BT : Retreat in US property after tax credit removed short-lived: analysts

Business Times - 03 Jun 2010

Retreat in US property after tax credit removed short-lived: analysts

Low mortgage rates and improving jobs market will underpin the sector

(NEW YORK) The retreat in the US housing market after the government halted its hefty tax credit in April should be short-lived, say analysts, and the market may resume its path to stability.

Home sales surged in April before the month-end deadline to take advantage of the credit and demand dropped sharply in the following weeks. But mortgage rates near record lows and an improving jobs market will help underpin the sector, even without the artificial stimulus of tax breaks, said analysts.

A housing sector rebound is seen as a key pillar in the economy's recovery, which has gained steam as consumer spending picks up while manufacturing activity, which has led the upswing, stays strong.

'It's back to a fundamentals market where there are no gimmicks,' said Mike Fratantoni, vice-president of research and economics at the Mortgage Bankers Association (MBA).

The first-time homebuyer credit, as well as US$1.4 trillion in debt purchases by the Federal Reserve, served their purpose: lowering mortgage rates and restoring life to the worst housing slump since the Depression.

Sales of new homes, juiced by the tax credit deadline, leaped almost 15 per cent in April to a two-year high. Existing home sales jumped 7.6 per cent in April and almost 23 per cent in the year.

But applications to buy homes plummeted by nearly a third to 13-year lows after tax credits of up to US$8,000 ended on April 30, proving that the incentive pulled sales forward, the Mortgage Bankers Association found.

Despite the recent drop-off, sales should stay elevated through the summer and then flat-line, said many analysts.

'Job growth has returned even more quickly than we anticipated and mortgage rates are trending down again below 5 per cent. Both will spur real home buying activity,' wrote John Burns Real Estate Consulting.

Deutsche Bank expects that housing will have a lesser hangover from federal incentives than many fear, akin to the auto market after the cash-for-clunkers programme ended last year.

'We believe that improving economic confidence, home price stabilisation and rising household incomes will provide an important tailwind to home resales - sufficient to offset the expired incentives,' Joseph LaVorgna and Carl Riccadonna wrote in a Deutsche report.

US non-farm payrolls rose by 290,000 in April, the fastest pace in four years, and a Reuters polls forecasts employers added another 513,000 jobs in May.

Trulia.com, a real estate website, said that Internet real estate searches are picking up after sinking in the first two weeks following April's spike.

'While there was a big hangover effect after the tax credit, we're starting to see people come back and searching again' in the latter part of May, said Ken Shuman of Trulia.

In data Trulia compiled for Reuters, cities across the country showed on-line property searches in the first two weeks of May erased a good chunk if not all of the activity in the last two weeks of the tax credit.

In Miami Beach, Florida, searches rose 2.8 per cent in the last two weeks of April compared with the prior two weeks, and then fell 6.6 per cent in the first two weeks of May. Memphis, Tennessee searches sank 29.1 per cent in the first two May weeks after a 10.9 per cent jump the prior two weeks.

'We do think there will be more market correction in some areas and we don't expect to see major price gains anywhere,'added Mr Shuman. 'We're not expecting a major double dip either, we're more in the flat-lining group.'

Stability would be welcome after a crash that swept prices down 30 per cent on average before gaining traction.

And few expect the housing market to turn bubbly, with unemployment and underemployment still high and banks seen repossessing nearly one million homes this year.

Households are also busy rebuilding balance sheets and are still as much as US$9 trillion dollars down in net worth from the peak, MBA's Mr Fratantoni noted. The MBA forecasts a 5 per cent drop in sales in the second quarter, having factored in the applications dive this month that followed April's spike.

It will be some months before it's clear whether the housing market is really on the road to recovery.

Mark Linne, executive vice-president of AppraisalWorld, said data at summer's end will better reflect the housing market's health, without the artificial prop of the tax credit.

'If we go through the summer and it's not robust and doesn't show any signs of life, then it continues like the groundhog thing - we wait through another winter.' - Reuters

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



Staying strong: Despite the recent drop-off, sales should stay elevated through the summer and then flat-line, say analysts

BT : KepLand uses rights proceeds for Lakeside site

Business Times - 03 Jun 2010

KepLand uses rights proceeds for Lakeside site

KEPPEL Land said in an update yesterday that it has used another $75.8 million of the proceeds from its rights issue last year, which netted the developer a total of $700.6 million.

KepLand, the property arm of Keppel Corporation, has now used $666.6 million of the proceeds from the rights issue.

The latest amount will be used to fund a quarter of the cost of a 99-year leasehold residential plot near Lakeside MRT Station, which KepLand won in a government land tender last month. The property group put in the top bid of $303 million - or $499 per sq ft per plot ratio - for the site, trumping 13 other bidders.

KepLand has said that it plans to develop a condominium with about 550 units - ranging from 500 sq ft to 1,400 sq ft - on the land parcel, which marked the developer's first acquisition of a pure residential site in Singapore in six years.

The units will be in one-bedroom to four-bedroom configurations as well as penthouses. The project is expected to be launch ready by the end of this year and completed at the end of 2013, KepLand said last month.

KepLand shares gained 2 cents to close at $3.46 yesterday.

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

BT : Financial woes ahead for property developers: report

Business Times - 03 Jun 2010

Financial woes ahead for property developers: report

(BEIJING) China's property developers will have financial difficulties in the future as the liability ratio of 13 of the country's top 50 listed developers had already exceeded 70 per cent, yesterday's Shanghai Securities News reported.

The government's recent property market tightening will continue to slow the market in the second half of the year, said the newspaper, citing a report released by China Real Estate Appraisal (CRA) on Tuesday.

The report indicated that centrally administered state-owned property developers had fared better than other enterprises amid the government tightening measures.

Stock prices of listed property developers had slumped well over 20 per cent since the government introduced macro control measures in April.

China Overseas Land and Investment Ltd, subsidiary of the centrally administered China State Construction Engineering Corporation, had maintained rapid growth and replaced China Vanke Co as the country's largest listed property developer by market value, said the CRA report.

Total assets of the top 50 listed property enterprises hit 1.78 trillion yuan (S$367.8 billion) at the end of 2009, up 38.8 per cent year on year, it said.

Total revenue of these companies rose 48.3 per cent year on year to stand at 406.04 billion yuan, while net profit topped 83.84 billion yuan, up 67.38 per cent\. \-- Xinhua

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

BT : State land tenders still fetching record prices

Business Times - 03 Jun 2010

State land tenders still fetching record prices

Top bid for condo plot near Potong Pasir MRT is $607 psf ppr

By KALPANA RASHIWALA

A STATE tender for a 99-year leasehold private housing site next to Potong Pasir MRT Station has fetched a record land price for the area - $607 per square foot per plot ratio (psf ppr).

This is also the second highest price paid for a 99-year condo site sold by the state in Singapore's Rest of Central Region.

However, analysts point out that save for the top two bids - both of which were from foreign parties (Qingdao Construction of China and SP Setia Bhd of Malaysia) - the offers, from local players, were within expectations.

DTZ's South-east Asia research head Chua Chor Hoon observed that 'more foreign players are entering the local property development market as they see growth opportunities in Singapore'.

'As they've no or very little landbank in Singapore, they have to bid more aggressively than local developers to gain a foothold.'

Yesterday's tender drew a whopping 15 bids, as the plot's relatively small size rendered the total investment quantum affordable to a wider pool of contenders.

The competition among them, as well as the plot's choice location next to an MRT station close to the city, helped to create a bullish top bid, say industry players.

There was a significant gap between the top two bids, which came in at around $600 psf ppr, and the next three bids (from Koh Brothers, Far East Organization and Allgreen Properties), which congregated around the $500 psf ppr level. The lowest offer, from Hong Leong Group, was $321 psf ppr.

When the 53,516 sq ft site at Pheng Geck Avenue was launched in April, analysts had predicted bids of $450-560 psf ppr.

Qingdao Construction director Zuo Haibin acknowledged that his company's bid was 'not cheap', but noted that it had not been able to clinch any sites at state tenders in the past eight months.

Qingdao's breakeven cost is likely to be around $950 psf; it will handle the project's construction as well.

Mr Zuo added that the company is looking at an average selling price of about $1,000-1,050 psf, although the actual pricing will depend on market conditions at the time of launch, which is expected by year-end.

CBRE Research said that units at 8@ Woodleigh and Woodsville 28 nearby were transacted in the subsale market at $865-1,130 psf in January-April this year. Both projects are also 99-year leasehold.

Qingdao's proposed scheme comprises 150-160 apartments, ranging from one to four-bedders. There will be two levels of basement carparking.

This will be Qingdao's third property development here. It is developing Natura Loft, a Design, Build and Sell Scheme project in Bishan, for HDB.

The company also has a 20 per cent stake in a light industrial development in the Kallang Pudding area.

Mr Zuo told BT that Qingdao plans to list its operations here on the Singapore bourse around late-2011 or early-2012. The company is part of QingJian Group in China.

Other bidders at yesterday's tender included Frasers Centrepoint, Sing Holdings, Hoi Hup, Sim Lian Land and Wah Khiaw Developments.

Colliers International said yesterday's top bid was 5 per cent shy of the $639 psf ppr that Wing Tai and Greatearth paid for the Ascentia Sky plot in the Alexandra Road area in December 2007.

That is the record price for condo land sold by the state in Rest of Central Region.

Qingdao Construction's bid is also 40 per cent above the $434 psf ppr that Frasers Centrepoint paid for the Woodsville 28 site in July 2007.

However, that site is farther from the MRT station.

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

BT : S'pore developers tread softly amid China curbs

Business Times - 03 Jun 2010

S'pore developers tread softly amid China curbs

As tighter measures kick in, they will monitor situation before new launches

By UMA SHANKARI

(SINGAPORE) Even as China developers continue to delay home sales, their Singapore-listed counterparts are ploughing ahead with their Chinese project launches.

But some Singapore developers concede that they will be monitoring the market closely before fixing future launches. They also expect demand from homebuyers to soften over the rest of the year as the impact of China's recent tightening measures kick in.

Already, property signings in Beijing slumped nearly 70 per cent to 3,357 in May from April, the Shanghai Securities News reported on Tuesday citing data from bjfdc.gov.cn. In Shanghai, China's financial centre, transactions may have dropped about 70 per cent to 2,550 signings, and in the industrial city of Shenzhen, sales fell 62 per cent, the paper reported.

But the five developers BT contacted said that they have yet to see a significant drop-off in home sales.

CapitaLand, which has a pipeline of around 20,000 units in China, said that it sold over 200 homes in April and May. It remains 'on track' to launch three new residential projects in the second half of the year, a spokesman said.

Keppel Land also said that there is no change in the launch schedule of its projects, which are mostly townships, for this year.

'We target to launch another 3,400 homes across different cities in China this year, although we will monitor the market closely and adjust our sale launches accordingly,' said a Keppel Land spokesman.

Sales for Keppel Land's China properties have been 'encouraging'. The developer said it sold over 900 homes in its townships in April and May.

China-based Yanlord Land also said that it remains 'on track' with its delivery and development schedule. And GuocoLand, which has a 1,176-unit residential project in Tianjin in its portfolio, is now monitoring the market before fixing a launch date.

For now, most property groups are bracing themselves for a short-term fall in transaction volumes.

'The market remains volatile owing to concerns over new and potential government tightening measures,' said a spokesman for Yanlord Land. 'Many homebuyers have adopted a more cautious approach towards purchases, and this may lead to near-term softening of demand over the next 3-6 months.'

Said Ho Bee Investment's executive director Ong Chong Hua: 'The tightening measures are expected to continue to cool the market in terms of volume as well as capital values for the rest of the year.'

But the measures are healthy as they will prevent a bubble from forming and create a more sustainable and healthy residential market, Mr Ong added: 'In the mid to longer term, we are very confident about the residential market as it is underpinned by the shortage of homes to house a huge population base which has become more affluent through the last decade of rapid economic growth.'

Ho Bee's projects in China are still in the early stages of design and development, and so there are no launches planned yet.

Keppel Land also expects buying volume to taper down in the short term.

China has in recent weeks announced several measures to cool the property market as it tries to peel back a stimulus plan and a US$1.4 trillion lending binge that revived economic growth while raising the risk of asset bubbles.

Its government has restricted pre-sales by developers, curbed loans for third-home purchases, raised minimum mortgage rates and tightened downpayment requirements for second-home purchases.

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

BT : Mezzanine loans revive as confidence returns

Business Times - 03 Jun 2010

Mezzanine loans revive as confidence returns

But banks' delay in foreclosing on defaulted loans seen as a drag

(NEW YORK) The W Hotel in Union Square has had an eventful six months. The 270-room hotel in New York City changed hands in December after the private equity division of Dubai World defaulted on a US$117 million mezzanine loan in the face of dwindling business. But the lender, LEM Mezzanine, could itself lose the hotel in the coming months as a result of its filing for bankruptcy protection this year.

Mezzanine loans, which are secured by stock or other ownership stakes in a company, became a popular form of secondary financing during the real estate boom, offering high returns to investors and high interest rates for borrowers. There is an estimated US$100 billion in mezzanine loans outstanding across the country, and when the economy slowed and business slumped they became a special headache for borrowers.

But despite built-in risks, lenders say mezzanine loans are beginning to resurface, albeit slowly.

'It's become something people want to do again,' said William Shanahan, vice-chairman at CB Richard Ellis who specialises in investment properties in New York. 'I think it's fair to say that right now, the desire to place mezzanine debt outweighs the demand for it, but a lot of people are looking to put mezzanine loans on their properties. There are a number of players out there right now.'

Like the level between the first and second floors for which it is named, mezzanine loans come second in priority to the first mortgage.

The loans are typically secured by stock in the company, so that if a property owner defaults, he risks not only handing over the keys to his building but also the equity tied to the asset. By comparison, when a borrower defaults on a first mortgage, only the property itself is at stake.

As a result, many building owners who financed property at the height of the real estate bubble, including the proprietors of the W Hotel and the Hancock Tower in Boston, were at the mercy of mezzanine lenders after the economy turned down, profits shrank and junior loans swirled into default.

In March last year, Normandy Real Estate Partners, based in New Jersey, took control of the Hancock Tower, the tallest building in New England, by quietly buying up mezzanine debt shortly after the property's owner, Broadway Partners, defaulted on loan payments.

But as banks begin to provide more senior financing on commercial assets and investor confidence returns to the market, so too will increased demand for new mezzanine loans, lenders said.

Since January, an estimated US$374 million in mezzanine and other secondary loans have been issued across the country, an increase from just US$210 million in all of last year, according to data provided by Jones Lang LaSalle, the Chicago-based commercial real estate services firm.

Typically, borrowers who are unable to secure all of their financing needs for a property acquisition with a first mortgage have few options other than a mezzanine loan, mainly because first mortgage lenders usually demand locked-in agreements barring a second mortgage with similar terms.

'Little by little, you're going to have more liquidity in the market, which means the volume of mezzanine lending is going to increase,' said Bruce Batkin, the president of Terra Capital Partners, a real estate investment company based in New York. 'I think that's going to be happening in the second half of the year.'

The Pembrook Group, a fund management company based in Harrison, NY, is expected to originate as much as US$100 million in mezzanine debt by the end of the year, including half a dozen pending deals in Chicago, California, Florida and Texas, said John Garth, a managing director in the New York City office of the six-year-old company.

In late January, the group placed a US$12 million mezzanine loan at an office park outside Pittsburgh owned by the Keystone Property Group, which secured a US$42 million mortgage from Deutsche Bank, Mr Garth said.

'Money has become much more available and at much more attractive rates in the last 90 days, and business is getting signed up and closed,' said Mr Garth, who said that Pembrook originated about US$250 million in mezzanine loans in 2006, at the peak of the market. 'It's literally been since the first of February that we've seen a lot of competition on high-quality deals, from Wall Street shops, banks and insurance companies.'

At the Partners Group, a private asset manager based in Switzerland, demand for mezzanine loans has escalated significantly since January, said Eliza Bailey, a senior vice-president in the company's San Francisco office. She predicted that by the end of this year, the group would place upwards of US$300 million in mezzanine debt, both nationally and globally.

Among the Partners Group's recent deals, she said, was a US$10 million mezzanine loan on a portfolio of commercial buildings throughout the United States, as well as an US$11.3 million loan on a collection of residential assets in Germany.

'It's improved dramatically in 2010 as far as the quality of the new asset deals that are in the market,' Ms Bailey said. 'There's more visibility to value the underlying assets, and there's a little bit more of a market acceptance of where we are in the cycle. In 2009, I don't think anybody was clear about where we were or where we were headed.'

Dan Gorczycki, a managing director at Savills, said that until banks ramped up efforts to foreclose on defaulted loans, rather than extend them indefinitely, mezzanine lending opportunities would continue to be relatively scarce. The so-called extend-and-pretend strategy practised by banks, he said, has prevented many commercial properties from returning to the market and, subsequently, from being refinanced with the help of mezzanine debt.

'Now that the market's recovered, some banks are getting tougher, but other banks are saying, 'Let's give these guys some more time to work things out',' . Mr Gorczycki said.

'When nobody's forced to sell, there's nothing left to buy,' he added\. \-- NYT

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



Another owner? The W Hotel may change hands again as LEM Mezzanine files for bankruptcy protection

ST Forum : Share details of lift upgrading costs with residents

Jun 2, 2010

Share details of lift upgrading costs with residents

THE estate I live in has been selected for the Lift Upgrading Programme (LUP). Though I am not required to vote and share the LUP cost as I am residing on a lift-landing floor, I laud the programme for the greater convenience it affords the residents, especially the elderly.

HDB has also thoughtfully introduced affordable payment schemes for those residents who have financial difficulties.

LUP is a cost-sharing programme with the Government and town councils subsidising a substantial part of the total upgrading cost. Residents benefiting from it may be paying only a small fraction of the cost, subject to a cap of $3,000 for Singapore citizen households. HDB should reveal more details on lift construction costs to the residents so they understand what they are paying for.

Take a three-room flat in a standard block for example. The information contained in the provided brochure indicated that the Government pays $19,800 or 90 per cent, the town council pays $1,100 or 5 per cent, and each household pays $1,100 or 5 per cent.

Do all these estimated amounts mean each household would have had to pay an estimated $22,000 without subsidies?

But with subsidies, each would pay only $1,100?

If 32 households benefit in one three-room standard block, based on $22,000 (without subsidy) per household, does this mean the estimated cost of adding one new lift to one such block is about $704,000?

I believe HDB would have the lift-construction costs prior to dividing the estimated shared amounts payable by the three parties, but there is no information regarding this in the brochure.

HDB should provide in the brochure the estimated total construction cost of adding one new lift to the block slated for upgrading so that the residents can understand even better and vote confidently for the LUP without any doubt.

Loh Ching Tiam

ST : China's property market tipped for further growth

Jun 2, 2010

sme spotlight

China's property market tipped for further growth

EVEN though it is a relatively new industry, China's property market has a huge potential to grow over the next decade or so, said Mr Zhu Zhong Yi, vice-president of the China Real Estate Association.

Mr Zhu was in Singapore yesterday to speak at the inaugural Singapore Sino Property Investment Forum held at Orchard Parade Hotel.

Speaking in Mandarin, he said that to ensure healthy growth and stability in the property market, China needs to adopt a number of measures.

He said the Chinese government and industry players should focus on raising living standards and ensuring that people can afford to own property.

To do that, the government has to properly regulate market prices, he added.

Mr Zhu noted that property prices are rising at different rates in different parts of China. The government needs to introduce some control to ensure the stability of the property market, he said.

He added that residential property development in China should be sustainable.

A sustainable approach benefits the environment, and it also brings about about cost-savings for developers, he said.

Other speakers at the forum included Ms Lim Bee Imm, senior manager of property sales at leading local developer Far East Organization, and Mr Nicholas Mak, a real estate lecturer from Ngee Ann Polytechnic.

LEE YEN NEE

TODAY ONLINE : Two mansions up for sale

Two mansions up for sale

05:55 AM Jun 01, 2010

SINGAPORE - Two freehold residential sites have been put up for collective sale for the same asking price - at least $22.5 million each - while another en bloc deal has been sealed for $95 million.

The 11-storey Waldorf Mansions in the Balestier area was built in the 1990s and occupies 11,384 square feet. Under the Master Plan 2008, the site is zoned for residential development and can be built up to a height of 36 storeys.

Foh Pin Mansion, at the junction of Charlton and Upper Serangoon roads, is a 30-year-old apartment block with 21 units. It sits on a 34,154-sq-ft site which, according to the same Master Plan, can be redeveloped into a three-storey mixed landed housing development.

The launch of both tenders yesterday came as it emerged that Pender Court condominium off West Coast Highway had been sold for $95 million - making it the seventh en bloc sale of the year, according to Mr Karamjit Singh, managing director of Credo Real Estate, which marketed the site.

The amount is under the minimum asking price of $100 million, but would nonetheless reap the owners of the 48 units nearly $2 million each.

As the agent also for Waldorf Mansion, Credo said the new site could yield some 50 residential units. The $22.5 million price tag would equate to $709 psf per plot ratio inclusive of development charge - meaning the developer would expect to break-even at about $1,100 psf, Credo added.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak expects the site to draw small developers because of the lack of small plots in the Government Land Sales programme; and its freehold status means they can sit on the site should the market fall.

Savills Singapore, which is handling the Foh Pin Mansion sale, expects the property - which is in an established estate - to draw a strong response in view of the keen bidding for recent Government land sales in the area.

The tender for Foh Pin Mansion closes on June 28 and that for Waldorf Mansions the day after.

Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved

TODAY ONLINE : Prime office rentals to rise 'strongly' in H2

Prime office rentals to rise 'strongly' in H2

05:55 AM Jun 02, 2010

by Julie Quek

SINGAPORE - Office rentals for international Grade A office space in Singapore's prime financial district look set to climb higher by at least 25 per cent over the next two years.

This was the view of property analysts who believe that office property rents have already reached bottom, and will likely see a strong pick-up from the second half of this year.

"International Grade A" refers to a new generation of office buildings in Singapore that are less than 10 years old, such as the Marina Bay Financial Centre (MBFC) and One Raffles Quay.

However, office rentals for Grade A-minus or Grade B buildings - developments in the financial district that are more than 10 years old - may still remain soft, said Mr Donald Han, managing director of Cushman and Wakefield.

A key driver propelling rents up is the strong demand from financial institutions and law firms for such International Grade A office property, said Mr Han.

He pointed out that these big players are moving to the MBFC so that they can expand and consolidate all their offices in one location.

"Companies are also looking to expand their offices this year, due mainly to the stronger than expected Singapore economy seen in the first quarter," said Mr Han.

Mr Tony Darwell, Nomura Singapore's executive director, noted that during from late 2007 to end of 2008, many companies faced a shortage of available office property space in Singapore.

As a result, many banks had to compromise and site their offices in different locations, said Mr Darwell.

Over the past six months, he has seen a surge of precommitment deals for International Grade A office space.

"In fact, some companies are even committing as early as one year before their current lease expires," said Mr Darwell.

Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved

BT : Housing problem worse than US

Business Times - 02 Jun 2010

Housing problem worse than US

It could stoke public discontent, warns a central bank adviser

(BEIJING) China's housing market problems are worse than those in the US before the global downturn as they could stoke public discontent, warned a central bank adviser.

The comments were made before China's State Council, or cabinet, announced that it would 'gradually reform the real estate tax' - the first official sign of a possible annual levy on residential housing aimed at reining in soaring prices.

'The housing market problem in China is actually much, much more fundamental, much bigger than the housing market problem in the US and UK before your financial crisis,' said Li Daokui, a member of the bank's monetary policy committee. 'It is more than (just) a bubble problem,' he told the Financial Times in an interview published yesterday.

The property market in the US collapsed as too many people were unable to repay their high-risk, or sub-prime mortgages, leading to a credit crunch in which thousands lost their homes and lending dried up. China has recently introduced a range of measures to prevent the growth of asset bubbles and soaring property prices.

The latest tax plan was expected to discourage property speculation and help replenish the coffers of local governments, which have been severely depleted by an investment binge over the past year, Chinese media reports have said.

Mr Li said that recent government measures to rein in the property market needed to be part of a long-term push to bring high housing prices under control, the Financial Times reported.

He warned that the high cost of housing could hamper future growth by slowing urbanisation. Rising prices were also a potential political flashpoint, especially among younger people who felt locked out of having their own home.

'When prices go up, many people, especially young people, become very anxious,' he said. 'It is a social problem.'

He added that there were still signs that the economy was overheating and recommended modest increases in deposit interest rates and the value of the Chinese currency, the report said.

Authorities have tightened restrictions on advance sales of new property developments, introduced new curbs on loans for third home purchases, and raised minimum downpayments for second homes.

Official data showed that real estate prices in 70 cities jumped 12.8 per cent in April, the fastest year-on-year rise for a single month in five years. -- AFP

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



Stacking it higher: Li Daokui, a member of the bank's monetary policy committee, says that recent measures to rein in the property market needs to be part of a long-term push to bring high housing prices under control

TODAY ONLINE : Realtors body does not condone 'scare tactics'

Realtors body does not condone 'scare tactics'

05:55 AM Jun 01, 2010

by Joanne Chan



SINGAPORE - Property agents have been urged to be responsible in the light of "scare tactics" on clients' concerns.

Emails forwarded to MediaCorp detailed how some agents are highlighting the Government's recent land sales to lower client expectations of property prices. These emails detail correspondence between agents of real estate firm ERA.

In one email, a senior division director drew attention to a news report on land released for private homes. He called on agents to use the news as "a bargaining point to lower down your private residential seller's high expectations".

This prompted another agent to disclose that she closed a deal after telling her client that the "market is going to crash".

Industry observers said the gap between buyers' and sellers' expectations is widening due to mixed market sentiment.

ERA said it did not have specific guidelines on how agents should communicate with clients, as long as the information presented is factually correct. Mr Eugene Lim, ERA Asia-Pacific's associate director, said: "It could be wrong usage of the word or overly strong usage of the word". What the agent was trying to say was that there will be downward pressure on prices because supply is increasing. It is also a matter of perspective and opinion.

"Today's sellers" are not "spooked by language", as most have sufficient information to form an opinion, he added.

Mr Steven Tan, advisory committee member of Singapore Accredited Estate Agencies (SAEA), said such conduct is not condoned by the industry. Telling the seller that the market is going to crash will ultimately make the seller dispose of his property at a price below expectation.

"Instead, the agent should provide more comprehensive analysis of the market condition and get the best possible price for the seller," he said.

Dr Tan Tee Khoon, SAEA's chief executive officer, said it may not have been a scare tactic. Agents may be informing sellers about the likely implications of the land release, and if the latter intends to postpone selling - thinking that prices will continue to rise - such expectations may not be realised. It could have been "responsible advice to make hay while the sun shines and sell at the best price".

It is also "not untrue that prices may falter in due course" and sellers may not get the best deal if they delay, he added.

The National Development Ministry is setting up a statutory board, the Council for Estate Agencies, to implement a regulatory framework for real estate agents. Consumers who feel they have been disadvantaged or misled by agencies or agents can report such matters to the new council.

Copyright 2010 MediaCorp Pte Ltd | All Rights Reserved

BT : Property sales dive 70% in Beijing and Shanghai

Business Times - 02 Jun 2010

Property sales dive 70% in Beijing and Shanghai

Developers delay launches on govt tightening measures

(BEIJING) Property sales in Beijing, Shanghai and Shenzhen fell as much as 70 per cent in May as developers delay sales following government tightening measures.

In China's capital Beijing property signings slumped nearly 70 per cent to 3,357 in May from April, the Shanghai Securities News reported, citing data from bjfdc.gov.cn. In Shanghai, the nation's financial centre, transactions may have dropped about 70 per cent to 2,550 signings, the paper reported, and in the industrial city of Shenzhen, sales fell 62 per cent.

China has restricted pre-sales by developers, curbed loans for third-home purchases, raised minimum mortgage rates and tightened down-payment requirements for second-home purchases. The government is trying to peel back a stimulus plan and US$1.4 trillion lending binge that revived economic growth while raising the risk of asset bubbles.

'The government should have put in tougher enforcement earlier to prevent the high prices,' said Lu Qilin, a Shanghai- based researcher at UWin. 'If the government doesn't stop this soon, the bubble will burst.'

An index tracking 34 real estate firms traded in Shanghai fell 2.2 per cent as of 1:13 pm yesterday, extending this year's loss to 30 per cent. China Vanke Co, the nation's biggest listed developer, dropped 1.3 per cent to 7.12 yuan. Poly Real Estate Group Co declined 3.9 per cent to 10.62 yuan.

Copper, aluminium and zinc also declined on concern slumping property transactions and slowing manufacturing growth in China, the world's biggest metals consumer, may hurt demand for commodities. Lead, nickel and tin fell.

Real estate prices rose a record 12.8 per cent in April from a year earlier, the National Bureau of Statistics said on May 11. Transactions for new homes in Shanghai fell 56 per cent in the month to May 16 from a month ago, to 520,000 square metres (5.6 million square feet), Mr Lu said.

Most developers are postponing project launch dates and are waiting to see market developments before finally pricing new projects, said Oscar Choi and Marco Sze, Hong Kong-based analysts at Citigroup Inc in a report distributed yesterday.

China's property market problems are worse than in the US or UK before the financial crisis, the Financial Times said yesterday, citing an interview with Li Daokui, a member of the Chinese central bank's monetary policy committee. The country's housing market problems combine a possible bubble with the risk of social discontent, he said.

China's State Council approved the National Development and Reform Commission's gradual property tax reform, according to a statement on the Chinese government website on Monday.

Shanghai's plan to begin a property tax on residential real estate has been submitted to the Chinese central government for review, the China Securities Journal reported on Monday. The city may impose the tax on people without residence permits and those who do not file income tax declarations for three years or more, the report said, citing unidentified people.

Shanghai developers have delayed sales of new residences because the municipal government hasn't announced its property policy, the Oriental Morning Post reported on Monday, citing unidentified developers. Only 46 of a scheduled 96 developments were put on sale for the month as of May 28, the newspaper reported, citing Soufun.com, a real estate data research website.

'We expect more measures to be introduced on developers, especially those to monitor construction schedule and restrict cash flow, thus pushing developers to cut the price earlier,' the Citigroup analysts wrote.

Shi Weijian, an analyst at Jianghai Securities, said Shanghai's government may announce a property tax as early as this month, which will likely be implemented at the end of the year. Shanghai home prices may fall between 25 per cent and 30 per cent from the introduction, he said.

Gao Jian, a Shanghai-based analyst at Northeast Securities, forecast a drop of prices of about 20 per cent should a property tax come into effect.

'We've seen downward pressure of housing transactions and prices, and the correction is likely to continue in the next one to two years,' he said. -- Bloomberg

Housing problem worse than US, Page 16

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



Pulling the brakes: China has restricted pre-sales by developers, curbed loans for third-home purchases, raised minimum mortgage rates and tightened down-payment requirements for second-home purchases

BT : JTC awards Tampines industrial site tender

Business Times - 02 Jun 2010

JTC awards Tampines industrial site tender

JTC Corporation yesterday said it has awarded the tender for an industrial site at Tampines Industrial Avenue 4 to Soon Hock Tuas Development, which trumped nine other bidders at the close of the government's tender on May 12.

Soon Hock Tuas Development submitted the highest bid of $33.1 million for the 30-year-lease plot, which has a land area of 538,000 square feet. The price works out to $62 per square foot per plot ratio (psf ppr). The site has a gross plot ratio of 0.64 to 0.8.

Soon Hock Tuas Development's bid was slightly higher than market expectations. When the site was launched, analysts said that the land parcel can fetch $40-$50 psf ppr, which translates to some $17.2 to $21.5 million for the entire plot.

The developer's bid was also 7 per cent higher than the second highest bid of $31 million put in by Tat Hong Holdings and more than three times the amount of the lowest bid from Yee Lee Development, which offered $10.2 million.

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

ST : Pender Court sold for $95m, 2 other sites for sale

Jun 1, 2010

Pender Court sold for $95m, 2 other sites for sale

PENDER Court, a 48-unit condominium off West Coast Highway, has been sold en bloc for $95 million.

This land price works out to $1,007 per sq ft (psf) on the potential gross floor area. The price is shy of the owners' asking price of $100million to $108 million but is way above the $80 million price negotiated in an ultimately abortive sale in the boom days of July 2007.

Bravo Building Construction called off the sale in early 2008. It had also pulled out of two other collective sale deals.

Owners of the 48 units will get close to $2 million each.

Credo Real Estate, which marketed the site, confirmed only the price and declined to comment further as the sale committee is not yet ready to make a formal announcement.

Meanwhile, Waldorf Mansions off Balestier Road and Foh Pin Mansion in Charlton Road have been put up for collective sale.

Both freehold estates have an indicative price of about $22.5 million each. At the 16-unit Waldorf Mansions, this equates to $709 psf per plot ratio, inclusive of a development charge of $104,000.

Credo Real Estate said the buyer can expect to break even at about $1,100 psf.

Built in the 1990s, the site has an allowed gross floor area of 31,875 sq ft. The buyer can redevelop the site into a project with 50 apartments of 600 sq ft on average, said Credo.

As for the 30-year-old, 21-unit Foh Pin Mansion, it can be redeveloped only into a three-storey mixed landed housing development as the land has been rezoned, said marketing agent Savills Singapore.

The buyer may undertake a cluster housing development, said Savills director of investment sales Suzie Mok.

A price of $21 million or $22 million will translate to a land price of about $610 psf to $650 psf, she said.

The tender for Waldorf Mansions closes on June 29 while the tender for Foh Pin closes a day earlier on June 28.

JOYCE TEO

ST : Waterfront, city homes still a hit in resale market

Jun 1, 2010

Waterfront, city homes still a hit in resale market

By Joyce Teo

WATERFRONT and prime city homes continue to be popular choices in the resale market, which could mean more conversions of office space into homes, property consultancy CB Richard Ellis (CBRE) says.

Its latest report says the total value of resale deals for these homes in Districts 1, 2 and 4 - where the Marina Bay, Shenton Way and Sentosa Cove areas are located - hit $470.2 million from January to May.

The 246 units sold in these upmarket districts in the first five months of this year make up 51 per cent of the total for all of last year. Although the value of these deals pales in comparison to the full-year 2007 peak of $2.08 billion for these districts, it compares relatively well with full-year sales of $750.8 million last year and average annual resale values of $737.8 million from 2005 to 2008.

CBRE's executive director for residential properties Joseph Tan said an ongoing, sustained demand for residential units in these areas could prompt developers to convert or redevelop older office blocks into high-end residential use.

One example is the conversion of the Ong Building site at 76 Shenton Way into a 202-unit residential project. This project sold out in March.

CBRE estimates 1.3 million sq ft of offices will be converted to mainly residential use from now to 2013, he said.

Office buildings that have received planning approvals for conversion to residential use include VTB Building, into 148 units; UIC Building, into 593 units; and Marina House, into 155 units.

On new launches, the euro zone crisis has made investors more cautious while the Government's large release of sites for sale could have dampened sentiment among owner-occupiers, says an industry source. He expects transactions and prices to cool to a more sustainable level.

The largest new release over the holiday weekend was the 1,145-unit condominium in Hougang - The Minton.

About 300 units were released, of which some 180 were sold at an average price of $850 per sq ft.

Property experts had reportedly said sales could have been more brisk if the condo had been launched earlier.

Developer Kheng Leong said 5 per cent of the buyers were foreigners, with the rest being locals or permanent residents.

The most popular were the two-bedroom units, it said. They accounted for some 35 per cent of the units purchased at the 99-year leasehold condo.

The one- and three-bedroom units each made up 25 per cent of the sales.

'The one-bedroom units didn't move as fast as the two-bedroom units. It shows that a lot of people are buying units to live in, rather than for investment,' said Knight Frank's managing director for residential services Peter Ow.

One-bedders have been popular with investors as they are deemed affordable.

ST : BOY! What a tough climb to the top

Jun 1, 2010

BOY! What a tough climb to the top

China-born developer, the Businessman of the Year, recalls long, hard struggle

By Gabriel Chen

A BEAMING Mr Zhong Sheng Jian, the founder of leading Chinese property developer Yanlord Land, last night recalled his tough climb to the top as he accepted a major Singapore business award.

Yanlord, which is listed on the Singapore Exchange, has developed a potent brand name that is now synonymous with high-end fully fitted apartments in the booming mainland market.

Last night, the 53-year old China-born entrepreneur, who became a Singapore citizen in the early 1990s, bagged the Businessman of the Year Award at this year's Singapore Business Awards.

'When I was informed about this award, many memories welled up in my mind,' said the father of five in his acceptance speech at the glitzy dinner event at Resorts World Sentosa. 'Visions of the past flashed across my eyes, memories of constantly being on the road, of the numerous destinations, of the different modes of transport, of the uncounted number of hotels I stayed in.'

Small and medium-sized enterprises (SMEs) also received good news yesterday. Deputy Prime Minister Teo Chee Hean said at the ceremony that SMEs will enjoy higher funding rates - 20 per cent more - for the productivity training programmes the Workforce Development Agency is developing with various industry associations.

For the winners last night, the awards - jointly organised by The Business Times and DHL Worldwide Express - affirmed their hard work on the long and often rough road to success.

Mr Zhong said an entrepreneur must be adaptable to succeed in the ever-changing market environment.

He should know what it means to seize opportunities, having capitalised on China's rapid urbanisation to venture into property development 17 years ago.

The Guangdong native launched the venture with funds he had accumulated from other business activities such as importing and trading in raw materials and paper, and from printing and paper-making businesses.

In his successful drive to build homes in China, Mr Zhong was inspired by the advanced property development concepts found in the Singapore property sector.

Instead of churning out the small, empty concrete boxes that passed for flats in China at the time, he decided to offer increasingly affluent city dwellers something better. So in 1993, the newly established Yanlord rolled out one of China's first high-end residential developments in Shanghai.

Mr Zhong played down his achievements, saying: 'Without the rapid reformation of the Chinese economy, I would not be able to achieve what I have today regardless of my personal ability.'

Another Singaporean honoured yesterday was Mr Phupinder Gill, president of the Chicago-based CME Group, the world's largest diverse futures market, who clinched the Outstanding Chief Executive (Overseas) of the Year award.

Mr Gill, 49, is a former relief teacher at Queenstown Secondary School.

He went to Washington State University in the 1980s to pursue a degree in finance and a Master of Business Administration degree. After graduation, he joined CME in 1988 as a clerk. 'I was paid US$5 an hour. This wasn't a lot,' he said.

He worked his way up the organisation, from operations specialist to senior risk analyst and then options manager, and later as president of the clearing house in 1998.

'The best advice I can give is that if you are in the workforce, think big, act big. Work at a company as if you own the firm,' he said.

Also honoured this year were Cerebos Pacific president Eiji Koike, who won the Outstanding Chief Executive award, and International SOS, which won the Enterprise award. The group provides medical assistance, international health care and security services.

gabrielc@sph.com.sg



THE WINNERS (From left) Outstanding Overseas CEO Phupinder Gill; Businessman of the Year Zhong Sheng Jian of Yanlord Land; Enterprise award winners Dr Pascal Rey-Herme, co-founder and group medical director, and Mr Arnaud Vaissie, co-founder, chairman and CEO of International SOS; and CEO of the Year Eiji Koike from Cerebos. -- ST PHOTO:MALCOLM KOH

BT : OUE unveils note issue; Lippo plans placement

Business Times - 01 Jun 2010

OUE unveils note issue; Lippo plans placement

Property firm plans acquisitions from $200m note sale

By UMA SHANKARI

INDONESIA'S Lippo Group is selling an undisclosed number of its shares in property group Overseas Union Enterprise (OUE), OUE said yesterday.

OUE is also planning to issue up to $200 million in convertible notes due 2015. The property group said that net proceeds from the sale of the notes - which are convertible into new ordinary shares - will be used to buy hospitality, retail, commercial and/or residential land sites or properties for development in Singapore.

'We have recently identified a property in Singapore that we are considering for our portfolio. The property is an office tower complex in the CBD (central business district) area which we believe is suitable for redevelopment,' said OUE.

The proposed acquisition and development will be financed by both internal resources and external borrowings, the company said.

OUE also said that it is looking to start a residential property business. Right now, it has one residential site - Twin Peaks, a project at the site of the former The Grangeford - in its portfolio. The project is expected to be launched sometime this month.

In the same series of filings to the Singapore Exchange, OUE also announced a planned vendor share placement. Controlling shareholder Lippo now has an indirect interest of 51.19 per cent in the company. It also holds 37.32 per cent of OUE's shares through Golden Concord Asia, which will sell an undisclosed number of its shares in a placement.

Lippo paid $957 million to buy Malaysian tycoon Ananda Krishnan's stake in the Singapore-listed OUE in March. This gave Lippo sole control of the property group. The move came following reports that ties between Lippo president Stephen Riady and Mr Krishnan were strained and that there were disagreements over the management of OUE.

Mr Riady, who also became OUE's executive chairman, told BT in an interview last month that OUE will be Lippo's Singapore flagship. His aim is to have 50 per cent of OUE's bottom line come from recurrent income and get development profit to make up the remaining half. OUE has almost no development profit now, Mr Riady said then.

Analysts said that the convertible note issue is probably aimed at funding future acquisitions of residential land.

'They (OUE) have publicly said that they want more development profits. To achieve this, they will first need to buy more land,' said an analyst with a foreign bank here.

The issue size and pricing will be determined after a book-building exercise, OUE said. The convertible notes will be offered to institutional or accredited investors in Singapore, qualified institutional buyers in the United States and also eligible investors outside the US.

OUE shares lost two cents to close at $18.98 yesterday.

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

BT : Far East may launch 6 projects in H2

Business Times - 01 Jun 2010

Far East may launch 6 projects in H2

It cites good sentiment, low interest rates

By UMA SHANKARI

FAR East Organization plans to launch up to six residential projects with more than 1,500 units in the second half of this year, said chief operating officer Chia Boon Kuah.

Mr Chia, who is bullish on the high-end and mass market segments of the private property market here, said most - if not all - of the projects could be pushed out by year-end.

'On the ground, the sentiment is quite good,' he said. 'The demand factors are there, with the positive economic situation in Singapore and the low interest rate environment.'

Two of the six projects are being developed as joint ventures with Frasers Centrepoint - Waterfront Gold with 361 units and and Waterfront Isle with 556.

The projects are the third and fourth phases of the two developers' Waterfront Collection along Bedok Reservoir.

The four other projects are fully owned by Far East.

They are: the 319-unit Greenwich at the corner of Yio Chu Kang and Seletar roads; the 214-unit Lanai in the Hillview area; the 72-unit Horizon Residences on Pasir Panjang Hill; and the luxury Skyline @ Orchard Boulevard, which will have 40 apartments.

Together, the six projects will yield 1,562 units - although not all units in each project will be released during the initial launch

Far East - Singapore's biggest private property group - has already launched two residential projects this year: the 280-unit Altez in Enggor Street and The Shore Residences opposite Katong Shopping Centre, which has 408 units. Last year, the developer launched 12 projects.

Of the six upcoming launches, four - Waterfront Gold, Greenwich, Skyline @ Orchard Boulevard and Horizon Residences - could be launched within four months, BT understands.

Waterfront Gold will have mostly smaller units to cater to current market demand.

In line with this, apartments at the project will be sold at higher prices per sq ft compared to the first two phases of the Waterfront Collection, Waterfront Waves and Waterfront Key. Units at Waterfront Waves, for example, fetched $850 psf on average.

Mr Chia is especially excited about Skyline @ Orchard Boulevard, which he said will 'offer super high net worth individuals world-class residences'.

The development was designed by Japanese architect Fumihiko Maki and is his first residential project outside Japan.

Far East is on the lookout for new residential sites.

'We are looking for land and when land is available, we will consider it carefully,' he said.

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



Horizon Residences: The 72-unit project could be launched within four months

BT : China property firms' dollar bonds take a hit

Business Times - 01 Jun 2010

China property firms' dollar bonds take a hit

Fears that the real-estate market is overheating weigh on performance

(HONG KONG) Dollar bonds sold by China real estate companies this year are the worst performers among Asian non-financial corporate debt denominated in the US currency amid concern that the nation's property market is overheating.

Yields on the US$3.9 billion of bonds issued by Kaisa Group Holdings Ltd, Country Garden Holdings Co and seven other developers since January widened by an average 2.26 percentage points relative to Treasuries as of last week, according to data compiled by Bloomberg. That's more than the 2.05 percentage point increase in spreads for the seven dollar-denominated bonds sold by other companies in Asia outside Japan.

Investors are demanding greater yields to lend to China property firms, a sign they expect borrowers will have a harder time meeting debt payments amid a government clampdown down on lending. Goldman Sachs Group Inc and Credit Suisse Group AG cut their profit estimates for Chinese real estate companies after a 12.8 per cent jump in real estate prices in April from a year earlier spurred the state to increase regulation.

'New issues by Chinese developers will stall for the time being,' said Vince Chan, the Hong Kong-based chief credit strategist with Amias Berman & Co LLP, a fixed-income advisory and brokerage firm founded by two former Citigroup Inc bankers. 'Investors need handsome rewards for getting exposed to weaker fundamentals.'

The amount of dollar bonds issued by China developers represents 45 per cent of all corporate dollar debt sales in Asia outside Japan this year, Bloomberg data show. The yield spread on US$350 million of 13.5 per cent notes sold by Shenzhen-based Kaisa last month widened the most of the nine issues, expanding to 16.52 percentage points from 11.07 percentage points, Nomura Holdings Inc prices on Bloomberg show.

Kaisa is developing 18 projects in Shenzhen, Dongguan and other cities in the Pearl River Delta, most of them high-rise residential complexes that combine recreational and commercial space, according to its website. An investor who bought the company's 2015 bonds at par would have lost 15.5 per cent.

Elsewhere in credit markets, the extra yield investors demand to own company debt instead of Treasuries widened 5 basis points last week to 193 basis points, or 1.93 percentage points, Bank of America Merrill Lynch index data show. The spread, which peaked at 511 on March 30, 2009, is up from this year's low of 142 on April 21. Average yields rose to 4.06 per cent, the highest based on weekly closes since the period ended on March 5.

Corporate bond issuance worldwide slowed this month to US$66.1 billion, down from US$183 billion in April and the least since December 2000, according to data compiled by Bloomberg.

'Companies have to be prepared to strike and strike quickly,' said Rick Martin, the London-based director of treasury at Virgin Media Inc, the UK's second-largest pay-television company, at a May 28 briefing in London. 'The key is to have the team ready and primed and able to pull the trigger at short notice. I can't think of a time when the forces have been so polarising.'

The cost to insure US corporate debt against default rose last week. Credit-default swaps on the Markit CDX North America Investment Grade Index Series 14, which investors use to hedge against losses or to speculate on creditworthiness, increased 25.1 basis points this month to a mid-price of 117.2 basis points. The index typically rises as investor confidence deteriorates and falls as it improves.

Bond risk rose in Asia yesterday, with the Markit iTraxx Asia index up four basis points, according to Royal Bank of Scotland Group Plc. The Markit iTraxx Japan index rose 5 basis points, Morgan Stanley prices show.

Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements. A basis point on a credit-default swap contract protecting US$10 million of debt from default for five years is equivalent to US$1,000 a year.

In emerging markets, spreads narrowed 16 basis points last week to 321 basis points, trimming the monthly increase to 63, according to the JPMorgan Emerging Market Bond Index.

China has added to regulations designed to cool the property market several times this year, including raising banks' reserve requirements three times since January, restricting pre-sales by developers and curbing loans for third- home purchases. It also raised minimum mortgage rates and tightened down-payment requirements for second homes.

Shanghai's plan to begin a property tax on residential real estate was submitted to the central government for review, the China Securities Journal reported yesterday, citing unidentified people.

Goldman Sachs lowered its 2010 net income estimates for Chinese developers by an average 13 per cent and reduced earnings forecasts for the next two years by 25 per cent, analysts led by Yi Wang wrote in a May 19 report. Credit Suisse pared earnings- per-share estimates by as much as 15 per cent for 2010 and 20 per cent for 2011, citing the government's clampdown.

'With the negative headlines coming out of this sector, investors are less likely to be drawn to participate in new issues because of a high coupon,' said Tan Chew May, a credit analyst for Aberdeen Asset Management Asia Ltd., which oversees US$1.5 billion of Asian dollar debt, in Singapore. 'With the trend of widening spreads, new names are forced to come at premium.'

China property developers paid coupons as high as 14 per cent to issue dollar debt this year, compared with an average 9.2 per cent for other companies in Asia and 6.2 per cent for US property companies. On average, Chinese property companies are paying a 10.875 per cent coupon.

Glorious Property Holdings Ltd, which has 26 real estate projects in cities including Shanghai, Beijing, Harbin and Changchun, postponed its first sale of dollar-denominated bonds in April. The Hong Kong-listed company cited poor credit market conditions for the delay.

Renhe Commercial Holdings Co, a developer of underground shopping centres based in Harbin, China, sold five-year, 11.75 per cent dollar notes on May 18 to yield 974 basis points more than Treasuries after delaying the sale for two weeks.

The relatively strong finances of China developers means some companies can afford to pay double-digit coupons, according to Andy Mantel, Hong Kong-based founder of hedge fund manager Pacific Sun Investment Management Ltd.

Country Garden, which builds villas, townhouses and apartments in China, sold bonds in April with an 11.25 per cent coupon. The company, controlled by China's second-richest woman, Yang Huiyan, said contracted revenue in the first quarter rose 82 per cent on sales in the Guangdong area. -- Bloomberg

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



Taking the heat off: China has moved to cool the property market several times this year