hong Kong Exchanges and Clearing, said the city is confident it will maintain its edge as the region's leading financial centre and has taken steps to broaden its focus away from just China. It is attracting increasing numbers of listings from global companies.
Rusal, an aluminium producer, in January became the first Russian company to list in Hong Kong. L'Occitane, the beauty products retailer, is this month scheduled to become the first French company to list in Hong Kong, as part of plans to boost sales across Asia. "We are more than just a gateway to China," said Mr Arculli. "Trading volumes are far higher than before and we have launched new products also."
In Singapore, though, the authorities remain confident that the momentum in this battle is with them.
"I think Hong Kong wants to be open, but it is becoming a more Chinese city in composition, in instincts and in governance," said a senior Singapore official. "That's not a bad future for Hong Kong, because southern China has a great future.
"But we're thinking about Asia and the world - there's Shanghai, there's Bangalore, there's Hyderabad, there are key Western cities that are not going to stay still. That's the way we think of our world. Hong Kong is not in the middle of the radar screen at all." The Financial Times
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
TODAY ONLINE : Govt measures were not intended to stop price rise, says minister
Govt measures were not intended to stop price rise, says minister
05:55 AM Apr 28, 2010
by Esther Ng
When the Government introduced measures to cool the property market in February, the steps were not intended to stop prices from rising.
Instead, they were calibrated to temper exuberance in the market and pre-empt a property bubble from forming, Minister for National Development Mah Bow Tan told Parliament yesterday.
Overall, property prices increased 5.6 per cent in the first quarter this year compared to 7.4 per cent in the fourth quarter of last year.
Recent data for public housing show signs of moderation. Resale prices registered slower quarter-on-quarter increase and the median cash over valuation has also stabilised, said Mr Mah.
MP for West Coast GRC Ho Geok Choo had asked what other measures MND intend to introduce as public and property prices continue to rise despite recent cooling measures.
Mr Mah informed the house that the government would "inject an even larger supply" of private housing through the Government Land Sales programme in the second half of the year if demand continues to be strong. Details of this will be announced in June.
Since January, the Housing and Development Board has launched 5,100 flats.
Another 7,400 units will be launched between May and September.
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
05:55 AM Apr 28, 2010
by Esther Ng
When the Government introduced measures to cool the property market in February, the steps were not intended to stop prices from rising.
Instead, they were calibrated to temper exuberance in the market and pre-empt a property bubble from forming, Minister for National Development Mah Bow Tan told Parliament yesterday.
Overall, property prices increased 5.6 per cent in the first quarter this year compared to 7.4 per cent in the fourth quarter of last year.
Recent data for public housing show signs of moderation. Resale prices registered slower quarter-on-quarter increase and the median cash over valuation has also stabilised, said Mr Mah.
MP for West Coast GRC Ho Geok Choo had asked what other measures MND intend to introduce as public and property prices continue to rise despite recent cooling measures.
Mr Mah informed the house that the government would "inject an even larger supply" of private housing through the Government Land Sales programme in the second half of the year if demand continues to be strong. Details of this will be announced in June.
Since January, the Housing and Development Board has launched 5,100 flats.
Another 7,400 units will be launched between May and September.
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
TODAY ONLINE : We'll look into loan loophole: Mah
We'll look into loan loophole: Mah
05:55 AM Apr 28, 2010
by Esther Ng
SINGAPORE - Housing and Development Board flats are not meant to be used as collateral for loans, legal or illegal. But credit companies and real estate agents, targeting flat owners in financial difficulties, are exploiting a loophole.
Besides lending money to these owners at exorbitant interest rates, they get a lawyer to file a caveat against the property with HDB. The property then cannot be transferred until the debt is settled.
All this is legal, but once the flat is sold, credit companies get first charge to the proceeds and the flat seller usually has little or nothing left, said MP for Jurong GRC Halimah Yacob in Parliament yesterday.
Minister for National Development Mah Bow Tan acknowledged this "loophole" and announced that these malpractices are being looked into, even before regulations to professionalise real estate agents are finalised. He is treating it "as a matter of urgency because there have been abuses and people have been exploited".
While most real estate agents are professional, there is a need to raise the standard of the industry as a whole.
"We're looking into whether we should have a formal form of registration for real estate agents, what are the mediation avenues available. If not, what are the dispute resolution mechanisms available, if not, what punishments can be meted to those who flout the rules," said Mr Mah.
A mandatory examination is one component under consideration.
Currently, real estate agencies are licensed by the Inland Revenue Authority of Singapore (Iras). It has received a total of 154 complaints against real estate agents in the past three years. In 2007, it received 47 complaints, followed by 63 in 2008 and 44 last year.
Mr Mah was responding to Mdm Halimah's enquiry on the number of complaints MND had received against property agents in the last three years.
The current licensing regime does not empower Iras to investigate agent misconduct. It usually refers the complaints it receives to the Singapore Accredited Estate Agencies (SAEA) for investigation and resolution, if the agent is from an SAEA-accredited agency. Otherwise, Iras will refer the complaints to the estate agencies directly, said Mr Mah.
Where there are serious allegations, for instance, of cheating or falsification of documents, Iras will advise the complainant to make a police report. Consumers have also lodged complaints with the Consumer Association of Singapore. There were 1,055 complaints in 2007, followed by 1,100 in 2008 and 1,079 last year.
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
05:55 AM Apr 28, 2010
by Esther Ng
SINGAPORE - Housing and Development Board flats are not meant to be used as collateral for loans, legal or illegal. But credit companies and real estate agents, targeting flat owners in financial difficulties, are exploiting a loophole.
Besides lending money to these owners at exorbitant interest rates, they get a lawyer to file a caveat against the property with HDB. The property then cannot be transferred until the debt is settled.
All this is legal, but once the flat is sold, credit companies get first charge to the proceeds and the flat seller usually has little or nothing left, said MP for Jurong GRC Halimah Yacob in Parliament yesterday.
Minister for National Development Mah Bow Tan acknowledged this "loophole" and announced that these malpractices are being looked into, even before regulations to professionalise real estate agents are finalised. He is treating it "as a matter of urgency because there have been abuses and people have been exploited".
While most real estate agents are professional, there is a need to raise the standard of the industry as a whole.
"We're looking into whether we should have a formal form of registration for real estate agents, what are the mediation avenues available. If not, what are the dispute resolution mechanisms available, if not, what punishments can be meted to those who flout the rules," said Mr Mah.
A mandatory examination is one component under consideration.
Currently, real estate agencies are licensed by the Inland Revenue Authority of Singapore (Iras). It has received a total of 154 complaints against real estate agents in the past three years. In 2007, it received 47 complaints, followed by 63 in 2008 and 44 last year.
Mr Mah was responding to Mdm Halimah's enquiry on the number of complaints MND had received against property agents in the last three years.
The current licensing regime does not empower Iras to investigate agent misconduct. It usually refers the complaints it receives to the Singapore Accredited Estate Agencies (SAEA) for investigation and resolution, if the agent is from an SAEA-accredited agency. Otherwise, Iras will refer the complaints to the estate agencies directly, said Mr Mah.
Where there are serious allegations, for instance, of cheating or falsification of documents, Iras will advise the complainant to make a police report. Consumers have also lodged complaints with the Consumer Association of Singapore. There were 1,055 complaints in 2007, followed by 1,100 in 2008 and 1,079 last year.
Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved
CNA : More en bloc sale activity expected as developers cater to mid-market segment
More en bloc sale activity expected as developers cater to mid-market segment
By Chris Howells | Posted: 27 April 2010 2207 hrs
SINGAPORE: Analysts expect more en bloc sales activity from the city fringes and East Coast areas as developers cater to a growing mid-market segment.
They were responding to proposals tabled in Parliament on Monday to smooth out the collective sales process.
The new rules also seek to address the role of the Strata Titles Board and balance the interest of property owners.
Collective sales have bounced back this year after a poor showing last year when only one deal was done.
So far, four developments have been sold with another deal at Margate Road expected to be completed this week.
These five sales combined are worth S$275 million versus the lone S$101 million deal done for the whole of 2009.
Going forward, market watchers expect between 20 and 40 en bloc deals to take place this year.
Donald Han, managing director, Cushman & Wakefield, said: “I think what we're seeing now is more on the fringe of the central areas is looking more promising right now. Those we call the rest of the central core area. The East Coast area is looking interesting right now.
“Mainly there is a combination of investors, developers who are eager to come in and develop the mid-end segment of the market."
Observers said such developments will likely attract small-to-mid sized developers that are currently being priced out of the government land sales programme where land prices rose up to 20 per cent last year.
Observers said they're currently seeing appetite for en bloc sales worth under S$100 million on average and land sizes of around 15,000-50,000 square feet.
Karamjit Singh, managing director, Credo Real Estate, said: "There's also a vacuum to satisfy larger developers demand for land in mid and prime sectors of the market because government land sale programme basically satisfies developers' demand in mass market locations."
Market watchers expect overall land prices to rise around five to 15 per cent this year.
They said good conditions and demand for property will drive developers into the collective market. - CNA/vm
By Chris Howells | Posted: 27 April 2010 2207 hrs
SINGAPORE: Analysts expect more en bloc sales activity from the city fringes and East Coast areas as developers cater to a growing mid-market segment.
They were responding to proposals tabled in Parliament on Monday to smooth out the collective sales process.
The new rules also seek to address the role of the Strata Titles Board and balance the interest of property owners.
Collective sales have bounced back this year after a poor showing last year when only one deal was done.
So far, four developments have been sold with another deal at Margate Road expected to be completed this week.
These five sales combined are worth S$275 million versus the lone S$101 million deal done for the whole of 2009.
Going forward, market watchers expect between 20 and 40 en bloc deals to take place this year.
Donald Han, managing director, Cushman & Wakefield, said: “I think what we're seeing now is more on the fringe of the central areas is looking more promising right now. Those we call the rest of the central core area. The East Coast area is looking interesting right now.
“Mainly there is a combination of investors, developers who are eager to come in and develop the mid-end segment of the market."
Observers said such developments will likely attract small-to-mid sized developers that are currently being priced out of the government land sales programme where land prices rose up to 20 per cent last year.
Observers said they're currently seeing appetite for en bloc sales worth under S$100 million on average and land sizes of around 15,000-50,000 square feet.
Karamjit Singh, managing director, Credo Real Estate, said: "There's also a vacuum to satisfy larger developers demand for land in mid and prime sectors of the market because government land sale programme basically satisfies developers' demand in mass market locations."
Market watchers expect overall land prices to rise around five to 15 per cent this year.
They said good conditions and demand for property will drive developers into the collective market. - CNA/vm
CNA : Leveraged developers a risk factor for China real estate
Leveraged developers a risk factor for China real estate
By Desmond Wong | Posted: 27 April 2010 2040 hrs
SINGAPORE: Leveraged developers, rather than end buyers, are the most likely source of risk for real estate in China.
And Citi says China's efforts to rein in its property price bubble are unlikely to affect other sectors, thanks to the government's effective control over policy.
Momentum in China real estate continues to build.
Citi says while the signs of a bubble are clear, the greatest risk within the market might not lie with the end buyers and high prices.
It says investors should watch the developers instead.
Thomas Flexner, global head of real estate, institutional clients group, Citi, says: "I think you do have to be sensitive which ones might have too much leverage, might have near term maturities, and might have a problem given the increasingly restrictive policies that China is beginning to apply to the residential sector."
China recently raised down payment for second home buyers from 40 per cent to 50 per cent, while increasing mortgage rates as well.
About one third of end-buyers in China pay entirely in cash, while the rest fund around 50 per cent of their property buys with debt.
Citi adds that China's tightening of the real estate sector is unlikely to hurt the rest of the economy for now, given the close control it has over policy making which allows it to introduce targeted changes as needed.
The lender says it remains confident about the long term growth of China's emerging real estate market, given the strong demand in areas outside the first tier cities.
Mr Flexner says: "In some of the top tier cities, like Beijing and Shanghai, there's been much more speculative investment... The other lesser cities that haven't attracted speculators tend to be much more driven by real home buyers."
But Citi stresses that while the long term fundamentals for real estate in emerging Asia are strong, investors should be prepared to accept a certain degree of volatility against a backdrop of fast, but uneven growth."
- CNA/jy
By Desmond Wong | Posted: 27 April 2010 2040 hrs
SINGAPORE: Leveraged developers, rather than end buyers, are the most likely source of risk for real estate in China.
And Citi says China's efforts to rein in its property price bubble are unlikely to affect other sectors, thanks to the government's effective control over policy.
Momentum in China real estate continues to build.
Citi says while the signs of a bubble are clear, the greatest risk within the market might not lie with the end buyers and high prices.
It says investors should watch the developers instead.
Thomas Flexner, global head of real estate, institutional clients group, Citi, says: "I think you do have to be sensitive which ones might have too much leverage, might have near term maturities, and might have a problem given the increasingly restrictive policies that China is beginning to apply to the residential sector."
China recently raised down payment for second home buyers from 40 per cent to 50 per cent, while increasing mortgage rates as well.
About one third of end-buyers in China pay entirely in cash, while the rest fund around 50 per cent of their property buys with debt.
Citi adds that China's tightening of the real estate sector is unlikely to hurt the rest of the economy for now, given the close control it has over policy making which allows it to introduce targeted changes as needed.
The lender says it remains confident about the long term growth of China's emerging real estate market, given the strong demand in areas outside the first tier cities.
Mr Flexner says: "In some of the top tier cities, like Beijing and Shanghai, there's been much more speculative investment... The other lesser cities that haven't attracted speculators tend to be much more driven by real home buyers."
But Citi stresses that while the long term fundamentals for real estate in emerging Asia are strong, investors should be prepared to accept a certain degree of volatility against a backdrop of fast, but uneven growth."
- CNA/jy
ST : Look out, moneylenders who target HDB flat sellers
Apr 28, 2010
Look out, moneylenders who target HDB flat sellers
Govt drafting measures to curb exploitation of cash-strapped owners
By Rachel Lin
THE Ministry of National Development (MND) has sent a clear message to moneylenders who exploit cash-strapped HDB sellers: The game is up.
It is drafting measures to crack down on these unscrupulous credit companies, which lend money to home owners on the condition that they repay the loan from the sale of their flats.
The moneylenders usually collude with real estate agents who, in return for a referral fee, link them up with home owners.
In addition, a legal loophole allows moneylenders to file a caveat on the flat, which ensures that they get first bite of the proceeds when the flat is sold.
'HDB flats are not meant for short-term profit,' MND Minister Mah Bow Tan said in Parliament yesterday. 'They are not meant to be used as collateral for loans, whether to legal or illegal moneylenders.
'My ministry is currently working with the relevant authorities on appropriate measures to curb such abuses.'
Existing measures have not been sufficient to deal with the problem, Mr Mah added.
The credit companies in question advertise openly in the newspapers, with lines such as 'legal loan for HDB sellers' or 'for HDB seller only'.
Some advertisements also state 'property agent referral welcomed'. Loans of up to $100,000 are offered, at interest rates like 1.5 per cent per month.
The matter had been flagged by Madam Halimah Yacob (Jurong GRC), who told The Straits Times later that she had received many complaints from the public.
The problem was becoming rampant, she said. Credit companies have even sent out text messages touting their loans to home owners.
These loans eat into the amount that HDB sellers eventually get from their flats, once the repayments and other fees are accounted for. 'They're expecting $70,000, but in the end, they get only $10,000. Sometimes, they get almost nothing,' Madam Halimah said.
Mr Mah told the House that his ministry is treating the problem 'as a matter of urgency'.
Both the errant credit companies and the estate agents who collude with them will come under scrutiny, he said.
Tougher rules for moneylenders will be introduced before the MND's larger move to regulate real estate agents more tightly.
Currently, complaints against real estate agents go to the Inland Revenue Authority of Singapore (Iras) or the Consumers Association of Singapore (Case).
However, Iras is not empowered to investigate rogue agents. If the agent is a member of an agency accredited by the Singapore Accredited Estate Agencies (SAEA), Iras refers him or her to the SAEA.
If not, the case is handed directly over to the relevant estate agency.
This present system contains one major loophole, Madam Halimah pointed out to the House: 'If you are the real estate agency, I think there will be less reason for you to find fault with your own agents, because that will affect your name.'
Mr Mah agreed that such a loophole existed. The MND is thus looking into a formal registration process for estate agents, compulsory exams, avenues for mediation and dispute resolution and disciplinary measures for errant agents.
'If the whole industry is not regulated, and in the current climate especially, there are a lot of temptations for estate agents to take short cuts and indulge in questionable practices,' he said.
Last year, Iras received 44 complaints against real estate agents, down from 63 in 2008 and 47 in 2006, Mr Mah told the House.
Case received 1,079 complaints last year, compared to 1,100 in 2008 and 1,055 in 2007.
lyuexin@sph.com.sg
--------------------------------------------------------------------------------
NOT COLLATERAL
'HDB flats are not meant for short-term profit. They are not meant to be used as collateral for loans, whether to legal or illegal moneylenders.'
MND Minister Mah Bow Tan
Look out, moneylenders who target HDB flat sellers
Govt drafting measures to curb exploitation of cash-strapped owners
By Rachel Lin
THE Ministry of National Development (MND) has sent a clear message to moneylenders who exploit cash-strapped HDB sellers: The game is up.
It is drafting measures to crack down on these unscrupulous credit companies, which lend money to home owners on the condition that they repay the loan from the sale of their flats.
The moneylenders usually collude with real estate agents who, in return for a referral fee, link them up with home owners.
In addition, a legal loophole allows moneylenders to file a caveat on the flat, which ensures that they get first bite of the proceeds when the flat is sold.
'HDB flats are not meant for short-term profit,' MND Minister Mah Bow Tan said in Parliament yesterday. 'They are not meant to be used as collateral for loans, whether to legal or illegal moneylenders.
'My ministry is currently working with the relevant authorities on appropriate measures to curb such abuses.'
Existing measures have not been sufficient to deal with the problem, Mr Mah added.
The credit companies in question advertise openly in the newspapers, with lines such as 'legal loan for HDB sellers' or 'for HDB seller only'.
Some advertisements also state 'property agent referral welcomed'. Loans of up to $100,000 are offered, at interest rates like 1.5 per cent per month.
The matter had been flagged by Madam Halimah Yacob (Jurong GRC), who told The Straits Times later that she had received many complaints from the public.
The problem was becoming rampant, she said. Credit companies have even sent out text messages touting their loans to home owners.
These loans eat into the amount that HDB sellers eventually get from their flats, once the repayments and other fees are accounted for. 'They're expecting $70,000, but in the end, they get only $10,000. Sometimes, they get almost nothing,' Madam Halimah said.
Mr Mah told the House that his ministry is treating the problem 'as a matter of urgency'.
Both the errant credit companies and the estate agents who collude with them will come under scrutiny, he said.
Tougher rules for moneylenders will be introduced before the MND's larger move to regulate real estate agents more tightly.
Currently, complaints against real estate agents go to the Inland Revenue Authority of Singapore (Iras) or the Consumers Association of Singapore (Case).
However, Iras is not empowered to investigate rogue agents. If the agent is a member of an agency accredited by the Singapore Accredited Estate Agencies (SAEA), Iras refers him or her to the SAEA.
If not, the case is handed directly over to the relevant estate agency.
This present system contains one major loophole, Madam Halimah pointed out to the House: 'If you are the real estate agency, I think there will be less reason for you to find fault with your own agents, because that will affect your name.'
Mr Mah agreed that such a loophole existed. The MND is thus looking into a formal registration process for estate agents, compulsory exams, avenues for mediation and dispute resolution and disciplinary measures for errant agents.
'If the whole industry is not regulated, and in the current climate especially, there are a lot of temptations for estate agents to take short cuts and indulge in questionable practices,' he said.
Last year, Iras received 44 complaints against real estate agents, down from 63 in 2008 and 47 in 2006, Mr Mah told the House.
Case received 1,079 complaints last year, compared to 1,100 in 2008 and 1,055 in 2007.
lyuexin@sph.com.sg
--------------------------------------------------------------------------------
NOT COLLATERAL
'HDB flats are not meant for short-term profit. They are not meant to be used as collateral for loans, whether to legal or illegal moneylenders.'
MND Minister Mah Bow Tan
ST : Stimulus withdrawal a worry for property sector
Apr 28, 2010
Stimulus withdrawal a worry for property sector
By Esther Teo
THE way governments wind back stimulus measures poses a key risk to the region's real estate markets, according to a Citibank executive yesterday.
Mr Aamir Rahim, chief executive of Citi Private Bank Asia Pacific, told a briefing: 'The impact of such liquidity withdrawal on interest rates and the speed of private sector capital deployment to pick up the slack produced by such withdrawal measures obviously are the overriding risks to the property outlook.'
Mr Rahim also flagged inflationary pressures as 'liquidity continues to chase assets' and the tightening of monetary policies as key risks to track.
The Chinese government, for example, has introduced yet more measures to cool the property market, ordering developers not to take deposits for sales of uncompleted flats without proper approval.
It has also imposed curbs on loans for purchases of third homes and increased the downpayment requirements and mortgage rates.
However, Citi's global head of real estate, Mr Thomas Flexner, said the steps are unlikely to overshoot and restrict growth in the other parts of the economy.
Mr Flexner, who was speaking at the briefing in conjunction with Citi's two-day Asia Pacific Property Conference at the Four Seasons Hotel this week, said that while the bubble in the Chinese residential market was 'very real', it is most pronounced at the higher-end and more speculative sectors of the first-tier cities.
In these centres, about 70 per cent of buyers are speculators.
'We call them speculators, they call themselves investors... There is real vulnerability there but I don't think it is systemic,' he added.
'There is certainly the prospect of potential losses by investors in that sector and on the part of developers who own land banks and who are leveraged.'
However, he said that, unlike a debt implosion or a credit bubble, which had contagion effects, China's bubble would not affect first-time home owners and would not have a 'significant larger impact on the Chinese economy and its ability to grow over time'.
Real estate is an increasingly popular asset class, with Asian clients of Citi Private Bank having close to 50 per cent of their portfolios in property.
This compares with 33 per cent globally.
(From left) Citi Private Bank Asia Pacific CEO Aamir Rahim, Citi real estate global head Thomas Flexner and Citi Private Bank Global Real Estate Group co-head Quek Kwang Meng. -- PHOTO: CITI ASIA PACIFIC
Stimulus withdrawal a worry for property sector
By Esther Teo
THE way governments wind back stimulus measures poses a key risk to the region's real estate markets, according to a Citibank executive yesterday.
Mr Aamir Rahim, chief executive of Citi Private Bank Asia Pacific, told a briefing: 'The impact of such liquidity withdrawal on interest rates and the speed of private sector capital deployment to pick up the slack produced by such withdrawal measures obviously are the overriding risks to the property outlook.'
Mr Rahim also flagged inflationary pressures as 'liquidity continues to chase assets' and the tightening of monetary policies as key risks to track.
The Chinese government, for example, has introduced yet more measures to cool the property market, ordering developers not to take deposits for sales of uncompleted flats without proper approval.
It has also imposed curbs on loans for purchases of third homes and increased the downpayment requirements and mortgage rates.
However, Citi's global head of real estate, Mr Thomas Flexner, said the steps are unlikely to overshoot and restrict growth in the other parts of the economy.
Mr Flexner, who was speaking at the briefing in conjunction with Citi's two-day Asia Pacific Property Conference at the Four Seasons Hotel this week, said that while the bubble in the Chinese residential market was 'very real', it is most pronounced at the higher-end and more speculative sectors of the first-tier cities.
In these centres, about 70 per cent of buyers are speculators.
'We call them speculators, they call themselves investors... There is real vulnerability there but I don't think it is systemic,' he added.
'There is certainly the prospect of potential losses by investors in that sector and on the part of developers who own land banks and who are leveraged.'
However, he said that, unlike a debt implosion or a credit bubble, which had contagion effects, China's bubble would not affect first-time home owners and would not have a 'significant larger impact on the Chinese economy and its ability to grow over time'.
Real estate is an increasingly popular asset class, with Asian clients of Citi Private Bank having close to 50 per cent of their portfolios in property.
This compares with 33 per cent globally.
(From left) Citi Private Bank Asia Pacific CEO Aamir Rahim, Citi real estate global head Thomas Flexner and Citi Private Bank Global Real Estate Group co-head Quek Kwang Meng. -- PHOTO: CITI ASIA PACIFIC
ST Forum : Worry over 'stretch' valuations
Apr 28, 2010
Worry over 'stretch' valuations
I TRIED to buy an apartment recently and was surprised when the bank loans officer advised me that his valuer could value property at whatever price I needed to secure a larger loan.
The property was valued at $510,000 in November last year and after checking with several banks, the present indicative value was between $530,000 and $540,0000.
So just last week, the property agent, together with her banker and the banker's valuer, assured me that the property's indicative valuation of $600,000 could be matched without any problem.
When I questioned the fact that the value had jumped so much and whether it would be a risk, I was advised by the loans officer that loans of under $1 million were rarely scrutinised and with an uptrending market, such 'stretch' valuations would easily be approved.
In fact, the agent's response was that the valuation was not important; it was purely the buyer's willingness to match the seller's price and that it was better to buy now before prices rose even higher.
Shouldn't the valuation of a property be an independent function to ensure that property prices are supportable? And if the banks and valuers are feeding a buying frenzy, where is the control mechanism to prevent a property bubble from developing?
Kang Wey-Ming
Worry over 'stretch' valuations
I TRIED to buy an apartment recently and was surprised when the bank loans officer advised me that his valuer could value property at whatever price I needed to secure a larger loan.
The property was valued at $510,000 in November last year and after checking with several banks, the present indicative value was between $530,000 and $540,0000.
So just last week, the property agent, together with her banker and the banker's valuer, assured me that the property's indicative valuation of $600,000 could be matched without any problem.
When I questioned the fact that the value had jumped so much and whether it would be a risk, I was advised by the loans officer that loans of under $1 million were rarely scrutinised and with an uptrending market, such 'stretch' valuations would easily be approved.
In fact, the agent's response was that the valuation was not important; it was purely the buyer's willingness to match the seller's price and that it was better to buy now before prices rose even higher.
Shouldn't the valuation of a property be an independent function to ensure that property prices are supportable? And if the banks and valuers are feeding a buying frenzy, where is the control mechanism to prevent a property bubble from developing?
Kang Wey-Ming
ST : Temporary tax credits lift US home prices
Apr 28, 2010
Temporary tax credits lift US home prices
MIAMI: United States home prices in February posted their first annual increase since the end of 2006, pumped up by temporary tax credits for home buyers. Another report showed that consumers in the US turned more optimistic this month as the growing economy raised hopes that jobs will become available.
However, although the Standard & Poor's/Case-Shiller home price index released yesterday eked out a 0.6 per cent gain, it was half the increase analysts had expected.
The data underscored the mixed and fragile nature of the housing recovery. Nationally, home prices are up more than 3 per cent from the bottom in May last year, but are still 30 per cent below the May 2006 peak.
And there is a 'risk that home prices could decline further before experiencing any sustained gains', cautioned Mr David Blitzer, chairman of the S&P index committee.
'It is too early to say that the housing market is recovering.'
Prices are getting a lift from temporary tax credits that expire at the end of this month. First-time buyers can claim up to US$8,000 (S$11,000) and home owners who buy and relocate can get up to US$6,500.
The Case-Shiller index measures home price increases and decreases relative to prices in January 2000. The base reading is 100; so a reading of 150 would mean that home prices have increased 50 per cent since the beginning of the index.
A rebound in prices is considered necessary to boost consumer optimism and help revive the economy. A home is the largest and most important financial asset for most Americans. So, as values climb, home owners feel wealthier and more comfortable spending.
For home owners who owe more on their mortgages than their properties are worth, rising prices rebuild equity.
Americans' confidence in the economy rose this month to the highest level since September 2008, just as the financial crisis escalated, private research group The Conference Board reported yesterday.
The Conference Board's confidence index rose to 57.9, exceeding all forecasts of economists surveyed by Bloomberg News and was the highest level since Lehman Brothers collapsed in September 2008.
The upbeat reading, combined with bullish earnings reports this week from companies ranging from Whirlpool Corp to UPS offered more hope that the economic recovery is gathering steam.
But unlike US businesses, which whittled down inventories during the recession, the housing market is suffering from a backlog of foreclosures. And as banks unload these properties en masse, it could overwhelm demand and push prices down again.
'The bottom line is that we're still fighting an uphill battle against a shadow inventory of foreclosures,' said Mr Daniel Alpert, managing director of Westwood Capital.
Still, it is 'highly unlikely' that price declines will approach the slide suffered in late 2008 and early 2009, wrote Mr Joshua Shapiro, chief US economist for MFR.
ASSOCIATED PRESS, BLOOMBERG
Temporary tax credits lift US home prices
MIAMI: United States home prices in February posted their first annual increase since the end of 2006, pumped up by temporary tax credits for home buyers. Another report showed that consumers in the US turned more optimistic this month as the growing economy raised hopes that jobs will become available.
However, although the Standard & Poor's/Case-Shiller home price index released yesterday eked out a 0.6 per cent gain, it was half the increase analysts had expected.
The data underscored the mixed and fragile nature of the housing recovery. Nationally, home prices are up more than 3 per cent from the bottom in May last year, but are still 30 per cent below the May 2006 peak.
And there is a 'risk that home prices could decline further before experiencing any sustained gains', cautioned Mr David Blitzer, chairman of the S&P index committee.
'It is too early to say that the housing market is recovering.'
Prices are getting a lift from temporary tax credits that expire at the end of this month. First-time buyers can claim up to US$8,000 (S$11,000) and home owners who buy and relocate can get up to US$6,500.
The Case-Shiller index measures home price increases and decreases relative to prices in January 2000. The base reading is 100; so a reading of 150 would mean that home prices have increased 50 per cent since the beginning of the index.
A rebound in prices is considered necessary to boost consumer optimism and help revive the economy. A home is the largest and most important financial asset for most Americans. So, as values climb, home owners feel wealthier and more comfortable spending.
For home owners who owe more on their mortgages than their properties are worth, rising prices rebuild equity.
Americans' confidence in the economy rose this month to the highest level since September 2008, just as the financial crisis escalated, private research group The Conference Board reported yesterday.
The Conference Board's confidence index rose to 57.9, exceeding all forecasts of economists surveyed by Bloomberg News and was the highest level since Lehman Brothers collapsed in September 2008.
The upbeat reading, combined with bullish earnings reports this week from companies ranging from Whirlpool Corp to UPS offered more hope that the economic recovery is gathering steam.
But unlike US businesses, which whittled down inventories during the recession, the housing market is suffering from a backlog of foreclosures. And as banks unload these properties en masse, it could overwhelm demand and push prices down again.
'The bottom line is that we're still fighting an uphill battle against a shadow inventory of foreclosures,' said Mr Daniel Alpert, managing director of Westwood Capital.
Still, it is 'highly unlikely' that price declines will approach the slide suffered in late 2008 and early 2009, wrote Mr Joshua Shapiro, chief US economist for MFR.
ASSOCIATED PRESS, BLOOMBERG
ST : Top bid of $148m for site near Changi Prison
Apr 28, 2010
Top bid of $148m for site near Changi Prison
By Esther Teo
A RESIDENTIAL site a stone's throw from Changi Prison has received a top bid of $148.3 million as developers look to replenish depleting land banks after months of sizzling home sales.
Tripartite Developers - part of Hong Leong Holdings - made the offer for the 3.1ha site at the corner of Upper Changi Road North and Flora Drive. There were five other bidders. Tripartite tendered $321 per sq ft (psf) on potential gross floor area (GFA) for the site, which had a maximum permissible GFA of 42,951 sq m. The land parcel can potentially yield 390 units.
The second highest bid was by Nam Hee Contractor and OPH Marymount, which came in at $143.2 million. The lowest was lodged by BBR-Tagore, whose holding company is Singapore Piling and Civil Engineering. It offered $91 million, the Urban Redevelopment Authority (URA) said yesterday.
Ho Bee Developments, Frasers Centrepoint and Sim Lian Land also bid.
The 99-year leasehold site, which is on the Government's reserve list, was launched for public tender on March 29 after a developer committed to bid at least $82 million. The tender closed yesterday.
Ngee Ann Polytechnic real estate lecturer Nicholas Mak said the top bid was fairly decent. 'The breakeven price is between $640 and $670 psf and nearby developments have been selling within that range,' he said.
A decision on the award of the tender will be made at a later date, URA said.
If Tripartite wins the tender, it will cement Hong Leong's presence in the area, which is already home to several large condominiums developed by the group, such as The Gale and Ferraria Park.
Meanwhile, the HDB said it will make available a site at the junction of Pasir Ris Drive 3 and Pasir Ris Drive 4 for application under the reserve list of the Government Land Sales (GLS) programme. Reserve list sites are offered on top of those on the confirmed list and are triggered for tender if at least one developer lodges an initial bid that meets a minimum threshold.
The 99-year leasehold site has a land area of 20,000 sq m and a gross plot ratio of 2.1. Its proposed development is for condominium housing and it has the potential to yield 380 units, the HDB said.
The Government has released all eight sites on the confirmed list of the first half of the GLS programme this year for sale.
Four sites have been sold while the tender for the other four will close in the next two months. Together they have a combined potential yield of 2,925 units.
Eighteen sites yielding 7,625 units were placed on the reserve list, bringing total potential supply quantum to 10,550 from the first half of the GLS programme - the highest since it started in 2001.
Top bid of $148m for site near Changi Prison
By Esther Teo
A RESIDENTIAL site a stone's throw from Changi Prison has received a top bid of $148.3 million as developers look to replenish depleting land banks after months of sizzling home sales.
Tripartite Developers - part of Hong Leong Holdings - made the offer for the 3.1ha site at the corner of Upper Changi Road North and Flora Drive. There were five other bidders. Tripartite tendered $321 per sq ft (psf) on potential gross floor area (GFA) for the site, which had a maximum permissible GFA of 42,951 sq m. The land parcel can potentially yield 390 units.
The second highest bid was by Nam Hee Contractor and OPH Marymount, which came in at $143.2 million. The lowest was lodged by BBR-Tagore, whose holding company is Singapore Piling and Civil Engineering. It offered $91 million, the Urban Redevelopment Authority (URA) said yesterday.
Ho Bee Developments, Frasers Centrepoint and Sim Lian Land also bid.
The 99-year leasehold site, which is on the Government's reserve list, was launched for public tender on March 29 after a developer committed to bid at least $82 million. The tender closed yesterday.
Ngee Ann Polytechnic real estate lecturer Nicholas Mak said the top bid was fairly decent. 'The breakeven price is between $640 and $670 psf and nearby developments have been selling within that range,' he said.
A decision on the award of the tender will be made at a later date, URA said.
If Tripartite wins the tender, it will cement Hong Leong's presence in the area, which is already home to several large condominiums developed by the group, such as The Gale and Ferraria Park.
Meanwhile, the HDB said it will make available a site at the junction of Pasir Ris Drive 3 and Pasir Ris Drive 4 for application under the reserve list of the Government Land Sales (GLS) programme. Reserve list sites are offered on top of those on the confirmed list and are triggered for tender if at least one developer lodges an initial bid that meets a minimum threshold.
The 99-year leasehold site has a land area of 20,000 sq m and a gross plot ratio of 2.1. Its proposed development is for condominium housing and it has the potential to yield 380 units, the HDB said.
The Government has released all eight sites on the confirmed list of the first half of the GLS programme this year for sale.
Four sites have been sold while the tender for the other four will close in the next two months. Together they have a combined potential yield of 2,925 units.
Eighteen sites yielding 7,625 units were placed on the reserve list, bringing total potential supply quantum to 10,550 from the first half of the GLS programme - the highest since it started in 2001.
BT : Changi site draws top bids at lower end of estimates
Business Times - 28 Apr 2010
Changi site draws top bids at lower end of estimates
By EMILYN YAP
THE tender for a 99-year leasehold residential site at Upper Changi Road North/Flora Drive closed yesterday on a more subdued note than other recent tenders.
The 3.07 hectare site, which can yield up to 390 apartments, drew bids from six developers. Hong Leong Group unit Tripartite Developers made the top offer of $148.3 million or $321 per sq ft per plot ratio (psf ppr).
A tie-up between units of Far East Organization and Orchard Parade Holdings followed close behind, with a bid of $143.2 million or $310 psf ppr.
Frasers Centrepoint was in third place with a bid of $140 million or $303 psf ppr. Sim Lian, Ho Bee and BBR-Tagore also took part in the tender.
The top bids were towards the lower end of consultants' projections at $300-$400 psf ppr. The site's distance from an MRT station could be a factor in this.
DTZ South-east Asia research head Chua Chor Hoon suggested the large supply of state land may also have dampened competition. With the release of more government land sale sites recently, developers have more choice and could be 'slightly more comfortable', she said.
Last month, the tender for a residential site at Tampines Avenue 1/Ave- nue 10 closed with eight bidders in the fray. Sim Lian made the highest offer of $302 million or $421 psf ppr.
In the latest tender for the Upper Changi Road North site, Hong Leong's top bid is likely to translate to a breakeven cost of $650-$700 psf, said Colliers International investment sales executive director Ho Eng Joo. The selling price could range from $750-$800 psf.
Mr Ho said Hong Leong is familiar with the Pasir Ris area. It is behind seven other projects in the vicinity with names from A to G, such as Edelweiss Park, Ferraria Park and The Gale.
At The Gale - which is a freehold development - units have been sold for $743-$833 psf this month, going by caveats lodged.
Developers hoping for a project in Pasir Ris can turn to another site on the reserve list. The Housing & Development Board has made a 99-year residential plot at the junction of Pasir Ris Drive 3 and Pasir Ris Drive 4 available for application from today.
The site, which is on the reserve list, is about two hectares and can yield an estimated 380 units. It is near Pasir Ris Park and Downtown East, and is surrounded by other parcels of state residential land.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Changi site draws top bids at lower end of estimates
By EMILYN YAP
THE tender for a 99-year leasehold residential site at Upper Changi Road North/Flora Drive closed yesterday on a more subdued note than other recent tenders.
The 3.07 hectare site, which can yield up to 390 apartments, drew bids from six developers. Hong Leong Group unit Tripartite Developers made the top offer of $148.3 million or $321 per sq ft per plot ratio (psf ppr).
A tie-up between units of Far East Organization and Orchard Parade Holdings followed close behind, with a bid of $143.2 million or $310 psf ppr.
Frasers Centrepoint was in third place with a bid of $140 million or $303 psf ppr. Sim Lian, Ho Bee and BBR-Tagore also took part in the tender.
The top bids were towards the lower end of consultants' projections at $300-$400 psf ppr. The site's distance from an MRT station could be a factor in this.
DTZ South-east Asia research head Chua Chor Hoon suggested the large supply of state land may also have dampened competition. With the release of more government land sale sites recently, developers have more choice and could be 'slightly more comfortable', she said.
Last month, the tender for a residential site at Tampines Avenue 1/Ave- nue 10 closed with eight bidders in the fray. Sim Lian made the highest offer of $302 million or $421 psf ppr.
In the latest tender for the Upper Changi Road North site, Hong Leong's top bid is likely to translate to a breakeven cost of $650-$700 psf, said Colliers International investment sales executive director Ho Eng Joo. The selling price could range from $750-$800 psf.
Mr Ho said Hong Leong is familiar with the Pasir Ris area. It is behind seven other projects in the vicinity with names from A to G, such as Edelweiss Park, Ferraria Park and The Gale.
At The Gale - which is a freehold development - units have been sold for $743-$833 psf this month, going by caveats lodged.
Developers hoping for a project in Pasir Ris can turn to another site on the reserve list. The Housing & Development Board has made a 99-year residential plot at the junction of Pasir Ris Drive 3 and Pasir Ris Drive 4 available for application from today.
The site, which is on the reserve list, is about two hectares and can yield an estimated 380 units. It is near Pasir Ris Park and Downtown East, and is surrounded by other parcels of state residential land.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Borrowers told to act as Sibor hits all-time low
Business Times - 28 Apr 2010
Borrowers told to act as Sibor hits all-time low
Individuals and corporates asked to hedge their interest rate exposures now
By SIOW LI SEN
(SINGAPORE) Singapore's key interest rate has crashed to all-time lows and banks have been quick to capitalise on it.
The key three-month Sibor or Singapore interbank offered rate plunged to 0.546 per cent yesterday, crashing through the previous historical low of 0.56 per cent in June 2003.
DBS, the nation's biggest mortgage player, is launching today a five-year fixed-rate home loan package which charges 2.25 per cent a year.
The bank's popular three-year fixed-rate package remains unchanged at 1.99 per cent a year.
Jeremy Soo, DBS Bank managing director and head, consumer banking group, Singapore, said customers should understand how interest rates will impact their repayment.
'Based on the last 10 years' trend, three-month interbank rate peaked at 3.56 per cent in January 2006, and has shown to be volatile although it has stayed low for the last 1-2 years,' he said.
'This is one of the reasons why our three-year fixed-rate continues to be very popular with our customers, especially since our three and five-year fixed- rates are at a historical low,' said Mr Soo.
DBS is offering two five- year fixed-rate packages. The cheaper package at 2.25 per cent is sold bundled with mortgage insurance called My Protector Mortgage. The standalone package charges 2.5 per cent a year. DBS has offered five-year fixed-rate packages before on requests.
Many bankers said the three-month Sibor is near the bottom and that it is a good time for corporates to hedge their interest rate exposure.
Said Wee Wei Min, OCBC Bank head of treasury advisory: 'As long-term interest rates are close to historical lows, we are advising customers who have floating-rate loans to hedge their exposures. They can choose to hedge part or all of these exposures.'
Although this seems to be an obvious choice, some customers may choose to remain unhedged.
'This is because the short end rates are even lower and they will incur immediate high negative carry (difference between the three or six-months rates and the long end rates) when they lock in long-term fixed rates.'
Ms Wee said there are other hedging solutions like buying interest rate caps - akin to paying premiums to buy insurance to protect themselves from rising interest rates.
'When rates remain low, the customer enjoys low interest rates; and when rates go up, the customer will have protection,' she said.
'It's close to the bottom, it can't go to zero. We're still an emerging market where there's a premium,' said Jimmy Koh, United Overseas Bank economist.
US interest rates are at zero, but that's not possible for markets like Singapore despite their strong fundamentals. Usually, US interest rates are higher than Singapore interest rates by about 300 basis points.
'We've told corporates to hedge their interest rate exposures now,' said Mr Koh. The continued appreciation of the Singapore dollar is attracting inflows, which in turn pressures the local interest rate.
Investors also buy the Singapore dollar as a proxy for the yuan, which is expected to be revalued although no one knows when. But the yuan cannot be freely traded, unlike the local unit.
'If you like the yuan, you use the Sing dollar as proxy,' Mr Koh said.
The question is: how long before interest rates turn? Most say by year- end, as they expect the US to hike its rates then.
Gerard Feng, treasurer at Citibank Singapore, projects that three-month Sibor will rise to 0.8 per cent by year-end.
Selena Ling, OCBC Bank head of treasury and research unit, is looking at three-month Sibor rising gradually to reach one per cent by end-2010, 'on the assumption that liquidity management will likely take on an even more prominent function to drain excess liquidity conditions from further fuelling any potential asset bubbles in the making'.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Borrowers told to act as Sibor hits all-time low
Individuals and corporates asked to hedge their interest rate exposures now
By SIOW LI SEN
(SINGAPORE) Singapore's key interest rate has crashed to all-time lows and banks have been quick to capitalise on it.
The key three-month Sibor or Singapore interbank offered rate plunged to 0.546 per cent yesterday, crashing through the previous historical low of 0.56 per cent in June 2003.
DBS, the nation's biggest mortgage player, is launching today a five-year fixed-rate home loan package which charges 2.25 per cent a year.
The bank's popular three-year fixed-rate package remains unchanged at 1.99 per cent a year.
Jeremy Soo, DBS Bank managing director and head, consumer banking group, Singapore, said customers should understand how interest rates will impact their repayment.
'Based on the last 10 years' trend, three-month interbank rate peaked at 3.56 per cent in January 2006, and has shown to be volatile although it has stayed low for the last 1-2 years,' he said.
'This is one of the reasons why our three-year fixed-rate continues to be very popular with our customers, especially since our three and five-year fixed- rates are at a historical low,' said Mr Soo.
DBS is offering two five- year fixed-rate packages. The cheaper package at 2.25 per cent is sold bundled with mortgage insurance called My Protector Mortgage. The standalone package charges 2.5 per cent a year. DBS has offered five-year fixed-rate packages before on requests.
Many bankers said the three-month Sibor is near the bottom and that it is a good time for corporates to hedge their interest rate exposure.
Said Wee Wei Min, OCBC Bank head of treasury advisory: 'As long-term interest rates are close to historical lows, we are advising customers who have floating-rate loans to hedge their exposures. They can choose to hedge part or all of these exposures.'
Although this seems to be an obvious choice, some customers may choose to remain unhedged.
'This is because the short end rates are even lower and they will incur immediate high negative carry (difference between the three or six-months rates and the long end rates) when they lock in long-term fixed rates.'
Ms Wee said there are other hedging solutions like buying interest rate caps - akin to paying premiums to buy insurance to protect themselves from rising interest rates.
'When rates remain low, the customer enjoys low interest rates; and when rates go up, the customer will have protection,' she said.
'It's close to the bottom, it can't go to zero. We're still an emerging market where there's a premium,' said Jimmy Koh, United Overseas Bank economist.
US interest rates are at zero, but that's not possible for markets like Singapore despite their strong fundamentals. Usually, US interest rates are higher than Singapore interest rates by about 300 basis points.
'We've told corporates to hedge their interest rate exposures now,' said Mr Koh. The continued appreciation of the Singapore dollar is attracting inflows, which in turn pressures the local interest rate.
Investors also buy the Singapore dollar as a proxy for the yuan, which is expected to be revalued although no one knows when. But the yuan cannot be freely traded, unlike the local unit.
'If you like the yuan, you use the Sing dollar as proxy,' Mr Koh said.
The question is: how long before interest rates turn? Most say by year- end, as they expect the US to hike its rates then.
Gerard Feng, treasurer at Citibank Singapore, projects that three-month Sibor will rise to 0.8 per cent by year-end.
Selena Ling, OCBC Bank head of treasury and research unit, is looking at three-month Sibor rising gradually to reach one per cent by end-2010, 'on the assumption that liquidity management will likely take on an even more prominent function to drain excess liquidity conditions from further fuelling any potential asset bubbles in the making'.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Tuesday, April 27, 2010
ST : MRT network driving up land value
Apr 27, 2010
MRT network driving up land value
By Dickson Li
THE opening of new MRT stations has pushed up property prices across the island and made it hard for developers to find land at viable prices.
Wing Tai Asia property director Chng Chee Beow told a discussion yesterday: 'The transportation networking makes things much closer and that brings up property prices.
'The biggest headache facing developers now is this: How can you find land with a reasonable price, so that the final cost of the product is reasonable?'
The panel discussion was held as part of the graduation ceremony for students in the Singapore Management University (SMU)-Building and Construction Authority advanced management programme.
The three-month course is for professionals in the building industry.
Analysts at the event, which was held at SMU, believe that property prices still have some room to move.
'With 700 sq km of land, and five million people, (prices) can only go one way - up,' said CIMB-GK Research economist Song Seng Woon.
'Opportunities are opening up in Singapore - when we see residential properties popping up, we see businesses setting up shop too. For instance, we are now seeing stronger pick-up in office rental so, all in all, this will support the residential market as well.'
Keppel Land, for instance, still has most of its assets in Singapore because the value of its assets here is 'very high', even though it wants overseas earnings to hit 50 per cent of the total, said chief executive Kevin Wong yesterday.
'We have been investing in office buildings... Marina Bay Financial Centre is a good example,' he added.
'Other than China, we're quite big in Vietnam and we're looking very carefully at Indonesia, where we have quite a significant exposure.'
Mr Song also points to the larger growth story in the region to explain his optimism about property values.
The price rises are a 'combination of not just local buying, but also because we've seen growth around the region and we get more buyers coming in from Hong Kong and mainland China', he said.
Low interest rates have fuelled the boom in property markets across the region, and 'property is one asset that you can leverage up on', he says.
The threat of central banks starting to roll back on monetary stimulus by raising interest rates does not worry Mr Song.
'Even if rates go up, it's going to be in environment where there's growth opportunity and momentum. So any tightening at this point will be accompanied by strong growth,' he said.
MRT network driving up land value
By Dickson Li
THE opening of new MRT stations has pushed up property prices across the island and made it hard for developers to find land at viable prices.
Wing Tai Asia property director Chng Chee Beow told a discussion yesterday: 'The transportation networking makes things much closer and that brings up property prices.
'The biggest headache facing developers now is this: How can you find land with a reasonable price, so that the final cost of the product is reasonable?'
The panel discussion was held as part of the graduation ceremony for students in the Singapore Management University (SMU)-Building and Construction Authority advanced management programme.
The three-month course is for professionals in the building industry.
Analysts at the event, which was held at SMU, believe that property prices still have some room to move.
'With 700 sq km of land, and five million people, (prices) can only go one way - up,' said CIMB-GK Research economist Song Seng Woon.
'Opportunities are opening up in Singapore - when we see residential properties popping up, we see businesses setting up shop too. For instance, we are now seeing stronger pick-up in office rental so, all in all, this will support the residential market as well.'
Keppel Land, for instance, still has most of its assets in Singapore because the value of its assets here is 'very high', even though it wants overseas earnings to hit 50 per cent of the total, said chief executive Kevin Wong yesterday.
'We have been investing in office buildings... Marina Bay Financial Centre is a good example,' he added.
'Other than China, we're quite big in Vietnam and we're looking very carefully at Indonesia, where we have quite a significant exposure.'
Mr Song also points to the larger growth story in the region to explain his optimism about property values.
The price rises are a 'combination of not just local buying, but also because we've seen growth around the region and we get more buyers coming in from Hong Kong and mainland China', he said.
Low interest rates have fuelled the boom in property markets across the region, and 'property is one asset that you can leverage up on', he says.
The threat of central banks starting to roll back on monetary stimulus by raising interest rates does not worry Mr Song.
'Even if rates go up, it's going to be in environment where there's growth opportunity and momentum. So any tightening at this point will be accompanied by strong growth,' he said.
ST : Govt proposes changes to en bloc sale rules
Apr 27, 2010
parliament
Govt proposes changes to en bloc sale rules
By Joyce Teo
COLLECTIVE property sales will be streamlined under proposed changes unveiled in Parliament yesterday, in the wake of a number of highly contentious drawn-out legal disputes.
At the same time, new checks and balances will be added into the legislation to ensure that the process is fair, and that unwilling sellers are not unduly harassed.
The Government proposes that if one attempt at an en bloc sale fails, then a two-year restricted period will apply, during which it will be far tougher to try again.
This is meant to discourage repeated attempts to sell when there is insufficient support among owners.
The proposals also aim to strip out some of the potentially time-wasting legal hurdles that may impede a sale.
Some recent attempted en bloc sales, such as Horizon Towers and Gillman Heights, have become bogged down in acrimonious disputes that have dragged on for some two years or more.
To speed up the process, the Strata Titles Board (STB) will be stripped of its role of making rulings in disputed cases.
The STB will continue its mediation role, but this will be limited to 60 days, again to expedite the resolution of disputes over contentious sales.
In other words, warring parties can head to the High Court earlier in the process to have their disputes resolved.
This will help reduce costs and time taken in resolving the more contentious cases, said the Law Ministry.
Government data shows that from 2006 to now, about 10 per cent of the 124 en bloc sale applications that went to the STB ended up in the High Court.
All these proposed changes were introduced in a Bill in Parliament yesterday, following feedback the Ministry of Law received on the Land Titles (Strata) Act.
The latest major overhaul of collective sale rules, aimed at achieving greater transparency, took effect in 2007.
Some of the recent en bloc sale disputes have centred on the role and motives of sales committee members.
The Government proposes that committee members be subject to stricter disclosure requirements. They will have to declare the extent to which they, their immediate family members and related firms have interests in the strata development and the date of purchase of the units.
This, said the Law Ministry, will allow owners to make a more informed choice on who they want to elect.
The proposals also aim to streamline the en bloc sale process at the stage of holding extraordinary general meetings (EGMs) of owners.
The Government proposes doing away with some EGM requirements, which industry experts applaud as a practical move. For instance, EGMs will not have to be called to update owners on consent levels, sales proposals, bid amounts received, or the terms and conditions of the sale and purchase agreement (when the developer buys the site).
This information can be supplied at regular meetings, which are easier to call as no decision-making is required from owners on these matters.
EGMs would still be required to appoint lawyers, consultants, approve the apportionment method, and the terms and conditions of the collective sale agreement (when owners agree to sell).
The two-year restricted period addresses complaints of owners who say a small number of keen sellers can cause trouble by repeatedly trying to sell, thereby wasting management funds.
During these two years, the first retry to convene an EGM to reappoint a sales committee will require the agreement of 50 per cent of the owners, up from the usual level of 20 per cent by share value or 25 per cent by the total number of owners.
Any subsequent attempts to convene EGMs within this period will need 80 per cent. If there is another failed attempt, the stricter rules will apply for another two years.
One critic of this proposal is Credo Real Estate managing director Karamjit Singh, who said this is 'a hindrance to majority owners seeking to reinitiate a sale in a booming market, as they may miss the sale opportunity'.
Said law firm Rodyk & Davidson partner Norman Ho: 'The changes tidy up the whole process. Frivolous cases where people try and try can be avoided, and EGMs can be cut down from at least four currently to two, making the process easier to handle.'
These proposed changes are expected to take effect in June this year.
parliament
Govt proposes changes to en bloc sale rules
By Joyce Teo
COLLECTIVE property sales will be streamlined under proposed changes unveiled in Parliament yesterday, in the wake of a number of highly contentious drawn-out legal disputes.
At the same time, new checks and balances will be added into the legislation to ensure that the process is fair, and that unwilling sellers are not unduly harassed.
The Government proposes that if one attempt at an en bloc sale fails, then a two-year restricted period will apply, during which it will be far tougher to try again.
This is meant to discourage repeated attempts to sell when there is insufficient support among owners.
The proposals also aim to strip out some of the potentially time-wasting legal hurdles that may impede a sale.
Some recent attempted en bloc sales, such as Horizon Towers and Gillman Heights, have become bogged down in acrimonious disputes that have dragged on for some two years or more.
To speed up the process, the Strata Titles Board (STB) will be stripped of its role of making rulings in disputed cases.
The STB will continue its mediation role, but this will be limited to 60 days, again to expedite the resolution of disputes over contentious sales.
In other words, warring parties can head to the High Court earlier in the process to have their disputes resolved.
This will help reduce costs and time taken in resolving the more contentious cases, said the Law Ministry.
Government data shows that from 2006 to now, about 10 per cent of the 124 en bloc sale applications that went to the STB ended up in the High Court.
All these proposed changes were introduced in a Bill in Parliament yesterday, following feedback the Ministry of Law received on the Land Titles (Strata) Act.
The latest major overhaul of collective sale rules, aimed at achieving greater transparency, took effect in 2007.
Some of the recent en bloc sale disputes have centred on the role and motives of sales committee members.
The Government proposes that committee members be subject to stricter disclosure requirements. They will have to declare the extent to which they, their immediate family members and related firms have interests in the strata development and the date of purchase of the units.
This, said the Law Ministry, will allow owners to make a more informed choice on who they want to elect.
The proposals also aim to streamline the en bloc sale process at the stage of holding extraordinary general meetings (EGMs) of owners.
The Government proposes doing away with some EGM requirements, which industry experts applaud as a practical move. For instance, EGMs will not have to be called to update owners on consent levels, sales proposals, bid amounts received, or the terms and conditions of the sale and purchase agreement (when the developer buys the site).
This information can be supplied at regular meetings, which are easier to call as no decision-making is required from owners on these matters.
EGMs would still be required to appoint lawyers, consultants, approve the apportionment method, and the terms and conditions of the collective sale agreement (when owners agree to sell).
The two-year restricted period addresses complaints of owners who say a small number of keen sellers can cause trouble by repeatedly trying to sell, thereby wasting management funds.
During these two years, the first retry to convene an EGM to reappoint a sales committee will require the agreement of 50 per cent of the owners, up from the usual level of 20 per cent by share value or 25 per cent by the total number of owners.
Any subsequent attempts to convene EGMs within this period will need 80 per cent. If there is another failed attempt, the stricter rules will apply for another two years.
One critic of this proposal is Credo Real Estate managing director Karamjit Singh, who said this is 'a hindrance to majority owners seeking to reinitiate a sale in a booming market, as they may miss the sale opportunity'.
Said law firm Rodyk & Davidson partner Norman Ho: 'The changes tidy up the whole process. Frivolous cases where people try and try can be avoided, and EGMs can be cut down from at least four currently to two, making the process easier to handle.'
These proposed changes are expected to take effect in June this year.
ST : Up to market to set prices of resale flats
Apr 27, 2010
parliament
Up to market to set prices of resale flats
By Esther Teo
NATIONAL Development Minister Mah Bow Tan said the Government has no intention of trying to fine-tune HDB policy for first-time buyers, preferring to leave it to the market.
His comments to Parliament yesterday also included the release of sales figures for the past two years that give a snapshot of how the markets for new and resale flats are faring.
He told MPs that about 8,000 first-time buyers bought resale HDB flats in each of the past two calendar years. This is out of about an average of 18,000 flats sold in each of those years.
Of the resale buyers, at least 6,800 had a monthly household income of less than $8,000, meaning they qualified for the CPF housing grant.
The new/resale ratio has fluctuated over the years. When resale prices were lower, such flats comprised as much as 70 per cent of total sales, but the proportion is coming down now as resale prices head north, he said.
Mr Mah was responding to a question from MP Lim Wee Kiak (Sembawang GRC), who asked if the Government will take steps to encourage more first-time resale buyers to allow for 'the renewing of estates'.
Dr Lim also asked if the Government would consider increasing the CPF housing grant or introducing another form of financing for the cash-over-valuation (COV) as a way of increasing the incentive for buying a resale flat.
Mr Mah reiterated that as the Government did not have a particular view on the new/resale ratio, there was no need to introduce incentives.
'The most important point is whether we have enough flats overall for first-timers to purchase, whether new or resale... I don't think we want to skew the decision either way; we will let the market take care of it.'
While build-to-order flats were priced lower due to subsidies, they required a longer waiting time and were mostly in non-mature estates, which might not suit some buyers, he said.
The minister also addressed MP Ho Geok Choo's (West Coast GRC) suggestion that the valuation process be reviewed to address high COVs.
Mr Mah said: 'The resale flat prices must be set by the market and the COV is part and parcel of the resale flat price.'
He added that there was nothing unusual about having a COV in the HDB resale market. 'Just last year, we had COVs which were either zero or negative, which reflected the market situation at that time. I dare say that as the market cools down and as supply catches up with demand, the COV prices will start to moderate as well.'
parliament
Up to market to set prices of resale flats
By Esther Teo
NATIONAL Development Minister Mah Bow Tan said the Government has no intention of trying to fine-tune HDB policy for first-time buyers, preferring to leave it to the market.
His comments to Parliament yesterday also included the release of sales figures for the past two years that give a snapshot of how the markets for new and resale flats are faring.
He told MPs that about 8,000 first-time buyers bought resale HDB flats in each of the past two calendar years. This is out of about an average of 18,000 flats sold in each of those years.
Of the resale buyers, at least 6,800 had a monthly household income of less than $8,000, meaning they qualified for the CPF housing grant.
The new/resale ratio has fluctuated over the years. When resale prices were lower, such flats comprised as much as 70 per cent of total sales, but the proportion is coming down now as resale prices head north, he said.
Mr Mah was responding to a question from MP Lim Wee Kiak (Sembawang GRC), who asked if the Government will take steps to encourage more first-time resale buyers to allow for 'the renewing of estates'.
Dr Lim also asked if the Government would consider increasing the CPF housing grant or introducing another form of financing for the cash-over-valuation (COV) as a way of increasing the incentive for buying a resale flat.
Mr Mah reiterated that as the Government did not have a particular view on the new/resale ratio, there was no need to introduce incentives.
'The most important point is whether we have enough flats overall for first-timers to purchase, whether new or resale... I don't think we want to skew the decision either way; we will let the market take care of it.'
While build-to-order flats were priced lower due to subsidies, they required a longer waiting time and were mostly in non-mature estates, which might not suit some buyers, he said.
The minister also addressed MP Ho Geok Choo's (West Coast GRC) suggestion that the valuation process be reviewed to address high COVs.
Mr Mah said: 'The resale flat prices must be set by the market and the COV is part and parcel of the resale flat price.'
He added that there was nothing unusual about having a COV in the HDB resale market. 'Just last year, we had COVs which were either zero or negative, which reflected the market situation at that time. I dare say that as the market cools down and as supply catches up with demand, the COV prices will start to moderate as well.'
ST : New HDB flats still affordable: Mah
Apr 27, 2010
parliament
New HDB flats still affordable: Mah
Prices within the means of the various income groups
By Sue-Ann Chia
THE hot issue of high property prices received another airing in Parliament yesterday, with the Government releasing fresh figures to show new flats are affordable to all first-time buyers.
In giving the numbers, National Development Minister Mah Bow Tan also addressed the issue of how findings can change when different base years are used to look at the HDB resale price index and household incomes.
He was replying to Mr Lim Biow Chuan (Marine Parade GRC) who had asked for housing affordability data based on how the median household income has risen in comparison to the HDB resale price index. Mr Lim also wanted to know if resale prices had risen faster than the growth of median household income in the last decade when different base years are used.
The issue of the relative pace of price and income increases first came under scrutiny early this month when Mr Mah released the two sets of figures in a Straits Times interview.
They showed that HDB home prices are not beyond reach. This is because the resale price index has risen by an average of 3.2 per cent annually from 1999 to last year, lower than the 3.9 per cent increase in median household income.
But opposition Reform Party member Hazel Poa later wrote in a blog post that the results would be different if the base year is changed from 1999, to say 2001 or 2006.
Mr Mah did not refer to Ms Poa, but said in his reply to Mr Lim: 'It is possible that prices of resale flats have risen faster than incomes when indexed against different years.'
Using more recent years like 2004 to index the growth, he said the an-nual growth in the resale price index exceeded income growth, owing to strong demand and the quick economic recovery (see chart).
But he also pointed out that if 1995 was used as the base year, it would yield a different result as resale flat prices rose by 2.8 per cent, lower than income growth of 3.2 per cent.
'Ultimately, what matters is whether at all times, first-time home buyers are able to afford HDB flats,' he said.
To that, the answer is 'yes', he said, as the Government has done two things to ensure new flats are not priced out of reach. One, new flats of different sizes and in different locations for different income groups are always available. Two, setting these flat prices so that they are well within the means of buyers in various income ceiling groups.
Elaborating on how new flats are affordable, he referred to a formula called the debt service ratio (DSR). It compares the monthly mortgage instalment to the monthly household income. The average DSR for new flats launched in the last six months when property prices surged ranged from 17 per cent to 25 per cent (see table). This applies to new flats in non-mature estates. For those in more central locations and mature estates, the DSR is around 30 per cent.
These figures are within the international benchmark for housing affordability, which ranges from 30 per cent to 35 per cent, he said.
But Nominated MP Paulin Straughan pointed out that the majority of flat owners seem to be using most of their Central Provident Fund (CPF) savings to pay for their home loans, with those living in three- and four-room flats having to top them up with cash. Will this lead to insufficient retirement savings, she asked.
Mr Mah said: 'I have to emphasise that buying an HDB flat is not an expenditure, it is an investment...because when you buy an HDB flat, at the end of the tenure of the flat or towards your retirement, that HDB flat is a very significant store of value.'
Citing a Department of Statistics survey, he said on average a Singaporean family has more than $100,000 in asset value in their flat. If that asset is monetised, they need not fear using up their CPF savings to pay for it.
'This is another vindication of our home ownership policy because if we were to use that same amount of money - 25 per cent of income - to rent rather than to buy a place, then at the end of 20 or 30 years, you will not be having this asset which you can use for retirement income,' said Mr Mah.
On whether the $8,000 household income ceiling for new flat buyers will be raised, he said the answer is still 'no'.
'We've a finite housing budget... and at the household income ceiling of $8,000 today, we're actually subsidising about 80 per cent of the population,' he said.
sueann@sph.com.sg
parliament
New HDB flats still affordable: Mah
Prices within the means of the various income groups
By Sue-Ann Chia
THE hot issue of high property prices received another airing in Parliament yesterday, with the Government releasing fresh figures to show new flats are affordable to all first-time buyers.
In giving the numbers, National Development Minister Mah Bow Tan also addressed the issue of how findings can change when different base years are used to look at the HDB resale price index and household incomes.
He was replying to Mr Lim Biow Chuan (Marine Parade GRC) who had asked for housing affordability data based on how the median household income has risen in comparison to the HDB resale price index. Mr Lim also wanted to know if resale prices had risen faster than the growth of median household income in the last decade when different base years are used.
The issue of the relative pace of price and income increases first came under scrutiny early this month when Mr Mah released the two sets of figures in a Straits Times interview.
They showed that HDB home prices are not beyond reach. This is because the resale price index has risen by an average of 3.2 per cent annually from 1999 to last year, lower than the 3.9 per cent increase in median household income.
But opposition Reform Party member Hazel Poa later wrote in a blog post that the results would be different if the base year is changed from 1999, to say 2001 or 2006.
Mr Mah did not refer to Ms Poa, but said in his reply to Mr Lim: 'It is possible that prices of resale flats have risen faster than incomes when indexed against different years.'
Using more recent years like 2004 to index the growth, he said the an-nual growth in the resale price index exceeded income growth, owing to strong demand and the quick economic recovery (see chart).
But he also pointed out that if 1995 was used as the base year, it would yield a different result as resale flat prices rose by 2.8 per cent, lower than income growth of 3.2 per cent.
'Ultimately, what matters is whether at all times, first-time home buyers are able to afford HDB flats,' he said.
To that, the answer is 'yes', he said, as the Government has done two things to ensure new flats are not priced out of reach. One, new flats of different sizes and in different locations for different income groups are always available. Two, setting these flat prices so that they are well within the means of buyers in various income ceiling groups.
Elaborating on how new flats are affordable, he referred to a formula called the debt service ratio (DSR). It compares the monthly mortgage instalment to the monthly household income. The average DSR for new flats launched in the last six months when property prices surged ranged from 17 per cent to 25 per cent (see table). This applies to new flats in non-mature estates. For those in more central locations and mature estates, the DSR is around 30 per cent.
These figures are within the international benchmark for housing affordability, which ranges from 30 per cent to 35 per cent, he said.
But Nominated MP Paulin Straughan pointed out that the majority of flat owners seem to be using most of their Central Provident Fund (CPF) savings to pay for their home loans, with those living in three- and four-room flats having to top them up with cash. Will this lead to insufficient retirement savings, she asked.
Mr Mah said: 'I have to emphasise that buying an HDB flat is not an expenditure, it is an investment...because when you buy an HDB flat, at the end of the tenure of the flat or towards your retirement, that HDB flat is a very significant store of value.'
Citing a Department of Statistics survey, he said on average a Singaporean family has more than $100,000 in asset value in their flat. If that asset is monetised, they need not fear using up their CPF savings to pay for it.
'This is another vindication of our home ownership policy because if we were to use that same amount of money - 25 per cent of income - to rent rather than to buy a place, then at the end of 20 or 30 years, you will not be having this asset which you can use for retirement income,' said Mr Mah.
On whether the $8,000 household income ceiling for new flat buyers will be raised, he said the answer is still 'no'.
'We've a finite housing budget... and at the household income ceiling of $8,000 today, we're actually subsidising about 80 per cent of the population,' he said.
sueann@sph.com.sg
ST : China mulls over tax on residential property
Apr 27, 2010
China mulls over tax on residential property
BEIJING: China is likely to introduce a property tax on residential housing in the first half of the year as part of its attempts to curb spiralling real estate prices, state media reported yesterday.
Such a move would mark a significant escalation of its struggle to cool down a booming property market now widely described as a bubble, the Wall Street Journal said.
The levy would be imposed on a trial basis in Beijing, Shanghai, Chongqing and Shenzhen, the Economic Observer newspaper said, citing sources.
Government agencies including the central bank, the Finance Ministry and the State Administration of Taxation are working out when to implement the tax, it said.
China currently has no such levy on residential property. It does impose a 1.2 per cent tax on 70 per cent to 90 per cent of the value of commercial real estate.
Details of the new tax were not yet finalised, the report said, such as whether it would be levied against all homes or merely on additional residences purchased by an individual home buyer beyond the first property.
The report came after Beijing recently announced a range of new measures to prevent the growth of asset bubbles and soaring property prices.
Official data showed real estate prices in 70 cities jumped 11.7 per cent last month, the fastest year-on-year rise for a single month in five years.
Beijing recently tightened curbs on advance sales of new projects, introduced new restrictions on loans for third-home purchases, and raised minimum down payments for second homes.
State media reports last week said banking regulators had ordered lenders to conduct quarterly stress tests on mortgages as the government tries to clamp down on bad loans and rein in speculation.
How the authorities handle any property tax will have significant implications for China's economy, and will ripple through global markets, the Journal said in its report yesterday.
It added that the construction boom is the main driver of the recovery in China and underpins the country's demand for raw materials, which has helped support global prices for commodities such as copper and iron ore.
Opponents fear new taxes would shatter confidence in the real estate market, leading to a bust that would damage the entire economy, it said.
AGENCE FRANCE-PRESSE
With additional information from the Wall Street Journal
China mulls over tax on residential property
BEIJING: China is likely to introduce a property tax on residential housing in the first half of the year as part of its attempts to curb spiralling real estate prices, state media reported yesterday.
Such a move would mark a significant escalation of its struggle to cool down a booming property market now widely described as a bubble, the Wall Street Journal said.
The levy would be imposed on a trial basis in Beijing, Shanghai, Chongqing and Shenzhen, the Economic Observer newspaper said, citing sources.
Government agencies including the central bank, the Finance Ministry and the State Administration of Taxation are working out when to implement the tax, it said.
China currently has no such levy on residential property. It does impose a 1.2 per cent tax on 70 per cent to 90 per cent of the value of commercial real estate.
Details of the new tax were not yet finalised, the report said, such as whether it would be levied against all homes or merely on additional residences purchased by an individual home buyer beyond the first property.
The report came after Beijing recently announced a range of new measures to prevent the growth of asset bubbles and soaring property prices.
Official data showed real estate prices in 70 cities jumped 11.7 per cent last month, the fastest year-on-year rise for a single month in five years.
Beijing recently tightened curbs on advance sales of new projects, introduced new restrictions on loans for third-home purchases, and raised minimum down payments for second homes.
State media reports last week said banking regulators had ordered lenders to conduct quarterly stress tests on mortgages as the government tries to clamp down on bad loans and rein in speculation.
How the authorities handle any property tax will have significant implications for China's economy, and will ripple through global markets, the Journal said in its report yesterday.
It added that the construction boom is the main driver of the recovery in China and underpins the country's demand for raw materials, which has helped support global prices for commodities such as copper and iron ore.
Opponents fear new taxes would shatter confidence in the real estate market, leading to a bust that would damage the entire economy, it said.
AGENCE FRANCE-PRESSE
With additional information from the Wall Street Journal
BT : Property financing tightened up a notch
Business Times - 27 Apr 2010
Property financing tightened up a notch
(HONG KONG) China has tightened real-estate financing by requiring developers to submit fund-raising plans for review, stepping up efforts to prevent a bubble even as the central bank pledged to maintain an 'easy' monetary policy.
The China Securities Regulatory Commission has sent financing requests from 41 companies to the Ministry of Land and Resources for reviews of land-use compliance, according to a statement posted on a government website on April 24.
Central bank governor Zhou Xiaochuan said in a statement at an International Monetary Fund meeting in Washington the same day that China will keep its 'relatively easy' monetary policy.
The two statements reflect policy makers' aim of both damping a surge in domestic property prices and sustaining an economic rebound amid uncertainty about the strength of a global recovery. The latest move adds to curbs on loans for third-home purchases, increased downpayment requirements and higher mortgage rates announced this month.
'The government only wants to curtail the excessive gains in some areas,' Li Daokui, an adviser to the central bank, said last week. 'Measures to increase home supply will follow.'
Any declines in property prices would add to a slump in equities in hurting returns on savings. China's one-year bank deposit rate has also fallen below the pace of inflation, eroding households' purchasing power.
The real-estate 'crackdown' will spur 'large pools of funds to enter the stock market', analysts led by Yu Jun at Beijing-based Citic Securities Co, China's largest brokerage, said in a report. An estimated 400 billion yuan (S$80.1 billion) may flow out of property into equities, with consumer-related shares with small capitalisations among those benefiting, Citic says.
Property prices in 70 cities went up by 11.7 per cent in March, the most since comparable records began in 2005, and China's economy expanded 11.9 per cent from a year earlier in the first quarter, suggesting tighter policies are needed.
Chinese banks lent a record 9.6 trillion yuan last year, and introduced a four trillion yuan stimulus package, to bolster growth through the global financial crisis. Officials remain unconvinced that the sustainability of the world economic recovery is assured.
'The outlook for the global economy faces many uncertainties,' Mr Zhou said in his statement. 'We will continue to implement a proactive fiscal policy and a relatively easy monetary policy, and will continuously improve the policy package to respond to the international financial crisis to maintain good momentum of the economic recovery.'
China's equities have fallen this year because of concern ending government stimulus along with measures to curb inflation will hurt economic growth.
The Shanghai Composite index is down 9 per cent in 2010, the world's eighth-worst performer. A gauge of property stocks in Shanghai has declined by more than 18 per cent.
Companies planning to invest in real estate through equity financing are subject to the reviews.
Companies with real-estate business that are planning to pay back bank loans or boosting operating capital are also required to submit equity financing plans to the ministry, China's securities regulator said.
The ministry will provide official comment on the companies' financing plans to the stock regulator after reviewing whether land purchases were made legally, according to the statement. It will also review whether there are cases of real estate being left idle and changes in the use of properties.
Developing nations with faster growth rates need to maintain 'good recovery momentum while also preventing the accumulation of asset bubbles, requiring the timely consideration of an exit from stimulus policies', Mr Zhou said.
China will continue with 'stable and relatively rapid' growth this year, while balancing 'inflation expectations', Mr Zhou said. The central government projects gross domestic product growth of about 8 per cent and an inflation rate of 3 per cent this year, the statement said.
People's Bank of China deputy governor Yi Gang said on April 24 that China should take 'early signs of inflation seriously' amid 'robust' economic growth.
China's policy makers raised the bank reserve ratio twice this year to contain inflation and slow loan growth. To cool the housing market, China on April 20 ordered developers not to take deposits for sales of uncompleted flats. -- Bloomberg
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Property financing tightened up a notch
(HONG KONG) China has tightened real-estate financing by requiring developers to submit fund-raising plans for review, stepping up efforts to prevent a bubble even as the central bank pledged to maintain an 'easy' monetary policy.
The China Securities Regulatory Commission has sent financing requests from 41 companies to the Ministry of Land and Resources for reviews of land-use compliance, according to a statement posted on a government website on April 24.
Central bank governor Zhou Xiaochuan said in a statement at an International Monetary Fund meeting in Washington the same day that China will keep its 'relatively easy' monetary policy.
The two statements reflect policy makers' aim of both damping a surge in domestic property prices and sustaining an economic rebound amid uncertainty about the strength of a global recovery. The latest move adds to curbs on loans for third-home purchases, increased downpayment requirements and higher mortgage rates announced this month.
'The government only wants to curtail the excessive gains in some areas,' Li Daokui, an adviser to the central bank, said last week. 'Measures to increase home supply will follow.'
Any declines in property prices would add to a slump in equities in hurting returns on savings. China's one-year bank deposit rate has also fallen below the pace of inflation, eroding households' purchasing power.
The real-estate 'crackdown' will spur 'large pools of funds to enter the stock market', analysts led by Yu Jun at Beijing-based Citic Securities Co, China's largest brokerage, said in a report. An estimated 400 billion yuan (S$80.1 billion) may flow out of property into equities, with consumer-related shares with small capitalisations among those benefiting, Citic says.
Property prices in 70 cities went up by 11.7 per cent in March, the most since comparable records began in 2005, and China's economy expanded 11.9 per cent from a year earlier in the first quarter, suggesting tighter policies are needed.
Chinese banks lent a record 9.6 trillion yuan last year, and introduced a four trillion yuan stimulus package, to bolster growth through the global financial crisis. Officials remain unconvinced that the sustainability of the world economic recovery is assured.
'The outlook for the global economy faces many uncertainties,' Mr Zhou said in his statement. 'We will continue to implement a proactive fiscal policy and a relatively easy monetary policy, and will continuously improve the policy package to respond to the international financial crisis to maintain good momentum of the economic recovery.'
China's equities have fallen this year because of concern ending government stimulus along with measures to curb inflation will hurt economic growth.
The Shanghai Composite index is down 9 per cent in 2010, the world's eighth-worst performer. A gauge of property stocks in Shanghai has declined by more than 18 per cent.
Companies planning to invest in real estate through equity financing are subject to the reviews.
Companies with real-estate business that are planning to pay back bank loans or boosting operating capital are also required to submit equity financing plans to the ministry, China's securities regulator said.
The ministry will provide official comment on the companies' financing plans to the stock regulator after reviewing whether land purchases were made legally, according to the statement. It will also review whether there are cases of real estate being left idle and changes in the use of properties.
Developing nations with faster growth rates need to maintain 'good recovery momentum while also preventing the accumulation of asset bubbles, requiring the timely consideration of an exit from stimulus policies', Mr Zhou said.
China will continue with 'stable and relatively rapid' growth this year, while balancing 'inflation expectations', Mr Zhou said. The central government projects gross domestic product growth of about 8 per cent and an inflation rate of 3 per cent this year, the statement said.
People's Bank of China deputy governor Yi Gang said on April 24 that China should take 'early signs of inflation seriously' amid 'robust' economic growth.
China's policy makers raised the bank reserve ratio twice this year to contain inflation and slow loan growth. To cool the housing market, China on April 20 ordered developers not to take deposits for sales of uncompleted flats. -- Bloomberg
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : The shoeshine boy's hottest tip: China property
Business Times - 27 Apr 2010
The shoeshine boy's hottest tip: China property
By ANDY XIE
'MY maid just asked for leave,' a friend in Beijing told me recently. 'She's rushing home to buy property. I suggested she borrow 70 per cent, so she could cap the loss.' It wasn't the first time I had heard such a story in China. Friends in Shanghai have told me similar ones. It seems all the housemaids are rushing into the market at the same time.
There are benefits to housekeeping for fund managers. China's housemaids may be Asia's answer to the shoeshine boy whose stock tips prompted Joseph Kennedy to sell his shares before the Wall Street Crash of 1929.
Another friend recently vacationed in the southern island-resort city of Sanya in Hainan province and felt compelled to visit a development sales office. Everyone she knew had bought there already. It's either buy or be unsocial. 'You should buy two,' the sharp sales girl suggested. 'In three years, the price will have doubled. You could sell one and get one free.' How could anyone resist an offer like that? The evidence in official-corruption cases no longer involves cash stashed in refrigerators or starlet mistresses in Versace. The evidence is now apartments. One mid-level official in Shanghai was caught with 24 of them.
First, let me make it perfectly clear that calling China's real-estate market a 'bubble' isn't denying China's development success. As optimism is an essential ingredient in a bubble, economic success is a necessary condition. Nor am I saying that prices will drop tomorrow. A bubble evolves and bursts in its own time. When it is about to burst, I'll let you know.
Expectations of a Chinese currency revaluation are, perhaps, the most important force inflating the bubble. First, it plays to latent human desire for a free lunch. You just need to exchange your money for yuan. According to all the experts on Wall Street, you can only gain. The money has been gushing into China.
Second, the revaluation story has kept Chinese money inside the country. The US dollar has always been the safe-haven asset for Chinese. This is why Chinese banks had a large dollar deposit base. Of course, anybody who was somebody had dollars offshore. Now all that money is back. More importantly, any income, legal or otherwise, now stays in China.
Why would corrupt officials keep apartments rather than cash? Well, according to Wall Street, the yuan is going to appreciate. So holding dollars is out of the question. And why hold Chinese cash when property prices are always going up? The corruption money can be turbocharged in the real-estate market. Only when they are caught do they understand the downside of holding fixed assets.
The massive liquidity waves have prompted Chinese banks to lend as much as possible. One Wall Street tradition adopted quickly in China was bonus recipients signing company cheques to themselves. All you need is to report eye-popping quarterly earnings. It is an easier game than on Wall Street: The Chinese government keeps the lending spread wide by fixing both the deposit and lending rates. You just have to lend. The earnings will follow. Might the loans turn bad in three years?
Well, I'm not going to give back my bonuses, right? For a bubble to last, you need a force to hold it together when it stumbles. Wall Street kept pumping out new natural or synthetic products to turn debt into demand for assets. Local governments play this role in China.
When it comes to interested parties, Chinese governments are knee-deep in the bubble. They get all the money from land sales. Land values have risen to half of the development cost. In hot spots, land costs more than the development - the governments want to collect the future price gain immediately.
When properties are sold, transaction and profit taxes kick in. Developers pay more levies to the governments than they earn. When developers finally book their earnings, they must put it to work, as good Wall Street analysts would recommend, so they buy land.
As land prices are much higher, their measly earnings aren't enough, so they have to borrow. The governments get all their earnings and debt repayments. Can you blame them for boosting the market whenever it slips? Land obsession is another force at work.
China was a rural economy not so long ago. The most important asset was always land. 'Be a government official and become rich' is a millennium-old Chinese saying. It didn't explain where the money went. It always went into agricultural land. In cities, you only see buildings, not paddy fields. But the buildings sit on land.
Now housemaids are in the market. Who else? Never underestimate 1.3 billion people. Welcome to China, the land of getting rich quick. -- Bloomberg
The writer is an independent economist based in Shanghai and was formerly Morgan Stanley's chief economist for the Asia-Pacific region. The opinions expressed are his own
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
The shoeshine boy's hottest tip: China property
By ANDY XIE
'MY maid just asked for leave,' a friend in Beijing told me recently. 'She's rushing home to buy property. I suggested she borrow 70 per cent, so she could cap the loss.' It wasn't the first time I had heard such a story in China. Friends in Shanghai have told me similar ones. It seems all the housemaids are rushing into the market at the same time.
There are benefits to housekeeping for fund managers. China's housemaids may be Asia's answer to the shoeshine boy whose stock tips prompted Joseph Kennedy to sell his shares before the Wall Street Crash of 1929.
Another friend recently vacationed in the southern island-resort city of Sanya in Hainan province and felt compelled to visit a development sales office. Everyone she knew had bought there already. It's either buy or be unsocial. 'You should buy two,' the sharp sales girl suggested. 'In three years, the price will have doubled. You could sell one and get one free.' How could anyone resist an offer like that? The evidence in official-corruption cases no longer involves cash stashed in refrigerators or starlet mistresses in Versace. The evidence is now apartments. One mid-level official in Shanghai was caught with 24 of them.
First, let me make it perfectly clear that calling China's real-estate market a 'bubble' isn't denying China's development success. As optimism is an essential ingredient in a bubble, economic success is a necessary condition. Nor am I saying that prices will drop tomorrow. A bubble evolves and bursts in its own time. When it is about to burst, I'll let you know.
Expectations of a Chinese currency revaluation are, perhaps, the most important force inflating the bubble. First, it plays to latent human desire for a free lunch. You just need to exchange your money for yuan. According to all the experts on Wall Street, you can only gain. The money has been gushing into China.
Second, the revaluation story has kept Chinese money inside the country. The US dollar has always been the safe-haven asset for Chinese. This is why Chinese banks had a large dollar deposit base. Of course, anybody who was somebody had dollars offshore. Now all that money is back. More importantly, any income, legal or otherwise, now stays in China.
Why would corrupt officials keep apartments rather than cash? Well, according to Wall Street, the yuan is going to appreciate. So holding dollars is out of the question. And why hold Chinese cash when property prices are always going up? The corruption money can be turbocharged in the real-estate market. Only when they are caught do they understand the downside of holding fixed assets.
The massive liquidity waves have prompted Chinese banks to lend as much as possible. One Wall Street tradition adopted quickly in China was bonus recipients signing company cheques to themselves. All you need is to report eye-popping quarterly earnings. It is an easier game than on Wall Street: The Chinese government keeps the lending spread wide by fixing both the deposit and lending rates. You just have to lend. The earnings will follow. Might the loans turn bad in three years?
Well, I'm not going to give back my bonuses, right? For a bubble to last, you need a force to hold it together when it stumbles. Wall Street kept pumping out new natural or synthetic products to turn debt into demand for assets. Local governments play this role in China.
When it comes to interested parties, Chinese governments are knee-deep in the bubble. They get all the money from land sales. Land values have risen to half of the development cost. In hot spots, land costs more than the development - the governments want to collect the future price gain immediately.
When properties are sold, transaction and profit taxes kick in. Developers pay more levies to the governments than they earn. When developers finally book their earnings, they must put it to work, as good Wall Street analysts would recommend, so they buy land.
As land prices are much higher, their measly earnings aren't enough, so they have to borrow. The governments get all their earnings and debt repayments. Can you blame them for boosting the market whenever it slips? Land obsession is another force at work.
China was a rural economy not so long ago. The most important asset was always land. 'Be a government official and become rich' is a millennium-old Chinese saying. It didn't explain where the money went. It always went into agricultural land. In cities, you only see buildings, not paddy fields. But the buildings sit on land.
Now housemaids are in the market. Who else? Never underestimate 1.3 billion people. Welcome to China, the land of getting rich quick. -- Bloomberg
The writer is an independent economist based in Shanghai and was formerly Morgan Stanley's chief economist for the Asia-Pacific region. The opinions expressed are his own
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
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