Aug 17, 2010
Sales of new private homes surge in July
By Joyce Teo
BUYERS returned to the private home market with an extra spring in their step after a lacklustre June laid low by school holidays, the World Cup and the euro zone crisis.
Developers sold almost twice as many new homes last month as they did in June in what some experts are calling a pre-Hungry Ghost Month burst.
Dr Chua Yang Liang, Jones Lang LaSalle's research head for South-east Asia, said the July number is 'a bit of a seasonal spike' as developers and buyers rush to act before the traditionally inauspicious month.
This 'pre-hunger rush' has also been seen in previous years, he said.
There were 1,544 new private homes sold in July against 847 in June, while developers launched 1,335 units compared with 1,010 in the previous month, according to the Urban Redevelopment Authority (URA) yesterday.
New private home sales totalled a robust 9,957 units for the first seven months.
While sales last month were relatively strong, buying interest remained selective with transactions lifted mostly by three new launches.
The top seller was The Scala near the Circle Line's Lorong Chuan station. Officially launched late last month, it sold 400 out of 468 units at a median price of $1,173 per sq ft.
Terrene at Bukit Timah - near the future Beauty World MRT station - sold 162 out of 172 units at a median price of $1,247 psf, while 368 Thomson sold out all 157 units last month at a median price of $1,403 psf.
Local buyers continued to drive the market in July, shown by the high take-up in suburban projects or those outside the central region, experts said.
Projects in the city fringes did relatively well. As with the suburban spots, developments near MRT stations or other key amenities with affordable pricing had better take-up rates, said Dr Chua.
These include the sold-out Centra Studios and Haig 162, and the near sold-out Leicester Suites: All offered affordably priced small format units, said CBRE Research.
Apart from 368 Thomson, prime projects did not attract much attention.
DTZ's head of South-east Asia research, Ms Chua Chor Hoon, said strong buying interest in the mass and mid-end segments continues to be fuelled by low interest rates and an improving economy.
PropNex chief executive Mohamed Ismail noted that the strengthening economy has raised slightly the threshold for the price per square foot that buyers are willing to pay.
A fairly busy July is expected to give way to a slower August because developers are likely to launch fewer units during the Hungry Ghost Month from Aug 10 to Sept 7.
'As we enter the month, coupled with the possibility of a double-dip recession in the US and a sluggish UK economy, we expect sales volume to weaken in August by about 25 to 35 per cent,' said Dr Chua.
'Some volatility may be experienced in the second half as a result of seasonal fluctuations and as the market awaits a clearer growth direction in the US and UK.'
Tuesday, August 17, 2010
ST : Temple loses TOP, devotees in a fix
Aug 17, 2010
Temple loses TOP, devotees in a fix
Loss of fire permit in July leads to premises being made off limits
By Yen Feng
DEVOTEES of the Cheng Teck Sian See Buddhist Association have been shut out of their temple during the ongoing Seventh Month activities.
The temple recently lost its temporary occupation permit (TOP) and fire permit. Without these, its premises are off-limits and members who want to pray are being turned away.
Already, the temple's trustees, who were occupying offices on the ground floor, have moved out.
The century-old temple in Geylang is said to have about 2,000 followers and holds some 800 Chinese ancestral tablets.
On July 19, the temple's trustees mailed to more than 200 members a notice that said: 'Due to the revocation of the TOP, we regret to inform that we are unable to conduct the Seventh Month puja celebrations in the premises this year.'
Ancestral veneration during the lunar seventh month is a cherished Chinese tradition and some devotees have expressed their disappointment at what has happened.
Mr Alvin Yap, 50, whose father's ancestral tablet has been kept at the temple for more than 20 years, said: 'This is a helpless situation for all of us. I hope the people involved in this can get to the root of the matter soon.'
Construction of the temple's new home in Geylang Lorong 20 began in 2007, after its original home in Tiong Bahru was reclaimed by the Government several years earlier.
The new, seven-storey building received its TOP last August.
But a site check conducted by Building and Construction Authority (BCA) officers in March found something amiss: a fire escape staircase with headroom of 1.8m, shorter than the approved height of 2m.
Around the same time, checks by the Singapore Civil Defence Force (SCDF) discovered several other irregularities, including absent fire doors, misplaced exit signs and missing smoke detectors.
In March, the SCDF downgraded the temple's fire safety certificate to a temporary fire permit and sent a letter to the temple's architects, WP Architects, saying it had until June 30 to regain the certificate.
A month later, the temple's TOP was partially suspended by the BCA - its third to seventh floors could no longer be used.
On July 9, the architects received a second letter from the SCDF that said that because the deadline for fire safety measures had not been met, the temporary permit was no longer valid.
This, in turn, led to another issue: Because the temple now did not have a fire permit, the BCA suspended the remainder of the temple's TOP for its first and second floors.
WP Architects says the matter is with its lawyers now and declined to comment further.
The temple's trustees and the parties involved in the temple's construction have locked horns a number of times over the last two years.
This year, the temple and its main contractor, Kenston Construction, went to court over the building's defects and outstanding payment issues.
In April, Kenston sued the temple and one of its trustees over comments made to the media about the temple's building safety issues.
The two parties, along with others involved in the matter, are seeking legal arbitration.
zengyan@sph.com.sg
--------------------------------------------------------------------------------
Timeline of events
2007: Construction begins on the temple's new home in Geylang Lorong 20.
August 2009: The seven-storey building gets its temporary occupation permit (TOP).
March 2010: BCA officers discover that the headroom for the fire escape staircase is 1.8m. The approved height is 2m.
Around the same time, checks by the SCDF uncover other irregularities, including absent fire doors, misplaced exit signs and missing smoke detectors.
The SCDF downgrades the temple's fire safety certificate to a temporary fire permit. It sends a letter to the temple's architects, WP Architects, saying it has until June 30 to reapply for the building's fire safety certificate.
April 2010: The temple's TOP is partially suspended by the BCA. The third to seventh floors are closed off.
July 2010: WP Architects receives a second letter from the SCDF that says that the temporary permit is no longer valid as the deadline has not been met.
As the temple does not have a fire permit, the BCA suspends the remainder of the temple's TOP for its first and second floors.
The TOP for the Cheng Teck Sian See Buddhist Association's building in Geylang, which was partially suspended by the BCA in April, was fully suspended last month. -- ST PHOTO: BENJAMIN NG
Temple loses TOP, devotees in a fix
Loss of fire permit in July leads to premises being made off limits
By Yen Feng
DEVOTEES of the Cheng Teck Sian See Buddhist Association have been shut out of their temple during the ongoing Seventh Month activities.
The temple recently lost its temporary occupation permit (TOP) and fire permit. Without these, its premises are off-limits and members who want to pray are being turned away.
Already, the temple's trustees, who were occupying offices on the ground floor, have moved out.
The century-old temple in Geylang is said to have about 2,000 followers and holds some 800 Chinese ancestral tablets.
On July 19, the temple's trustees mailed to more than 200 members a notice that said: 'Due to the revocation of the TOP, we regret to inform that we are unable to conduct the Seventh Month puja celebrations in the premises this year.'
Ancestral veneration during the lunar seventh month is a cherished Chinese tradition and some devotees have expressed their disappointment at what has happened.
Mr Alvin Yap, 50, whose father's ancestral tablet has been kept at the temple for more than 20 years, said: 'This is a helpless situation for all of us. I hope the people involved in this can get to the root of the matter soon.'
Construction of the temple's new home in Geylang Lorong 20 began in 2007, after its original home in Tiong Bahru was reclaimed by the Government several years earlier.
The new, seven-storey building received its TOP last August.
But a site check conducted by Building and Construction Authority (BCA) officers in March found something amiss: a fire escape staircase with headroom of 1.8m, shorter than the approved height of 2m.
Around the same time, checks by the Singapore Civil Defence Force (SCDF) discovered several other irregularities, including absent fire doors, misplaced exit signs and missing smoke detectors.
In March, the SCDF downgraded the temple's fire safety certificate to a temporary fire permit and sent a letter to the temple's architects, WP Architects, saying it had until June 30 to regain the certificate.
A month later, the temple's TOP was partially suspended by the BCA - its third to seventh floors could no longer be used.
On July 9, the architects received a second letter from the SCDF that said that because the deadline for fire safety measures had not been met, the temporary permit was no longer valid.
This, in turn, led to another issue: Because the temple now did not have a fire permit, the BCA suspended the remainder of the temple's TOP for its first and second floors.
WP Architects says the matter is with its lawyers now and declined to comment further.
The temple's trustees and the parties involved in the temple's construction have locked horns a number of times over the last two years.
This year, the temple and its main contractor, Kenston Construction, went to court over the building's defects and outstanding payment issues.
In April, Kenston sued the temple and one of its trustees over comments made to the media about the temple's building safety issues.
The two parties, along with others involved in the matter, are seeking legal arbitration.
zengyan@sph.com.sg
--------------------------------------------------------------------------------
Timeline of events
2007: Construction begins on the temple's new home in Geylang Lorong 20.
August 2009: The seven-storey building gets its temporary occupation permit (TOP).
March 2010: BCA officers discover that the headroom for the fire escape staircase is 1.8m. The approved height is 2m.
Around the same time, checks by the SCDF uncover other irregularities, including absent fire doors, misplaced exit signs and missing smoke detectors.
The SCDF downgrades the temple's fire safety certificate to a temporary fire permit. It sends a letter to the temple's architects, WP Architects, saying it has until June 30 to reapply for the building's fire safety certificate.
April 2010: The temple's TOP is partially suspended by the BCA. The third to seventh floors are closed off.
July 2010: WP Architects receives a second letter from the SCDF that says that the temporary permit is no longer valid as the deadline has not been met.
As the temple does not have a fire permit, the BCA suspends the remainder of the temple's TOP for its first and second floors.
The TOP for the Cheng Teck Sian See Buddhist Association's building in Geylang, which was partially suspended by the BCA in April, was fully suspended last month. -- ST PHOTO: BENJAMIN NG
BT : S'pore still cheaper to build in than HK and London: DLS
Business Times - 17 Aug 2010
S'pore still cheaper to build in than HK and London: DLS
Data refutes earlier report that S'pore is costliest Asian country to build in
By UMA SHANKARI
SINGAPORE is still a much cheaper place to build than Hong Kong and London, the director of Davis Langdon & Seah Singapore (DLS) said yesterday - refuting an earlier report that found otherwise.
DLS data shows that at end-Q1 2010, construction costs in Singapore for standard apartments, standard office space and 'prestige' office space were lower than those in London, Tokyo, Sydney and Hong Kong.
'Cost data recorded by our offices in the region has clearly established that Singapore is the third costliest city to build in (in the region) after Tokyo and Hong Kong,' DLS director Seah Choo Meng told BT in an interview.
Construction costs in London and Sydney have also been consistently higher than in Singapore, he said.
Mr Seah was responding to a report released two weeks ago by EC Harris that said Singapore is now the most expensive Asian country to build in except Japan and the 10th most expensive worldwide. This was despite a 5-8 per cent drop in tender prices here last year, EC Harris said.
Tender prices here were higher than in Hong Kong and London, according to EC Harris's international construction cost report covering 50 countries. Switzerland was the most expensive country to build in globally, the report found. Hong Kong was ranked 21st globally while the UK - or London - was ranked 16th.
Yesterday, Mr Seah presented DLS data that shows building costs in Singapore are lower than those in London, Tokyo, Sydney and Hong Kong.
The two firms collect data from their worldwide offices from the jobs they handle. The EC Harris report did not include values for Japan because the firm did not have any projects there in the past two years.
The differentiation between the DLS and EC Harris data is partly caused by a difference in how much each of them said tender prices in Singapore fell last year.
The EC Harris report put the fall at between 5 and 8 per cent. But DLS put it at 20 per cent.
Mr Seah noted: 'The Building and Construction Authority's (BCA) record has shown a drop of 15 per cent; Rider Levett Bucknall (another consultancy) indicated a drop of 18.5 per cent while DLS saw a drop in the region of 20 per cent.'
EC Harris also said the Singapore market recovered on the back of sustained demand and strong economic growth - leading to tender price growth in the first six months of the year.
Mr Seah agrees the market recovered, but said tender prices have only climbed by 3 per cent since the start of this year - which means construction prices are still a long way from their peaks after last year's 20 per cent drop.
Although Singapore is not the most expensive city in Asia in which to build, BCA is looking at how to boost construction cost-efficiency to bridge a gap in productivity between Singapore and other advanced countries, Mr Seah said. The productivity of the construction industry in Singapore is only half of that in Australia's and one third of that in Japan.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
S'pore still cheaper to build in than HK and London: DLS
Data refutes earlier report that S'pore is costliest Asian country to build in
By UMA SHANKARI
SINGAPORE is still a much cheaper place to build than Hong Kong and London, the director of Davis Langdon & Seah Singapore (DLS) said yesterday - refuting an earlier report that found otherwise.
DLS data shows that at end-Q1 2010, construction costs in Singapore for standard apartments, standard office space and 'prestige' office space were lower than those in London, Tokyo, Sydney and Hong Kong.
'Cost data recorded by our offices in the region has clearly established that Singapore is the third costliest city to build in (in the region) after Tokyo and Hong Kong,' DLS director Seah Choo Meng told BT in an interview.
Construction costs in London and Sydney have also been consistently higher than in Singapore, he said.
Mr Seah was responding to a report released two weeks ago by EC Harris that said Singapore is now the most expensive Asian country to build in except Japan and the 10th most expensive worldwide. This was despite a 5-8 per cent drop in tender prices here last year, EC Harris said.
Tender prices here were higher than in Hong Kong and London, according to EC Harris's international construction cost report covering 50 countries. Switzerland was the most expensive country to build in globally, the report found. Hong Kong was ranked 21st globally while the UK - or London - was ranked 16th.
Yesterday, Mr Seah presented DLS data that shows building costs in Singapore are lower than those in London, Tokyo, Sydney and Hong Kong.
The two firms collect data from their worldwide offices from the jobs they handle. The EC Harris report did not include values for Japan because the firm did not have any projects there in the past two years.
The differentiation between the DLS and EC Harris data is partly caused by a difference in how much each of them said tender prices in Singapore fell last year.
The EC Harris report put the fall at between 5 and 8 per cent. But DLS put it at 20 per cent.
Mr Seah noted: 'The Building and Construction Authority's (BCA) record has shown a drop of 15 per cent; Rider Levett Bucknall (another consultancy) indicated a drop of 18.5 per cent while DLS saw a drop in the region of 20 per cent.'
EC Harris also said the Singapore market recovered on the back of sustained demand and strong economic growth - leading to tender price growth in the first six months of the year.
Mr Seah agrees the market recovered, but said tender prices have only climbed by 3 per cent since the start of this year - which means construction prices are still a long way from their peaks after last year's 20 per cent drop.
Although Singapore is not the most expensive city in Asia in which to build, BCA is looking at how to boost construction cost-efficiency to bridge a gap in productivity between Singapore and other advanced countries, Mr Seah said. The productivity of the construction industry in Singapore is only half of that in Australia's and one third of that in Japan.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Developers sell 9,957 homes in first 7 months
Business Times - 17 Aug 2010
Developers sell 9,957 homes in first 7 months
Outlook still positive but buyers will be more selective with greater spread of projects
By KALPANA RASHIWALA
(SINGAPORE) Developers' sales of private homes surged 82 per cent month on month to 1,544 units in July from the low of 847 units in June, according to latest official figures. This reflects a resumption in home buying, which had taken a breather during the school holidays and World Cup.
However, sales are expected to slip to around 800-1,000 units again in August, on the back of slower launches during the Hungry Ghost Month, say some property agents. After this ends on September 7, both launches and sales will pick up again, they reckon.
In the first seven months of this year, developers have sold 9,957 private homes (excluding executive condos), after last year's strong sales of 14,688 units.
CB Richard Ellis expects the full-year figure will be about 14,000 units. Jones Lang LaSalle's estimate is 13,000-14,000 while DTZ's SE Asia research head Chua Chor Hoon puts the number at 13,000-15,000 units.
'The outlook still remains positive against the backdrop of Singapore's economic growth and the low interest rate environment but buyers will be more selective given that so many Government Land Sale sites are being sold; this will translate to greater choice of new projects.
'Prices have also been on the rise, so potential buyers will be more discerning in picking properties that have better potential for rental income or capital appreciation,' Ms Chua added. DTZ's data shows that secondary market prices of completed private homes appreciated about 6-8 per cent in the first half of this year; her full-year forecast is an 8-13 per cent increase.
CB Richard Ellis executive director (residential) Joseph Tan reckons that developers are unlikely to test new price benchmarks when they resume launches next month. But prices are unlikely to fall below current levels either, as land prices remain high, he adds.
On the other hand, signs of buyer price resistance continue to prevail. Colliers International's analysis of official developer monthly sales data released by Urban Redevelopment Authority shows that the proportion of private homes sold by developers priced at $1,500 psf and below was at its highest level in 10 months in July, at 88 per cent.
The Outside Central Region, where mass-market properties are typically located, accounted for 42.8 per cent of the total 1,544 units sold by developers in July, while the Core Central Region, where the most expensive homes in Singapore are found, had a 17.9 per cent share.
Nonetheless, a handful of buyers picked up properties at top-line prices in July, notes CB Richard Ellis executive director Li Hiaw Ho. The most expensive apartment/condominium unit (in terms of $ per square foot) sold by a developer in July was a unit at Boulevard Vue which fetched $4,600 per square foot. BT understands that Far East Organization sold the high-floor unit of 4,456 sq ft for $20.5 million.
URA's data shows that other high-end deals last month included a unit at The Orchard Residences which sold at $4,099 psf and another at Skyline @ Orchard Boulevard at $3,719 psf.
The least expensive non-landed home was a unit at The Minton in Hougang which was transacted at $612 psf.
July's surge in primary market sales came on the back of three major launches - 368 Thomson, Terrene at Bukit Timah and The Scala at Serangoon Avenue 3. Together, they made up 46.6 per cent of the total 1,544 units developers sold in July.
The top-selling project was The Scala, with 400 units transacted at a median price of $1,173 psf.
Also helping to boost last month's sales were sell-out launches for three projects that comprised mostly one-bedders - the 51-unit Centra Studios at Lorong 25 Geylang, 99-unit Haig 162 and Leicester Suites (46 of its 47 units were sold last month). 'Their success could be attributed to the affordably-priced small-format units they offered,' says CBRE's Mr Li.
Developers launched 1,335 private homes in July, up from 1,010 units in June.
Projects expected to be released after Ghosts Month include NV Residences in Pasir Ris, Twin Peaks on the Grangeford site, Cityscape in Mergui Road and Killiney 118.
Two executive condo projects - the 573-unit Esparina Residences at Compassvale Bow in Sengkang and Chinese developer MCC Land's 406-unit The Canopy in Yishun - are slated for release in October, say market watchers.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Developers sell 9,957 homes in first 7 months
Outlook still positive but buyers will be more selective with greater spread of projects
By KALPANA RASHIWALA
(SINGAPORE) Developers' sales of private homes surged 82 per cent month on month to 1,544 units in July from the low of 847 units in June, according to latest official figures. This reflects a resumption in home buying, which had taken a breather during the school holidays and World Cup.
However, sales are expected to slip to around 800-1,000 units again in August, on the back of slower launches during the Hungry Ghost Month, say some property agents. After this ends on September 7, both launches and sales will pick up again, they reckon.
In the first seven months of this year, developers have sold 9,957 private homes (excluding executive condos), after last year's strong sales of 14,688 units.
CB Richard Ellis expects the full-year figure will be about 14,000 units. Jones Lang LaSalle's estimate is 13,000-14,000 while DTZ's SE Asia research head Chua Chor Hoon puts the number at 13,000-15,000 units.
'The outlook still remains positive against the backdrop of Singapore's economic growth and the low interest rate environment but buyers will be more selective given that so many Government Land Sale sites are being sold; this will translate to greater choice of new projects.
'Prices have also been on the rise, so potential buyers will be more discerning in picking properties that have better potential for rental income or capital appreciation,' Ms Chua added. DTZ's data shows that secondary market prices of completed private homes appreciated about 6-8 per cent in the first half of this year; her full-year forecast is an 8-13 per cent increase.
CB Richard Ellis executive director (residential) Joseph Tan reckons that developers are unlikely to test new price benchmarks when they resume launches next month. But prices are unlikely to fall below current levels either, as land prices remain high, he adds.
On the other hand, signs of buyer price resistance continue to prevail. Colliers International's analysis of official developer monthly sales data released by Urban Redevelopment Authority shows that the proportion of private homes sold by developers priced at $1,500 psf and below was at its highest level in 10 months in July, at 88 per cent.
The Outside Central Region, where mass-market properties are typically located, accounted for 42.8 per cent of the total 1,544 units sold by developers in July, while the Core Central Region, where the most expensive homes in Singapore are found, had a 17.9 per cent share.
Nonetheless, a handful of buyers picked up properties at top-line prices in July, notes CB Richard Ellis executive director Li Hiaw Ho. The most expensive apartment/condominium unit (in terms of $ per square foot) sold by a developer in July was a unit at Boulevard Vue which fetched $4,600 per square foot. BT understands that Far East Organization sold the high-floor unit of 4,456 sq ft for $20.5 million.
URA's data shows that other high-end deals last month included a unit at The Orchard Residences which sold at $4,099 psf and another at Skyline @ Orchard Boulevard at $3,719 psf.
The least expensive non-landed home was a unit at The Minton in Hougang which was transacted at $612 psf.
July's surge in primary market sales came on the back of three major launches - 368 Thomson, Terrene at Bukit Timah and The Scala at Serangoon Avenue 3. Together, they made up 46.6 per cent of the total 1,544 units developers sold in July.
The top-selling project was The Scala, with 400 units transacted at a median price of $1,173 psf.
Also helping to boost last month's sales were sell-out launches for three projects that comprised mostly one-bedders - the 51-unit Centra Studios at Lorong 25 Geylang, 99-unit Haig 162 and Leicester Suites (46 of its 47 units were sold last month). 'Their success could be attributed to the affordably-priced small-format units they offered,' says CBRE's Mr Li.
Developers launched 1,335 private homes in July, up from 1,010 units in June.
Projects expected to be released after Ghosts Month include NV Residences in Pasir Ris, Twin Peaks on the Grangeford site, Cityscape in Mergui Road and Killiney 118.
Two executive condo projects - the 573-unit Esparina Residences at Compassvale Bow in Sengkang and Chinese developer MCC Land's 406-unit The Canopy in Yishun - are slated for release in October, say market watchers.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : HK property stocks hit by tighter mortgage lending rules
Business Times - 17 Aug 2010
HK property stocks hit by tighter mortgage lending rules
(HONG KONG) Developers fell in Hong Kong trading after the government tightened mortgage lending rules and said it will increase the supply of land to help cool surging home prices.
Sun Hung Kai Properties Ltd, the world's biggest builder by market value, dropped 4.1 per cent to HK$110 at the 4pm close of trading, its biggest decline since May 25. Cheung Kong Holdings Ltd, controlled by Hong Kong's richest man Li Ka-shing, declined 2.3 per cent.
Property transactions in some of the city's largest residential complexes slumped by more than half over the weekend, according to Centaline Property Agency Ltd. Financial Secretary John Tsang said the government won't hesitate to introduce further measures if necessary, after saying on Aug 13 that home prices are approaching the level of 1997, the height of a previous bubble that was followed by a six-year slump.
The measures 'will hurt sentiment on property stocks,' JPMorgan & Chase Co analysts Raymond Ngai and Ryan Li wrote in a note yesterday. 'The market will require a bigger discount for developers on concerns of property bubbles and ongoing policy measures.'
The government has been seeking to rein in home prices that have soared about 45 per cent since the beginning of 2009, boosted by mortgage rates at the lowest in two decades and buying by mainland Chinese.
Henderson Land Development Co, the developer controlled by billionaire Lee Shau-kee, declined 3.2 per cent to HK$48.45. Sino Land Co dropped 5.7 per cent to HK$13.28, the biggest loser among the seven-member Hang Seng Property Index. The gauge fell 2.6 per cent yesterday, bringing its loss this year to 3.9 per cent.
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 on Friday. The government will increase land sales next year, Mr Tsang said.
'The basket of measures will have the effect of stabilising prices,' said Buggle Lau, chief analyst at property agency Midland Holdings Ltd.
Weekend transactions of used apartments at 10 of Hong Kong's biggest private residential complexes fell 53.5 per cent from a week earlier to 32, Centaline, one of the city's largest real estate agencies, said.
'The demand-side measures should have an immediate impact on the market,' Mirae Asset Management Ltd analysts Keith Yeung and Stephanie Lau wrote in a report. 'Speculative activities will come down sharply and developers' premium pricing capability is likely to be affected.' Home prices will fall 10 per cent, and Sun Hung Kai and Sino Land are the 'most vulnerable' developers because they bought 'expensive parcels of land,' according to the Mirae analysts.
Sun Hung Kai on June 8 paid HK$10.9 billion for a residential site in the Ho Man Tin district. The price, which beat a Bloomberg News estimate by 30 per cent, is the highest paid in a government auction in urban Hong Kong since the market peaked in 1997.
Sino Land, one of the biggest commercial landlords in the Tsim Sha Tsui district, and K Wah International Holdings Ltd in December bought two residential sites for HK$10.4 billion in what was then the city's biggest land auction in almost two years.
Last week's measures came as Hong Kong's economy expanded a more-than-estimated 6.5 per cent in the second quarter, according to a government report last week, topping the 6.3 per cent median forecast of 13 economists in a Bloomberg survey. Hong Kong's economy will grow between 5 per cent and 6 per cent for the full year, the government said, revising up a previous forecast.
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 any property 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 square feet.
Down payments for investment properties will rise to 40 per cent from 30 per cent, Mr Chan said.
Since the early 1990s, Hong Kong banks have been restricted from lending more than 70 per cent of the purchase price of a home, to reduce the risk of loan losses from a market crash. To help the market recover from the 1998 crash, buyers were subsequently allowed to borrow a further 15 per cent of their home's value as long as they obtained mortgage insurance, a move that increased affordability while limiting risk for banks.
The market has already been cooling, with new mortgage approvals declining to HK$35.4 billion in June, down 6.2 per cent from May, according to HKMA data. Some 0.03 per cent of mortgage loans were delinquent, while only 310 owners in the city owe more on their homes than their properties are worth.
'Our house view on property developers is 'cautious' because the government is determined to curb the overheating real-estate market,' said Steve Tse, a research manager at BEA Union Investment Management. 'They don't want a bubble, and they want to get it under control.' - Bloomberg
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
HK property stocks hit by tighter mortgage lending rules
(HONG KONG) Developers fell in Hong Kong trading after the government tightened mortgage lending rules and said it will increase the supply of land to help cool surging home prices.
Sun Hung Kai Properties Ltd, the world's biggest builder by market value, dropped 4.1 per cent to HK$110 at the 4pm close of trading, its biggest decline since May 25. Cheung Kong Holdings Ltd, controlled by Hong Kong's richest man Li Ka-shing, declined 2.3 per cent.
Property transactions in some of the city's largest residential complexes slumped by more than half over the weekend, according to Centaline Property Agency Ltd. Financial Secretary John Tsang said the government won't hesitate to introduce further measures if necessary, after saying on Aug 13 that home prices are approaching the level of 1997, the height of a previous bubble that was followed by a six-year slump.
The measures 'will hurt sentiment on property stocks,' JPMorgan & Chase Co analysts Raymond Ngai and Ryan Li wrote in a note yesterday. 'The market will require a bigger discount for developers on concerns of property bubbles and ongoing policy measures.'
The government has been seeking to rein in home prices that have soared about 45 per cent since the beginning of 2009, boosted by mortgage rates at the lowest in two decades and buying by mainland Chinese.
Henderson Land Development Co, the developer controlled by billionaire Lee Shau-kee, declined 3.2 per cent to HK$48.45. Sino Land Co dropped 5.7 per cent to HK$13.28, the biggest loser among the seven-member Hang Seng Property Index. The gauge fell 2.6 per cent yesterday, bringing its loss this year to 3.9 per cent.
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 on Friday. The government will increase land sales next year, Mr Tsang said.
'The basket of measures will have the effect of stabilising prices,' said Buggle Lau, chief analyst at property agency Midland Holdings Ltd.
Weekend transactions of used apartments at 10 of Hong Kong's biggest private residential complexes fell 53.5 per cent from a week earlier to 32, Centaline, one of the city's largest real estate agencies, said.
'The demand-side measures should have an immediate impact on the market,' Mirae Asset Management Ltd analysts Keith Yeung and Stephanie Lau wrote in a report. 'Speculative activities will come down sharply and developers' premium pricing capability is likely to be affected.' Home prices will fall 10 per cent, and Sun Hung Kai and Sino Land are the 'most vulnerable' developers because they bought 'expensive parcels of land,' according to the Mirae analysts.
Sun Hung Kai on June 8 paid HK$10.9 billion for a residential site in the Ho Man Tin district. The price, which beat a Bloomberg News estimate by 30 per cent, is the highest paid in a government auction in urban Hong Kong since the market peaked in 1997.
Sino Land, one of the biggest commercial landlords in the Tsim Sha Tsui district, and K Wah International Holdings Ltd in December bought two residential sites for HK$10.4 billion in what was then the city's biggest land auction in almost two years.
Last week's measures came as Hong Kong's economy expanded a more-than-estimated 6.5 per cent in the second quarter, according to a government report last week, topping the 6.3 per cent median forecast of 13 economists in a Bloomberg survey. Hong Kong's economy will grow between 5 per cent and 6 per cent for the full year, the government said, revising up a previous forecast.
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 any property 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 square feet.
Down payments for investment properties will rise to 40 per cent from 30 per cent, Mr Chan said.
Since the early 1990s, Hong Kong banks have been restricted from lending more than 70 per cent of the purchase price of a home, to reduce the risk of loan losses from a market crash. To help the market recover from the 1998 crash, buyers were subsequently allowed to borrow a further 15 per cent of their home's value as long as they obtained mortgage insurance, a move that increased affordability while limiting risk for banks.
The market has already been cooling, with new mortgage approvals declining to HK$35.4 billion in June, down 6.2 per cent from May, according to HKMA data. Some 0.03 per cent of mortgage loans were delinquent, while only 310 owners in the city owe more on their homes than their properties are worth.
'Our house view on property developers is 'cautious' because the government is determined to curb the overheating real-estate market,' said Steve Tse, a research manager at BEA Union Investment Management. 'They don't want a bubble, and they want to get it under control.' - Bloomberg
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Fusionopolis' Solaris 60% leased
Business Times - 17 Aug 2010
Fusionopolis' Solaris 60% leased
By EMILYN YAP
SOLARIS, an extension of the Fusionopolis research cluster at Buona Vista, has been 60 per cent leased ahead of its completion by the end of the year.
The developer Soilbuild Group is in 'advanced negotiations' with other potential tenants.
Soilbuild's executive director Low Soon Sim gave BT these updates following the release of the company's second quarter results last week.
Organisations which have signed leases at Solaris include government agency Spring Singapore, software designer Autodesk, video game creator and publisher Ubisoft, and green building consultancy Kaer.
Spring Singapore is Solaris' largest tenant to date, taking up some 15 per cent of the total net lettable area of around 430,000 sq ft. Tenants should be moving in in the early part of next year, Mr Low said.
Soilbuild won the tender for Phase 2B of Fusionopolis in April 2008 and put in around $140 million to develop Solaris on the 83,248 sq ft site.
The building is designed by famed architect Ken Yeang and will be decked with roof gardens and other energy saving features.
Most of the space at the Solaris is set aside for offices. There will also be a childcare centre, and retail outlets will occupy some 3,000 sq ft of space. Soilbuild plans to start marketing the retail space this quarter.
JTC Corporation, which oversees the development of Fusionopolis as a research centre for the infocommunication, media, science and engineering industries, expects the completion of Solaris to boost human traffic flow in the area.
Fusionopolis Phase 1, which was officially opened in October 2008, currently has a working population of around 2,500 people. According to The Straits Times, business has been poor for retail outlets there. Just about 57 per cent of the retail space has been taken up.
JTC estimates that the daily average human traffic flow will increase to 4,000 when Solaris is completed. The working population could grow further as Fusionopolis expands through more phases.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Fusionopolis' Solaris 60% leased
By EMILYN YAP
SOLARIS, an extension of the Fusionopolis research cluster at Buona Vista, has been 60 per cent leased ahead of its completion by the end of the year.
The developer Soilbuild Group is in 'advanced negotiations' with other potential tenants.
Soilbuild's executive director Low Soon Sim gave BT these updates following the release of the company's second quarter results last week.
Organisations which have signed leases at Solaris include government agency Spring Singapore, software designer Autodesk, video game creator and publisher Ubisoft, and green building consultancy Kaer.
Spring Singapore is Solaris' largest tenant to date, taking up some 15 per cent of the total net lettable area of around 430,000 sq ft. Tenants should be moving in in the early part of next year, Mr Low said.
Soilbuild won the tender for Phase 2B of Fusionopolis in April 2008 and put in around $140 million to develop Solaris on the 83,248 sq ft site.
The building is designed by famed architect Ken Yeang and will be decked with roof gardens and other energy saving features.
Most of the space at the Solaris is set aside for offices. There will also be a childcare centre, and retail outlets will occupy some 3,000 sq ft of space. Soilbuild plans to start marketing the retail space this quarter.
JTC Corporation, which oversees the development of Fusionopolis as a research centre for the infocommunication, media, science and engineering industries, expects the completion of Solaris to boost human traffic flow in the area.
Fusionopolis Phase 1, which was officially opened in October 2008, currently has a working population of around 2,500 people. According to The Straits Times, business has been poor for retail outlets there. Just about 57 per cent of the retail space has been taken up.
JTC estimates that the daily average human traffic flow will increase to 4,000 when Solaris is completed. The working population could grow further as Fusionopolis expands through more phases.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Monday, August 16, 2010
ST : No quick fix for junk mail menace
Aug 16, 2010
No quick fix for junk mail menace
Pasting fliers on common property attracts fine, but flats' door grilles are a grey area
By Jamie Ee Wen Wei
THEY are here, there, everywhere. It's the invasion of advertising fliers, and Housing Board residents are upset as it seems that very little can be done to put a stop to the problem.
They are irked because the culprits, unable to drop fliers in anti-junk-mail letter boxes, now slip the sheets between flats' door grilles.
The accumulated paper can slip onto the floor and create a mess. The fliers at the door also show that a flat is vacant or the family is away.
While the authorities can fine advertisers for sticking fliers on common property, slotting these sheets into the grilles is a grey area.
Eunos resident Nadia Abdul Muttalib wrote to The Straits Times two weeks ago. The manager in her 30s came home one night to find a pile of ash outside a neighbouring unit which had been vacant for some months. She suspected that pranksters had set fire to fliers left outside it.
Her corridor has also been strewn with fliers from estate agents and home maintenance firms, among others.
The litterbugs should be stopped, she said in her Aug3 letter, which prompted at least 11 others to write in.
Sengkang resident Mark Chan, 32, travels once every three months, and is worried that an accumulation of fliers outside flats could be a telltale sign that no one is home, making them a target for burglars.
Advertisers have resorted to such tactics as a result of anti-junk-mail locking devices installed on letter boxes in HDB estates. These mean fliers cannot be slotted in.
MPs interviewed acknowledge their residents' complaints, adding that there is no straightforward solution to the longstanding problem.
Aljunied GRC MP Cynthia Phua says the town council there has fined businesses for sticking advertisements on common property in the estate, but not for leaving fliers at the door.
'It's neither vandalism nor littering because they are left at the door grille,' said the Aljunied Town Council chairman, noting that the issue is a tricky one.
It is an offence to paste fliers on common property without prior written approval from the town council. The maximum penalty is $5,000.
Madam Halimah Yacob, a Jurong GRC MP, said the town council there receives an average of five complaints a month about unwanted fliers left at residents' doors.
Jurong Town Council has put up noticeboards at the lift lobbies of 10 residential blocks and commercial buildings in the town centre for advertisers to use for free. She said this solution has been quite effective, though not wholly so.
The town council also advises junk mailers to advertise in its newsletter.
Ms Lee Bee Wah, an MP for Ang Mo Kio GRC, flagged the issue of unwanted fliers in Parliament in May.
In its written reply, the Ministry of National Development said the town councils and HDB cannot stop businesses - estate agencies included - from distributing fliers to HDB households. It advised residents to refrain from responding to the fliers to discourage such marketing practices.
Mr Ben Ang, 29, who runs a printing and distribution firm, said his staff avoid units which carry 'No fliers' signs. 'If there is a notice outside the home to say no depositing of junk mail, we will respect the family,' he said.
Estate agent Albert Wong, 50, defended such door-to-door distribution, saying it is targeted, and it works. He is thinking of using telemarketing but feels fliers are 'less intrusive' because one can easily throw them away.
'Unless we go back to using the old letter box system, I have no choice but to distribute the fliers door to door,' he said.
jamieee@sph.com.sg
--------------------------------------------------------------------------------
DIFFICULT TO FINE
'It's neither vandalism nor littering because they are left at the door grille.'
Aljunied GRC MP Cynthia Phua, noting that the issue was a tricky one
No quick fix for junk mail menace
Pasting fliers on common property attracts fine, but flats' door grilles are a grey area
By Jamie Ee Wen Wei
THEY are here, there, everywhere. It's the invasion of advertising fliers, and Housing Board residents are upset as it seems that very little can be done to put a stop to the problem.
They are irked because the culprits, unable to drop fliers in anti-junk-mail letter boxes, now slip the sheets between flats' door grilles.
The accumulated paper can slip onto the floor and create a mess. The fliers at the door also show that a flat is vacant or the family is away.
While the authorities can fine advertisers for sticking fliers on common property, slotting these sheets into the grilles is a grey area.
Eunos resident Nadia Abdul Muttalib wrote to The Straits Times two weeks ago. The manager in her 30s came home one night to find a pile of ash outside a neighbouring unit which had been vacant for some months. She suspected that pranksters had set fire to fliers left outside it.
Her corridor has also been strewn with fliers from estate agents and home maintenance firms, among others.
The litterbugs should be stopped, she said in her Aug3 letter, which prompted at least 11 others to write in.
Sengkang resident Mark Chan, 32, travels once every three months, and is worried that an accumulation of fliers outside flats could be a telltale sign that no one is home, making them a target for burglars.
Advertisers have resorted to such tactics as a result of anti-junk-mail locking devices installed on letter boxes in HDB estates. These mean fliers cannot be slotted in.
MPs interviewed acknowledge their residents' complaints, adding that there is no straightforward solution to the longstanding problem.
Aljunied GRC MP Cynthia Phua says the town council there has fined businesses for sticking advertisements on common property in the estate, but not for leaving fliers at the door.
'It's neither vandalism nor littering because they are left at the door grille,' said the Aljunied Town Council chairman, noting that the issue is a tricky one.
It is an offence to paste fliers on common property without prior written approval from the town council. The maximum penalty is $5,000.
Madam Halimah Yacob, a Jurong GRC MP, said the town council there receives an average of five complaints a month about unwanted fliers left at residents' doors.
Jurong Town Council has put up noticeboards at the lift lobbies of 10 residential blocks and commercial buildings in the town centre for advertisers to use for free. She said this solution has been quite effective, though not wholly so.
The town council also advises junk mailers to advertise in its newsletter.
Ms Lee Bee Wah, an MP for Ang Mo Kio GRC, flagged the issue of unwanted fliers in Parliament in May.
In its written reply, the Ministry of National Development said the town councils and HDB cannot stop businesses - estate agencies included - from distributing fliers to HDB households. It advised residents to refrain from responding to the fliers to discourage such marketing practices.
Mr Ben Ang, 29, who runs a printing and distribution firm, said his staff avoid units which carry 'No fliers' signs. 'If there is a notice outside the home to say no depositing of junk mail, we will respect the family,' he said.
Estate agent Albert Wong, 50, defended such door-to-door distribution, saying it is targeted, and it works. He is thinking of using telemarketing but feels fliers are 'less intrusive' because one can easily throw them away.
'Unless we go back to using the old letter box system, I have no choice but to distribute the fliers door to door,' he said.
jamieee@sph.com.sg
--------------------------------------------------------------------------------
DIFFICULT TO FINE
'It's neither vandalism nor littering because they are left at the door grille.'
Aljunied GRC MP Cynthia Phua, noting that the issue was a tricky one
BT : UK house asking prices fall in August
Business Times - 16 Aug 2010
UK house asking prices fall in August
LONDON - Asking prices for homes in England and Wales fell by 1.7 per cent in August after an oversupply of property coincided with a seasonal dip in demand, property website Rightmove said on Monday.
Prices fell by their biggest margin since a 2.2 per cent decline recorded in December, another period when the holiday season depresses prices.
Rightmove said average stock per agent rose for a sixth consecutive month during the latest survey period and the number of properties added to its website jumped 41 per cent from a year earlier.
'No one really wants to come to market in August unless they have to. It shows these new sellers have a compelling need to sell,' Rightmove commercial director Miles Shipside said in a statement.
The latest month-on-month price fall comes after a 0.6 per cent decline in July, the first dip this year. The Royal Institution of Chartered Surveyors and mortgage lender Nationwide both reported seasonally adjusted falls in selling prices last month.
Rightmove said asking prices were 4.3 per cent higher than a year ago, above July's 3.7 per cent annual growth rate but below the 5.0 per cent seen in June.
The West Midlands saw the biggest monthly price fall, down 4.4 per cent, closely followed by London with a 4.1 per cent drop.
'The number of sellers coming to market in the capital is the highest seen in the month of August since 2007,' Shipside said.
'New seller levels seem to be getting back to a degree of pre-credit-crunch normality, but mortgage levels have a lender-imposed ceiling. Its restricted height is giving the market a long-term headache as pent-up buyer demand continues to bang up against it.'
Rightmove said it based its data on a survey of 116,879 asking prices on its website between July 11 and Aug 7, which it says covers 90 per cent of property marketed via estate agents in England and Wales. -- REUTERS
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
UK house asking prices fall in August
LONDON - Asking prices for homes in England and Wales fell by 1.7 per cent in August after an oversupply of property coincided with a seasonal dip in demand, property website Rightmove said on Monday.
Prices fell by their biggest margin since a 2.2 per cent decline recorded in December, another period when the holiday season depresses prices.
Rightmove said average stock per agent rose for a sixth consecutive month during the latest survey period and the number of properties added to its website jumped 41 per cent from a year earlier.
'No one really wants to come to market in August unless they have to. It shows these new sellers have a compelling need to sell,' Rightmove commercial director Miles Shipside said in a statement.
The latest month-on-month price fall comes after a 0.6 per cent decline in July, the first dip this year. The Royal Institution of Chartered Surveyors and mortgage lender Nationwide both reported seasonally adjusted falls in selling prices last month.
Rightmove said asking prices were 4.3 per cent higher than a year ago, above July's 3.7 per cent annual growth rate but below the 5.0 per cent seen in June.
The West Midlands saw the biggest monthly price fall, down 4.4 per cent, closely followed by London with a 4.1 per cent drop.
'The number of sellers coming to market in the capital is the highest seen in the month of August since 2007,' Shipside said.
'New seller levels seem to be getting back to a degree of pre-credit-crunch normality, but mortgage levels have a lender-imposed ceiling. Its restricted height is giving the market a long-term headache as pent-up buyer demand continues to bang up against it.'
Rightmove said it based its data on a survey of 116,879 asking prices on its website between July 11 and Aug 7, which it says covers 90 per cent of property marketed via estate agents in England and Wales. -- REUTERS
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Braving the uncertain China property market
Business Times - 16 Aug 2010
NEWS ANALYSIS
Braving the uncertain China property market
Developers are still looking to expand there but analysts are advising caution
By UMA SHANKARI
(SINGAPORE) It is getting increasing difficult to get a sense of the state of China's residential property market.
Developers listed on the Singapore Exchange - both household Singaporean names and their China-based counterparts - continue to be bullish.
But analysts advise caution. There is also some speculation that another round of government tightening measures could be on the horizon as home prices in China continue to hold firm.
But for now, developers are still looking to expand in China. Last Thursday, City Developments said it has set up a new unit with some $300 million on hand to build up its presence in China.
Its fully-owned subsidiary, CDL China Limited, will target all segments of China's property market - the high-end, mid-tier and mass market residential markets as well as the commercial and hospitality sectors. So far, 12 first-tier and second-tier cities in China have been earmarked for investment.
'Going down the road, there is always a fear that the bubble in China will burst. I don't believe that it will burst that much,' said CityDev executive chairman Kwek Leng Beng during the company's Q2 results briefing.
His move comes after one of Singapore's biggest China proponents, CapitaLand, reiterated that it will continue to grow in China. The developer plans to set up a new business unit to build 'affordable' homes in China and Vietnam.
Developers are also going ahead with planned launches. CapitaLand said during its Q2 results briefing that launches were on track and selling prices will be maintained. The group's target, which is to launch 3,000 units on average a year, remains intact.
China-based Yanlord Land Group has also said it is looking to launch new projects and new phases of its existing projects in the second half of 2010.
But on the ground, many are watchful, and wary. Citigroup reported earlier this month that speculation on a new wave of tightening measures led to a 'mini sell-off'.
Caution returned to China's property sector early this month due to recent speculation that the government may introduce a new wave of tightening, the bank said. Talk was that the authorities will target development schedules, crack down on land hoarding and further tighten mortgage loans for third-unit purchase, Citigroup analysts wrote in an Aug 6 note.
In addition, it has been reported by the local press that China banks have been asked to stress-test for a 60 per cent home-price fall. All the news resulted in a small sell-off in the China property sector in early August - even though most of the news had not yet been made official.
The Citigroup analysts' view is that new tightening measures are unlikely. Instead, China's central government will focus on the implementation of existing tightening measures in H2, they believe.
The trepidation on the ground is caused by the fact that the home prices are not falling by much yet.
Property prices in China rose at a slower pace in July from the previous month as efforts to curb speculative investment in the real estate sector started to take effect. Home prices in 70 major cities rose 10.3 per cent year-on-year in July, the National Bureau of Statistics said last Tuesday, down from 11.4 per cent in June.
The figure marked the third straight month of slowing year-on-year growth in prices after Beijing announced a slew of measures from January to April 2010 to prevent the real estate sector from overheating.
But prices are not easing much on a month-on-month basis. Despite all the measures, property prices only eased 0.1 per cent month-on-month in June 10 - marking the first time that prices fell since February 2009. And prices in July were unchanged from June, according to the statistics bureau.
But despite the riskier operating environment (as compared to Singapore), developers are heading in because 'there is no denying that China will one day become the largest economy in the world', as Mr Kwek put it.
For CapitaLand, its China residential properties continued to provide support to its financials for H1 and Q2 2010. The developer sold over 1,100 units in the first six months of the year.
But DMG & Partners Research analyst Brandon Lee pointed out that CapitaLand's sales volume in China fell to 382 units in Q2 2010 (from 801 units in Q1).
'For H2 2010, we expect this trend to persist, suggesting subdued take-up for upcoming launches in Hangzhou, Kunshan and Shanghai,' Mr Lee said.
A key project to watch out for next is CapitaLand's luxury Paragon development at Shanghai Luwan. The company said during its recent Q2 results briefing that pre-launch interest in the project is extremely strong. It hopes to launch 116 units in Q1 2011.
'While management is optimistic on the eventual pricing, citing the 100,000-150,000 yuan (S$20,061-S$30,092) per square metres achieved for comparable projects, we remain mindful of lingering policy risks in the region,' wrote CIMB analyst Donald Chua about the project in an August 5 note.
Leading and 'brand-name' developers are still seeing decent sales in China in Q2 and Q3 on the back of better product quality and more flexible pricing strategies. Their profitability is likely to be respectable even if they cut prices going forward.
But to play it safe, some analysts are now advising investors to focus their attention on commercial properties and players instead.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
What lies ahead? There is some speculation that another round of govt tightening measures could be on the horizon as home prices in China continue to hold firm
NEWS ANALYSIS
Braving the uncertain China property market
Developers are still looking to expand there but analysts are advising caution
By UMA SHANKARI
(SINGAPORE) It is getting increasing difficult to get a sense of the state of China's residential property market.
Developers listed on the Singapore Exchange - both household Singaporean names and their China-based counterparts - continue to be bullish.
But analysts advise caution. There is also some speculation that another round of government tightening measures could be on the horizon as home prices in China continue to hold firm.
But for now, developers are still looking to expand in China. Last Thursday, City Developments said it has set up a new unit with some $300 million on hand to build up its presence in China.
Its fully-owned subsidiary, CDL China Limited, will target all segments of China's property market - the high-end, mid-tier and mass market residential markets as well as the commercial and hospitality sectors. So far, 12 first-tier and second-tier cities in China have been earmarked for investment.
'Going down the road, there is always a fear that the bubble in China will burst. I don't believe that it will burst that much,' said CityDev executive chairman Kwek Leng Beng during the company's Q2 results briefing.
His move comes after one of Singapore's biggest China proponents, CapitaLand, reiterated that it will continue to grow in China. The developer plans to set up a new business unit to build 'affordable' homes in China and Vietnam.
Developers are also going ahead with planned launches. CapitaLand said during its Q2 results briefing that launches were on track and selling prices will be maintained. The group's target, which is to launch 3,000 units on average a year, remains intact.
China-based Yanlord Land Group has also said it is looking to launch new projects and new phases of its existing projects in the second half of 2010.
But on the ground, many are watchful, and wary. Citigroup reported earlier this month that speculation on a new wave of tightening measures led to a 'mini sell-off'.
Caution returned to China's property sector early this month due to recent speculation that the government may introduce a new wave of tightening, the bank said. Talk was that the authorities will target development schedules, crack down on land hoarding and further tighten mortgage loans for third-unit purchase, Citigroup analysts wrote in an Aug 6 note.
In addition, it has been reported by the local press that China banks have been asked to stress-test for a 60 per cent home-price fall. All the news resulted in a small sell-off in the China property sector in early August - even though most of the news had not yet been made official.
The Citigroup analysts' view is that new tightening measures are unlikely. Instead, China's central government will focus on the implementation of existing tightening measures in H2, they believe.
The trepidation on the ground is caused by the fact that the home prices are not falling by much yet.
Property prices in China rose at a slower pace in July from the previous month as efforts to curb speculative investment in the real estate sector started to take effect. Home prices in 70 major cities rose 10.3 per cent year-on-year in July, the National Bureau of Statistics said last Tuesday, down from 11.4 per cent in June.
The figure marked the third straight month of slowing year-on-year growth in prices after Beijing announced a slew of measures from January to April 2010 to prevent the real estate sector from overheating.
But prices are not easing much on a month-on-month basis. Despite all the measures, property prices only eased 0.1 per cent month-on-month in June 10 - marking the first time that prices fell since February 2009. And prices in July were unchanged from June, according to the statistics bureau.
But despite the riskier operating environment (as compared to Singapore), developers are heading in because 'there is no denying that China will one day become the largest economy in the world', as Mr Kwek put it.
For CapitaLand, its China residential properties continued to provide support to its financials for H1 and Q2 2010. The developer sold over 1,100 units in the first six months of the year.
But DMG & Partners Research analyst Brandon Lee pointed out that CapitaLand's sales volume in China fell to 382 units in Q2 2010 (from 801 units in Q1).
'For H2 2010, we expect this trend to persist, suggesting subdued take-up for upcoming launches in Hangzhou, Kunshan and Shanghai,' Mr Lee said.
A key project to watch out for next is CapitaLand's luxury Paragon development at Shanghai Luwan. The company said during its recent Q2 results briefing that pre-launch interest in the project is extremely strong. It hopes to launch 116 units in Q1 2011.
'While management is optimistic on the eventual pricing, citing the 100,000-150,000 yuan (S$20,061-S$30,092) per square metres achieved for comparable projects, we remain mindful of lingering policy risks in the region,' wrote CIMB analyst Donald Chua about the project in an August 5 note.
Leading and 'brand-name' developers are still seeing decent sales in China in Q2 and Q3 on the back of better product quality and more flexible pricing strategies. Their profitability is likely to be respectable even if they cut prices going forward.
But to play it safe, some analysts are now advising investors to focus their attention on commercial properties and players instead.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
What lies ahead? There is some speculation that another round of govt tightening measures could be on the horizon as home prices in China continue to hold firm
BT : Rebranding KL will take much work
Business Times - 16 Aug 2010
MALAYSIA INSIGHT
Rebranding KL will take much work
Traffic congestions, unrestrained building hampering efforts
By PAULINE NG
KL CORRESPONDENT
THERE are growing calls to rebrand Kuala Lumpur. The Malaysian capital is looking dull and jaded, provincial in contrast to bustling and 'happening' Hong Kong, Bangkok and Singapore. Even Jakarta is attracting admirers, its new vibrancy so palpable it is infectious, say Indonesia watchers.
Malaysia wants to rebrand the city under the Greater KL initiative - one of a handful identified under a federal government programme to focus on potential key drivers of the economy.
Part of the exercise is to ensure that Kuala Lumpur moves up the livable city rankings, so that it will attract multinational companies and skilled labour to invest and set up shop.
Improving the quality of life - more parks, affordable housing, better basic services and public transport - is also part of the equation.
One current focus appears to be unlocking choice government landbank in and around the city centre by transforming them into attractive mixed development projects that can lure tier-one investors, which would bring its own knock-on effect.
A choice plot is the mega 400 acre site on which the Royal Malaysian Airforce base is currently located. Given its location at the fringe of the city, it has enormous potential to be a landmark development. Many people would like a good proportion of the area to be left as open areas or converted into public parks given the lack of such amenities in the city.
One major concern relating to the unlocking of state lands is the potential for a huge oversupply given the private sector's own plans to add 14 million to15 million square feet of office space over the next four years.
Given the average annual take-up rate of two million square feet - at best 2.5 million - many property players believe the concerns ought not to be dismissed.
Foreign investors have been slow on the uptake, and should the hoped-for entry of these investors not match the additional supply, yields could be seriously depressed.
Malaysia's investment policies also need to be sufficiently competitive to attract investments in services it desires in areas such as oil and gas, banking and finance, tourism, education and IT. Indeed, the property sector is banking - perhaps overly - on new investments and the demand for office space to meet the additional supply.
That aside, adding millions of square feet without the corresponding infrastructure will only worsen the congestion nightmare that is often KL. International property buyers are reportedly put off by the thought that the city sees an annual rise of 70,000 vehicles.
In the interim Malaysia is contemplating a mass transport system (MRT) at a cost of about RM40 billion (S$17.2 billion) as better public transport is desperately needed since only 12-13 per cent of the people use public transport in the city. The situation in other cities is as dire, owing to the government's prioritization of the national car project.
But even if approved by next year, the MRT system is expected to take at least 10 years to complete.
Because the state has been slow to step up the pace of infrastructure development while not restraining private developers from erecting new buildings, efforts to transform KL into a place to work and live have gained little traction.
Many people avoid going into the city if they can help it. Which is a pity because KL has a lot to offer - it is colourful, has a fantastic range of food and cultures, a decent nightlife, historical landmarks as well as modern ones, and some great shopping.
The challenge is to make it all easily accessible and a pleasurable experience.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
MALAYSIA INSIGHT
Rebranding KL will take much work
Traffic congestions, unrestrained building hampering efforts
By PAULINE NG
KL CORRESPONDENT
THERE are growing calls to rebrand Kuala Lumpur. The Malaysian capital is looking dull and jaded, provincial in contrast to bustling and 'happening' Hong Kong, Bangkok and Singapore. Even Jakarta is attracting admirers, its new vibrancy so palpable it is infectious, say Indonesia watchers.
Malaysia wants to rebrand the city under the Greater KL initiative - one of a handful identified under a federal government programme to focus on potential key drivers of the economy.
Part of the exercise is to ensure that Kuala Lumpur moves up the livable city rankings, so that it will attract multinational companies and skilled labour to invest and set up shop.
Improving the quality of life - more parks, affordable housing, better basic services and public transport - is also part of the equation.
One current focus appears to be unlocking choice government landbank in and around the city centre by transforming them into attractive mixed development projects that can lure tier-one investors, which would bring its own knock-on effect.
A choice plot is the mega 400 acre site on which the Royal Malaysian Airforce base is currently located. Given its location at the fringe of the city, it has enormous potential to be a landmark development. Many people would like a good proportion of the area to be left as open areas or converted into public parks given the lack of such amenities in the city.
One major concern relating to the unlocking of state lands is the potential for a huge oversupply given the private sector's own plans to add 14 million to15 million square feet of office space over the next four years.
Given the average annual take-up rate of two million square feet - at best 2.5 million - many property players believe the concerns ought not to be dismissed.
Foreign investors have been slow on the uptake, and should the hoped-for entry of these investors not match the additional supply, yields could be seriously depressed.
Malaysia's investment policies also need to be sufficiently competitive to attract investments in services it desires in areas such as oil and gas, banking and finance, tourism, education and IT. Indeed, the property sector is banking - perhaps overly - on new investments and the demand for office space to meet the additional supply.
That aside, adding millions of square feet without the corresponding infrastructure will only worsen the congestion nightmare that is often KL. International property buyers are reportedly put off by the thought that the city sees an annual rise of 70,000 vehicles.
In the interim Malaysia is contemplating a mass transport system (MRT) at a cost of about RM40 billion (S$17.2 billion) as better public transport is desperately needed since only 12-13 per cent of the people use public transport in the city. The situation in other cities is as dire, owing to the government's prioritization of the national car project.
But even if approved by next year, the MRT system is expected to take at least 10 years to complete.
Because the state has been slow to step up the pace of infrastructure development while not restraining private developers from erecting new buildings, efforts to transform KL into a place to work and live have gained little traction.
Many people avoid going into the city if they can help it. Which is a pity because KL has a lot to offer - it is colourful, has a fantastic range of food and cultures, a decent nightlife, historical landmarks as well as modern ones, and some great shopping.
The challenge is to make it all easily accessible and a pleasurable experience.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Sunday, August 15, 2010
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
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
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
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
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
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.
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.
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.
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.
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.
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.
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