Nov 11, 2009
S'pore household net wealth hits $1 trillion
HOUSEHOLDS have generally weathered the financial crisis well with net wealth rising to an all-time high of
$1 trillion as of Sept 30, after slumping to $895 billion in the first quarter this year.
The record numbers - released in the Monetary Authority of Singapore's (MAS) annual Financial Stability Review on Monday - go a long way towards explaining why the recession that has just ended seemed less painful than previous downturns.
The recovery in the stock and property markets since the first quarter is one reason, but Singaporeans are also richer as they saved, invested and paid down their debt.
The global economic recovery has meant a strong rebound in net wealth - assets minus liabilities.
Take property assets, for instance. The MAS data showed that real estate holdings have turned around - they were up by an estimated 9 per cent to $537 billion in the three months to Sept 30, from the low of $491 billion in the second quarter.
The central bank noted that household assets remain more than six times the value of household liabilities, while aggregate household net wealth is about four times the value of gross domestic product, up from about 3.6 times in the first quarter.
Singaporeans refused to splurge on credit, keeping debt at roughly the same level during the economic downturn, the data showed.
Total liabilities increased by just 4 per cent year-on-year in the third quarter - much lower than the long- term average growth rate of about 13 per cent, the MAS said.
Most of the increase came from mortgages, which account for the bulk of household borrowing. This was mainly due to the increased activity in the property market.
'In short, households have generally weathered the crisis relatively well on the back of their strong balance sheets,' said the MAS.
Wednesday, November 11, 2009
TodayOnline : A HOME TO CALL YOUR OWN
A HOME TO CALL YOUR OWN
Let owners mortgage their HDB flats for private loans
05:55 AM Nov 09, 2009
by Conrad Raj editor-at-large conrad@mediacorp.com.sg
THE Housing and Development Board (HDB) has received numerous awards and kudos over the nearly 50 years of its existence, including the 2008 United Nations Public Service Award for providing affordable homes to the vast majority of Singaporeans.
For the most part, the commendations are deserved. More than 85 per cent of Singaporeans now live in an HDB flat with 95 per cent of them considered home-owners, according to HDB chairman James Koh Cher Siang. This must be the highest ratio of home-owners of any country in the world.
But while you can rent out your flat under certain conditions, and even do a lease buyback to unlock value if you are an elderly, you cannot mortgage your apartment for a loan even if the property is fully paid up for.
Why not? I could not get a proper answer from a phone call to the HDB.
So I went to its website where it said: "HDB flats can only be mortgaged to banks or financial institutions to finance the purchase of the flat itself. You are not allowed to use your HDB flat, which has been fully paid for, as collateral to banks to raise credit facilities for private reasons. This is to avoid exposing flat owners like yourself to the risk of losing your flat should you be unable to repay the bank loan."
This begs the question: Why this difference between an HDB flat, which in effect comes with a 99-year lease, and any other leasehold property?
Perhaps HDB's reasoning was valid and even necessary during those days, now long past, when most buyers were less sophisticated and less knowledgeable in the ways of modern finance. But people these days are more sophisticated.
And in any case, some HDB flat-owners already make themselves vulnerable to banking foreclosure rules when they take out a home loan from a financial institution. In other words, they are already exposed to the risk of losing their flat - allowing them to take out a mortgage loan does not add to that risk.
So why not let the flat owner have a shot at putting his asset to better use? Furthermore, shouldn't the financial institution be the best judge as to whether one's flat is good enough collateral for a loan?
Then there are those residents eligible for lease buyback - applicable to the elderly in three-room and smaller flats, who under the scheme would have the tail-end of their lease bought up by the HDB and given a monthly payment through an annuity for life. Why not offer them the alternative of using the flat to get a loan?
Over the last few years, the HDB has been easing its rules, especially on selling and tenanting out its flats. For instance, since 2003, anyone wishing to sell his flat bought with bank loans and without a Central Provident Fund housing grant, has been able to do so after living in it for a year, compared with two-and-a-half years previously.
The same time-lock applies to those who bought resale flats without housing grants, and who choose to refinance their mortgages with a bank loan.
You can also sublet your entire flat after living in it for five years in the case of a subsidised unit, and only three years if you did not use an HDB subsidy.
Yet, one cannot use the flat to get a private loan. And we are not talking small beer here. These days some HDB flats - especially those near a Mass Rapid Transit line - can cost almost as much as a private apartment.
Singaporeans these days are financially more sophisticated, and the HDB's rules ought to change with them. It's time the board eases its restrictions on using housing board flats as loan collateral, and let HDB dwellers really feel that they own their homes.
Let owners mortgage their HDB flats for private loans
05:55 AM Nov 09, 2009
by Conrad Raj editor-at-large conrad@mediacorp.com.sg
THE Housing and Development Board (HDB) has received numerous awards and kudos over the nearly 50 years of its existence, including the 2008 United Nations Public Service Award for providing affordable homes to the vast majority of Singaporeans.
For the most part, the commendations are deserved. More than 85 per cent of Singaporeans now live in an HDB flat with 95 per cent of them considered home-owners, according to HDB chairman James Koh Cher Siang. This must be the highest ratio of home-owners of any country in the world.
But while you can rent out your flat under certain conditions, and even do a lease buyback to unlock value if you are an elderly, you cannot mortgage your apartment for a loan even if the property is fully paid up for.
Why not? I could not get a proper answer from a phone call to the HDB.
So I went to its website where it said: "HDB flats can only be mortgaged to banks or financial institutions to finance the purchase of the flat itself. You are not allowed to use your HDB flat, which has been fully paid for, as collateral to banks to raise credit facilities for private reasons. This is to avoid exposing flat owners like yourself to the risk of losing your flat should you be unable to repay the bank loan."
This begs the question: Why this difference between an HDB flat, which in effect comes with a 99-year lease, and any other leasehold property?
Perhaps HDB's reasoning was valid and even necessary during those days, now long past, when most buyers were less sophisticated and less knowledgeable in the ways of modern finance. But people these days are more sophisticated.
And in any case, some HDB flat-owners already make themselves vulnerable to banking foreclosure rules when they take out a home loan from a financial institution. In other words, they are already exposed to the risk of losing their flat - allowing them to take out a mortgage loan does not add to that risk.
So why not let the flat owner have a shot at putting his asset to better use? Furthermore, shouldn't the financial institution be the best judge as to whether one's flat is good enough collateral for a loan?
Then there are those residents eligible for lease buyback - applicable to the elderly in three-room and smaller flats, who under the scheme would have the tail-end of their lease bought up by the HDB and given a monthly payment through an annuity for life. Why not offer them the alternative of using the flat to get a loan?
Over the last few years, the HDB has been easing its rules, especially on selling and tenanting out its flats. For instance, since 2003, anyone wishing to sell his flat bought with bank loans and without a Central Provident Fund housing grant, has been able to do so after living in it for a year, compared with two-and-a-half years previously.
The same time-lock applies to those who bought resale flats without housing grants, and who choose to refinance their mortgages with a bank loan.
You can also sublet your entire flat after living in it for five years in the case of a subsidised unit, and only three years if you did not use an HDB subsidy.
Yet, one cannot use the flat to get a private loan. And we are not talking small beer here. These days some HDB flats - especially those near a Mass Rapid Transit line - can cost almost as much as a private apartment.
Singaporeans these days are financially more sophisticated, and the HDB's rules ought to change with them. It's time the board eases its restrictions on using housing board flats as loan collateral, and let HDB dwellers really feel that they own their homes.
ST : This for developers and their customers
Nov 11, 2009
This for developers and their customers
NO PROPERTY bubble shall be tolerated. This bald assertion went down like a splash of cold water on the fast heating market when, in September, the Government stopped home loans on easy terms and chose not to extend concessionary support for developers upon its scheduled expiry next year. These concessions were granted in the last Budget. Speculative demand did slow as a result of these moves, but price levels were still too high for comfort. Developers were pushing their luck cashing in after a fallow period. Last week came an early announcement that land sales targeted at mass market buyers, including parcels for executive condominiums, will be available for bids early next year. Land releases have a gestation period between tender and launch, but the depressant effect on sentiment is immediate. The market understands that, like nothing else. This undoubtedly was the intention of the National Development Ministry, as the consensus among government trend trackers is that the variable economic recovery is hard to chart. It makes sense that asset price inflation associated with unjustified market exuberance has to be checked.
Within days, the Monetary Authority of Singapore reinforced the message with a prominent warning on real estate activity in its year-end Financial Stability Review. It cited risks covering the opposing contingencies of a faltering economic recovery leading to property portfolio devaluations, and a sustained recovery leading inevitably to higher interest rates, which would be trouble for the over-leveraged and the illiquid. The central bank's concern about macro stability is naturally holistic, seeing what adverse impact unrestrained stock and property bets in a period of unstable growth can have on the soundness of the banking system. Household debt shall not grow onerous, it is saying by extension. Banks' lending capacity must remain unimpeded so as to keep the economy oiled. It would be compromised if the rebound falters and brings in its train business failures, job losses and the ultimate danger of soured loans forcing banks to be again stringent with credit. The MAS bottom line (developers should prick their ears up here) is that further intervention in the property market would be necessary if 'speculative momentum' re-emerged.
Buying activity and price levels for the rest of the year and up till the next Budget is presented will tell if the industry and its customers see the inherent risks of acting too hastily on the rebound. It took Hong Kong a dozen years for property values to right themselves. But stable growth never stood a chance in that archetypal monetised enclave. Its government is now desperately acting to head off a bubble forming.
This for developers and their customers
NO PROPERTY bubble shall be tolerated. This bald assertion went down like a splash of cold water on the fast heating market when, in September, the Government stopped home loans on easy terms and chose not to extend concessionary support for developers upon its scheduled expiry next year. These concessions were granted in the last Budget. Speculative demand did slow as a result of these moves, but price levels were still too high for comfort. Developers were pushing their luck cashing in after a fallow period. Last week came an early announcement that land sales targeted at mass market buyers, including parcels for executive condominiums, will be available for bids early next year. Land releases have a gestation period between tender and launch, but the depressant effect on sentiment is immediate. The market understands that, like nothing else. This undoubtedly was the intention of the National Development Ministry, as the consensus among government trend trackers is that the variable economic recovery is hard to chart. It makes sense that asset price inflation associated with unjustified market exuberance has to be checked.
Within days, the Monetary Authority of Singapore reinforced the message with a prominent warning on real estate activity in its year-end Financial Stability Review. It cited risks covering the opposing contingencies of a faltering economic recovery leading to property portfolio devaluations, and a sustained recovery leading inevitably to higher interest rates, which would be trouble for the over-leveraged and the illiquid. The central bank's concern about macro stability is naturally holistic, seeing what adverse impact unrestrained stock and property bets in a period of unstable growth can have on the soundness of the banking system. Household debt shall not grow onerous, it is saying by extension. Banks' lending capacity must remain unimpeded so as to keep the economy oiled. It would be compromised if the rebound falters and brings in its train business failures, job losses and the ultimate danger of soured loans forcing banks to be again stringent with credit. The MAS bottom line (developers should prick their ears up here) is that further intervention in the property market would be necessary if 'speculative momentum' re-emerged.
Buying activity and price levels for the rest of the year and up till the next Budget is presented will tell if the industry and its customers see the inherent risks of acting too hastily on the rebound. It took Hong Kong a dozen years for property values to right themselves. But stable growth never stood a chance in that archetypal monetised enclave. Its government is now desperately acting to head off a bubble forming.
ST : Property cycles hard to predict
Nov 11, 2009
Property cycles hard to predict
But the Government will do its best to avoid boom-bust cycles, says Finance Minister
By Fiona Chan
PROPERTY cycles are hard to predict, but the Government will try to avoid boom-bust cycles, said Finance Minister Tharman Shanmugaratnam yesterday.
'We will keep our eyes on the ball and use all the tools at our disposal, but in a calibrated fashion,' he told about 80 business leaders at a forum to garner feedback for the Economic Strategies Committee. Mr Tharman is heading this committee to look into new ways for Singapore to grow.
The Government will probably not use 'macro tools' to manage property cycles, such as changing interest rates or exchange rates, because these rates have many other effects such as on businesses as well, said Mr Tharman in his concluding remarks at the forum.
But there are other options. These include tweaking rules on credit, adjusting land supply and - in extreme situations - amending tax policies, he said.
Two months ago, the Government introduced measures to help cool the property market, including removing the interest absorption payment scheme and significantly increasing land supply.
On Monday, the Monetary Authority of Singapore also highlighted the possibility that additional cooling measures may be needed if there is a renewed surge in property speculation.
'We do want to manage the property cycle as best we can, prevent boom and bust,' said Mr Tharman, adding that this is not easy as it is difficult to anticipate Singapore's property needs four or five years in advance. As for broader economic cycles, Singapore will always be exposed to ups and downs beyond its control, he said.
'As a city, and a global city at that, we will always be subject to global cycles in specific industries as well as the global macro cycle,' he said.
The important thing is to achieve good average growth over the cycle, rather than go for a lower growth path to avoid volatility, said Mr Tharman. 'If you try to dampen all volatility, you usually end up with a lower average as well.'
The unusually strong growth that Singapore enjoyed in 2006 and 2007 helped pull the average growth across the most recent business cycle up to 5 per cent, he added. Without this, wage growth in particular would have been weak.
So Singapore should opt for a path of good growth in incomes, but prepare its businesses and workers well for occasional shocks and respond quickly when they come, said Mr Tharman.
Singapore has 'not come out too badly' in the downturn in terms of its ability to buffer companies and employees and to prepare for recovery, he said. But for its next growth phase, the country must undergo a 'step change'. What are needed are higher skills, higher productivity and a higher level of expertise across the board.
Singapore could not engage in strategies of the industrial policy type, that try to plan well ahead of the market. But it moves quickly to identify emerging market trends and work with early adopters to develop clusters of real strength, Mr Tharman said.
One advantage that Singapore can use is its diversity of both people and companies. This will prove a big boon in an age where the Asian consumer is expected to be a key driver of economic growth, Mr Tharman said.
'In Singapore, you can get a feel of what is happening all around Asia... a sense of what the emerging drivers are.'
Property cycles hard to predict
But the Government will do its best to avoid boom-bust cycles, says Finance Minister
By Fiona Chan
PROPERTY cycles are hard to predict, but the Government will try to avoid boom-bust cycles, said Finance Minister Tharman Shanmugaratnam yesterday.
'We will keep our eyes on the ball and use all the tools at our disposal, but in a calibrated fashion,' he told about 80 business leaders at a forum to garner feedback for the Economic Strategies Committee. Mr Tharman is heading this committee to look into new ways for Singapore to grow.
The Government will probably not use 'macro tools' to manage property cycles, such as changing interest rates or exchange rates, because these rates have many other effects such as on businesses as well, said Mr Tharman in his concluding remarks at the forum.
But there are other options. These include tweaking rules on credit, adjusting land supply and - in extreme situations - amending tax policies, he said.
Two months ago, the Government introduced measures to help cool the property market, including removing the interest absorption payment scheme and significantly increasing land supply.
On Monday, the Monetary Authority of Singapore also highlighted the possibility that additional cooling measures may be needed if there is a renewed surge in property speculation.
'We do want to manage the property cycle as best we can, prevent boom and bust,' said Mr Tharman, adding that this is not easy as it is difficult to anticipate Singapore's property needs four or five years in advance. As for broader economic cycles, Singapore will always be exposed to ups and downs beyond its control, he said.
'As a city, and a global city at that, we will always be subject to global cycles in specific industries as well as the global macro cycle,' he said.
The important thing is to achieve good average growth over the cycle, rather than go for a lower growth path to avoid volatility, said Mr Tharman. 'If you try to dampen all volatility, you usually end up with a lower average as well.'
The unusually strong growth that Singapore enjoyed in 2006 and 2007 helped pull the average growth across the most recent business cycle up to 5 per cent, he added. Without this, wage growth in particular would have been weak.
So Singapore should opt for a path of good growth in incomes, but prepare its businesses and workers well for occasional shocks and respond quickly when they come, said Mr Tharman.
Singapore has 'not come out too badly' in the downturn in terms of its ability to buffer companies and employees and to prepare for recovery, he said. But for its next growth phase, the country must undergo a 'step change'. What are needed are higher skills, higher productivity and a higher level of expertise across the board.
Singapore could not engage in strategies of the industrial policy type, that try to plan well ahead of the market. But it moves quickly to identify emerging market trends and work with early adopters to develop clusters of real strength, Mr Tharman said.
One advantage that Singapore can use is its diversity of both people and companies. This will prove a big boon in an age where the Asian consumer is expected to be a key driver of economic growth, Mr Tharman said.
'In Singapore, you can get a feel of what is happening all around Asia... a sense of what the emerging drivers are.'
BT : Mustafa Warehouse closes doors to shoppers
Business Times - 11 Nov 2009
Mustafa Warehouse closes doors to shoppers
URA case against company due for mention in court today
THE shutters finally came down at Mustafa Warehouse in Kallang Pudding Road yesterday afternoon after the company was slapped with a writ of summons last Thursday by Urban Redevelopment Authority (URA) for unauthorised use of the warehouse building.
The case against the building's owner, Mohamed Mustafa & Samsuddin Co Pte Ltd, is due to be mentioned in the Subordinate Courts today.
The six-storey building is approved for warehouse use but for the past four weeks or so, a department store has been operating on the first level and a supermarket on level two. Commercial activities like these are not permitted in warehouse developments. The building's upper levels are used as a warehouse.
Yesterday afternoon, around 2pm, customers shopping in the facility were told to leave, after which staff started to close the shutters on the first two levels, BT understands. Customers were told to shop at Mustafa Centre in Little India instead.
Last week, when URA served the writ of summons to Mustafa, a URA spokeswoman said that approval to use the premises as a warehouse was given in 2001. Its owner subsequently submitted an application in 2004 to change the building's use to a wholesale centre for household goods and appliances.
'The application was not approved and URA advised the owner that the proposed wholesale centre use involves sale of products and is considered commercial use, which is not allowed in a warehouse development. URA recently received feedback regarding the unauthorised commercial activities,' URA's spokeswoman said last Thursday.
If found guilty, Mustafa could be fined up to $200,000 for the breach, which is classified as a planning offence under the Planning Act.
Mustafa Warehouse closes doors to shoppers
URA case against company due for mention in court today
THE shutters finally came down at Mustafa Warehouse in Kallang Pudding Road yesterday afternoon after the company was slapped with a writ of summons last Thursday by Urban Redevelopment Authority (URA) for unauthorised use of the warehouse building.
The case against the building's owner, Mohamed Mustafa & Samsuddin Co Pte Ltd, is due to be mentioned in the Subordinate Courts today.
The six-storey building is approved for warehouse use but for the past four weeks or so, a department store has been operating on the first level and a supermarket on level two. Commercial activities like these are not permitted in warehouse developments. The building's upper levels are used as a warehouse.
Yesterday afternoon, around 2pm, customers shopping in the facility were told to leave, after which staff started to close the shutters on the first two levels, BT understands. Customers were told to shop at Mustafa Centre in Little India instead.
Last week, when URA served the writ of summons to Mustafa, a URA spokeswoman said that approval to use the premises as a warehouse was given in 2001. Its owner subsequently submitted an application in 2004 to change the building's use to a wholesale centre for household goods and appliances.
'The application was not approved and URA advised the owner that the proposed wholesale centre use involves sale of products and is considered commercial use, which is not allowed in a warehouse development. URA recently received feedback regarding the unauthorised commercial activities,' URA's spokeswoman said last Thursday.
If found guilty, Mustafa could be fined up to $200,000 for the breach, which is classified as a planning offence under the Planning Act.
BT : SPH-led consortium makes top bid for Clementi mall
Business Times - 11 Nov 2009
SPH-led consortium makes top bid for Clementi mall
With FairPrice and Income onboard, it puts in $541.9m bid
(SINGAPORE) A joint venture involving Singapore Press Holdings (SPH) subsidiary Times Properties, NTUC FairPrice Co-Op and NTUC Income Insurance Co-op placed the top bid of $541.898 million for a mall being developed in Clementi Town Centre by the Housing & Development Board (HDB).
The top bid was 41.9 per cent above the next highest bid of $382 million, made by a joint venture involving Keppel Land's fund management unit Alpha Investment Partners and Guthrie.
HDB is building only the core structure and facade of the mall, which it aims to hand over to the winning bidder in August next year. The new owner will then finish the project internally, with flexibility to plan the theme and layout.
Clementi Mall - the working name for the property - comprises two basement levels and five storeys above ground with a maximum net floor area of 18,000 square metres or 193,750 square feet of retail space.
An air-conditioned bus interchange will be on the first level and the third level will be connected to Clementi MRT Station.
The SPH-led consortium's top bid works out to $2,797 per square foot (psf) based on the maximum allowable retail net floor area (NFA), says Stella Hoh, head of investments at Jones Lang LaSalle, which handled the tender exercise for the mall for HDB.
Including an estimated fitting-out cost of about $50 million, the unit price works out to $3,055 psf of retail NFA, she added.
Knight Frank managing director Danny Yeo, using a lower fit-out expenditure assumption of $40 million, says the top bid works out to about $3,003 psf of retail NFA.
'To achieve a 5.5 per cent to 6 per cent net property yield that most investors would want today for such an asset, an average gross monthly rental of about $18 psf would be required. Right now the average rental at the best suburban malls is about $15-16 psf,' he said.
'If they get their tenant mix right, it would not be a problem to grow the mall's rental level in a few years,' he added.
When contacted, a spokesman for SPH said: 'We intend to optimise the usage efficiency of the mall.'
He added that 'the joint venture parties have evaluated the business case for the project and believe that it is a reasonable bid', citing several factors, including the good catchment area.
Besides its location in Clementi Town, the property is in close proximity to the Holland, Bukit Timah and West Coast areas with key tertiary institutions such as the National University of Singapore, Ngee Ann Polytechnic, Singapore Polytechnic and UniSIM.
'There are not many malls in the area. The property is in a high-traffic area due to integrated transport amenities and the business will provide solid and steady income stream to the JV parties,' he added.
SPH is leading the joint venture with a 60 per cent stake, with FairPrice and Income taking 20 per cent each.
FairPrice will operate a supermarket and Income is also considering taking up some space in Clementi Mall, said SPH's spokesman.
The other bidders at yesterday's tender were Frasers Centrepoint Ltd ($352.1 million), the trustee of CapitaMall Trust, and Australia's Lend Lease group.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
SPH-led consortium makes top bid for Clementi mall
With FairPrice and Income onboard, it puts in $541.9m bid
(SINGAPORE) A joint venture involving Singapore Press Holdings (SPH) subsidiary Times Properties, NTUC FairPrice Co-Op and NTUC Income Insurance Co-op placed the top bid of $541.898 million for a mall being developed in Clementi Town Centre by the Housing & Development Board (HDB).
The top bid was 41.9 per cent above the next highest bid of $382 million, made by a joint venture involving Keppel Land's fund management unit Alpha Investment Partners and Guthrie.
HDB is building only the core structure and facade of the mall, which it aims to hand over to the winning bidder in August next year. The new owner will then finish the project internally, with flexibility to plan the theme and layout.
Clementi Mall - the working name for the property - comprises two basement levels and five storeys above ground with a maximum net floor area of 18,000 square metres or 193,750 square feet of retail space.
An air-conditioned bus interchange will be on the first level and the third level will be connected to Clementi MRT Station.
The SPH-led consortium's top bid works out to $2,797 per square foot (psf) based on the maximum allowable retail net floor area (NFA), says Stella Hoh, head of investments at Jones Lang LaSalle, which handled the tender exercise for the mall for HDB.
Including an estimated fitting-out cost of about $50 million, the unit price works out to $3,055 psf of retail NFA, she added.
Knight Frank managing director Danny Yeo, using a lower fit-out expenditure assumption of $40 million, says the top bid works out to about $3,003 psf of retail NFA.
'To achieve a 5.5 per cent to 6 per cent net property yield that most investors would want today for such an asset, an average gross monthly rental of about $18 psf would be required. Right now the average rental at the best suburban malls is about $15-16 psf,' he said.
'If they get their tenant mix right, it would not be a problem to grow the mall's rental level in a few years,' he added.
When contacted, a spokesman for SPH said: 'We intend to optimise the usage efficiency of the mall.'
He added that 'the joint venture parties have evaluated the business case for the project and believe that it is a reasonable bid', citing several factors, including the good catchment area.
Besides its location in Clementi Town, the property is in close proximity to the Holland, Bukit Timah and West Coast areas with key tertiary institutions such as the National University of Singapore, Ngee Ann Polytechnic, Singapore Polytechnic and UniSIM.
'There are not many malls in the area. The property is in a high-traffic area due to integrated transport amenities and the business will provide solid and steady income stream to the JV parties,' he added.
SPH is leading the joint venture with a 60 per cent stake, with FairPrice and Income taking 20 per cent each.
FairPrice will operate a supermarket and Income is also considering taking up some space in Clementi Mall, said SPH's spokesman.
The other bidders at yesterday's tender were Frasers Centrepoint Ltd ($352.1 million), the trustee of CapitaMall Trust, and Australia's Lend Lease group.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
BT : All tools to avoid property boom, bust
Business Times - 11 Nov 2009
All tools to avoid property boom, bust
FINANCE Minister Tharman Shanmugaratnam yesterday said the government will use every tool at its disposal 'in a calibrated fashion' to prevent boom and bust in the property market. One day after the Monetary Authority of Singapore served notice of further action to cool the housing market if needed, in the face of growing speculation risks, Mr Tharman spoke about the need to manage the property cycle.
It won't involve macroeconomic levers such as the interest rate or exchange rate, though, as such tools apply across the board to businesses at large, not just the asset markets.
'But we do have other tools like credit rules, land supply decisions and, in the extreme, tax policies, which we will use in a calibrated fashion depending on the circumstance, depending on the stage of the asset market.' He was speaking about managing volatility generally at an Economic Strategies Committee industry forum when he cited the property market. 'We will keep our eyes on the ball and use every tool at our disposal in a calibrated fashion to try to manage . . . as best as we can,' he said.
But it's 'very hard to anticipate four to five years in advance what's going to happen globally, regionally and hence within this global city', he said, recalling how the government did pay heed to market signals of a supply glut in the property sector a few years ago, but found instead, by 2006 and 2007, a severe shortage, especially in the office market.
All tools to avoid property boom, bust
FINANCE Minister Tharman Shanmugaratnam yesterday said the government will use every tool at its disposal 'in a calibrated fashion' to prevent boom and bust in the property market. One day after the Monetary Authority of Singapore served notice of further action to cool the housing market if needed, in the face of growing speculation risks, Mr Tharman spoke about the need to manage the property cycle.
It won't involve macroeconomic levers such as the interest rate or exchange rate, though, as such tools apply across the board to businesses at large, not just the asset markets.
'But we do have other tools like credit rules, land supply decisions and, in the extreme, tax policies, which we will use in a calibrated fashion depending on the circumstance, depending on the stage of the asset market.' He was speaking about managing volatility generally at an Economic Strategies Committee industry forum when he cited the property market. 'We will keep our eyes on the ball and use every tool at our disposal in a calibrated fashion to try to manage . . . as best as we can,' he said.
But it's 'very hard to anticipate four to five years in advance what's going to happen globally, regionally and hence within this global city', he said, recalling how the government did pay heed to market signals of a supply glut in the property sector a few years ago, but found instead, by 2006 and 2007, a severe shortage, especially in the office market.
Tuesday, November 10, 2009
BT : HLF stirs waters, cuts HDB home loan rates
Business Times - 10 Nov 2009
HLF stirs waters, cuts HDB home loan rates
DBS says it, too, is offering revised low rates; OCBC says it remains competitive
By SIOW LI SEN
(SINGAPORE) Hong Leong Finance (HLF) has slashed its HDB home loan rates in a bid to undercut the competition amid a low interest rate environment, but it seems some banks might have been even quicker on the draw.
Yesterday, HLF said its latest HDB home loan rates are 0.50 per cent lower than its last promotional rates.
It now offers variable rates at 1.33 per cent, 2.13 per cent and 2.83 per cent for the first, second year and third year respectively. The variable rates are based on a board rate which currently stands at 4.25 per cent. Its new two-year fixed-rate package charges 1.63 per cent and 2.63 per cent in the first and second year respectively, totalling 4.26 per cent.
But rival DBS said it too has new lower home loan packages applicable to both HDB and private properties. A DBS spokeswoman said the bank 'just' revised its home loan rates.
DBS's variable package charges the same 1.675 per cent based on three-month Sibor plus one per cent for every year of the loan. The three-month Sibor or Singapore interbank offered rate is 0.675 per cent. Borrowers can also opt for a two-year fixed rate at 1.88 per cent for both years which amounts to 3.76 per cent.
At OCBC, the variable rate for three years is the same 1.66 per cent each year and based on its board rate of 4.5 per cent. Those who want a two-year fixed can pay 1.99 per cent per year.
'OCBC Bank's home loan packages will remain competitive to respond to market conditions,' said Phang Lah Hwa, head of consumer secured lending, OCBC Bank.
HLF, Singapore's largest finance company, said the new rates apply until the end of the year and are for up to 80 per cent financing.
'The revision in rates is to ensure that our package is one of the lowest in the market,' said an HLF spokeswoman.
'We hope that with the new rates, our customers will continue to support us and allow us to capture a bigger slice of the HDB market which is presently very active and healthy,' she said.
HLF said customers who sign on with a minimum loan of $200,000 will also get a choice of KrisFlyer air miles or dining vouchers with five hotels in Singapore.
'There has been an increasing demand for HDB flats and we pride ourselves with moving with the market and the changing needs of our customers,' said Ian Macdonald, HLF president.
'Response to Hong Leong Finance's earlier home loan promotion has been very encouraging and we are confident that the new rates will perform just as well,' he added.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
HLF stirs waters, cuts HDB home loan rates
DBS says it, too, is offering revised low rates; OCBC says it remains competitive
By SIOW LI SEN
(SINGAPORE) Hong Leong Finance (HLF) has slashed its HDB home loan rates in a bid to undercut the competition amid a low interest rate environment, but it seems some banks might have been even quicker on the draw.
Yesterday, HLF said its latest HDB home loan rates are 0.50 per cent lower than its last promotional rates.
It now offers variable rates at 1.33 per cent, 2.13 per cent and 2.83 per cent for the first, second year and third year respectively. The variable rates are based on a board rate which currently stands at 4.25 per cent. Its new two-year fixed-rate package charges 1.63 per cent and 2.63 per cent in the first and second year respectively, totalling 4.26 per cent.
But rival DBS said it too has new lower home loan packages applicable to both HDB and private properties. A DBS spokeswoman said the bank 'just' revised its home loan rates.
DBS's variable package charges the same 1.675 per cent based on three-month Sibor plus one per cent for every year of the loan. The three-month Sibor or Singapore interbank offered rate is 0.675 per cent. Borrowers can also opt for a two-year fixed rate at 1.88 per cent for both years which amounts to 3.76 per cent.
At OCBC, the variable rate for three years is the same 1.66 per cent each year and based on its board rate of 4.5 per cent. Those who want a two-year fixed can pay 1.99 per cent per year.
'OCBC Bank's home loan packages will remain competitive to respond to market conditions,' said Phang Lah Hwa, head of consumer secured lending, OCBC Bank.
HLF, Singapore's largest finance company, said the new rates apply until the end of the year and are for up to 80 per cent financing.
'The revision in rates is to ensure that our package is one of the lowest in the market,' said an HLF spokeswoman.
'We hope that with the new rates, our customers will continue to support us and allow us to capture a bigger slice of the HDB market which is presently very active and healthy,' she said.
HLF said customers who sign on with a minimum loan of $200,000 will also get a choice of KrisFlyer air miles or dining vouchers with five hotels in Singapore.
'There has been an increasing demand for HDB flats and we pride ourselves with moving with the market and the changing needs of our customers,' said Ian Macdonald, HLF president.
'Response to Hong Leong Finance's earlier home loan promotion has been very encouraging and we are confident that the new rates will perform just as well,' he added.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
ST : Apex court clears air on property deal
Nov 10, 2009
Apex court clears air on property deal
Not signing option form may not be enough for pullout if all the terms for deal have been met
By K.C. Vijayan
FAILING to sign the option-to-purchase form may not be enough to let one pull out of a property deal.
This is especially so if the buyer's deposit has been banked in and there are e-mail exchanges to show that a deal had been agreed upon, the Court of Appeal has ruled.
The case in point - the sale of an apartment in an Upper Serangoon condominium in May 2007.
E-mail messages were exchanged indicating that a price of $506,000 had been agreed upon and later, the 1 per cent option fee was paid and banked in.
About a week later, the seller tried to back out.
His lawyer, Mr Leslie Netto, argued that the seller was obliged to go ahead with the deal only after the seller had signed and issued the option to purchase. But the Appeals Court held that this was a 'mere formality' as all the conditions needed for a binding written contract had already been fulfilled in this case.
The buyer's deposit had been banked in and the exchange of e-mail messages between both parties identified them and the property clearly. They showed that the parties had agreed on the price and the terms to close the deal.
Legally, all three Ps - parties, property and price - and the T - terms of the option to purchase - had been met and the Appeals Court said this was enough to satisfy the criteria for a binding written contract.
In law, such property deals have to be made in writing.
The judgment released last week also showed the court was prepared to recognise e-mail messages to transact a property deal.
'The requirement of a signature had also been satisfied on the facts of the present case,' said Justice Andrew Phang, who wrote the apex court's 23-page grounds of judgment.
Another reason cited for enforcing the contract, or recognising the deal, in this case was the exchange of money that had taken place.
The judgment is a timely one, said lawyers and property dealers, as it makes clear that one party cannot pull out at the last minute should a better offer arise. Signing the option letter is not the point of no return in such deals.
Said Drew & Napier's Mr Adrian Tan: 'This is a problem that has surfaced in the last few years ever since the property boom started.'
Money has changed hands and then the parties try to get out of the deal by not signing the option forms when they see prices rise. This will not work any more, he said.
'The Court of Appeal has conclusively established the law in this area. All home owners and property agents should take note.'
Mr Chris Koh, director of Dennis Wee Properties, said banking in the option fee of $5,060 in this case amounted to acceptance of the deal.
His advice: 'If you are not sure of wanting to sell, then don't accept the cheque. You cannot accept the cheque and then say you don't want to sell.'
vijayan@sph.com.sg
--------------------------------------------------------------------------------
About the case
WHEN a couple who had been renting a unit in Rio Vista condominium in Upper Serangoon learnt that a fourth-floor unit was being sold in 2007, they offered to pay $506,000 for it.
Mr Chiranjeev Singh and his wife then gave property agent Helene Ong a cheque for 1 per cent of the purchase price, which she banked into seller Joseph Mathew's bank account here, as instructed.
Mr Mathew was then working in India.
Four key e-mail exchanges ensued - three from Ms Ong to Mr Mathew, and one from him indicating acceptance of the deal.
But about a week later, he e-mailed Ms Ong, rejecting the offer and declining to sign the option-to-purchase form she had sent him.
Mr Mathew returned here on May 26, 2007, and went into talks with Mr Singh about the deal.
The talks failed and lawyer Boo Moh Cheh took the case to court for Mr Singh.
High Court Judge Andrew Ang ordered Mr Mathew to sign the option-to-purchase form, failing which the Supreme Court Registrar would exercise its power to sign it on his behalf.
Mr Mathew appealed to the Court of Appeal, which dismissed his suit and ordered him to pay costs.
His unit, which eventually went at the $506,000 price first agreed upon, was understood to be worth $670,000 some 15 months later.
Apex court clears air on property deal
Not signing option form may not be enough for pullout if all the terms for deal have been met
By K.C. Vijayan
FAILING to sign the option-to-purchase form may not be enough to let one pull out of a property deal.
This is especially so if the buyer's deposit has been banked in and there are e-mail exchanges to show that a deal had been agreed upon, the Court of Appeal has ruled.
The case in point - the sale of an apartment in an Upper Serangoon condominium in May 2007.
E-mail messages were exchanged indicating that a price of $506,000 had been agreed upon and later, the 1 per cent option fee was paid and banked in.
About a week later, the seller tried to back out.
His lawyer, Mr Leslie Netto, argued that the seller was obliged to go ahead with the deal only after the seller had signed and issued the option to purchase. But the Appeals Court held that this was a 'mere formality' as all the conditions needed for a binding written contract had already been fulfilled in this case.
The buyer's deposit had been banked in and the exchange of e-mail messages between both parties identified them and the property clearly. They showed that the parties had agreed on the price and the terms to close the deal.
Legally, all three Ps - parties, property and price - and the T - terms of the option to purchase - had been met and the Appeals Court said this was enough to satisfy the criteria for a binding written contract.
In law, such property deals have to be made in writing.
The judgment released last week also showed the court was prepared to recognise e-mail messages to transact a property deal.
'The requirement of a signature had also been satisfied on the facts of the present case,' said Justice Andrew Phang, who wrote the apex court's 23-page grounds of judgment.
Another reason cited for enforcing the contract, or recognising the deal, in this case was the exchange of money that had taken place.
The judgment is a timely one, said lawyers and property dealers, as it makes clear that one party cannot pull out at the last minute should a better offer arise. Signing the option letter is not the point of no return in such deals.
Said Drew & Napier's Mr Adrian Tan: 'This is a problem that has surfaced in the last few years ever since the property boom started.'
Money has changed hands and then the parties try to get out of the deal by not signing the option forms when they see prices rise. This will not work any more, he said.
'The Court of Appeal has conclusively established the law in this area. All home owners and property agents should take note.'
Mr Chris Koh, director of Dennis Wee Properties, said banking in the option fee of $5,060 in this case amounted to acceptance of the deal.
His advice: 'If you are not sure of wanting to sell, then don't accept the cheque. You cannot accept the cheque and then say you don't want to sell.'
vijayan@sph.com.sg
--------------------------------------------------------------------------------
About the case
WHEN a couple who had been renting a unit in Rio Vista condominium in Upper Serangoon learnt that a fourth-floor unit was being sold in 2007, they offered to pay $506,000 for it.
Mr Chiranjeev Singh and his wife then gave property agent Helene Ong a cheque for 1 per cent of the purchase price, which she banked into seller Joseph Mathew's bank account here, as instructed.
Mr Mathew was then working in India.
Four key e-mail exchanges ensued - three from Ms Ong to Mr Mathew, and one from him indicating acceptance of the deal.
But about a week later, he e-mailed Ms Ong, rejecting the offer and declining to sign the option-to-purchase form she had sent him.
Mr Mathew returned here on May 26, 2007, and went into talks with Mr Singh about the deal.
The talks failed and lawyer Boo Moh Cheh took the case to court for Mr Singh.
High Court Judge Andrew Ang ordered Mr Mathew to sign the option-to-purchase form, failing which the Supreme Court Registrar would exercise its power to sign it on his behalf.
Mr Mathew appealed to the Court of Appeal, which dismissed his suit and ordered him to pay costs.
His unit, which eventually went at the $506,000 price first agreed upon, was understood to be worth $670,000 some 15 months later.
BT : Wages rise, debts slow and S'poreans get richer
Business Times - 10 Nov 2009
Wages rise, debts slow and S'poreans get richer
Households have weathered crisis relatively well: MAS
By SIOW LI SEN
(SINGAPORE) Singaporeans are getting richer as household debt has risen slower than wage growth, financial crisis notwithstanding. Add high property prices and the reluctance to spend freely and you have household assets standing at more than six times the household debts.
'Households have on the whole weathered the crisis relatively well, thanks to strong balance sheets,' according to the Monetary Authority of Singapore's (MAS) Financial Stability Review 2009 released yesterday.
'The asset quality of household loans has not deteriorated significantly and so should not affect the stability of the banking system,' it said.
Household net wealth stood at an all time high, an estimated $1,001 billion in Q3 2009, after hitting a trough at $895 billion in Q1 2009. This is also more than double that of $400 billion plus in 1999.
Aggregate household net wealth is at about 4 times of gross domestic product, up from about 3.6 times in Q1 2009.
Still, the MAS said the healthy position is not uniform across all homes.
'Those who were retrenched or highly leveraged would likely have come under more pressure,' it said.
As Singaporeans maintain discipline in taking on consumer debt, assets remain more than 6 times the household liabilities .
Cash and CPF balances alone have exceeded total household liabilities since 2006.
After declining in Q4 2007 and Q1 2009, household holdings of equity and managed funds are estimated to have recovered by about 40 per cent to $150 billion in Q3 2009, in tandem with the rising global equity markets.
Similarly, property holdings have turned around, up by an estimated 9 per cent to $537 billion in Q3 2009 from the low of $491 billion in Q2 2009.
Total liabilities increased moderately by 4.4 per cent year-on-year in Q3 2009, which is much lower than the long-term average growth rate of about 13 per cent. Most of the increase came from housing loans, which account for the bulk of household borrowing. After moderating from around 15 per cent in Q4 2007 to 8.8 per cent in Q4 2008, housing loan growth has seen a recent uptick to 12 per cent in Q3 2009 due to increased activity in the property market.
Other types of household debt such as credit cards, car loans and share financing grew at a sluggish pace.
Share financing loan growth recovered from negative territory in Q2 2009 to 18 per cent in Q3 2009, along with the rebound in the stock markets.
Share financing represents less than one per cent of total household debt currently.
Credit card loan growth slowed from 19.5 per cent in Q3 2008 to 11.4 per cent in Q3 2009 while car loans shrank by 2.2 per cent in Q3 2009 as a result of falling car sales.
Credit card loans comprise a relatively small share of total household debt at about 3 per cent as of Q3 2009.
Household remuneration growth has outpaced the rate of increase in household debt in the last few years and the household debt to remuneration ratio has been falling.
'However, the ratio may rise this year, as the downturn would likely constrain wage growth. As of June 2009, average wages had contracted 2.1 per cent year-on-year, compared to a 3.8 per cent rise in household liabilities over the same period,' the MAS said.
Looking ahead, households may be tempted to take on more leverage in the short term, given strong market sentiment in the domestic equity and property markets and expectations that low interest rates could persist for some time, it said.
'This might expose households to increased risks in light of the still uncertain paths of economic recovery and interest rates. The current healthy balance sheet position suggests that households in general would be well placed to weather these downside risks.'
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
Wages rise, debts slow and S'poreans get richer
Households have weathered crisis relatively well: MAS
By SIOW LI SEN
(SINGAPORE) Singaporeans are getting richer as household debt has risen slower than wage growth, financial crisis notwithstanding. Add high property prices and the reluctance to spend freely and you have household assets standing at more than six times the household debts.
'Households have on the whole weathered the crisis relatively well, thanks to strong balance sheets,' according to the Monetary Authority of Singapore's (MAS) Financial Stability Review 2009 released yesterday.
'The asset quality of household loans has not deteriorated significantly and so should not affect the stability of the banking system,' it said.
Household net wealth stood at an all time high, an estimated $1,001 billion in Q3 2009, after hitting a trough at $895 billion in Q1 2009. This is also more than double that of $400 billion plus in 1999.
Aggregate household net wealth is at about 4 times of gross domestic product, up from about 3.6 times in Q1 2009.
Still, the MAS said the healthy position is not uniform across all homes.
'Those who were retrenched or highly leveraged would likely have come under more pressure,' it said.
As Singaporeans maintain discipline in taking on consumer debt, assets remain more than 6 times the household liabilities .
Cash and CPF balances alone have exceeded total household liabilities since 2006.
After declining in Q4 2007 and Q1 2009, household holdings of equity and managed funds are estimated to have recovered by about 40 per cent to $150 billion in Q3 2009, in tandem with the rising global equity markets.
Similarly, property holdings have turned around, up by an estimated 9 per cent to $537 billion in Q3 2009 from the low of $491 billion in Q2 2009.
Total liabilities increased moderately by 4.4 per cent year-on-year in Q3 2009, which is much lower than the long-term average growth rate of about 13 per cent. Most of the increase came from housing loans, which account for the bulk of household borrowing. After moderating from around 15 per cent in Q4 2007 to 8.8 per cent in Q4 2008, housing loan growth has seen a recent uptick to 12 per cent in Q3 2009 due to increased activity in the property market.
Other types of household debt such as credit cards, car loans and share financing grew at a sluggish pace.
Share financing loan growth recovered from negative territory in Q2 2009 to 18 per cent in Q3 2009, along with the rebound in the stock markets.
Share financing represents less than one per cent of total household debt currently.
Credit card loan growth slowed from 19.5 per cent in Q3 2008 to 11.4 per cent in Q3 2009 while car loans shrank by 2.2 per cent in Q3 2009 as a result of falling car sales.
Credit card loans comprise a relatively small share of total household debt at about 3 per cent as of Q3 2009.
Household remuneration growth has outpaced the rate of increase in household debt in the last few years and the household debt to remuneration ratio has been falling.
'However, the ratio may rise this year, as the downturn would likely constrain wage growth. As of June 2009, average wages had contracted 2.1 per cent year-on-year, compared to a 3.8 per cent rise in household liabilities over the same period,' the MAS said.
Looking ahead, households may be tempted to take on more leverage in the short term, given strong market sentiment in the domestic equity and property markets and expectations that low interest rates could persist for some time, it said.
'This might expose households to increased risks in light of the still uncertain paths of economic recovery and interest rates. The current healthy balance sheet position suggests that households in general would be well placed to weather these downside risks.'
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
BT : Beware of low interest rates - they may bubble over
Business Times - 10 Nov 2009
Beware of low interest rates - they may bubble over
By ROBERT SAMUELSON
WHEN Nouriel Roubini talks, the world listens. Prof Roubini is, of course, the once-obscure New York University economist whose dire warnings about a financial crisis proved depressingly prophetic. Last week, Prof Roubini was shouting. Writing in the Financial Times, he warned that the Federal Reserve and other government central banks are fuelling a massive new asset 'bubble' that - while not in imminent danger of bursting - will someday do so with calamitous consequences.
Here's Prof Roubini's argument. The Fed is holding short-term interest rates near zero. Investors and speculators borrow US dollars cheaply and use them to buy various assets - stocks, bonds, gold, oil, minerals, foreign currencies. Prices rise. Huge profits can be made.
But this can't last, Prof Roubini warns. The Fed will eventually raise interest rates. Or outside events (a confrontation with Iran, fear of a double-dip recession) will change market psychology. Then, investors will rush to lock in profits, and the sell-off will trigger a crash. Stock, bond and commodity prices will plunge. Losses will mount, confidence will fall and the real economy will suffer. 'The Fed and other policymakers seem unaware of the monster bubble they are creating,' he writes.
Haven't we seen this movie before? Well, maybe. Like home values a few years ago, asset prices have risen spectacularly. Since its March 9 low, the US stock market has gained more than 50 per cent. An index of stocks for 22 'emerging market' countries (including Brazil, China and India) has doubled from its recent low. Oil at about US$80 a barrel has increased 150 per cent from its recent low of US$31. Gold is near an all-time high around US$1,090 an ounce. Meanwhile, the US dollar has dropped against many currencies. Half of Prof Roubini's story resonates.
But the other half is less convincing: that prices, driven by cheap loans, have reached speculative levels. Remember that the economy seemed in a free fall early this year. Terrified consumers and cautious companies hoarded cash, cut spending and dumped stocks. Since then, the mood and economic indicators have improved. Higher stock and commodity prices have mostly recovered the big losses of those panicky months.
Today's prices are usually below previous peaks. Oil's peak was nearly US$150 a barrel. Similarly, the S&P 500 stock index, around 1,065, is a third lower than its peak on Oct 9, 2007 (1,565.15), and roughly where it was on Election Day 2008 (1,005.75). By historical price-earnings ratios - the ratio of stock prices to per-share profits - these levels can be justified, if the economic recovery continues. With massive layoffs, business costs have been cut sharply.
Nor is it clear that cheap US dollar loans are promoting speculation. 'In the United States and Europe, banks are reducing lending,' says economist Hung Tran of the Institute of International Finance, a research organisation of financial institutions. 'You see hedge funds taking on less leverage (borrowed money) than in 2007.' What actually happened, he says, is that as investors became less fearful, they moved funds from cash into other markets, pushing up prices. He cites outflows this year from money market mutual funds exceeding US$300 billion.
Indeed, that's what the Fed wants, argues economist Drew Matus of Bank of America. Low interest rates on money market funds and current accounts are 'trying to force you to do something with it (the money)' - either spend it or invest it. Depression prevention means supporting consumption and asset markets.
So, Prof Roubini's new bubble remains unproved. But this doesn't invalidate his warning. We've learned that there's a thin line between promoting economic expansion and fostering bubbles. With hindsight, lax Fed policies contributed to both the 'tech' bubble of the late 1990s and the recent housing bubble, though how much is debatable.
The most worrying signs of speculative excesses, says Mr Tran, involve some Asian and Latin American developing countries. They've received sizable capital inflows (money from abroad). These have boosted local stock markets and reflect disaffection with the US dollar.
Their central banks - imitating the Fed - have also kept local interest rates low, fuelling rapid credit growth. Some of their stock markets have exceeded previous highs. These countries face a dilemma. Raising rates may attract more 'hot' foreign capital; keeping them low may encourage speculative borrowing in local currency.
But the dilemma arises from the Fed's low interest rates and the weak US dollar. The conclusion: How deftly the Fed navigates from its present policy matters for the world as well as the US. If it's too fast, it may kill the economic recovery; if it's too slow, it may spawn bubbles - and kill the recovery. -- The Washington Post Writers Group
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
Beware of low interest rates - they may bubble over
By ROBERT SAMUELSON
WHEN Nouriel Roubini talks, the world listens. Prof Roubini is, of course, the once-obscure New York University economist whose dire warnings about a financial crisis proved depressingly prophetic. Last week, Prof Roubini was shouting. Writing in the Financial Times, he warned that the Federal Reserve and other government central banks are fuelling a massive new asset 'bubble' that - while not in imminent danger of bursting - will someday do so with calamitous consequences.
Here's Prof Roubini's argument. The Fed is holding short-term interest rates near zero. Investors and speculators borrow US dollars cheaply and use them to buy various assets - stocks, bonds, gold, oil, minerals, foreign currencies. Prices rise. Huge profits can be made.
But this can't last, Prof Roubini warns. The Fed will eventually raise interest rates. Or outside events (a confrontation with Iran, fear of a double-dip recession) will change market psychology. Then, investors will rush to lock in profits, and the sell-off will trigger a crash. Stock, bond and commodity prices will plunge. Losses will mount, confidence will fall and the real economy will suffer. 'The Fed and other policymakers seem unaware of the monster bubble they are creating,' he writes.
Haven't we seen this movie before? Well, maybe. Like home values a few years ago, asset prices have risen spectacularly. Since its March 9 low, the US stock market has gained more than 50 per cent. An index of stocks for 22 'emerging market' countries (including Brazil, China and India) has doubled from its recent low. Oil at about US$80 a barrel has increased 150 per cent from its recent low of US$31. Gold is near an all-time high around US$1,090 an ounce. Meanwhile, the US dollar has dropped against many currencies. Half of Prof Roubini's story resonates.
But the other half is less convincing: that prices, driven by cheap loans, have reached speculative levels. Remember that the economy seemed in a free fall early this year. Terrified consumers and cautious companies hoarded cash, cut spending and dumped stocks. Since then, the mood and economic indicators have improved. Higher stock and commodity prices have mostly recovered the big losses of those panicky months.
Today's prices are usually below previous peaks. Oil's peak was nearly US$150 a barrel. Similarly, the S&P 500 stock index, around 1,065, is a third lower than its peak on Oct 9, 2007 (1,565.15), and roughly where it was on Election Day 2008 (1,005.75). By historical price-earnings ratios - the ratio of stock prices to per-share profits - these levels can be justified, if the economic recovery continues. With massive layoffs, business costs have been cut sharply.
Nor is it clear that cheap US dollar loans are promoting speculation. 'In the United States and Europe, banks are reducing lending,' says economist Hung Tran of the Institute of International Finance, a research organisation of financial institutions. 'You see hedge funds taking on less leverage (borrowed money) than in 2007.' What actually happened, he says, is that as investors became less fearful, they moved funds from cash into other markets, pushing up prices. He cites outflows this year from money market mutual funds exceeding US$300 billion.
Indeed, that's what the Fed wants, argues economist Drew Matus of Bank of America. Low interest rates on money market funds and current accounts are 'trying to force you to do something with it (the money)' - either spend it or invest it. Depression prevention means supporting consumption and asset markets.
So, Prof Roubini's new bubble remains unproved. But this doesn't invalidate his warning. We've learned that there's a thin line between promoting economic expansion and fostering bubbles. With hindsight, lax Fed policies contributed to both the 'tech' bubble of the late 1990s and the recent housing bubble, though how much is debatable.
The most worrying signs of speculative excesses, says Mr Tran, involve some Asian and Latin American developing countries. They've received sizable capital inflows (money from abroad). These have boosted local stock markets and reflect disaffection with the US dollar.
Their central banks - imitating the Fed - have also kept local interest rates low, fuelling rapid credit growth. Some of their stock markets have exceeded previous highs. These countries face a dilemma. Raising rates may attract more 'hot' foreign capital; keeping them low may encourage speculative borrowing in local currency.
But the dilemma arises from the Fed's low interest rates and the weak US dollar. The conclusion: How deftly the Fed navigates from its present policy matters for the world as well as the US. If it's too fast, it may kill the economic recovery; if it's too slow, it may spawn bubbles - and kill the recovery. -- The Washington Post Writers Group
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
BT Breaking News: Clementi Mall tender draws top bid of almost $542 million
Business Times - 10 Nov 2009
Clementi Mall tender draws top bid of almost $542 million
By KALPANA RASHIWALA
The Housing & Development Board's tender for Clementi Mall has attracted a total of six bids. The top bid by CM Domain Pte Ltd, a unit of Singapore Press Holdings, was for $541.898 million, which works out to $2,800 per square foot based on the net lettable area of 18,000 sq metres or 193,750 sq ft.
The mall is being sold on 99-year leasehold tenure.
HDB is building only the core structure and facade, which it aims to hand over to the eventual buyer around August next year. The new owner will then finish the project internally, with flexibility to plan the theme and layout. The buyer will also have naming rights to the mall.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
Clementi Mall tender draws top bid of almost $542 million
By KALPANA RASHIWALA
The Housing & Development Board's tender for Clementi Mall has attracted a total of six bids. The top bid by CM Domain Pte Ltd, a unit of Singapore Press Holdings, was for $541.898 million, which works out to $2,800 per square foot based on the net lettable area of 18,000 sq metres or 193,750 sq ft.
The mall is being sold on 99-year leasehold tenure.
HDB is building only the core structure and facade, which it aims to hand over to the eventual buyer around August next year. The new owner will then finish the project internally, with flexibility to plan the theme and layout. The buyer will also have naming rights to the mall.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
BT : More action may be needed if recent property measures inadequate: MAS
Business Times - 10 Nov 2009
More action may be needed if recent property measures inadequate: MAS
Risk of speculation escalating as market expects low interest rates to persist
By CONRAD TAN
(SINGAPORE) Further action to cool the Singapore property market may be needed if recent measures to dampen speculation prove insufficient, the Monetary Authority of Singapore said yesterday.
Looking ahead, 'price levels and transaction activity bear close monitoring', MAS said in its yearly Financial Stability Review, published yesterday.
'As Singapore emerges from recession and with the market expecting low interest rates to persist for some time, the risk of a renewed escalation of speculative momentum cannot be discounted.'
Despite lingering uncertainties in the economic outlook for Singapore and the rest of the world, 'the domestic property market activity has taken on its own dynamic', MAS said in a special section in the report highlighting what it sees as the key risks to Singapore's financial system.
Other downside risks centre on the sustainability of the global economic recovery after governments start to withdraw their fiscal stimulus and tighten monetary policy, MAS said.
'Should growth turn out weaker than expected, property buyers and speculators could face capital losses as the market corrects. Conversely, if the recovery stays on course, interest rates will eventually rise and drive up financing costs with severe implications for those who have overextended themselves,' it said elsewhere in the report, commenting on the recent sharp rise in private home prices.
'While the market rebound may appear to be aligned with improved prospects for the domestic economy, the current low interest rate environment has also played a part by reducing the cost of property financing,' MAS said.
'If unchecked, this could lead to a rising spiral of demand and prices as more and more property buyers and speculators are drawn into the market, and expose the property market to the continuing risks in the global economy.'
The steep increase in property prices here in recent months has already prompted the government to act to discourage speculation.
In September, the government banned interest-only housing loans and the interest absorption scheme that allows developers to absorb interest payments for apartments that are still being built.
It also restarted the confirmed list of the Government Land Sales programme in the first half of next year to meet the strong demand for private homes.
Unlike sites listed on the reserve list, confirmed-list land sites are put up for sale at a pre-determined date, without the need for the sale to be triggered by an application from developers.
Last Friday, the National Development Ministry said that it would place eight residential sites on the confirmed list for the first six months of next year.
That definite increase in residential land for sale is expected to have a dampening effect on overall home prices.
'We would view the comments made by the MAS as more of a pre-emptive signal for now,' said Donald Chua, an equity analyst at CIMB here in a note to clients.
'A low interest rate environment coupled with strong property demand has led to fears of rising speculative activity.'
However, since the recent measures to discourage speculation were announced, 'the euphoria on property has clearly cooled down in recent months, which should lead to more normalised property demand', he added.
If the latest measures aren't effective in curbing home price increases quickly enough, the government's next step could be to reduce the limit on how much of a property's price may be financed with a bank loan, from 80-90 per cent now, Mr Chua said.
Banks' loan exposures to the property sector remain in line with historical trends, MAS said.
Its most recent aggregate bank lending data show that half of all Singapore-dollar bank loans at the end of September were to the broad property sector, with business loans to the building and construction sector making up 17.8 per cent of total bank lending, and consumer housing loans contributing another 31.6 per cent.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved
More action may be needed if recent property measures inadequate: MAS
Risk of speculation escalating as market expects low interest rates to persist
By CONRAD TAN
(SINGAPORE) Further action to cool the Singapore property market may be needed if recent measures to dampen speculation prove insufficient, the Monetary Authority of Singapore said yesterday.
Looking ahead, 'price levels and transaction activity bear close monitoring', MAS said in its yearly Financial Stability Review, published yesterday.
'As Singapore emerges from recession and with the market expecting low interest rates to persist for some time, the risk of a renewed escalation of speculative momentum cannot be discounted.'
Despite lingering uncertainties in the economic outlook for Singapore and the rest of the world, 'the domestic property market activity has taken on its own dynamic', MAS said in a special section in the report highlighting what it sees as the key risks to Singapore's financial system.
Other downside risks centre on the sustainability of the global economic recovery after governments start to withdraw their fiscal stimulus and tighten monetary policy, MAS said.
'Should growth turn out weaker than expected, property buyers and speculators could face capital losses as the market corrects. Conversely, if the recovery stays on course, interest rates will eventually rise and drive up financing costs with severe implications for those who have overextended themselves,' it said elsewhere in the report, commenting on the recent sharp rise in private home prices.
'While the market rebound may appear to be aligned with improved prospects for the domestic economy, the current low interest rate environment has also played a part by reducing the cost of property financing,' MAS said.
'If unchecked, this could lead to a rising spiral of demand and prices as more and more property buyers and speculators are drawn into the market, and expose the property market to the continuing risks in the global economy.'
The steep increase in property prices here in recent months has already prompted the government to act to discourage speculation.
In September, the government banned interest-only housing loans and the interest absorption scheme that allows developers to absorb interest payments for apartments that are still being built.
It also restarted the confirmed list of the Government Land Sales programme in the first half of next year to meet the strong demand for private homes.
Unlike sites listed on the reserve list, confirmed-list land sites are put up for sale at a pre-determined date, without the need for the sale to be triggered by an application from developers.
Last Friday, the National Development Ministry said that it would place eight residential sites on the confirmed list for the first six months of next year.
That definite increase in residential land for sale is expected to have a dampening effect on overall home prices.
'We would view the comments made by the MAS as more of a pre-emptive signal for now,' said Donald Chua, an equity analyst at CIMB here in a note to clients.
'A low interest rate environment coupled with strong property demand has led to fears of rising speculative activity.'
However, since the recent measures to discourage speculation were announced, 'the euphoria on property has clearly cooled down in recent months, which should lead to more normalised property demand', he added.
If the latest measures aren't effective in curbing home price increases quickly enough, the government's next step could be to reduce the limit on how much of a property's price may be financed with a bank loan, from 80-90 per cent now, Mr Chua said.
Banks' loan exposures to the property sector remain in line with historical trends, MAS said.
Its most recent aggregate bank lending data show that half of all Singapore-dollar bank loans at the end of September were to the broad property sector, with business loans to the building and construction sector making up 17.8 per cent of total bank lending, and consumer housing loans contributing another 31.6 per cent.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved
BT : nex mall to have roof garden dog run
Business Times - 10 Nov 2009
nex mall to have roof garden dog run
By KALPANA RASHIWALA
(SINGAPORE) nex, the mall which is being built next to Serangoon MRT Station, will have a dog run - the first in a shopping centre here.
The 2,000 sq ft run will be on the roof garden at the fourth level. 'We hope that with the introduction of a designated dog area at nex, perhaps we can attract a new group of regular mall visitors who are pet lovers,' says Tong Kok Wing, general manager of Guthrie Consultancy Services, which is providing project consultancy and marketing for nex.
The run has been set aside for dogs to exercise and play in an off-leash environment under the supervision of their owners. 'Under guidelines stipulated by the Agri-Food and Veterinary Authority (AVA), certain breeds of dogs must be muzzled and the same will apply here,' a Guthrie spokeswoman said.
To visit the dog run, dog owners and their pets will have to use designated lifts in the mall or escalators outside. Dogs will not be allowed in other parts of the mall.
A Pet Safari store will be on the same level as the dog park. The store, operated by Pet Lovers Centre - one of Singapore's largest pet food retailers - will occupy more than 5,000 sq ft in a double-storey unit. It will offer pet food, accessories, veterinary services and pets for sale.
So far, more than 70 per cent of retail space at nex has been committed. Anchor tenants include Challenger, rivals Fairprice Xtra and Cold Storage, Courts, Isetan, Shaw Cineplex, Food Republic and Food Junction. The mall is being developed at an estimated cost of $1.3 billion and is slated to be completed by end-2010.
Other places in Singapore where there are dog runs include West Coast Park, Bishan Park and Pasir Ris Farmway.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
For pet lovers: Dog owners and their pets will have to use designated lifts in the mall or escalators outside. Dogs will not be allowed in other parts of the mall
nex mall to have roof garden dog run
By KALPANA RASHIWALA
(SINGAPORE) nex, the mall which is being built next to Serangoon MRT Station, will have a dog run - the first in a shopping centre here.
The 2,000 sq ft run will be on the roof garden at the fourth level. 'We hope that with the introduction of a designated dog area at nex, perhaps we can attract a new group of regular mall visitors who are pet lovers,' says Tong Kok Wing, general manager of Guthrie Consultancy Services, which is providing project consultancy and marketing for nex.
The run has been set aside for dogs to exercise and play in an off-leash environment under the supervision of their owners. 'Under guidelines stipulated by the Agri-Food and Veterinary Authority (AVA), certain breeds of dogs must be muzzled and the same will apply here,' a Guthrie spokeswoman said.
To visit the dog run, dog owners and their pets will have to use designated lifts in the mall or escalators outside. Dogs will not be allowed in other parts of the mall.
A Pet Safari store will be on the same level as the dog park. The store, operated by Pet Lovers Centre - one of Singapore's largest pet food retailers - will occupy more than 5,000 sq ft in a double-storey unit. It will offer pet food, accessories, veterinary services and pets for sale.
So far, more than 70 per cent of retail space at nex has been committed. Anchor tenants include Challenger, rivals Fairprice Xtra and Cold Storage, Courts, Isetan, Shaw Cineplex, Food Republic and Food Junction. The mall is being developed at an estimated cost of $1.3 billion and is slated to be completed by end-2010.
Other places in Singapore where there are dog runs include West Coast Park, Bishan Park and Pasir Ris Farmway.
Copyright © 2007 Singapore Press Holdings Ltd. All rights reserved.
For pet lovers: Dog owners and their pets will have to use designated lifts in the mall or escalators outside. Dogs will not be allowed in other parts of the mall
BT : Ho Bee, MCL sell 51 units at Parvis
Business Times - 10 Nov 2009
Ho Bee, MCL sell 51 units at Parvis
(SINGAPORE) Ho Bee Investment and MCL Land last week sold 51 units at their Parvis condo at Holland Hill at an average price of about $1,480 per square foot (psf).
Unlike the recent trend of smallest units in a project selling out first, what happened at Parvis was quite the reverse, with four-bedroom apartments accounting for the most number of units sold - 19. This was followed by two-bedders (15 units) and three-bedders (14 units).
MCL and Ho Bee even sold three penthouses in response to buyer interest, although these were not part of the initial batch of 85 units they released for the preview.
They are now proceeding to do an official launch of the project at the weekend, when they will release more units in the freehold condo, which has a total of 248 units. The 12-storey project is being built on the former Holland Hill Mansions site.
Ho Bee general manager Chong Hock Chang revealed that ex-owners of Holland Hill Mansions had picked up seven apartments.
Singaporeans bought 39 of the 51 units sold. Permanent residents and foreigners acquired the remaining 12 units; they were mostly Malaysians, with some Indonesians, Mr Chong added.
The three penthouses sold comprise two single-level units of 2,300 square feet each, with three bedrooms and costing about $3.3 million apiece, and a 2,800-sq-ft duplex unit with four bedrooms, priced at about $4.1 million. The duplex was picked up by a foreigner while Singaporeans bought the two single-level penthouses.
Last month, Ho Bee released the freehold Trilight condo on Newton Road. To date, it has sold 61 units in the 30-storey project at an average price of $1,650 psf.
Ho Bee, MCL sell 51 units at Parvis
(SINGAPORE) Ho Bee Investment and MCL Land last week sold 51 units at their Parvis condo at Holland Hill at an average price of about $1,480 per square foot (psf).
Unlike the recent trend of smallest units in a project selling out first, what happened at Parvis was quite the reverse, with four-bedroom apartments accounting for the most number of units sold - 19. This was followed by two-bedders (15 units) and three-bedders (14 units).
MCL and Ho Bee even sold three penthouses in response to buyer interest, although these were not part of the initial batch of 85 units they released for the preview.
They are now proceeding to do an official launch of the project at the weekend, when they will release more units in the freehold condo, which has a total of 248 units. The 12-storey project is being built on the former Holland Hill Mansions site.
Ho Bee general manager Chong Hock Chang revealed that ex-owners of Holland Hill Mansions had picked up seven apartments.
Singaporeans bought 39 of the 51 units sold. Permanent residents and foreigners acquired the remaining 12 units; they were mostly Malaysians, with some Indonesians, Mr Chong added.
The three penthouses sold comprise two single-level units of 2,300 square feet each, with three bedrooms and costing about $3.3 million apiece, and a 2,800-sq-ft duplex unit with four bedrooms, priced at about $4.1 million. The duplex was picked up by a foreigner while Singaporeans bought the two single-level penthouses.
Last month, Ho Bee released the freehold Trilight condo on Newton Road. To date, it has sold 61 units in the 30-storey project at an average price of $1,650 psf.
ST : Billionaire eyes islands beyond Singapore
Nov 9, 2009
Billionaire eyes islands beyond Singapore
By Amresh Gunasingham
HE ARRIVED in a whirlwind of publicity earlier this year and bought a $15.46 million penthouse at The Sail @ Marina Bay condominium.
Now, Indian billionaire Bhupendra Kumar Modi is setting his sights beyond Singapore.
He wants to spend US$100 million (S$140 million) to buy beach resorts in popular spots such as Bintan and Batam, and invest in at least four smaller islands which remain largely underdeveloped.
The privately owned islands with a combined land area of more than 300ha - or two-thirds the size of Sentosa - are north of Batam.
Dr Modi is the flamboyant founder-chairman of conglomerate Spice Group, which has interests ranging from telecommunications to entertainment. Speaking to The Straits Times at his 5,834 sq ft home, the Singapore permanent resident said he expects more than a 100 per cent return on his investments.
'I never realised until I came to this country that these islands were so big and so close,' said Dr Modi, 60, who moved here in May from the United States.
He also relocated the global headquarters of Mumbai-based Spice Corp to Singapore, and set aside US$200 million to invest through his office here. Already, well over US$100 million has been sunk into investments, from property and office space to acquiring a 20 per cent stake in online telephony firm MediaRing in August.
Now he is looking further afield. He plans to turn popular tourist spots such as the Pura Jaya resort in Batam into attractive havens for the rich and famous from Bollywood.
The carrot? Casinos and private villas with pools and spas. He also plans to build more and better houses, schools and hospitals on these islands.
Pura Jaya's owner, Indonesian businessman Zulkarnain Khadir, has confirmed that he is looking to sell the resort and is in discussions with Dr Modi as well as some other parties.
'For the last 12 years, these islands have lacked investment. There has been little change,' Dr Modi noted. He is understood to be in discussions with a number of banks as potential partners.
He feels developing the nearby islands offers an avenue to overcoming the challenge of land scarcity in Singapore: 'Looking at future development, we cannot continue doing what we have (here) for the last 50 years because it has reached a point of saturation. These islands could be examples of the future, that would also be commercially viable.'
Mr Michael Yong, a director of Kosmo Suria - the company that owns the group of islands just off Batam - said it was in early-stage discussions with Dr Modi: 'We have a meeting planned... to take these plans further. Our estimated target to start development is early next year.'
Dr Modi has also made his presence felt in other areas. He has pledged one of the largest single donations of $1.3 million to the Lee Kuan Yew School of Public Policy, which will fund scholarships and executive training programmes.
This contribution was recognised at the school's annual dinner in September, which was graced by Minister Mentor Lee Kuan Yew.
'I'm not here just to do business. I could do business anywhere. I'm here because I see a long-term future,' Dr Modi said.
Dr Modi wants to buy resorts in popular spots like Bintan and Batam and invest in at least four smaller islands. -- PHOTO: BHUPENDRA KUMAR MODI
Billionaire eyes islands beyond Singapore
By Amresh Gunasingham
HE ARRIVED in a whirlwind of publicity earlier this year and bought a $15.46 million penthouse at The Sail @ Marina Bay condominium.
Now, Indian billionaire Bhupendra Kumar Modi is setting his sights beyond Singapore.
He wants to spend US$100 million (S$140 million) to buy beach resorts in popular spots such as Bintan and Batam, and invest in at least four smaller islands which remain largely underdeveloped.
The privately owned islands with a combined land area of more than 300ha - or two-thirds the size of Sentosa - are north of Batam.
Dr Modi is the flamboyant founder-chairman of conglomerate Spice Group, which has interests ranging from telecommunications to entertainment. Speaking to The Straits Times at his 5,834 sq ft home, the Singapore permanent resident said he expects more than a 100 per cent return on his investments.
'I never realised until I came to this country that these islands were so big and so close,' said Dr Modi, 60, who moved here in May from the United States.
He also relocated the global headquarters of Mumbai-based Spice Corp to Singapore, and set aside US$200 million to invest through his office here. Already, well over US$100 million has been sunk into investments, from property and office space to acquiring a 20 per cent stake in online telephony firm MediaRing in August.
Now he is looking further afield. He plans to turn popular tourist spots such as the Pura Jaya resort in Batam into attractive havens for the rich and famous from Bollywood.
The carrot? Casinos and private villas with pools and spas. He also plans to build more and better houses, schools and hospitals on these islands.
Pura Jaya's owner, Indonesian businessman Zulkarnain Khadir, has confirmed that he is looking to sell the resort and is in discussions with Dr Modi as well as some other parties.
'For the last 12 years, these islands have lacked investment. There has been little change,' Dr Modi noted. He is understood to be in discussions with a number of banks as potential partners.
He feels developing the nearby islands offers an avenue to overcoming the challenge of land scarcity in Singapore: 'Looking at future development, we cannot continue doing what we have (here) for the last 50 years because it has reached a point of saturation. These islands could be examples of the future, that would also be commercially viable.'
Mr Michael Yong, a director of Kosmo Suria - the company that owns the group of islands just off Batam - said it was in early-stage discussions with Dr Modi: 'We have a meeting planned... to take these plans further. Our estimated target to start development is early next year.'
Dr Modi has also made his presence felt in other areas. He has pledged one of the largest single donations of $1.3 million to the Lee Kuan Yew School of Public Policy, which will fund scholarships and executive training programmes.
This contribution was recognised at the school's annual dinner in September, which was graced by Minister Mentor Lee Kuan Yew.
'I'm not here just to do business. I could do business anywhere. I'm here because I see a long-term future,' Dr Modi said.
Dr Modi wants to buy resorts in popular spots like Bintan and Batam and invest in at least four smaller islands. -- PHOTO: BHUPENDRA KUMAR MODI
ST : Katong Mall changing hands at $248m
Nov 10, 2009
Katong Mall changing hands at $248m
It will get $55m revamp to become lifestyle, F&B hub
By Joyce Teo
A FORMER CapitaLand executive has stitched together a $247.55 million deal to snap up Katong Mall.
Mr Pua Seck Guan (second picture) set up a private trust called Perennial Katong Retail Trust to buy the mall from Tuan Sing Holdings' Golden Cape Investment. The investors are no more than six parties, including corporate and institutional investors and Mr Pua.
The seven-storey centre, in a fairly affluent neighbourhood at the junction of East Coast and Joo Chiat roads, will undergo a $55 million revamp lasting 12 to 15 months.
This will transform it into a lifestyle and food and beverage hub, said Mr Pua, who was chief executive of CapitaLand Retail before stepping down a year ago.
Tuan Sing bought the mall en bloc for $219 million last July.
Mr Pua said this deal started about three weeks ago when 'some one approached me'.
'After pumping in the upgrading cost, the returns can be attractive,' he said, adding that the expected net property yield after completion will be about 6 per cent to 8 per cent.
Its gross floor area will be relatively unchanged at 282,000 sq ft after redevelopment works.
But its net lettable area will rise from 172,170 sq ft to over 206,000 sq ft, said a statement from Perennial Real Estate.
The revamp will add 99 more carpark spaces to make a total of 278. These will be on basements two and three. About 30,000 sq ft of retail space on basement two will then be relocated to more prime areas on the upper floors as well as a newly created fifth floor - now the rooftop.
A cinema will occupy the top floor, while anchor tenants will include a food court and gourmet supermarket, said the statement.
BreakTalk has expressed interest in leasing space at the mall.
Mr Pua is the founder and CEO of Perennial Real Estate but still heads the international operations at Indian real estate giant DLF, which he joined after leaving CapitaLand.
Apart from asset management, he is looking to put together a fund at DLF as well a real estate investment trust for the firm's India assets. He said the DLF job 'allows him to be more entrepreneurial'.
More plans are in the pipeline for Perennial, formed to engage in real estate activities, including fund and asset management and retail management in Singapore, India and China, he said.
The Katong Mall transaction is expected to be completed by the end of January. The mall is likely to close around the middle of next year for renovation works.
Katong Mall changing hands at $248m
It will get $55m revamp to become lifestyle, F&B hub
By Joyce Teo
A FORMER CapitaLand executive has stitched together a $247.55 million deal to snap up Katong Mall.
Mr Pua Seck Guan (second picture) set up a private trust called Perennial Katong Retail Trust to buy the mall from Tuan Sing Holdings' Golden Cape Investment. The investors are no more than six parties, including corporate and institutional investors and Mr Pua.
The seven-storey centre, in a fairly affluent neighbourhood at the junction of East Coast and Joo Chiat roads, will undergo a $55 million revamp lasting 12 to 15 months.
This will transform it into a lifestyle and food and beverage hub, said Mr Pua, who was chief executive of CapitaLand Retail before stepping down a year ago.
Tuan Sing bought the mall en bloc for $219 million last July.
Mr Pua said this deal started about three weeks ago when 'some one approached me'.
'After pumping in the upgrading cost, the returns can be attractive,' he said, adding that the expected net property yield after completion will be about 6 per cent to 8 per cent.
Its gross floor area will be relatively unchanged at 282,000 sq ft after redevelopment works.
But its net lettable area will rise from 172,170 sq ft to over 206,000 sq ft, said a statement from Perennial Real Estate.
The revamp will add 99 more carpark spaces to make a total of 278. These will be on basements two and three. About 30,000 sq ft of retail space on basement two will then be relocated to more prime areas on the upper floors as well as a newly created fifth floor - now the rooftop.
A cinema will occupy the top floor, while anchor tenants will include a food court and gourmet supermarket, said the statement.
BreakTalk has expressed interest in leasing space at the mall.
Mr Pua is the founder and CEO of Perennial Real Estate but still heads the international operations at Indian real estate giant DLF, which he joined after leaving CapitaLand.
Apart from asset management, he is looking to put together a fund at DLF as well a real estate investment trust for the firm's India assets. He said the DLF job 'allows him to be more entrepreneurial'.
More plans are in the pipeline for Perennial, formed to engage in real estate activities, including fund and asset management and retail management in Singapore, India and China, he said.
The Katong Mall transaction is expected to be completed by the end of January. The mall is likely to close around the middle of next year for renovation works.
ST : New flats for Bukit Merah View residents
Nov 9, 2009
New flats for Bukit Merah View residents
300 families can pick Sers replacement flats in nearby Tiong Bahru
By Jennani Durai
FAMILIES in about 300 flats in Bukit Merah View will be offered new homes in nearby Tiong Bahru as their old blocks are slated for redevelopment.
The homeowners can choose from 700 units of new flats ranging from studio to 5-roomers in the Boon Tiong Road area that will be built by the Housing Board.
The 36-year-old flats in Blocks 110, 111, 113 and 114 will be torn down, to be replaced by 700 units, under the Selective En-bloc Redevelopment Scheme (Sers).
News of the move was announced yesterday by the ward's MP, Ms Indranee Rajah, who was making good on her earlier promise to the constituents.
She gave the news at Tanjong Pagar GRC's Tree Planting Day, at which Minister Mentor Lee Kuan Yew was the guest of honour.
The Bukit Merah move brings to 73 the total number of sites identified for Sers since August 1995.
The area's residents had expressed disappointment at being passed over for upgrading when Ms Indranee became MP for Tanglin-Cairnhill in 2001.
'I promised them that I would look into it and since that time I have had an ongoing dialogue with the HDB over the residents' concerns.'
She found from her walkabouts and a survey of the residents that most preferred Sers over upgrading.
Ms Linda Cheang, 44, who lives on the third floor of Block 114, said: 'We told Ms Indranee twice... that we wished to have the en-bloc scheme. She said some of the other residents wanted upgrading. We said we don't want that as the flats are too old...'
Sers involves redeveloping old blocks of flats and rehousing residents in new and better flats nearby.
The homeowners will be compensated according to current market value, said Ms Indranee. In turn, they can buy the replacement flats at subsidised prices. Each owner will be informed by the HDB of his compensation amount, she added.
Ms Indranee noted that the replacement flats will be at a prime location, near Tiong Bahru Plaza and an MRT station. In addition, some shops and an eating house will be built.
The news came as a relief to many residents who had been waiting a long time for improvement work on their blocks.
'When we heard a few years ago the blocks opposite ours were going en-bloc, I felt disappointed as I had almost bought a flat there. Now, I'm glad these flats will finally go en-bloc,' said food-seller K.W. Teo, who lives in Block 110.
Ms Cheang agreed: 'I am very happy.'
The homeowners may register for their replacement flat in the third quarter of next year, said an HDB statement.
The HDB will also hold an exhibition from Nov 12-18 near Block 114 for residents to find out more about Sers.
Construction of the replacement flats will begin in early 2011 and is expected to be completed by mid-2014.
But Block 116 will not be torn down. The four-storey block was considered for Sers, said the MP. But a study of the area found that it, along with Block 115, which houses the market and hawker centre, formed 'an integral focus point of the community at the neighbourhood centre'.
'If Block 116 was...torn down, it would be like ripping away part of the heart of the community,' said Ms Indranee.
But she assured the residents that she will seek HDB's approval for the block to be considered for the Lift Upgrading Programme. 'Again, this promise is not made lightly. I am very conscious that there are many elderly people in Block 116 who would benefit greatly from having lifts. So I will do my best for Block 116.
'You will not be left out.'
New flats for Bukit Merah View residents
300 families can pick Sers replacement flats in nearby Tiong Bahru
By Jennani Durai
FAMILIES in about 300 flats in Bukit Merah View will be offered new homes in nearby Tiong Bahru as their old blocks are slated for redevelopment.
The homeowners can choose from 700 units of new flats ranging from studio to 5-roomers in the Boon Tiong Road area that will be built by the Housing Board.
The 36-year-old flats in Blocks 110, 111, 113 and 114 will be torn down, to be replaced by 700 units, under the Selective En-bloc Redevelopment Scheme (Sers).
News of the move was announced yesterday by the ward's MP, Ms Indranee Rajah, who was making good on her earlier promise to the constituents.
She gave the news at Tanjong Pagar GRC's Tree Planting Day, at which Minister Mentor Lee Kuan Yew was the guest of honour.
The Bukit Merah move brings to 73 the total number of sites identified for Sers since August 1995.
The area's residents had expressed disappointment at being passed over for upgrading when Ms Indranee became MP for Tanglin-Cairnhill in 2001.
'I promised them that I would look into it and since that time I have had an ongoing dialogue with the HDB over the residents' concerns.'
She found from her walkabouts and a survey of the residents that most preferred Sers over upgrading.
Ms Linda Cheang, 44, who lives on the third floor of Block 114, said: 'We told Ms Indranee twice... that we wished to have the en-bloc scheme. She said some of the other residents wanted upgrading. We said we don't want that as the flats are too old...'
Sers involves redeveloping old blocks of flats and rehousing residents in new and better flats nearby.
The homeowners will be compensated according to current market value, said Ms Indranee. In turn, they can buy the replacement flats at subsidised prices. Each owner will be informed by the HDB of his compensation amount, she added.
Ms Indranee noted that the replacement flats will be at a prime location, near Tiong Bahru Plaza and an MRT station. In addition, some shops and an eating house will be built.
The news came as a relief to many residents who had been waiting a long time for improvement work on their blocks.
'When we heard a few years ago the blocks opposite ours were going en-bloc, I felt disappointed as I had almost bought a flat there. Now, I'm glad these flats will finally go en-bloc,' said food-seller K.W. Teo, who lives in Block 110.
Ms Cheang agreed: 'I am very happy.'
The homeowners may register for their replacement flat in the third quarter of next year, said an HDB statement.
The HDB will also hold an exhibition from Nov 12-18 near Block 114 for residents to find out more about Sers.
Construction of the replacement flats will begin in early 2011 and is expected to be completed by mid-2014.
But Block 116 will not be torn down. The four-storey block was considered for Sers, said the MP. But a study of the area found that it, along with Block 115, which houses the market and hawker centre, formed 'an integral focus point of the community at the neighbourhood centre'.
'If Block 116 was...torn down, it would be like ripping away part of the heart of the community,' said Ms Indranee.
But she assured the residents that she will seek HDB's approval for the block to be considered for the Lift Upgrading Programme. 'Again, this promise is not made lightly. I am very conscious that there are many elderly people in Block 116 who would benefit greatly from having lifts. So I will do my best for Block 116.
'You will not be left out.'
ST : MAS flags two risks to property buyers
Nov 10, 2009
MAS flags two risks to property buyers
Danger of loss in a weak economy or interest rate burden in a buoyant one
By Gabriel Chen
HOME buyers are being advised to pause a moment before leaping into the purchase of that dream apartment.
The Monetary Authority of Singapore (MAS) yesterday cited two scenarios in which the resurgent private property sector may not stay quite so rosy.
The central bank also flagged possible fresh measures to cool the sector, on top of last week's government announcement that plenty of mass market condominium sites will be released next year.
The first scenario MAS outlined is that if economic growth proves to be weaker than expected, property buyers - including speculators - could suffer losses as the market corrects and home prices fall.
Second, even if the economic recovery stays on course, property buyers could suffer a hit of a different kind in the longer term, the central bank warned.
In a rebounding economy, it is more likely that interest rates - now at rock bottom levels - will eventually rise, and this will drive up monthly instalments on home loans that are not fixed.
This could have severe implications for buyers who have over-extended themselves with big home loans, believing interest rates will always stay low.
The MAS issued the words of caution in its annual Financial Stability Review released yesterday, even as it acknowledged a strong rebound of the economy.
It said households here have weathered the crisis relatively well, owing to their sound money management. Banks are not weighed down by risky loans.
However, MAS said that with the market expecting interest rates to stay low for some time, more buyers, including speculators, may be drawn to the market, driving up demand and prices.
Given the risks, MAS said prices and sales needed to be monitored closely.
It outlined earlier government market cooling steps, adding: 'The nature and timing of further measures, if deemed necessary, would have to be balanced against the still-uncertain path of economic recovery.'
According to Urban Redevelopment Authority data, private home prices surged 15.8 per cent in the third quarter - the sharpest quarterly rise in 28 years.
Volume has been strong with 12,969 homes sold in the first nine months of the year. Experts expect full-year sales to exceed the 2007 new home sales record of 14,811 units.
The MAS warning comes as a growing number of Asian nations, such as Hong Kong and South Korea, step up efforts to rein in property buying, for fear of a home prices bubble.
In September, Singapore, for its part, announced a slew of measures to cool the market, including the withdrawal of the interest absorption scheme that allowed home buyers to defer payments.
Details of mass market land sites to be offered to developers in the first half of next year were unveiled last week.
These steps have had some effect already - with the number of home sales falling in the last two months. A key indicator of speculative activity, sub-sales - when uncompleted homes are bought and resold before being built - are also down.
MAS pointed to encouraging signs on banks' property exposure. More than 70 per cent of housing loans are for owner-occupied residential properties, which suggests a lower risk profile, it said.
One trend MAS noted: the share of total loans where the value of the outstanding loan is above 80 per cent of the property's value has surged from 8 per cent last December to 17 per cent in September this year. However, dreaded negative equity, where a home loan exceeds the value of the home, remains very low at less than 3 per cent of loans.
In any case, banks' checks include the person's debt-servicing ability. Said Standard Chartered Singapore's general manager for retail banking products, Mr Dennis Khoo: 'You should not have more than $1 for every $2 that you earn going into overall debt servicing.'
MAS flags two risks to property buyers
Danger of loss in a weak economy or interest rate burden in a buoyant one
By Gabriel Chen
HOME buyers are being advised to pause a moment before leaping into the purchase of that dream apartment.
The Monetary Authority of Singapore (MAS) yesterday cited two scenarios in which the resurgent private property sector may not stay quite so rosy.
The central bank also flagged possible fresh measures to cool the sector, on top of last week's government announcement that plenty of mass market condominium sites will be released next year.
The first scenario MAS outlined is that if economic growth proves to be weaker than expected, property buyers - including speculators - could suffer losses as the market corrects and home prices fall.
Second, even if the economic recovery stays on course, property buyers could suffer a hit of a different kind in the longer term, the central bank warned.
In a rebounding economy, it is more likely that interest rates - now at rock bottom levels - will eventually rise, and this will drive up monthly instalments on home loans that are not fixed.
This could have severe implications for buyers who have over-extended themselves with big home loans, believing interest rates will always stay low.
The MAS issued the words of caution in its annual Financial Stability Review released yesterday, even as it acknowledged a strong rebound of the economy.
It said households here have weathered the crisis relatively well, owing to their sound money management. Banks are not weighed down by risky loans.
However, MAS said that with the market expecting interest rates to stay low for some time, more buyers, including speculators, may be drawn to the market, driving up demand and prices.
Given the risks, MAS said prices and sales needed to be monitored closely.
It outlined earlier government market cooling steps, adding: 'The nature and timing of further measures, if deemed necessary, would have to be balanced against the still-uncertain path of economic recovery.'
According to Urban Redevelopment Authority data, private home prices surged 15.8 per cent in the third quarter - the sharpest quarterly rise in 28 years.
Volume has been strong with 12,969 homes sold in the first nine months of the year. Experts expect full-year sales to exceed the 2007 new home sales record of 14,811 units.
The MAS warning comes as a growing number of Asian nations, such as Hong Kong and South Korea, step up efforts to rein in property buying, for fear of a home prices bubble.
In September, Singapore, for its part, announced a slew of measures to cool the market, including the withdrawal of the interest absorption scheme that allowed home buyers to defer payments.
Details of mass market land sites to be offered to developers in the first half of next year were unveiled last week.
These steps have had some effect already - with the number of home sales falling in the last two months. A key indicator of speculative activity, sub-sales - when uncompleted homes are bought and resold before being built - are also down.
MAS pointed to encouraging signs on banks' property exposure. More than 70 per cent of housing loans are for owner-occupied residential properties, which suggests a lower risk profile, it said.
One trend MAS noted: the share of total loans where the value of the outstanding loan is above 80 per cent of the property's value has surged from 8 per cent last December to 17 per cent in September this year. However, dreaded negative equity, where a home loan exceeds the value of the home, remains very low at less than 3 per cent of loans.
In any case, banks' checks include the person's debt-servicing ability. Said Standard Chartered Singapore's general manager for retail banking products, Mr Dennis Khoo: 'You should not have more than $1 for every $2 that you earn going into overall debt servicing.'
'More curbs if needed'
Today :
Analysts mull options like lower loan caps, capital gains tax
by Esther Fung 05:55 AM Nov 10, 2009
SINGAPORE - More state land has been set aside for homes and mortgage financing schemes have been tightened - but still, the Government is keeping a watchful eye and may do more to temper sentiment in the property market if need be.
In its annual Financial Stability Review released yesterday, the Monetary Authority of Singapore (MAS) said: "As Singapore emerges from recession, and with the market expecting low interest rates to persist for some time, the risk of a renewed escalation of speculative momentum cannot be discounted."
"More measures might then be necessary," though their nature and timing "would have to be balanced against the still uncertain path of economic recovery", added the regulator.
Given the special note made of loan interest rates - and property analyst Colin Tan's belief that excess liquidity is the cause of the exuberance - should Singapore take a leaf from Hong Kong, which plans to lower mortgage caps for luxury property to 60 per cent, from 70 per cent?
Observers note that the froth here is in the mass-market projects rather than the luxury segment - but still, the principle could be adopted.
Policy-makers could impose a lower loan quantum for home purchases, forcing buyers to fork out more cash up front. Since 2005, buyers have been able to borrow up to 90 per cent of a property's value (though most take up to 80 per cent as it is more costly to borrow above this level).
"Right now, the greater concern is to reduce the lending to the property sector," said Mr Tan, head of consultancy and research at Chesterton Suntec International.
Another option is to reinstate the capital gains tax, which was part of the 1996 anti-speculation package. Some observers felt it would not be effective, as there is not as much "flipping" activity now compared to 13 years ago.
Indeed, sub-sale transactions - where a buyer of a new home sells it before it is built - averaged just 11 per cent of all transactions in the second and third quarters, below the peaks seen in 1996 to 1997, said MAS, but "close to the 13 per cent average" in 2007 and 2008.
Ngee Ann Polytechnic real estate lecturer Nicholas Mak said: "Reviving the capital gains tax is quite a hard-handed move, and this could impair Singapore's attractiveness to foreign investors."
Introducing stamp duties of which home sellers would have to pay a portion could be another option. Currently, only buyers pay stamp duty, about 3 per cent of the property price. But this is a blunt tool, as it also hurts genuine demand, noted Mr Mak.
The Government would have to implement more calibrated measures to target giddy investors, yet ensure they do not stub out the nascent economic recovery, most analysts said.
Associate Professor Annie Koh, dean of executive and professional education at the Singapore Management University, said: "To come up with a tight policy right now might kill the goose that lays the golden egg. Central bankers would be watching how much of the real sector is actually recovering, before they do anything drastic."
In September, the Government banned the Interest Absorption Scheme and interest-only loans. It is also reinstating its land sales confirmed list, identifying eight sites for the first half of 2010.
Analysts mull options like lower loan caps, capital gains tax
by Esther Fung 05:55 AM Nov 10, 2009
SINGAPORE - More state land has been set aside for homes and mortgage financing schemes have been tightened - but still, the Government is keeping a watchful eye and may do more to temper sentiment in the property market if need be.
In its annual Financial Stability Review released yesterday, the Monetary Authority of Singapore (MAS) said: "As Singapore emerges from recession, and with the market expecting low interest rates to persist for some time, the risk of a renewed escalation of speculative momentum cannot be discounted."
"More measures might then be necessary," though their nature and timing "would have to be balanced against the still uncertain path of economic recovery", added the regulator.
Given the special note made of loan interest rates - and property analyst Colin Tan's belief that excess liquidity is the cause of the exuberance - should Singapore take a leaf from Hong Kong, which plans to lower mortgage caps for luxury property to 60 per cent, from 70 per cent?
Observers note that the froth here is in the mass-market projects rather than the luxury segment - but still, the principle could be adopted.
Policy-makers could impose a lower loan quantum for home purchases, forcing buyers to fork out more cash up front. Since 2005, buyers have been able to borrow up to 90 per cent of a property's value (though most take up to 80 per cent as it is more costly to borrow above this level).
"Right now, the greater concern is to reduce the lending to the property sector," said Mr Tan, head of consultancy and research at Chesterton Suntec International.
Another option is to reinstate the capital gains tax, which was part of the 1996 anti-speculation package. Some observers felt it would not be effective, as there is not as much "flipping" activity now compared to 13 years ago.
Indeed, sub-sale transactions - where a buyer of a new home sells it before it is built - averaged just 11 per cent of all transactions in the second and third quarters, below the peaks seen in 1996 to 1997, said MAS, but "close to the 13 per cent average" in 2007 and 2008.
Ngee Ann Polytechnic real estate lecturer Nicholas Mak said: "Reviving the capital gains tax is quite a hard-handed move, and this could impair Singapore's attractiveness to foreign investors."
Introducing stamp duties of which home sellers would have to pay a portion could be another option. Currently, only buyers pay stamp duty, about 3 per cent of the property price. But this is a blunt tool, as it also hurts genuine demand, noted Mr Mak.
The Government would have to implement more calibrated measures to target giddy investors, yet ensure they do not stub out the nascent economic recovery, most analysts said.
Associate Professor Annie Koh, dean of executive and professional education at the Singapore Management University, said: "To come up with a tight policy right now might kill the goose that lays the golden egg. Central bankers would be watching how much of the real sector is actually recovering, before they do anything drastic."
In September, the Government banned the Interest Absorption Scheme and interest-only loans. It is also reinstating its land sales confirmed list, identifying eight sites for the first half of 2010.
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