ST : Exec condos back after 5 years

Aug 15, 2010

property

Exec condos back after 5 years

Failed Jurong tender won't affect activity and prices, say experts; 4 projects slated for launch this year

By Joyce Teo

A tender for an executive condominium (EC) site drew no takers last Thursday. But that will not affect the activity level - or prices - in the EC market this year.

Four new EC projects yielding about 1,400 units in total will be launched over the next three to six months, said a recent CBRE Research report.

These sites - in Compassvale Bow, Punggol Field, Buangkok and Yishun - were awarded in the first half of the year.

ECs are making a comeback after a hiatus of five years as the Government steps in to ramp up supply for Singaporeans who can afford more than an HDB flat but find private property out of their reach.

The last EC launch was La Casa in Woodlands in 2005.

Last Thursday, an EC site tender in Jurong West Street 42 closed without attracting a single bid, taking the market by surprise.

But there will be another four EC sites available for sale later in the year - in Punggol Drive; at the junction of Elias Road and Pasir Ris Drive 1; Tampines Avenue 8; and Segar Road.

These sites can potentially yield another 2,200 units.

An industry expert said the failed Jurong tender may affect the speed of EC launches but not prices.

'Developers may want to rush out their EC launches because they see that the general property market may be facing more uncertainty,' he said.

But prices will not be affected as developers who bid high for previous sites will not want to lower their final selling prices, he added.

Mr Li Hiaw Ho, executive director of CBRE Research, said: 'Given the tender bid prices for the residential sites in recent months, developers are not likely to reduce prices of the new private homes.

'Assuming the historical 30 per cent price gap between private suburban homes and new ECs remains, median prices of new ECs are likely to stay around $650 per sq ft to $750 psf.'

EC prices have risen with the improving property market, particularly as developers have bid higher at recent EC tenders.

But now that new mass market condos can easily cost nearly $1,000 psf or more, ECs will be attractive to some buyers as they would be priced around

$700 psf, said PropNex chief executive Mohamed Ismail.

A new EC should always be at least 20 per cent to 25 per cent cheaper than a mass market private property, he added.

This is because ECs come with sale restrictions that may cause a buyer to lose out on a market cycle and thus have to wait a few years to cash out profitably, he added.

ECs have initial sale restrictions similar to those for public housing, such as a minimum occupation period of five years.

After five years, they can be sold, but to only Singaporeans and permanent residents. They become private properties after 10 years, when they can also be sold to foreigners.

Mr Ismail said there will always be buyers keen to take the EC route to becoming a private property owner, as first-time EC buyers are entitled to HDB housing grants.

Buyers of new EC units have to meet a gross monthly household income ceiling criterion of $10,000, compared to the $8,000 income ceiling for a new HDB flat.

joyceteo@sph.com.sg



The last EC launch was La Casa (left) in Woodlands in 2005. ECs have initial sale restrictions similar to those for public housing, such as a minimum occupation period of five years. After five years, they can be sold, but to only Singaporeans and permanent residents. They become private properties after 10 years, when they can also be sold to foreigners. -- PHOTO: FAR EAST ORGANIZATION

ST : Er, what is a mortgage?

Aug 15, 2010

FINANCIAL QUOTIENT

Er, what is a mortgage?

Where do you see this?

In articles about investment.

What does it mean?

A mortgage is a loan secured by real property. This property becomes the collateral. For instance, we use a mortgage loan to finance our purchases of HDB flats and private residential property. Depending on the criteria, you may be allowed by financial institutions to borrow up to 90 per cent of the property value. The balance can be paid in cash and from your Central Provident Fund savings.

Why is it important?

There is a variety of mortgage loans in the market. An example is the fixed rate mortgage loan, where the interest rate remains the same for a specified period. A home buyer may choose this if he wants to lock in the prevailing rates so that he need not be concerned with future fluctuations. Other types of loans include variable rate mortgage loans and loans pegged to, say, the Singapore Interbank Offered Rate. The latter is the rate at which banks lend to one another.

So you want to use the term. Just say...

'Home buyers who over-extended themselves with big mortgages because of the current low interest rates may get into financial difficulties when rates rise in the future.'

Lorna Tan

ST : Seletar aviation hub coming up fast

Aug 14, 2010

Seletar aviation hub coming up fast

Rolls-Royce factory and Eurocopter facility to be ready by end of year

By Karamjit Kaur

THE development of Seletar Aerospace Park, which stalled last year because of the recession, is picking up speed again, with some key projects slated for completion before the end of the year.

Construction works were in full swing during a recent visit to the site.

British engine giant Rolls-Royce, a key tenant, said a factory to make engine fan blades for large aircraft - its first such plant outside England - should be completed by December.

Two other facilities, a regional training centre and a plant to assemble and test engines, will come up in the middle of next year, the company told The Straits Times.

Rolls-Royce, which has been in Singapore for more than 50 years, is investing more than $700 million in the whole project, covering 154,000 sq m.

It has started a recruitment drive to fill 500 positions, with key posts in operations, finance, human resources and engineering already filled.

Helicopter manufacturer Eurocopter is also building a facility at Seletar to train pilots and carry out maintenance and repair work. It is 70 per cent built and will be completed in October.

In revised plans, the company will now invest $43 million in its Seletar project instead of $15 million as earlier announced, said Eurocopter South-east Asia president Bernhard Brenner.

Part of the extra cost is due to a new simulator to be installed at the pilot training academy, he said.

With the new facility, the company will be able to work on up to 24 helicopters at a time, instead of the present 12 at its Loyang Way premises. Eurocopter is owned by the European Aeronautic Defence and Space Company, which is the parent of aircraft maker Airbus.

Engine maker Pratt & Whitney has also confirmed plans to set up operations at Seletar.

These aviation heavyweights are among the first players in the development of the 300ha aerospace hub, which will transform the sleepy environs of Seletar Airport, a former military airbase, into a modern aviation centre with aircraft hangars, factories and buildings.

Before the makeover was announced, Seletar was home to a handful of aerospace companies as well as flying schools and private jet companies.

Bigger players like ST Aerospace, Jet Aviation and the Singapore Youth Flying Club are staying on, but many smaller companies have not made their final decisions yet.

The chief executive officer of Executive Jets Asia and Flying Doctors Asia, Mr Prithpal Singh, said: 'We are happy where we are now and our lease only expires in two years' time, so we still have time to decide whether we want to stay or move out.'

JTC Corp, which is spearheading the entire development, due to be completed by 2018, has started work on a cluster of factories and a seven-storey building, but Mr Singh said these do not meet his operational needs.

He said: 'We will see what more they offer us and then we will decide.'

To support the development of the aerospace park, Changi Airport Group, which manages Seletar Airport, is upgrading the passenger terminal building there and erecting a new control tower to handle any increase in the number of flights.

The runway is also being extended from 1.6km to 1.8km to enable pilots to land bigger aircraft like the Airbus 320 single-aisle jet with greater ease.

The extension will be completed next month, but additional works to be done to the end of the runway mean it will be operational for 10 hours a day and closed the rest of the time until the works are completed by the third quarter of next year.

Changi Airport spokesman Ivan Tan said the work will be carried out at night when there is less aircraft activity, so as to minimise the inconvenience.

Even while extension works were ongoing, the airport had at times opened the runway after hours to meet specific operational requests of companies operating at Seletar, he said.

karam@sph.com.sg



Rolls-Royce's factory to make engine fan blades will be its first outside England. -- PHOTO: ROLLS-ROYCE

ST : George Town is now Boom Town

Aug 14, 2010

memo from kl

George Town is now Boom Town

Restored shophouses giving Penang capital a new lease of life

By Carolyn Hong

GEORGE TOWN (PENANG): The row of 19th century shophouses in tiny Stewart Lane were crumbling into disrepair when Ms Narelle McMurtrie recognised their potential and bought them.

The Australian, who is famed for her boutique Bon Ton resort in Langkawi, painstakingly restored them to their former beauty.

The old coffee factory became the Kopi Cine cafe and the Reading Room, where visitors can browse its collection of books. Three shophouses were converted into guest residences. Four shophouses in Armenian Street, a five-minute walk away, were turned into a shop and more guestrooms.

Collectively called the Straits Collection, this stylish development caused a stir in Penang when it opened in December last year.

Many saw the new development as a tangible sign that George Town was finally emerging from years of shabbiness.

'There's definitely a spark. I feel a real energy downtown,' said Ms McMurtrie.

Opposite her cafe in Stewart Lane, hoardings shield another seven derelict shophouses, which will be transformed into a luxury boutique hotel.

Not far away, another much-awaited hotel project - owned by well-known Malaysian architect Hijjas Kasturi - will open by the end of this year.

Ms McMurtrie said that along the inner city's narrow lanes, many old shophouses were getting a new lease of life and new businesses were opening.

Agreeing, Mr Eric Fam, who manages the magnificent Cheong Fatt Tze mansion, said the feeling of rejuvenation was discernible everywhere, from the new buses plying the roads to cleaned-up tourist areas.

There are still problems, of course, but the activities and redevelopment taking place are creating a buzz.

The revival came after George Town was listed as a Unesco World Heritage Site in 2008. It was a joint entry with Malacca, which is enjoying a boom of its own.

Dr Andrew Aeria, a Penang activist and university lecturer, said the listing had accelerated the pace of rejuvenation that began a decade ago with the repeal of a pre-war law which kept rents forcibly low.

As rents soared, tenants fled George Town initially. Properties fell into disrepair but in recent years many shophouses have been sold and restored.

Dr Aeria said a recent infusion of new capital, due to cheap global credit snapping up relatively cheap Penang properties, had also boosted prices.

'The listing highlighted the city as a new location for global living and heritage tourism,' he said.

The tourism sector has boomed. Penang received nearly six million tourists last year, up 20 per cent from the year before. Almost half the foreign tourists were from Singapore. It hopes to see 10 million tourists by 2014.

The rapid pace of redevelopment and rejuvenation has, nevertheless, sparked worries about the over-gentrification of George Town. There is also concern that people unable to keep up with the rising costs will be pushed out.

Mr Fam noted that property prices have risen steadily and that rundown shophouses these days command a lot more money than they did just a few years ago.

Some locals say many of the old shophouses have been snapped up by wealthy foreigners and Malaysians, and turned into playgrounds for the rich. Local businesses have been forced out, they say.

Dr Aeria said the government had focused too much on the physical re-development of heritage properties for quick returns and was not taking a real interest in the local communities and their daily lives.

'This flies in the face of the Unesco listing status,' he said.

Agreeing, Mr Fam said that while people have returned to live in the city as it becomes habitable again, some local communities are being displaced.

Ms McMurtrie, however, believes the city's rejuvenation is led mostly by local people, who have made it lively and have set up new businesses.

She cited a Chinese restaurant near her cafe which did so well it moved out of its makeshift premises and into two shophouses.

'The spark comes from the local people who live and work here. They are proud of their city as it's now a heritage site, and are investing in it,' she said.

Dr Aeria said the government should do more to control the pace and direction of private investments.

He noted that it has yet to tackle a roiling controversy over swiftlet farms being set up in old shophouses for the lucrative bird's nest industry. This has triggered complaints about pollution, and could threaten the heritage listing.

Both the federal and state governments have been at loggerheads since Penang fell to the opposition alliance Pakatan Rakyat in 2008.

The federal government has cut out the state government by funding projects directly, while the Penang government has not done enough to attract appropriate businesses to George Town, according to Dr Aeria.

'I wish both governments would learn how to work together. Unfortunately, both prefer to score political points and behave like squabbling children,' he said.

carolynh@sph.com.sg



This stylish development called the Straits Collection, boasting a cafe, reading room, shops and guesthouses, caused a stir when it opened last year. It had previously been a row of dilapidated 19th century shophouses before Ms Narelle McMurtrie bought them and restored them. -- PHOTO: THE STRAITS COLLECTION

ST : Hong Kong acts to avoid property bubble

Aug 14, 2010

Hong Kong acts to avoid property bubble

Mortgage lending rules tightened, more land to be released to cool market

HONG KONG: Hong Kong's government yesterday said it will tighten mortgage lending rules and increase the supply of land to avoid a property bubble, warning that prices of some flats are approaching historic highs.

Financial Secretary John Tsang said prices in June were up 8 per cent from the end of last year despite a series of government measures introduced in April to cool the overheating market.

'A large amount of hot money has flown into Hong Kong's financial system.

'Flat prices of some popular housing developments are fast approaching historic highs,' he told a press conference.

'There is an increased risk of a property bubble forming because interest rates are expected to continue being very low for some time to come.'

Down payments for apartments costing HK$12 million (S$2.1 million) or more will rise to 40 per cent - from 30 per cent - with immediate effect, Hong Kong Monetary Authority chief executive Norman Chan said yesterday.

For properties worth HK$12 million or less, the maximum loan amount will be capped at HK$7.2 million, meaning down payments will increase for properties valued above HK$10.3 million. Luxury homes in the city are defined as those costing at least HK$10 million or bigger than 1,000 sq ft.

Down payments for investment properties will rise to 40 per cent from 30 per cent as well, Mr Chan said.

The government will also increase land sales next year, Mr Tsang said earlier.

Hong Kong has been seeking to rein in home prices that have soared about 40 per cent since the beginning of last year, boosted by the lowest mortgage rates in two decades and buying by mainland Chinese. Mr Tsang said home prices are approaching the levels of 1997, the height of a previous bubble that was followed by a six-year slump.

'This is a serious attempt by the government to slow the growth in property prices,' said CLSA Asia Pacific Markets regional head of property research Nicole Wong. 'Maybe a lot of people still have HK$4.8 million for a down payment on a HK$12 million flat, but luxury is a leading sector and this is sending a message that this is serious.'

Hong Kong banks will also be asked to apply stress tests on mortgage rates rising 2 percentage points, Mr Chan said. Mortgage borrowers' debt-to-income ratio should not be higher than 60 per cent when the interest rate increases by 200 basis points, he added.

'We want to remind all potential homebuyers that the interest rate right now is at a very abnormal level and it is impossible for this to be sustained,' Mr Chan said.

Banks are offering mortgage terms as low as 70 basis points above the one-month Hong Kong interbank offered rate, which is currently at 0.22 per cent.

Mr Tsang said the government would auction three extra sites on its latest application list in the remainder of the fiscal year ending March next year, regardless of whether developers table an offer. Two of these three sites would be auctioned next month.

Under Hong Kong's application list system, a land auction is triggered only when a developer offers at least 80 per cent of the government's minimum price for a lot on the list.

Mr Tsang added that the government would also convert some industrial sites into residential sites.

'The key to the issue of ever-rising home prices is the shortage of supply, and that the government has to wait at least a few years from now to see the effect of increasing land supply on the property market,' said Hang Seng Bank economist Irina Fan. 'The risk of asset-price bubbles will continue to grow as we expect the low interest rate environment will last for an extended period.'

The government will also raise the cancellation fee to 10 per cent of the deposit - from 5 per cent - and ban the resale of new flats before transactions are completed, Mr Tsang said.

Speculation in the Hong Kong market needs attention and the measures will increase the cost for speculators, he added.

BLOOMBERG, AGENCE FRANCE-PRESSE



With immediate effect, down payments for apartments costing HK$12 million (S$2.1 million) or more will rise to 40 per cent, from the current 30 per cent. -- PHOTO: AGENCE FRANCE-PRESSE

BT : Henderson to sell flats at HK project under probe

Business Times - 14 Aug 2010

Henderson to sell flats at HK project under probe

(Hong Kong)

HONG Kong billionaire Lee Shau-kee's Henderson Land Development Co plans to sell 10 new apartments at the luxury development where the cancellation of sales worth HK$2.67 billion (S$466.9 million) sparked an investigation by authorities.

The builder held a briefing with real estate agents on Thursday to start marketing the 10 units at 39 Conduit Road, spokeswoman Bonnie Ngan said in a phone interview yesterday. The units were not part of the 20 collapsed sales, she added.

'It shows that the developer is quite optimistic about where the luxury property market is heading,' said Patrick Chow, head of research at Ricacorp Properties Ltd, a local real estate brokerage. 'I don't think they would've put it out to the market if they don't have lots of confidence they'll be able to sell them at these prices. It would look very bad for them if they have to lower prices or even withdraw them.'

Hong Kong's fifth-biggest builder by market value is under government and police investigation after it said in June that 20 of 24 luxury flats it had expected to sell at the development had been cancelled. The company has denied any wrongdoing, and police and government officials have declined to comment on their probes.

The developer is aiming to sell the 10 flats that are priced at as much as about HK$186 million as home prices in the city are expected to increase with interest rates at two-decade lows and demand for the city's high-end properties from mainland buyers.

The value of Hong Kong luxury homes may climb 10 per cent in the second half on record-low mortgage rates and strong economic growth, according to Jones Lang LaSalle Inc.

Henderson's shares dropped one per cent to HK$50.05 at the 4pm close of trading in Hong Kong. The stock is down 14 per cent this year. The seven-member Hang Seng Property Index, which includes Henderson, fell 1.3 per cent in 2010.

The city's overall property prices surged more than 40 per cent since the beginning of last year, according to the Centa-City Leading Index, a weekly measure developed by Centaline Property Agency Ltd and City University of Hong Kong.

Hong Kong's Commercial Crime Bureau took documents from Henderson's offices a month ago as part of the investigation.

Henderson said it will take a charge of HK$734 million against earnings from the cancelled sales.

The builder said in October one of the flats was selling for as much as a record HK$88,000 a square foot.

The 10 new apartments range in size from 2,808 square feet to 3,533 square feet, according to a price list on the development's website.

The cheapest is listed at HK$81 million and the most expensive at HK$186 million. -- Bloomberg

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

BT : US mortgage rates hit 4.44% this week

Business Times - 14 Aug 2010

REAL ESTATE
US mortgage rates hit 4.44% this week

Increasing pessimism over weak economic recovery pulls down rates to lowest level in decades

(Washington)

GROWING pessimism over the weak economic recovery pushed US mortgage rates to the lowest level in decades for the seventh time in eight weeks.

The average rate on a 30-year fixed mortgage hit 4.44 per cent this week, mortgage buyer Freddie Mac said on Thursday. And some brokers say homeowners looking to refinance have even managed to do so for as low as 4 per cent.

Still, cheap rates have done little to boost the struggling housing market. Instead, they are highlighting investors' fears that the rebound is stalling and the country could be slipping back into a recession.

Investors are shifting their money away from stocks and into safer Treasury bonds. That is sending Treasury yields lower.

Mortgage rates track those yields. And the Federal Reserve is pushing those yields down even further. The central bank said on Tuesday it would buy Treasurys to help aid the recovery, using the proceeds from debt and mortgage-backed securities it bought from Fannie Mae and Freddie Mac.

That move alone is unlikely to push average rates down to 4 per cent, said Bob Walters, chief economist at Quicken Loans. But average rates that low are still a possibility if the economic outlook worsens even further.

'The silver lining to a bad economy is that interest rates fall,' Mr Walters said. 'If you can lower your debt burden by refinancing, that's great.'

Up to now, low rates have failed to spark a struggling housing market. Slow job growth, a 9.5 per cent unemployment rate and tight credit standards have kept people from buying homes. Applications to refinance have grown but remain well short of a massive boom.

Overall home loan applications rose only 0.6 per cent last week from a week earlier, the Mortgage Bankers Association said on Wednesday.

For those homeowners with solid finances, the opportunity to refinance below 4 per cent is persuading some to consider 15-year fixed loans. Those average rates dropped to 3.92 per cent, down from 3.95 per cent last week and the lowest in decades.

More homeowners are choosing that option because it allows them to save money in the long run, though it costs more in monthly payments. Freddie Mac says nearly a third of borrowers refinancing 30-year loans in the April-to-June picked loans with 15-year or 20-year terms.

Still, savvy consumers can already find 30-year fixed rates at or near 4 per cent if they are willing to pay a little more upfront.

Chik Quintans, assistant sales manager with Atlas Mortgage in Seattle, said he was able to get two clients into mortgages with a 4 per cent interest rate and a fee of one per cent of the total mortgage amount on Wednesday. But rates have inched up since then.

'Every day's different,' Mr Quintans said. 'Sometimes people have to ruminate, and then the opportunity's gone.'

Refinancing could pick up significantly if rates fall further. An average rate below 4.375 per cent could be enough of a drop so that many people who refinanced last year could shave a half of a percentage point of their mortgage rates, said Scott Buchta, chief mortgage strategist with Braver Stern Securities.

Lenders could find themselves in a bind if traffic picks up, Mr Buchta said. Many have laid off thousands of workers over the past three years and don't have enough staff to handle a crush of new applications.

Mortgage rates often fluctuate significantly, even within a given day. To calculate the national average, Freddie Mac collects mortgage rates on Monday through Wednesday of each week from about 125 banks, thrifts and credit unions around the country in a voluntary survey.

Rate quotes from parts of the country with more lending activity - such as the West and Northeast - are given more weight in creating the average.

Rates on five-year adjustable-rate mortgages averaged 3.56 per cent, down from 3.63 per cent a week earlier. Rates on one-year adjustable-rate mortgages fell to an average of 3.53 per cent from 3.55 per cent.

The rates do not include add-on fees known as points. One point is equal to one per cent of the total loan amount. The nationwide fee for loans in Freddie Mac's survey averaged 0.7 a point for all loans except for 15-year mortgages, which averaged 0.6 of a point. -- AP

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

BT : Living costs up for first time in four months

Business Times - 14 Aug 2010

LATEST US DATA
Living costs up for first time in four months

CPI increased 0.3% in July, highest in a year

THE cost of living in the US climbed last month for the first time in four months, pointing to a stabilisation that may ease concern a slowdown in growth will spur deflation.

The consumer-price index increased 0.3 per cent, the most in a year and exceeding the 0.2 per cent gain projected by the median forecast of economists surveyed by Bloomberg News, figures from the Labor Department showed yesterday. A gauge excluding volatile food and fuel costs, the so-called core rate, increased 0.1 per cent, as projected.

The report showed rents, the biggest component in CPI, increased for a second month, and the cost of clothing, used cars and tobacco climbed, diminishing the risk of a protracted drop in prices that would hurt the economy. Economists say the lack of inflation gives Federal Reserve policy makers scope to leave the benchmark interest rate near zero into 2011 to help invigorate the economy.

'Inflation should be tame,' Jonathan Basile, an economist at Credit Suisse in New York, said before the report. 'An upside risk to core inflation is the recent modest acceleration in shelter costs.' A report from the Commerce Department showed sales at U.S. retailers rose less than forecast in July, indicating the lack of jobs is prompting Americans to rein in spending. Purchases increased 0.4 per cent, led by autos and gasoline. Excluding auto dealers and service stations, demand dropped 0.1 per cent.

The forecast gain in consumer prices was based on the median estimate of 77 economists in a Bloomberg survey. Projections ranged from no change to a gain of 0.4 per cent.

In the 12 months ended in July, prices rose 1.2 per cent following a 1.1 per cent year-over-year gain the prior month. Economists had forecast a 1.2 per cent rise in the 12 months to July, according to the survey median.

The core rate rose 0.9 per cent from July 2009, matching the smallest year-over-year gain since 1966.

Fed policy makers this week left the overnight interbank lending rate target in a range of zero to 0.25 per cent, where it's been since December 2008. High unemployment, low inflation and stable price expectations 'are likely to warrant exceptionally low levels of the federal funds rate for an extended period,' the U.S. central bank said, repeating language from every policy meeting since March 2009.

The CPI is the broadest of three monthly price gauges from Labor, because it includes goods and services. Almost 60 per cent of the CPI covers prices consumers pay for services ranging from medical visits to airline fares and movie tickets.

The cost of medical care decreased 0.1 per cent in June, the biggest drop since 1975. Bloomberg

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

BT : SC Global Q2 profit soars 5 times

Business Times - 14 Aug 2010

SC Global Q2 profit soars 5 times

Revenue rises 18%; group's total financial liabilities fall slightly

By UMA SHANKARI

SC Global Developments, a developer of exclusive high-end luxury residences, yesterday reported a five-fold increase in Q2 net profit to $40.4 million - up from $7.8 million a year ago.

Higher revenue recognition from the group's development projects, including The Marq on Paterson Hill, Hilltops and Martin No. 38, contributed strongly to the reported profit as construction progressed for these projects.

Revenue for the three months ended June 30, 2010 rose 18 per cent to $267.7 million from $226.4 million.

'We are very pleased with the group's strong performance,' said chief executive Simon Cheong. 'Operationally, our developments under construction in Singapore are proceeding as planned and have resulted in higher revenue recognition based on the progress of construction.'

Earnings per share for Q2 2010 rose to 10.12 cents from 1.98 cents a year ago.

For the first half of 2010, SC Global's net profit rose 194 per cent to $53.8 million from $18.3 million a year ago. Group revenue for the half year increased 28 per cent to $458.4 million from $357.6 million last year. Revenue from a development project in China, Kairong International Gardens in Shenyang, and the group's subsidiary in Australia, AVJennings, also contributed to first-half revenue.

SC Global's total financial liabilities fell slightly to $1.62 billion as at end-June 2010 compared to $1.66 billion as at end-December 2009. Gearing, as measured by total debt to total assets, fell to 63 per cent from 65 per cent at the end of 2009.

The company held cash and cash equivalents of $177.6 million at end-June 2010, down from $264 million at the end of 2009. It said the decrease was mainly due to the repayment of reserve facilities, which were drawn to hold as additional liquidity since the fourth quarter of 2008 when the financial markets and credit environment became more volatile.

Mr Cheong added that SC Global holds a land bank of over 1.1 million square feet of developable gross floor area in the prime areas of Orchard Road and Sentosa Cove. Its operations in China and Australia also continued to expand and strengthen, he said: 'These will continue to underpin the group's performance going forward.'

SC Global shares gained three cents to close at $1.63 yesterday.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

BT : Chip Eng Seng posts 56% rise in Q2 profit

Business Times - 14 Aug 2010

Chip Eng Seng posts 56% rise in Q2 profit

By UMA SHANKARI

CONSTRUCTION and property group Chip Eng Seng Corp yesterday reported a 56 per cent climb in Q2 net profit, boosted mainly by property sales as well as higher construction activity.

Net profit for the three months ended June 30 rose to $22.4 million from $14.4 million a year ago. This came on the back of an 84 per cent climb in group revenue to $125 million from $68.1 million last year.

Revenue from the property development segment surged sevenfold to $40.5 million, accounting for almost a third of group revenue in Q2. This was mainly from sales of Chip Eng Seng's 100 per cent-owned development project Oasis@Elias, which was launched in the second half of 2009. As at June 30, 66 per cent of the project had been sold.

Revenue from construction activities also jumped 35 per cent to $84.1 million due to revenue recognition from ongoing developments such as The Parc Condominium, City Vista Residences, Grange Infinite as well as HDB projects.

Earnings per share rose to 3.4 cents in Q2 2010 from 2.18 cents last year.

For the first six months of 2010, net profit rose 76 per cent to $47.2 million from $26.8 million a year ago. Group revenue jumped 53 per cent to $225 million from $147.1 million.

Chip Eng Seng executive chairman Lim Tiam Seng said that the company will continue to benefit from the sustained recovery in the Singapore property market which has resulted in higher sales volume and prices at its projects. It has been actively replenishing its land bank in the past half-year, both locally and overseas.

The group also said it has obtained the temporary occupation permit (TOP) for its 50 per cent joint-venture project, The Parc Condominium. City Vista Residences, another 50 per cent joint-venture project, is expected to obtain its TOP in the coming months. City Vista Residences will be relaunched in the coming months.

As for its construction arm, Chip Eng Seng is expanding its precast division and also looking at ways to incorporate environmental protection practices into its business. The group's outstanding order book for its construction contracts stood at $233 million at end-June.

Chip Eng Seng shares gained half a cent to close at 35.5 cents yesterday.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

BT : HK tightens mortgage rules to cool property prices

Business Times - 14 Aug 2010

HK tightens mortgage rules to cool property prices

(Hong Kong)

THE Hong Kong government tightened mortgage lending yesterday for bigger flats as their prices head for historic highs, fuelling asset bubbles in the Chinese territory.

Property shares will likely feel pressure next week on the news, after late losses pushed the Hang Seng index to its worst weekly performance since early July.

Hong Kong, home to property tycoons such as Li Ka-shing and Lee Shau-kee, faces overheating in its real estate sector, driven by record-low interest rates, abundant liquidity partly due to mainland Chinese buying and Asia's strong economy.

'We need to take preventive measures before an asset bubble forms,' Hong Kong Financial Secretary John Tsang told a news conference after the government announced economic data.

'Experience indicates when the property market heats up, a lot of speculation takes place in the market,' he said. 'I will not hesitate to introduce further measures if necessary.'

In a separate news conference, the Hong Kong Monetary Authority announced tighter rules for lending, lowering the mortgage loan ceiling to 60 per cent from 70 per cent for properties with transaction prices of HK$12 million (S$2.1 million) or above.

Previously, mass-market apartments usually had a higher loan ceiling of 70 per cent, while luxury apartments are categorised as those that cost HK$20 million or more.

The government will also raise the forfeit of deposits for buyers who cancel apartment transactions to 10 per cent, up from 5 per cent, to discourage speculators.

While trying to increase the housing supply, the government has also set a limit on debt servicing ratios of mortgage applicants to 50 per cent, rather than the current 50-60 per cent. 'This is quite a powerful move to clamp down speculation in the property market,' said Alva To, head of consulting for North Asia at property services firm DTZ. The latest moves will likely dampen sentiment in the stock market next week.

'That is going to have a bit of pressure on the share prices, but not by too much. Actually if you look at the share prices, they have not performed that well if you compare that to the physical market,' Eva Lee, an analyst at Macquarie Securities.

Housing prices have risen by another 10 per cent since the start of 2010, after gaining about a third last year. Property stocks fell 1.3 per cent since the beginning of this year.

Mr Tsang said prices for large flats had surpassed previous highs of 1997 and were fast approaching historic highs.

Earlier this year, the government slapped a higher stamp duty on luxury apartments to try and rein in prices.

It is also increasing scrutiny of Hong Kong property developers such as Henderson Land Development Co Ltd, which was investigated by police after announced sales of several units at one of its luxury apartment developments ultimately failed to close. -- Reuters

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

BT : Mumbai slums giving way to high-rise luxury condos for super-rich

Business Times - 14 Aug 2010

REAL ESTATE
Mumbai slums giving way to high-rise luxury condos for super-rich

(Mumbai)

DEVELOPERS in Mumbai, the world's most densely populated city, are putting up luxury high-rise condos for millionaires in former slums and re-housing displaced residents on the same properties.

The 60-storey twin-tower Imperial, with apartments costing as much as US$14 million, was built on the narrow lanes cluttered with tin sheds that once housed 10,000 slum residents. The 50-storey Lodha Bellisimo has sprung up a few metres from the prison that houses the only gunman caught alive during the 60-hour terror siege of the Taj Mahal Palace and Tower in 2008.

'Mumbai is a very congested city and to accommodate this congestion and have more open spaces we have to rise up vertically,' said Amit Thacker, a director at SD Corp, builder of The Imperial, India's tallest apartment complex. 'This is possible only when we clear the existing occupied plots of land by rehabilitating the existing residents.'

Constrained by a four-decade-old law limiting height in built-up areas of India's financial capital, developers are constructing luxury towers in shanty towns and re-housing the slum-dwellers in new flats the size of a single-car garage. India's government is relying on such projects to make cities slum-free by 2015 as it braces itself for an inflow of about 250 million people who are expected to pour into urban spaces in the next 20 years.

The penthouses at The Imperial are estimated to sell for between US$13 million and US$14 million, according to Jones Lang LaSalle Meghraj, the local unit of the second-largest publicly traded commercial property broker. They boast views of the Arabian Sea, a golf course and Mumbai's horse-racing track. Flats at the Bellisimo cost as much as US$6 million.

DB Realty Ltd and the K. Raheja Corp are building luxury residential towers with views of train tracks on defunct textile mills in central Mumbai's Jacob Circle, an area congested with traffic, industrial units and slums.

FSI Developers including Housing Development & Infrastructure Ltd and Ackruti City Ltd are building in slums because of a 46-year-old law that limits building height in established residential areas of Mumbai, a city of 18 million built on seven islands.

Mumbai's Floor Space Index (FSI) - which determines the maximum floor area permitted in a building compared with the land on which it's constructed - was introduced in 1964 and set at 4.5. That means a building on a one acre plot of land, a little smaller than a football field, vertical living space totalling 196,000 square feet can be built.

The Municipal Corporation of Greater Mumbai lowered the permitted FSI to 1.33 times in 1991, which means all buildings with an FSI exceeding 4.5 times were built before 1964. That's the opposite to most cities with limited land which tend to raise the permitted FSI to accommodate growth, as in Manhattan, Singapore, Hong Kong and Chinese cities, according to a World Bank report last year.

'Abnormal constraints on FSI are one of the main reasons' Mumbai hasn't built more tall buildings, said New Jersey-based Alain Bertaud, an urban planning consultant for the World Bank who has been visiting the city annually for the past 15 years.

While Mumbai's FSI varies from one to 1.33, it can go as high as four in the slum areas under redevelopment.

Half of Mumbai's 18 million residents live in slums - more than the population of Switzerland. The city's clusters of ramshackle huts made from scrap materials line narrow garbage-strewn alleyways, usually lack proper sanitation facilities and water supply, and residents often use pilfered electricity from tapping into power cables.

The business district is a different world. Mumbai is the world's fourth-most expensive business location, behind London, Hong Kong and Tokyo, according to real estate services company CB Richard Ellis Group Inc.

The government plans to make the country 'slum-free' by 2015, Finance Minister Pranab Mukherjee reiterated in his budget speech in February. -- Bloomberg

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.

TODAY ONLINE : Speculators - are they making a comeback?

Speculators - are they making a comeback?

Recent launch prices for condos in outlying areas way above existing properties'

05:55 AM Aug 13, 2010

by Colin Tan



The confirmation of the positive numbers for the private residential sector in Singapore for 2Q2010 appears to have unleashed another wave of buying onto the market.

From landed homes to HDB flats, the market is awash with liquidity. My colleagues in the appraisal department tell me that the rising prices for properties not matched by their valuations have not scuttled too many deals.

In the public housing market, higher cash-over-valuation (COVs) on top of higher prices have also not slowed the rise in the HDB resale market.

With so much cash floating around, I have often maintained that the market is always waiting for a good excuse to renew its buying activity.

That excuse was provided within the past two weeks. The Scala, a 99-year leasehold project near Lorong Chuan MRT station attracted hundreds of potential buyers - or over a thousand according to one report - that balloting was needed to sort out who got to enter the showflat first.

Of course, it helped that a private preview held earlier for Hong Leong staff and other buyers meant that about a third of the units had already been sold before the official launch.

The timing of the launch was also spot on as it came after more stations on the Circle Line from Bartley right through to Dhoby Ghaut were opened for public use. This meant that most residents in the area have already had experience using the new line.

Because the Circle Line serves mainly lower population density areas, there is less overcrowding on the trains. This means that most rides are much more pleasant than rides on the older North-South or East-West lines. To be near an MRT station is already a plus, but to be near the Circle Line is a bonus.

In the following week, the preview of The Greenwich condominium caused a rare traffic jam in the quiet Seletar Hills estate. The showflat closed at 2am the following morning in order to cope with the demand.

It has been a while since we saw such frenzied buying activity. Who are these people who stayed up to the wee hours after midnight to book a unit? Are we seeing the return of speculators to the market?

All the signs are there. On a per-square-foot basis, the reported average selling price of about $1,150 psf for The Scala is about 1.5 times the prices of existing apartments in the area.

One buyer was quoted as hoping for a 10- to 20-per-cent increase in prices within two years. This sounds reasonable, until you realise that he is already paying 50-per-cent more than for existing apartments in the area.

The jump in prices are definitely going to flow through into the third quarter private housing statistics.

The launch price for The Greenwich was at $980 psf on average, rising to $1,025 psf over the weekend - a record for a location so far away from the city centre.

One consultant was spot on when he was quoted as saying "the buyers are those who really like this corner of Singapore".

Yes, it is really in one corner of Singapore. You need to own a car to live there or it can be pretty troublesome. Most residents in the area prefer living in houses rather than apartments. And the reason why they opt to live so far away from the city is because it is the only way houses can be affordable for them.

Why would someone choose to live in an apartment there when there are more than ample choices of apartments closer to the city with a better public transport network.

By any stretch of reasoning, I cannot see how owner occupiers can justify their purchases at these launch prices. It is also a little too much for investors.

That leaves the speculator, someone who plays the odds in the hope that it pays off and pays off really well. By their own reckoning, they need not depend on other Singaporean buyers. After all, the Chinese are coming. And they are known to pay big. Really big.

The writer is head of research and consultancy at Chesterton Suntec International.



Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved

ST : CDL targets bigger China footprint

Aug 13, 2010

CDL targets bigger China footprint

$300m allotted to beef up presence; chief says time is ripe to snap up sites

By Jessica Cheam

PROPERTY developer City Developments (CDL) is looking to boost its presence in the fast-growing Chinese market and has set aside $300 million for its newly minted unit, CDL China.

CDL executive chairman Kwek Leng Beng said yesterday the time looked ripe to snap up sites or investment properties at attractive prices in China, given the tightening of its property market by regulators.

The group has in its sights about 12 Tier 1 or Tier 2 cities, according to CDL China's newly appointed chief executive Sherman Kwek, who was speaking at the group's results briefing yesterday.

The new venture aims to focus on mid-tier to mid-high-end residential properties and will also look for commercial developments 'for medium- to long-term capital value and steady streams of income', said Mr Kwek, the elder son of Mr Kwek Leng Beng.

CDL China currently owns a 36-storey office building - Tianjin City Tower - in the north-eastern Chinese city, and CDL unit Millennium & Copthorne (M&C) has hotels across China.

CDL China's Mr Kwek said the group will first look into acquiring land directly from the government and developing properties on its own before seeking joint ventures.

Chairman Kwek Leng Beng stressed yesterday that the group intended to retain a firm foothold in Singapore, despite it seeking a larger footprint overseas.

CDL will be launching the first phase of two new projects - NV Residences in Pasir Ris and Copthorne Orchard in Bukit Timah - in the third quarter of the year, he said.

Singapore's strong economic growth has benefited the group's property development, hotel operations and rental properties. But this growth 'needs to be measured and taken in its context as there are still many external risks in the world economy, especially in Europe and the United States, with the possible impact yet to be determined', added Mr Kwek.

Despite recent concerns of a property bubble, he said Singapore was not at risk. Current prices, which climbed 5.3 per cent for the three months ended June, have not spiked and are at levels only slightly above previous peaks, he noted.

Private home prices are now 1.5 per cent ahead of the 1996 peak, and 3.7 per cent higher than the one in 2008.

Mr Kwek said recent government measures to cool the market were sufficient, but it would take a while for the effects to be felt.

He did not expect further price-calming measures from the Government, and pointed out that luxury properties had not sold as well as the industry had expected. This segment would perform well - perhaps next year - only if the wider global economy stabilises.

For the second quarter ended June 30, CDL posted a 17.6 per cent rise in net profit to $164.6 million over the figure in the same period last year.

Healthy sales of Singapore homes helped push revenue up by 19.6 per cent to $941.7 million for the period, and half-year sales rose 20 per cent to $1.7 billion.

Net profit for the half-year rose by 36.2 per cent to $304 million compared with that in the same period last year.

Earnings per share were 17.4 cents for the quarter, up from 14.7 cents a year ago; while net asset value for the group increased to $6.78 as of June 30 from $6.57 as of Dec 31 last year.

CDL unit M&C posted a 56.3 per cent rise in net profit to £25 million (S$45 million) in the second quarter. Its net profit for the half-year rose by 62 per cent to £37.2 million on the back of a recovery in the hotel sector.

DMG and Partners Securities investment analyst Brandon Lee said yesterday that the group's 45-year domestic track record was a key competency, but its overseas footprint - aside from hotels - remained less established.

Commenting on the timing of CDL's entry into the China market, which has lagged behind some of its competitors', Mr Lee said CDL's success will depend on the location of its investments.

'There are still growth opportunities with demand from genuine home buyers strong in certain cities,' he said, adding that he expected initial progress to be 'tepid, with earnings contribution only in the medium to long term'.

CDL China's Mr Kwek acknowledged that 'there's a lot of work to be done' since competitors are already established in the market, but the group 'will make the best' out of its latest move.

jcheam@sph.com.sg

ST : No bids for EC site in Jurong

Aug 13, 2010

No bids for EC site in Jurong

Lack of interest a sign that developers have become more selective

By Joyce Teo

AN EXECUTIVE condominium (EC) site that experts thought might draw at least two or three developers failed to attract a single bid at the tender's close yesterday.

The surprise lack of interest in the Jurong West site likely stems from the Government's recent decision to put a record number of sites up for tender in coming months, giving developers a wealth of choice.

Bids were tipped to come in between $230 and $300 per sq ft per plot ratio for the 99-year leasehold site after strong interest in other EC tenders this year.

But developers have become much more selective and the site is not particularly appealing, being next to the expressway with no amenities nearby and some distance from the MRT, said experts.

ERA Asia-Pacific associate director Eugene Lim added: 'If the site is not attractive, developers would presume that it would be difficult to sell. So why take the risk?'

A developer who declined to be named said: 'There are too many choices out there. You have only so much resources so you have to pick something that you can make money from.'

EL Development managing director Lim Yew Soon said: 'I would think most of us want to choose a site that is more attractive. There's an opportunity cost even if you put in an opportunistic bid as you may miss the next tender.'

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said developers will be more cautious with sites where they see limited pricing flexibility.

ECs are aimed at households with a gross monthly income ceiling of $10,000 so developers would want to price units at below a million each, he said. They should cost at least 10 to 15 per cent less than a private mass market condo unit.

The last time an EC site had no takers was in late 2008 when the market was weakening. That site - at the junction of Punggol Field and Punggol Road and near Punggol MRT station - eventually sold in June this year.

A Ministry of National Development spokesman said: 'It's not possible to conclude the lack of bids is a sign of the market cooling. Developers' participation on Government land sales sites is affected by several factors, of which location of the sites and supply of sites are some of the considerations.'

However, Mr Mak said the Jurong West outcome will have a 'psychological effect on the land sales market'.

'It could signal to developers that they no longer need to bid high for sites that are not attractively located,' he said.

The Jurong EC site can yield an estimated 460 units with a maximum permissible gross floor area of 542,988 sq ft.

Meanwhile, demand for new build-to- order (BTO) HDB flats remained strong, with 2,163 applications received for 171 four-room flats in Jurong West.

Applications for the five-room flats in the same area were nearly 12 times the 104 units on offer. The project in Bukit Panjang drew 2,123 applications for 313 four-room flats.

joyceteo@sph.com.sg

ST : YOG and F1 driving up hotel room rates

Aug 13, 2010

YOG and F1 driving up hotel room rates

Industry players warn against shutting out lower-budget visitors

By Ng Kai Ling

HOTEL rates in Singapore have spiked and are likely to stay high till the end of September, with events like the Youth Olympic Games (YOG) and the Singapore Grand Prix driving up demand.

Booking through a travel agent, a night's stay at a four-star hotel like Furama City Centre or Carlton Hotel starts from $250 a room - about 40 per cent higher than in the same period last year.

Travel agents and analysts said hoteliers are seizing the opportunity provided by this peak travel period to raise already high room rates.

Tourist arrivals hit a record high of one million last month.

'When demand is high, hoteliers will try to sell rooms at a higher price. For example, a room that went for $200 can now go for $250, if not $300, because demand is there,' said industry consultant David Ling, managing director of HVS Asia Pacific.

In the first six months of the year, the average room rate was $204, compared with $195 over the same period last year, according to figures from the Singapore Tourism Board.

'Rates will continue to remain high for the rest of August, and in September, because of demand from YOG and F1 supporters. But we expect hotel rates to normalise in the fourth quarter after the two major events,' Mr Ling added.

He estimates that the average room rate for the year will be 10 per cent to 15 per cent higher than 2009's $191 average.

The demand for hotel rooms has been so high that travel agents said they are having problems booking more, on top of what is already contracted to them.

SA Tours senior executive Dan Lim said: 'It's difficult to get more rooms as all the hotels are almost fully booked. The only way is to try a walk-in booking, or to book through the Internet, which can cost a bit more.'

Booking online directly, a night at the Carlton hotel starts from $280 a room, compared to $250 through a travel agent.

Across the board, hotel occupancy for the first six months of this year was at 85 per cent, a strong rebound from last year's 72 per cent.

The numbers reflect the seven consecutive record-breaking months of tourist arrivals in Singapore - hotels being one of the main beneficiaries of the tourist boom.

Since January, tourists have spent $755 million on rooms alone, with hotels' room revenues climbing between 5.8 per cent and 36.5 per cent. But the brisk sales may come at a cost.

'It is a double-edged sword,' said CTC Holidays senior vice-president of marketing and public relations Alicia Seah. 'On the one hand, we are taking in bookings from fans and supporters of YOG. On the other hand, leisure travellers are staying away because it is too expensive.'

Industry players warn that Singapore's high prices in general, coupled with higher room rates, may be shutting some tourists out.

'As pricing increases, it will likely edge out some visitors with lower travel budgets. There is a need (and an opportunity for developers) to construct more economy hotels in Singapore, to recapture and attract this visitor segment in the medium to long term,' said Mr Ling.

Hotels contacted would not give numbers, but said that occupancy rates have been high. Marina Bay Sands, in particular, said it is seeing nearly full occupancy this weekend when the YOG opens, and high levels of occupancy for the next weekend.

kailing@sph.com.sg


--------------------------------------------------------------------------------

HIGH DEMAND, HIGH PRICE

'When demand is high, hoteliers will try to sell rooms at a higher price. For example, a room that went for $200 can now go for $250, if not $300, because demand is there.'

Industry consultant David Ling, managing director of HVS Asia Pacific

ST : Liat Towers gets pop-up flood gate

Aug 13, 2010

Liat Towers gets pop-up flood gate

60cm barrier will rise from pavement only when there is a threat of flood

By Victoria Vaughan & Amresh Gunasingham

THE flood defence method of choice at Liat Towers in Orchard Road will be a pop-up barrier.

The first of its kind here, the $100,000 mechanism will make an appearance only when floods threaten, rising out of the pavement when activated to fit into a stainless steel frame.

In drier times, it will lie flush against the pavement in front of the mall.

The 60cm barrier - low enough for most people to stride over when raised - will stretch from the Orange Julius food and drink outlet near the Paterson Road side of the building to the Hermes boutique on the Angullia Park side.

The technology for it was adapted from a similar system installed in the Marina Bay Sands casino. If a fire breaks out there, a glass panel in the skylight will rise to let the smoke out.

Designer Jwee Quek of design and construction company Parafoil said: 'We've modified the design to act as a flood defence for Liat Towers. It is unique as it operates without the use of electricity.'

He explained that the panels will be held down by an electromagnetic lock. When the lock is switched off, the panels will rise to fit into the steel frame, which will be decorated to blend in with the look of the building and its surroundings.

The Liat Towers system will be activated by a key switch and an alarm. Yellow beacons will flash to warn pedestrians to steer clear of the rising panels.

Mr Chik Hai Lam, a supervisor at Goldvein which owns Liat Towers, expects work to begin by the end of the month and to be completed in three months. He said during the works, the pavement will need to be excavated about 0.33m deep.

Goldvein will bear the cost of the barrier.

Unusually heavy rain triggered floods on June 16 and 25 and on July 17 this year. The shops in Liat Towers, particularly those below street level, lost business from having to be shut for repairs; their loss of stocks ruined by rainwater also ran into millions of dollars.

Since July 17, the National Environment Agency (NEA) has issued 13 heavy-rain warnings, although this is not considered unusual.

The latest went out on Wednesday at about 1pm, when Little India, MacPherson and Seletar were flooded.

In Veerasamy Road in Little India, the water was about ankle-deep, although it subsided in 30 minutes.

National water agency PUB said the areas where flash floods struck that day - Little India, Kampong Ampat and Seletar - were known flooding hot spots because they were low-lying areas.

Drains in these areas will be widened by the end of the year, it added.

The floods of June and last month were unusual, given that wetter weather normally comes in the last three months of the year.

The NEA said that rainfall in the first two weeks of this month, at 176mm, was around the average for the month.

vvaughan@sph.com.sg

amreshg@sph.com.sg

BT : Jurong EC tender tale with a twist - and no bids

Business Times - 13 Aug 2010

Jurong EC tender tale with a twist - and no bids

Site's remoteness, supply of govt land in the pipeline cited for poor response

By EMILYN YAP

(SINGAPORE) The tender for an executive condominium (EC) site at Jurong West drew gasps of astonishment from market watchers when it closed yesterday - not because there were many bids but because there was absolutely none.

Observers attributed the lack of interest to the site's remoteness, and suggested that developers had become more selective given the many other pieces of state land available for sale.

The Housing and Development Board launched the 99-year leasehold site from the confirmed list for sale last month. It sits at Jurong West Street 42 and is some distance away from Lakeside MRT Station.

The site could have yielded around 460 units. Consultants which BT polled then did not think it was particularly attractive, but thought it might still reel in bids ranging from $230-$300 per square foot per plot ratio.

With no bids coming in, the site could be brought over to next year's government land sales (GLS) programme. The Ministry of National Development (MND) told BT that it will make future plans for the site known at a later date.

For an industry which has gotten used to seeing 10 or more developers vying for a residential site since the second half of 2009, the absence of any takers in the latest tender was surprising.

November 2008 was the last time when an EC site on the confirmed list saw no demand - the global downturn had kept developers away from the plot at Punggol. But it was subsequently sold in June and its tender drew five bids.

A developer who has been actively bidding for land told BT that he gave the tender of the Jurong West site a miss because the plot is not near an MRT station. Good location is especially important for ECs, he said. Furthermore, the government will be releasing more land and he has to 'reserve ammunition for better located sites'.

Consultants echoed these views. Colliers International investment sales executive director Ho Eng Joo said that developers are likely to be less aggressive and more selective given the many sites they will have to choose from.

The government has been increasing land supply as private home prices climbed in the last few quarters. The second half GLS offers 31 sites for private residences, which include a few other EC plots at areas such as Pasir Ris and Tampines.

Knight Frank's consultancy and research manager Ong Kah Seng also suggested that developers which bought land recently could be focusing on preparing those sites for launch.

Industry watchers hesitated to say if the lack of demand for the site at Jurong West signalled a cooling of the property market.

MND also said it was not possible to conclude so. Developers' participation in tenders 'is affected by several factors, of which location of the site and supply of sites are some of the considerations', it said.

In a report yesterday, CB Richard Ellis said it expects to see more activity in the EC market when four new projects with some 1,400 units altogether are launched in the next three to six months.

'Assuming the historical 30 per cent gap between private suburban homes and new ECs remains, median prices of new ECs are likely to stay at around $650 psf to $750 psf,' said CBRE Research executive director Li Hiaw Ho.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.