The leasing market in Sentosa Cove is slowly but surely taking form with the completion of an estimated 300 homes.

Once non-existent, the leasing market in Sentosa Cove is slowly but surely taking form with the completion of an estimated 300 homes, including the 200-unit The Berth by the Cove condominium. This paper hopes to provide readers with initial information on the rental returns that could be expected by investing in a home in Sentosa Cove.

Early investors of Sentosa Cove resort homes must certainly possess large risk appetite. This is because although the idea of developing the 117-ha Sentosa Cove into an idyllic waterfront enclave second to none in Singapore was mooted as early as the 1980’s, the first land parcel was successfully sold to the private sector for development only in end-2003. As such, the rental market of resort homes in Sentosa Cove was non-existent when the earlier projects were launched for sale. Earlier investors of Sentosa Cove resort homes had to bet their money solely based on their outlook for this exclusive gated marina community.

The situation is rather different today. Five years on, 99.6% of all land parcels available for sale in Sentosa Cove had been successfully sold to private developers and individuals. These could yield over 2,000 condominium units and 400 bungalows and terraces.

Of these, an estimated 300 homes had received Temporary Occupation Permit (TOP). These are from the 200-unit condominium project The Berth by the Cove and five institutional landed projects - The Berthside, Ocean 8, The Villas @ Sentosa Cove, Coral Island and Hai Leck’s terrace project as well as some other individual landed housing units.

With the completion of these projects, the leasing market in Sentosa Cove is slowly but surely taking form. In fact, according to the Urban Redevelopment Authority (URA)’s Real Estate Information System (Realis) and Info-Tools, some 51 leasing contracts were recorded for homes in Sentosa Cove between January 2007 and April 2008. Contracted monthly gross rents are believed to range between $4,700 for a 2-bedroom unit to as high as $12,250 for a 4-bedroom unit for condominium developments and between $12,000 and $30,000 per unit for the landed homes.

The leasing market for non-landed homes appeared to be significantly more active than for landed
homes. With 46 leasing contracts recorded for The Berth by the Cove, this sole completed condominium development accounted for the lion’s share of the 51 leases signed between January 2007 and April 2008.

It also translates to at least a 23.0% tenancy rate for the project assuming that all these 46 leases are signed on the typical two-year tenancy contractual terms. In other words, at least 46 of the 200-unit development had successfully found tenants as of April 2008. This can be considered a feat given the mammoth amount of construction works taking place on the cove to complete the remaining 2,200 homes.

Leasing activity in Sentosa Cove reached a height in the July and September 2007 quarter in which some 30 leasing contracts were recorded, representing more than half of the 51 leasing contracts signed so far for homes in Sentosa Cove. This frenzied leasing activity led to median monthly gross rents in The Berth by the Cove condominium reaching a height of $7.28 per sq ft/ month in the following quarter i.e. between October and December 2007.

However, mirroring the larger market, Sentosa Cove’s leasing market appeared to have been affected somewhat by the weak sentiments brought about by the ailing US economy and global financial markets stemming from the US sub-prime mortgage crisis. Leasing activity slowed down sharply, chalking up just ten deals in the first four months of 2008. Rents in The Berth by the Cove, thus, weakened slightly to record a median of $6.89 per sq ft / month in the month of April 2008.

Notwithstanding, an analysis of the rental transactions for The Berth by the Cove showed that investors who bought their units in end-2004/early-2005 at an attractive launch price averaging in the region of $8601 per sq ft and have held their units till today are enjoying attractive net rental yields averaging at 5.5%.

However, as prices of homes in Sentosa Cove surged in tandem with the bull run in the general market in addition to the rising prestige of resort homes in this enclave, investors who entered the market in 2007 and purchased their units in The Berth by the Cove at an average price of $1,5202 per sq ft had to contend with lower net rental yields averaging at 3.5%.

Nevertheless, these investors would still be enjoying a higher net rental return compared to those who invested in a freehold luxury apartments on the main island of Singapore in recent times since the latter are generating average net rental returns estimated to be in the region of 2.3%.

If investors of The Berth by the Cove are now reaping healthy rental returns, can the same be said of those who have invested in Sentosa Cove resort apartments that are still under construction? Would rental rates hold in the face of increased stock? Would yields be depressed further if sale prices of such resort homes continue to surge?

To answer these questions, one would only need to bear in mind that the stock of resort homes in Sentosa Cove would be controlled at 2,500 units. This will preserve the exclusivity and resort ambience of homes in Sentosa Cove. Moreover, a fair balance of purchasers of Sentosa Cove homes would be looking to owner occupy their properties, thus further limiting the stock available for rent.

With Singapore’s growing status as a global city and regional financial hub, homes in Sentosa Cove will be well in demand by the rising population of well heeled expatriates opting for oceanfront tropical resort lifestyle. Hence, it can safely be said that the investment value of resort homes in Sentosa Cove would be preserved for a long time to come.

Background information on Sentosa Cove

Sentosa Cove is situated on the eastern end of Sentosa Island, a leisure island off the southern coast of the main island of Singapore.

Covering a land area of 117 ha, the bulk of which is reclaimed land, Sentosa Cove is home to Singapore’s first and only exclusive gated marina community inspired by the renowned waterfront resorts and towns in the Mediterranean, Australian Gold Coast and Southern California but modified to feature tropical architecture. This luxury estate will comprise some 2,500 99-year leasehold homes in the form of oceanfront villas, waterway bungalows, hillside mansions and upscale condominiums when completed in 2010. Landed homes here are the only ones for which foreign ownership is allowed in Singapore. Elsewhere in Singapore, foreign ownership of landed properties is allowed only subject to approval by the Ministry of Law upon meeting certain conditions.

The first land parcel on Sentosa Cove was put on the market in end-2003. As of June 2008, all except two bungalow plots have been sold to developers or individuals via a mixture of sale modes including private treaty, public tender and auction.

All the land parcels that had been sold to developers or individuals are estimated to be able to accommodate over 2,000 condominium and 400 landed units. Of these, 12 projects comprising six condominiums and six landed housing developments have been launched for sale since 2004. These projects have been well received with units in many of those launched before the market was weighed down by the onset of the US sub-prime mortgage crisis being snapped up within a short time-frame.

Prices of luxury non-landed homes had also been chased up from the initial launch price of $785 per sq ft in November 2004 for The Berth by the Cove to the current $2,800 per sq ft for The Marina Collection. Based on caveats lodged, prices of landed homes such as those for the bungalows have similarly trended up steeply from an average of $703 per sq ft of land in end 2005 to the current $1,159 per sq ft of land with a benchmark price of $1,591 per sq ft of land area being achieved in October 2007 for a resale unit with land area of 8,170 sq ft on Paradise Island.

In the pipeline, approximately some 430 condominium and landed housing units on Sentosa Cove could potentially be launched for sale in 2008. The condominium units include Ho Bee Group’s 151-unit Seascape and City Developments Limited’s 228-unit Sentosa Quayside. Beyond 2008, an additional 387 condominium and landed housing units are expected to be generated from developers’ land bank.

By Colliers International Singapore

Located on Scotts Road at the intersection with Cairnhill Road, this 153m tall tower is situated in close proximity to Orchard Road, Singapore’s famous shopping and lifestyle street.

The condominium will be an exemplary and distinctive 31-storey luxury residential development of 67 apartments with elevated panoramic views. Targeted at the international market, the building presents a radically new vision and innovative design.

The design maximizes the full potential of the site; four individual apartment towers are vertically offset from one another and suspended from a central core. The skyline of floating towers explores the most attractive views towards the city centre and an extensive green zone to the north.

The lifted towers reduce the building’s footprint to a minimum, providing a generous ground with extensive communal leisure spaces and a lush tropical landscape.

Each apartment will be served by two private lifts with direct access to each residence. Luxury amenities include concierge service gym and elemental spa facilities, a 50m long lap pool, children’s pool and Jacuzzi. An outdoor Sky Terrace with clubhouse dining facilities, and pavilions within the landscape will provide intimate spaces for private entertainment.

Location: Scotts Road

Tenure: Freehold

Site Area: 65,663sqft

Development: 1 block of 31- storey High Rise Condominium

Expected Completion: TBA

Total Units: 67

Unit Types:

3 Bdrm – duplex unit
3 Bdrm + study (simplex unit)
4 Bdrm + study (duplex unit)
4 Bdrm + study (Penthouse Duplex Unit)

Parking Lots: 221 (3 lots per unit)

Email lushhome@gmail.com for more information or private preview.

High yields and strong results are making real estate investment trusts (Reits) stand out in a volatile market. But there is debate over their potential as defensive plays, with some market watchers cautioning that Reits are not necessarily safer bets because of their link to the cyclical property sector.

Most Reits turned in impressive results for the quarter ended June 30, 2008. The 18 which reported their performance before last Friday all achieved higher distributable income and distribution per unit (DPU) over the same period last year.

Distribution yields reported by the Reits, based on annualised DPUs and last Friday’s closing prices, ranged from 4.8 per cent to 11 per cent. Reits which offered yields above 10 per cent included MapleTree Logistics Trust, healthcare-related First Reit and Lippo- MapleTree Indonesia Retail Trust.

Overall, the Reits had an average distribution yield of around 7.8 per cent, offering a spread of over 4.6 percentage points above the 10-year Singapore government bond yield of 3.14 per cent on Friday. Compared with one-year fixed deposit rates which start from around 0.8 per cent, the Reits offered an even wider spread.

Analysts say Reits have largely performed in line with expectations. Their good performances have won them fans - with many trading at discounts to net asset values and thus offering relatively high yields, OCBC Investment Research said in a recent report that investors could ‘take a fresh look at S-Reits as defensive vehicles offering stable cash flows and high yields’.

However, others pointed out that Reits still may not match up to traditional defensive plays, including high-yielding blue chips like telcos and banks. While Reits do offer high distribution yields, the sector is influenced by movements in the property market, which tends to be more cyclical compared with, for instance, the telecommunications industry, or even banking, they say.

Distribution yields are also a function of Reits’ unit prices, so yields may look high simply because unit prices have dropped, explained one analyst. Considering both capital gains and distributions to investors, Reits have not done as well compared to around a year ago, he added. The FTSE ST Reit Index has fallen by more than 10 per cent since it was launched on Jan 10 this year.

Reit fans, on the other hand, argue that few sectors are completely resistant to economic slowdowns. Also, some Reits may be more resilient because they can lock in leases over several years, which helps stabilise earnings.

Where there is agreement among most of the market watchers BT spoke to is that Reits will continue to generate steady operating results. For those which have locked in leases or are able to gain from higher rental reversions on lease renewal, ‘there is a lot of predictability in terms of their earnings and distributions,’ said Daiwa Institute of Research analyst David Lum.

With credit conditions staying tough, however, much of the earnings growth will have to come organically. Reits may still acquire properties but they will have to be more selective, analysts say.

Analysts’ top Reit picks include Suntec Reit. ‘With 32.6 per cent of total office net lettable area up for renewal in FY09, we believe Suntec is well-positioned for rental reversion with current $14 psf signing rents versus passing rent of around $6.30 psf,’ said a Citi Investment Research report last week.

CapitaCommercial Trust was another popular choice. Goldman Sachs reiterated its ‘buy’ call on the Reit, favouring its strong organic growth and ‘leadership among office Reits’.

Source : Business Times - 4 Aug 2008

I REFER to last Thursday’s article, ‘Lights out? Not for quaint lamp posts in Seletar’, and applaud the JTC Corporation for saving some of the character of the old Seletar airbase. However, saving these 30 lamp posts is only scratching the surface of what can be done.

I feel more can be done to retain the area’s charm and greenery. On a recent drive there, I was horrified to see the amount of change already happening, even though the roadworks will not start until next year.

The area I refer to is the plot of land that sits just in front of the temporary offices of the aerospace companies. A lot of greenery has been removed, making the area sterile and lifeless. Is this what we want for this gem of a place that has been untouched by construction for at least 50 years? I urge JTC to try and save as many trees as possible, and confine road construction to the area nearer the airport and leave as much as possible alone.

In the same article, it was mentioned that 204 old black- and-white houses will be saved, for which I am grateful. However, I can’t help but feel that, of the remaining 174, more can be saved if creative planning is employed. Can JTC try to keep more of them for use?

I also wish to highlight the other old buildings in the airbase which are not black-and- white houses, that is, the administrative military buildings which have been abandoned for some time. Their architecture is rather unique and worth saving. I hope JTC is looking into keeping these and integrating them with the rest of the planned area.

Please, do as much as possible to save this area. It will be a real shame if, years down the road, we regret this rash act of demolition. It will be too late by then.

Sandra Alison Jayandran (Mdm)

Source : Straits Times - 4 Aug 2008

It has sleek wooden flooring and stylish Balinese furnishings. Its open-air bathroom opens up to a small, tranquil garden. It even has its own pebbled driveway that comes with an automated gate.

This resort villa is not in popular Bali or Phuket, but right here in rural Kranji.

It is one of 19 farmstay villas that will open at the new D’Kranji Farm Resort in Lim Chu Kang next month.

Developed at a cost of $10 million, the 5ha lifestyle-cum-agriculture resort (about the size of six football fields) will also feature a wellness spa, seafood restaurant, beer garden, fruit plantation, herb garden and a coffee museum.

Developed by mainboard-listed company HLH Group, which has interests in property development, building construction and agriculture, the resort has been flooded with enquiries and bookings since plans for it were announced last year.

Each air-conditioned 21 sq m villa (nearly the size of a one-room flat) comes with a double bed, bathroom and balcony.

Modelled on the rooms of a five-star hotel, they also offer room service, housekeeping and wireless Internet connection.

Accounts executive Juridah Ibrahim, 28, who made a booking in June, tells LifeStyle: ‘I don’t have to travel out of Singapore to experience a farmstay. Also, it’s a unique getaway and I am looking forward to discover Lim Chu Kang.’

Although admission to D’Kranji is free, the villas won’t come cheap. LifeStyle understands that each room could cost at least $200 a night.

The resort is expecting over 70 per cent occupancy rate over the next four months, says Dr Tan Siang Hee, 40, chief executive officer of HLH Agri International, which operates D’Kranji.

In 2005, the Urban Redevelopment Authority (URA) eased its rules to let farms open shops, restaurants and farmstays. The Singapore Land Authority (SLA) followed up the following year by putting up vacant state land for tender for agricultural entertainment uses in Lim Chu Kang.

Mr Teo Jing Kok, SLA’s deputy director of lease management & sales, says: ‘The agri-tainment uses enable entrepreneurs to try something different to make Singapore a more exciting place to live, work and play.’

In 2006, HLH’s wholly-owned subsidiary HLH Agri R & D won the bid for the largest of three plots of land in Lim Chu Kang at $880,000 on a 20-year lease.

Construction and building firm Yoli Technologies won the bid for the other two plots of land, also earmarked for agri-tainment, at $476,336 and $398,000.

Dr Tan tells LifeStyle: ‘We are targeting 60 per cent locals and the rest are foreign visitors. They will include families, schools and corporate companies who come here for retreats.’

He says the resort will not be adding more rooms as it has to comply with URA’s guidelines of building up to a maximum of 300 sq m for hospitality purposes.

But D’Kranji will not be the only operator offering farmstays at Lim Chu Kang. The Nyee Phoe Group, which runs a 2.2-ha flower farm, will be building four villas to be completed by the end of this year.

At D’Kranji, visitors can go on free educational tours to learn about the agriculture products at the farm, which will incorporate a herb garden with over 30 types of herbs such as basil, sage and lemon balm.

Its 21 farming plots will offer crops such as dragon fruit, corn, guava and mangosteen for sale.

There will also be a 1,000 sq m corn field and 1,000 sq m padi field at the education facility, says Dr Tan.

Business owners in Lim Chu Kang welcome the new farm. Says Mrs Ivy-Singh Lim, 58, who runs the Bollywood Veggies organic farm next door: ‘The new farm will enhance the lifestyle offerings in Lim Chu Kang. They will draw many more visitors, which is beneficial for all of us.’

Next January, Bollywood Veggies will incorporate a $500,000 culinary school called Bollywood Bhanccha (Warrior’s Kitchen in Nepalese).

SLA’s Mr Teo says: ‘The entrepreneurs are taking the bold

initiatives to turn Lim Chu Kang into a rustic recreational hinterland.’

Meanwhile, Dr Tan wants to draw 500,000 visitors to his farm annually, which is about 1,400 visitors daily. To achieve this, the resort will provide a free shuttle service every 45 minutes from Yew Tee MRT station next month.

This is in addition to the existing hourly shuttle service from Kranji MRT station to Lim Chu Kang from 9am to 5pm, provided by Kranji Countryside Association. A round trip costs $2 for adults and $1 for children.

Giving a tour of D’Kranji, which now has 22 employees, Dr Tan adds: ‘While staying here, visitors can take the opportunity to explore Lim Chu Kang. There are many types of farms to visit here.’

Source : Sunday Times - 3 Aug 2008

Demand still there with expats on smaller housing allowances and those priced out of condo market

Rents at many condominiums in Singapore appear to be peaking, but landlords of Housing Board flats are still riding the cash wave.

HDB rents continued their steady rise in the second quarter of this year, increasing across all flat types and most towns as renters sought cheaper alternatives to increasingly costly condos.

Priced out

Owners of four-room flats benefited the most, with average monthly rents climbing almost 10 per cent to $1,750, from $1,600 in the previous three months, according to the latest data from HDB.

In terms of towns, Bukit Batok, Central, Serangoon and Hougang saw major rent rises across all flat types.

Generally, HDB rents have been increasing because rents of private apartments ‘have hit a level too high for many to afford’, said Mr Chris Koh, director of real estate agency Dennis Wee Properties.

‘Those who used to be renting a condo at $2,000 to $2,500 a month find they have very few options when they want to renew their lease because their landlords have increased rents to $3,000 to $3,500.’

Many of these displaced tenants work for smaller firms and do not have the flexibility of higher rent budgets, so they turn to HDB flats, Mr Koh said.

Some new tenants are also S-pass holders with smaller budgets that can only fit HDB flats rather than condos, added Dr Tan Tee Khoon, head of KF Property Network, a subsidiary of Knight Frank.

He also noted that the stock of HDB flats for rent remains fairly constant, unlike that of condos. Supply of HDB flats is also limited because of the conditions imposed on owners who want to lease out their flats.

Rising across the board

Between April and June, eight out of every 10 towns saw higher rents for four-room flats, with Jurong East experiencing jumps of up to 21 per cent.

The priciest place to rent a four-room flat is now Bukit Merah, where the average monthly rent is $2,300. Close behind are flats in the Central area, Toa Payoh and Bishan, which command $2,000 or more.

‘Bukit Merah has become popular with foreign nurses who work at Singapore General Hospital, and Jurong East is getting a lot of foreign students from Nanyang Technological University and foreign factory workers working in the west,’ explained Mr Koh.

He added that Toa Payoh seems to attract expatriates working in the city as well as foreign nurses from Thomson Medical Centre and Mt Alvernia Hospital.

Landlords of other types of HDB flats are also seeing a tidy profit. Monthly rents of three-room and five-room flats went up by $100 on average to $1,500 and $1,900 respectively.

For three-room flats, the biggest growth was in Hougang, where rents soared 40 per cent to $1,400 a month. They also saw sizeable increases of more than 10 per cent in Geylang, Bukit Batok, Ang Mo Kio, Serangoon and the Central area.

For five-room flats, Bukit Timah, Jurong West and Hougang were especially in demand. But the most expensive five-room flats are still in Marine Parade and Central, where they go for $2,550 and $2,400 a month, respectively.

Steady in the short term

Rentals for HDB flats are likely to hold steady or even rise for the rest of the year as they remain much more affordable than condos, predicted Mr Koh.

KF’s Dr Tan also believes HDB rents will rise a further 10 to 15 per cent in the next six months.

‘As more new condos are completed next year and the year after, rents of condos will ease and then only will we see HDB rents easing off as tenants will have more choices,’ Mr Koh said.

Source : Sunday Times - 3 Aug 2008

Taking out a huge real estate loan seems risky, but it may sometimes be a better option

After my last Small Change column was published, a colleague came up to me and said: ‘Property isn’t a high-risk investment.

‘In fact, it appeals to a low-risk investor like me who doesn’t know enough to invest in stocks and shares. What- ever spare cash I have, I use it to pay off my housing loan.’

I had argued in my column that property investment is a high-risk, high-reward game, using the example of a $1 million home bought with $100,000 cash and $900,000 borrowed.

If the price of the home rises by 10 per cent, it will be worth $1.1 million and the investor would have doubled his initial capital. But if it were to fall by an equal amount, his capital would have been wiped out.

So who’s right?

Both of us are.

Residential property is a familiar investment to many Singaporeans since home ownership became the cornerstone of government policy in the mid-1960s.

Indeed, whether you are a sophisticated investor or one wet behind the ears, you can’t go wrong buying a home as a long-term investment in land-scarce Singapore. Seen in this light, it is a safe investment.

It becomes highly risky only when one buys a second, third or fourth property leveraging on borrowings and relying substantially on rental incomes to service the loans.

On reflection, I realise there are many people like my colleague who pay down their housing loans very early, and take pride in doing so.

This sentiment is entirely understandable. Many of us take home ownership for granted, thanks to the Government’s hugely successful public housing programme.

But for the older generation and the one before that, the fear of not having a roof over one’s head was very real.

To them, it’s an achievement to own a fully paid-up home as quickly as possible.

To these people, I say: ‘Go ahead, if you can afford it.’

‘What do you mean?’ you may retort. ‘If I take my spare cash to repay my home loan, surely I can afford it.’

Not necessarily.

There is a cost in putting too much equity into a home purchase.

To illustrate, let’s take the example of two young couples - X and Y - who buy a Housing Board resale flat at the market valuation price of $500,000.

Let’s assume each couple have savings totalling $150,000 in their Central Provident Fund Ordinary Accounts (OA) and a combined monthly income of $6,000. Both are are entitled to an HDB concessionary loan - currently at 2.6 per cent a year.

Under the rules, buyers are allowed to pay 10 per cent as down payment and borrow the remaining 90 per cent to finance their purchase.

Couple X, being very prudent, choose to use up all their OA balances to pay for their home. They take out a 30-year, $350,000 loan to finance the rest. For simplicity’s sake, let’s assume the entire $150,000 goes towards paying the down payment. In reality, the actual amount will be less, minus the money to pay stamp duty, home protection scheme insurance and legal fees.

Couple Y, being more gung-ho, decide to pay the minimum down payment of 10 per cent, which works out to $50,000. They, too, take a 30-year loan but for a higher amount of $450,000.

Using a financial calculator, Couple X and Couple Y’s monthly loan instalments work out to about $1,400 and $1,800 respectively.

Couple X’s monthly CPF OA contribution totalling $1,380 is almost just about able to cover fully their monthly instalment whereas Couple Y would have to top up an additional $420 in cash.

At the end of 30 years, Couple X will have paid a total of $504,000 to repay their $350,000 loan whereas Couple Y will have coughed out $648,000 on their $450,000 loan.

Interest charges by Couple X and Couple Y over this period work out to $154,000 and $198,000 respectively.

On the face of it, Couple X seem far better off. Their monthly repayment is lower and they incur $44,000 less in interest charges.

On closer inspection, the benefits of borrowing less are not that clear cut.

Firstly, one needs to take into account that Couple Y kept $100,000 of their OAs from the start. This means they get to earn annual interest income, which Couple X will forgo until their CPF contributions from income accumulate again.

Interest payment for OA balances is 2.5 per cent a year. For the first $20,000, a higher interest of 3.5 per cent applies.

Insofar as the first $20,000 is concerned, it is better to leave the money untouched and earning 3.5 per cent a year than to use it to pay off an HDB loan that charges 2.6 per cent per annum.

As for amounts greater than $20,000, one doesn’t lose much either since the difference between interest payable on an HDB loan and earned for money kept in the OA is a mere 0.1 percentage point (2.6 per cent - 2.5 per cent).

Secondly, keeping substantial savings in the OA can be an important buffer to cope with a temporary loss of income.

The sum of $100,000 is equivalent to five years’ worth of monthly repayments. So even if one or both persons who make up Couple Y were to stop working for some reason or quit to start a family or take a sabbatical, they can continue to service their loan entirely from their OAs for about five years while looking for their next job.

Couple X, on the other hand, will have no such luxury. They will be forced to tap their cash savings immediately in similar circumstances.

Thirdly, having some spare savings in the OA opens up investment opportunities and flexibility.

Bear in mind that the HDB loan at 2.6 per cent is really cheap money.

Last year, insurer Aviva offered an endowment plan called Big e that paid up to 3.5 per cent in interest a year. The plan, which guaranteed a return higher than 2.5 per cent, has since been discontinued.

However, such opportunities that offer low-risk returns based on positive interest differential (3.5 per cent - 2.6 per cent) can be expected to surface from time to time.

For those with a higher risk appetite, there are also numerous CPF-approved investments that have a track record of generating annual returns in excess of 5 per cent over the mid to long term.

Although I used the HDB flat purchase as an example, the argument is also valid for private property purchases, given the current low interest rate environment.

Fourthly, if your flat is rented out, you can apply to the taxman to offset your rental income with the interest paid on the loan. So the bigger the loan amount, the higher will be the interest offset.

Finally, if all else fails and there is no reasonable opportunity to earn a better return, there is always the option of using your OA balance to pay down your housing debt at any time.

Bear in mind this option is irreversible. You can pay down a housing loan but you cannot top it up.

Do note that if you take an HDB loan, you must ‘invest’ your excess OA balance before your first appointment with the board.

That is because HDB will exhaust your OA for down payment - minus the amount for stamp duty, legal fees and home protection insurance - before granting you a loan.

In the earlier example, Couple Y would have to withdraw from their OAs the sum of $100,000 - or an appropriate amount after taking into account the 10 per cent down payment and ancillary charges - and put it into a CPF-approved investment.

If the investment is meant to be a temporary one, choosing a low-risk, low-return fund like DBS Enhanced Income Fund would be appropriate.

After the first appointment, you may liquidate the investment and return the proceeds to your OA.

Be aware that this ’round tripping’ is not cost free as agent bank fees and sales charges apply. These charges are nominal though.

To sum up, taking on a big housing debt is not necessarily a bad thing. In certain circumstances, it may even be the prudent thing to do.

Whether you choose to be Couple X or Couple Y, you must do your sums and feel comfortable with the plan.

Source : Sunday Times - 3 Aug 2008

Where do you see this?

In articles about property and Government announcements on the sale of land.

What does it mean?

It is a method of selling land that the Government employs.

Sites on the confirmed list are for outright sale, meaning they will be tendered out on scheduled dates, regardless of whether developers have indicated interest.

Why is it important?

This is not a market-driven approach. But it allows the Government to hasten the development of certain sites for planning and other strategic reasons.

For instance, in its land sales programme for the second half of the year, it offered a 3ha hotel site at Bukit Chermin Road under the confirmed list.

The sale of the site, it said, is timed to coincide with the 2011 completion of Labrador Nature and Coastal Walk nearby. Together, these developments will enhance the attractiveness of the area as a premier leisure and recreation destination.

The Government also offered a site in Stamford Road comprising the existing Capitol Theatre, Capitol Building, Stamford House and Capitol Centre.

So you want to use the term? Just say…

‘The Stamford Road site with the conserved Capitol Theatre is on the latest confirmed list. That means it should be sold soon. When it is restored, the area will become more vibrant.’

Source : Sunday Times - 3 Aug 2008

Location: 32 & 32A Cairnhill Road

Tenure: Freehold

Type of Developement: High Rise Condominium 1 Block of 18-storey & 1 Block of 20-storey Residential Area

Total Units: 64

Unit Types:

3 Bdrm - 2121 sqft (30 units)
4 Bdrm - 2530~2551 sqft (30 units)
Penthouse - 4370 sqft (1 unit)
Duplex Penthouse - 4693~4919 sqft (2 units)

Facilities:

50m Lap Pool, Swimming Pool, Wading Pool, Childen’s Pool, Garden Pavilion, Pool Pavilion, Children Play Area, Sky Terrace (2nd Storey), Gymnasium, Multi-purpose Room, Changng Rooms, Steam Room, BBQ Area, Jacuzzi

Email lushhome@gmail.com for more information or private preview.

THE more things change, the more they become the same.

Globalisation has led to essentially the same ‘glamour zones’ springing up in major cities and in those aspiring to join their league. These are places for a city’s wealthy and elite, who divide their time between restaurants, golf courses and brand-name stores, when they are not shuttling between the airport and their upmarket homes.

Despite their lack of individuality, these urban spaces flourish, perhaps because they reassure and comfort the professionals who cross borders to take up high-level jobs requiring their particular skills. After all, a move to the other side of the world would not be so bad if Prada, DKNY and Starbucks are there to meet you.

These universal, ‘placeless’ enclaves have taken root in cities competing to join the likes of New York, London, Frankfurt and Paris - global cities that commandeer a chunk of the global economy.

Yet we see much evidence too of resistance to cultural globalisation. Many have become conscious that the competitiveness of their cities depends not on becoming like every other city in the world but on recognising what makes the cities unique. They have come to realise that their cities can stay on the mental maps of international investors and businesses if they developed and conserved places important to their denizens.

So unlike the cities that have gone for super-expressways and iconic, ultra-modern buildings and airports, such cities seek recognition of their history and architectural heritage and a place in Unesco’s list of World Heritage Sites.

The Land Transport Authority (LTA) is doing an admirable job putting Singapore on the global map through integrated transport systems. Yet after all the efforts to connect people to their destinations, will Singaporeans still have places that they want to go to? Though the LTA has made several bids at conservation, its tunnels and road-widening efforts have, nonetheless, erased spots meaningful to Singaporeans.

The latest to bite the demolition dust is the New Seventh Storey Hotel in Bugis. Both the LTA and Urban Redevelopment Authority have given sound explanations of why the hotel had to go but it was something that contributed to Singapore’s urban identity. Unlikely to be found anywhere else, places like the hotel weave themselves into the story of a neighbourhood and help it stick in the collective memory of the city’s residents.

Spots like these make us ask questions: How did the New Seventh Storey Hotel get its name? And why was it built in that particular neighbourhood rather than somewhere else? In seeking and finding the answers to such questions, we invest ourselves in the city where it is found.

Unique buildings also lend an identity to a particular road when we try to remember where it is and what it looks like. Much of the charm of the Champs-Elysees, for instance, lies in the places strung along its length - from the Arc de Triomphe to the Tuileries Gardens - as well as the history behind them.

And places that linger in our minds do more than help us visualise a road: They also enable us to see our past.

Many Singaporeans who have gone abroad for an extended period to work or study have lamented the disappearance of favourite haunts such as hawker centres or coffee shops when they return. Still others have expressed frustration that they can’t show their children where Mum and Dad used to live or go to school; they can only indicate the general area. They may not even be able to point out the streets along which they walked to school if these have been cleared to make way for highways and so on.

We should never forget what centralised planning has done for Singaporeans. Public housing, neighbourhood conveniences, schools, polyclinics, public transport, parks, open spaces, city centres and such - it would be churlish to quibble about decisions to demolish the old to make way for such newer and better amenities.

Yet urban planning in the new millennium clearly must involve more than meeting our basic needs. It must take into account places that remind us of who we are.

Urban planning can be meaningful only if it encompasses diversity and absorbs the views of the citizens using these places.

By keeping this in mind, those responsible for shaping our landscape, such as the Singapore Land Authority, will be able to build a city that truly accommodates people and their need for places both new and historic.

Because, sometimes, the more things change, the more we need them to stay the same.

The writer is a professor at the National Institute of Education, Nanyang Technological University.

Source : Straits Times - 2 Aug 2008

Fears of their decline next year may be somewhat exaggerated

RECENT media reports predicting that private home rents will take a steep dive next year are certainly alarming. But a closer look at the numbers suggests that they may not take such a beating after all.

Last week, CB Richard Ellis (CBRE) said that it expects rents to fall by 5-10 per cent on average next year. In the prime areas, rents could slide by up to 15 per cent, the property firm said.

The projections are based on two major assumptions: that a record number of homes will be completed next year; and that the tenant pool here will shrink significantly as corporations stop hiring expatriates or, in some cases, even send some expats home.

‘It’s a double blow,’ said CBRE Research.

However, developers and other analysts say that the number of completed homes may not be that high and the economic situation next year not that bad.

According to CBRE’s data, 13,400 homes will be completed next year. But official estimates from the Urban Redevelopment Authority (URA) put the number of landed and non-landed private homes expected to be completed in 2009 at a more modest 10,418.

Likewise, CapitaLand’s in-house estimates say that about 12,000 units will be completed from the second half of 2008 to end-2009.

‘It is a comfortable number,’ Patricia Chia, head of CapitaLand’s Singapore residential unit, told reporters at the developer’s second-quarter results briefing yesterday. Over the past six years, 8,000-8,500 private homes were completed on average each year, she said.

There are also demolitions to consider. CBRE said there will be 1,700-1,850 units demolished in 2009. Net supply next year could therefore come in even lower.

Take, for example, Q2 2008 numbers. According to Citigroup, while 2,587 units were completed in the second quarter, net supply was only 761 - implying that some 1,826 units were demolished. This partly helped occupancy rebound slightly to 93.9 per cent following three consecutive quarters of decline, the bank said in a recent report.

Rentals will also be helped by other factors, developers point out. Many of the new units coming onstream in 2009 and 2010 have already been sold, and not all of them will end up on the rental market.

The HDB market, where prices rose 4.5 per cent quarter-on-quarter in Q2, is also cause for optimism. The number of HDB resale applications also rose 22 per cent quarter-on-quarter.

‘HDB upgraders who buy mass market private units will not rent out their new homes,’ said one developer. ‘Many of the units in new mass market condos completed in 2009 and 2010 will not be part of the supply for renters.’

For now, while rental growth is slowing down, it is still on the uptrend. Citigroup said that rentals rose 2.5 per cent quarter-on- quarter in Q2 - much slower than the 6 per cent increase seen in the first quarter.

But the other, bigger factor which could also lead to rents taking a precipitous plunge next year - the state of the macroeconomic environment - is still up in the air.

CBRE, for example, adopted scenarios in which the economic climate either stays the same or worsens in 2009 to arrive at its forecasts.

Other analysts, on the other hand, expect things to turn around in the second half of 2009.

For now, jobs growth is continuing apace, they point out. 70,600 new jobs were created in the second quarter, down only slightly from a record 73,200 jobs in Q1 and the second highest job creation rate on record.

The slowdown in services jobs creation to 37,600, from a record 46,500 jobs in Q1, was however a cause for concern. ‘We suspect much of this may have reflected a slowdown in financial services hiring,’ said Citigroup economist Kit Wei Zheng.

But while firms in the financial sector may hold off on hiring, companies in other industries should continue hiring next year. The overall pool of renters should therefore continue to climb in 2009.

‘There should be enough people looking to rent in the next 12-18 months,’ said Ku Swee Yong, director of marketing and business development at Savills Singapore.

Growth in mass market and HDB rents should continue next year, he said. But asking rents at large high-end apartments - of 4,000 sq ft and more - could fall as companies cut back on housing allowances for their employees, Mr Ku added.

As for overall rents, it’s anybody’s guess. Much depends on how quickly the world recovers from the US sub-prime mortgage crisis - or how much worse things get. But private home rentals here are unlikely to make a large reversal.

Source : Business Times - 2 Aug 2008

CapitaLand plans to launch in the second half of this year a freehold condo - Urban Resort - with about 70 units on the Silver Tower site in Cairnhill. The average price is expected to be above $3,000 psf, CapitaLand Residential Singapore CEO Patricia Chia told reporters after the group announced second-quarter results.

CapitaLand has also sold 11 of the 40 units released so far at Latitude at Jalan Mutiara in the River Valley area at an average price of $2,400 to $2,500 psf. Over at Tong Watt Road, it has sold close to 30 of 80 units released recently at The Wharf Residence; prices range from $1,500 to $1,900 psf.

CapitaLand leads a consortium that will redevelop Farrer Court which is slated for launch in the first half of next year.

Asked about his outlook for the Singapore residential market, Mr Liew said: ‘Demand is still very good for the mass market. (For) the mid-range, there are still good signs of take-up; I think prices are still holding well for the mid-range.

‘But in the high-end, there’s not going to be massive demand. (In terms of prices), obviously it won’t be the $5,600 psf record price that we achieved for a penthouse at Orchard Residences last year. But prices will still be above $3,000 psf.

‘So prices will still be way above the last peak, pre-Asian crisis. Demand is still there. People who sold their properties through en bloc sales still have to buy apartments,’ he said.

Given Singapore’s limited land resource and with population projected to grow to 6.5 million, in the ‘long term, property prices will go up’, Mr Liew said, adding: ‘It’s a no-brainer.’

‘I think we’re overinfected with the housing slump in the US. That sort of mood comes to Singapore that property prices (here) will (also) go down. But look at the fundamentals, look at demand fundamentals. I think we are much stronger in Asia,’ Mr Liew noted.

The group’s earnings are underpinned by progressive recognition of $4 billion residential sales in Singapore in 2006 and 2007.

CapitaLand’s chief investment officer Kee Teck Koon said that in Singapore, the group has hardly any residential stock or inventory that it is holding. ‘So there is no issue of writing down. Most importantly, those new projects we’ve got, we have underwritten a value that is very supportable even at current prices,’ he added.

Source : Business Times - 2 Aug 2008

At Kallang and Jellicoe roads, the 45,451 sq ft site costs $249.6 psf ppr

THE Urban Redevelopment Authority (URA) has received a committed bid of $51 million for a hotel site at Kallang and Jellicoe roads.

This works out to $249.6 per sq ft per plot ratio (psf ppr) for the 45,451 sq ft site, which is on the reserve list of the Government Land Sales programme.

The site, which has a maximum permissible gross floor area of 204,363 sq ft, will now be put up for public tender.

Knight Frank director (research and consultancy) Nicholas Mak believes that barring any major shocks to the economy, the tender could attract bids in the range of $400-$450 psf ppr.

‘This is a relatively good site only two MRT stations from Raffles City and close to the future Kallang Riverside,’ he said.

But poor market sentiment or lower-than-expected visitor arrivals in the coming months could result in lesser bids of $330-$400 psf ppr.

While public tenders always draw bids higher than the trigger price, one property consultant said that he is surprised the site at Kallang and Jellicoe roads was even triggered, given the state of the global economy and rising construction costs.

‘Investors will have to now factor a much longer period for their return on investment,’ he noted.

The public tender for the site follows poor response to hotel development sites in Balestier Road and Race Course Road, with the former attracting a top bid of $172 psf ppr and the latter drawing no bid at all. URA has said that the government is evaluating the tendered bids for the Balestier Road site, the tender for which closed on July 16.

In this light, Mr Mak said that the trigger price for site at Kallang and Jellicoe roads, which can be compared to the government’s reserve price, seems ‘realistic’.

URA projects that a 455-room hotel can be built, which Mr Mak reckons would be positioned as a business-class establishment.

Including the site at Kallang and Jellicoe roads, there are 10 hotel development sites on the GLS reserve list.

According to URA, the reserve list for second-half of 2008 provides for total potential supply of 5,050 hotel rooms, including a white site at Outram Road.

There is one site on the GLS confirmed list, and including a commercial site at North Bridge Road, the confirmed list could potentially yield 700 hotel rooms.

Source : Business Times - 2 Aug 2008

ALL it took was one look at the big balcony spanning the living room and the master bedroom, and the deal was sealed for Mrs Jean Hong.

The 47-year-old company director bought a three-bedroom unit for close to $1,500 per square foot in the Parc Centennial condominium in KampongJava Road three months ago and is still gushing about the large balcony to her friends.

BED AND BALCONY (left): Among the features of the 51-unit Parc Centennial condo is a balcony that spans from the bedroom to the living room (not shown). Located in Kampong Java Road, the project is expected to be completed in 2011. — PHOTOS: EL DEVELOPMENT, CITY DEVELOPMENTS LIMITED

She is planning to rent it out and feels expatriates will appreciate the balcony space.

‘There is enough space to put some chairs and a small table in the balcony, so that the tenant is able to have a drink or read there without cluttering the place unnecessarily,’ she said.

Parc Centennial is among a number of new condos that are bucking the trend of developments from the 1990s, which had balconies that were tiny corners with just standing space or irregular-shaped ones that nobody used.

In contrast, some of the new private housing projects today have large balconies that even extend to the master bedroom or outside the lift.

SOAK UP THE SCENERY: Cliveden at Grange Road, which offers three-, four- and five-bedroom units, comes with panoramic views of Orchard Road which can be enjoyed from the expensive balconies.

Projects with generous balconies include completed ones like Residences@Evelyn in Evelyn Road as well as those nearing completion such as Parc Centennial, JIA at 65 Wilkie Road, Lucida in Suffolk Road, Parc Mackenzie in Mackenzie Road and Cliveden at Grange in Grange Road.

Developers say that buyers prefer units with large balconies because the open space lets in natural light and ventilation and can be used as an alfresco dining area or just an outdoor area to relax in.

EL Development, the developer behind Parc Centennial, designed its units with large balconies because of the expansive views offered at the site: There are no tall buildings nearby so residents have good views of the surrounding greenery.

The balcony also serves to screen off the afternoon sun for the west-facing units.

GREEN VIEWS: Located off Bukit Timah Road, the Shelford Suites condominium project has 77 units, all of which look out to lush greenery. Its targeted completion date is 2011.

Similarly for developer City Developments Limited (CDL), the decision to incorporate balconies into the projects depends on their location.

‘Typically, buyers would like a balcony where there are good views of the surroundings, such as the lush greenery which residents of Shelford Suites or Cliveden at Grange can enjoy, or if there are waterfront views that can be appreciated, which is the case with One Shenton and The Oceanfront@Sentosa Cove,’ said Mr Chia Ngiang Hong, group general manager of CDL.

Larger balconies are also good for homeowners to keep in touch with their surroundings, says developer SDB. Its first local project here, JIA, is only seven storeys high so owners get to enjoy the greenery nearby from their balconies.

The developer also designed the balconies with enough depth to put a coffee table.

‘Enjoying the outdoors from the balcony means being able to have a relaxing cup of tea comfortably seated,’ said Ms Leon Kim Yoke, senior manager of SDB Properties.

The developer has also included ‘fold and slide’ screens at the balconies to provide privacy when required. They double as safety features.

Their two-bedroom units even have the lift opening directly into the balcony.

‘Large balconies are targeted at those who enjoy the outdoors and do not want to be confined to indoor spaces only. Anyone downsizing from a landed property to an apartment would particularly appreciate such features,’ Ms Kim Yoke added.

Mrs Hong, who lives in Serangoon Gardens, agrees.

‘In my house, I can take a walk around my garden or koi pond, but in a condo, you have only your bedrooms and living room to turn to, so having a balcony helps.

‘Even some HDB flats are getting their own balconies too nowadays. With large balconies, I am able to get higher rents for my unit,’ she said.

About 70 to 80 per cent of expatriates opt for large balconies, according to Mr John Koh, 60, associate director of Huttons real estate group.

‘Singaporeans are quite kiasu. Some think it is a waste of space and don’t want to pay for it,’ he said.

Senior executive Kelvin Ho, who bought a flat in Parc Mackenzie, begged to differ.

‘I don’t understand why people don’t want balconies. I like the open air, space, lights, breeze and view. I think it is usable space,’ he said.

It is opportune that buyers like him have secured units that come with large balconies as they may become a thing of the past with the recent announcement by the Urban Redevelopment Authority.

From Oct 7, features such as bay windows, balconcies and planter boxes are no longer exempt from the gross floor area (GFA) calculations.

This means that developers may scale down balcony sizes since they will be charged for the area, unlike now.

‘I think it’s scary if the sizes of balconies shrink in future as Singapore is going to be one large concrete jungle,’ said Mrs Hong.

‘Personally, I do not mind paying for the space if the design is nice and it is functional.’

Source : Straits Times - 2 Aug 2008

Interim earnings halved to $763m, but condo launches won’t be held back

Property giant CapitaLand expects the market to stay sluggish for a while but it is still preparing to launch three mid- to high-end condos here before Christmas.

‘For outlook…it’ll probably be very flat,’ said chief executive Liew Mun Leong at a results briefing yesterday that unveiled a plunge in first-half profit.

Prices in general will be ‘quite flat’, with a correction seen in the high-end segment, said Mr Liew after the meeting. He added that demand for mass market homes is ’still very good’ while mid-end home prices are holding well.

The picture in the high-end segment is not as rosy as prices have fallen after buyers bailed out of the market overnight. But CapitaLand said high-end prices remained relatively high.

‘High-end volume will slow down, prices will not hit $5,000 psf but will still be above $3,000 psf,’ said Mr Liew. ‘As I keep saying, it is much more than pre-Asian financial crisis prices.’ Home prices reached around $2,400 per square foot (psf) at the 1996 peak.

CapitaLand said in its results statement that sentiment in the local property market is likely to remain cautious for the rest of the year until there is greater stability in the global financial markets and improved credit environment.

But demand is still there, it said. Against this backdrop, CapitaLand is planning to release two projects in River Valley - the 127-unit Latitude in Jalan Mutiara and the 186-unit The Wharf Residence in Tong Watt Road.

It will also launch Urban Resort, which will have about 70 units on the former Silver Tower site in Cairnhill, at above $3,000 psf.

Pre-launch sales have started at the two River Valley projects. CapitaLand said it has sold 11 out of 40 units at an average of $2,400 to $2,500 psf during the preview for Latitude in the first half of the year. It has also sold ‘close to 30′ of 80 units at $1,500 to $1,900 psf since the preview for The Wharf held three weeks ago.

Meanwhile, CapitaLand reported a 43.5 per cent drop in second-quarter net profit to $515.2 million on the back of a 12.3 per cent fall in revenue to $820.1 million. The drop came largely on lower home sales and amid an absence of one-off gains.

First-half profit was $762.7 million, down nearly 50 per cent, while revenue fell 7.7 per cent to $1.45 billion.

CapitaLand has had to delay the launch of residential projects in China due to bad weather delaying construction.

Earnings before interest and tax from overseas contributed 54 per cent of the total, as China’s contribution rose on the fair value gain of Raffles City Shanghai. Australia’s contribution fell nearly 82 per cent due to provision for foreseeable losses on development projects and lower fair value gains.

Second-quarter earnings per share was 18.3 cents, down from 32.6 cents last year, while net asset value per share reached $3.68, up from $3.54 at the end of last year.

CapitaLand shares fell 23 cents to $5.47 yesterday.

Source : Straits Times - 2 Aug 2008

Mass market take-up rate still good despite slowdown in luxury sector

There are still signs of life in the mass housing market, despite signs that the luxury sector is flattening out, according to the head of Singapore’s biggest developer.

“The outlook for Singapore residential prices will probably be very flat,” said Mr Liew Mun Leong, chief executive of CapitaLand. “The mass market take-up rate is still very good and for the mid-range tier, the prices are holding out well. But people will not be buying aggressively for the high-end sector now.”

He likened last year’s rush to buy luxury homes to watch-collecting.

“If you observe the high-end buyers, they are not buying for investment purposes but as a second or third property in Asia.” he said. “For the high-end property, the prices will still hover around $3,000 per square foot.”

In coming months, CapitaLand is targeting to launch 186 units at The Wharf Residences and 127 units at Latitude. Both are mid-tier developments in the River Valley area.

The recent slowdown in both local and regional property markets reduced CapitaLand’s profits in the first half of this year.

It yesterday posted earnings of $762 million, some 44 per cent lower than $1.5 billion recorded this time last year when profits were boosted by an exceptional gain from the sale of Temasek Tower.

“We have done well for this period, the profits booked so far have surpassed the $750 million for the full year of 2006.” said Mr Liew.

Even so, the slowdown in the Singapore property sector locally is evident, with overseas earnings contributing 54 per cent of the earnings before tax, up from 31 per cent last year.

On the international front, CapitaLand has a Malaysian retail real estate investment trust of about RM2 billion ($840 million) on track to launch by year-end. The fund will be listed in Kuala Lumpur and would bring its stable of property trusts to six.

While in Abu Dhabi, CapitaLand is building about 9,000 homes in joint venture with Mubadala Development Company. Sales are due to begin in late this year.

Source : Weekend Today - 2 Aug 2008

Group hopes to list Malaysia retail Reit on Bursa Malaysia by end-2008

CapitaLand group president and CEO Liew Mun Leong has urged analysts and journalists ‘not to be overinfected with what’s happening in the US’. He made this call yesterday at the property group’s briefing on its results - which saw second-quarter net profit falling 43.5 per cent year-on-year to $515.2 million.

‘Despite the cautious market sentiment, we have a positive outlook as our business units are competitively positioned and geographically diversified,’ said Mr Liew.

CapitaLand’s Q2 net profit drop was due mainly to lower fair value gains from the revaluation of investment properties, lower portfolio gains and developments profits, and the absence of writeback of previous provisions. ‘Lower revaluation gains were partly a result of the moderation in price increase for the Singapore property market and partly because the group divested some of its investment properties in 2007,’ the group said.

First-half net profit also declined 49.8 per cent year-on-year to $762.7 million. Mr Liew pointed out that 2007 was an exceptional year.

The group posted return on equity of 15 per cent in H1 2008, down from 38 per cent in the corresponding year-ago period but slightly ahead of the 14.5 per cent achieved for full-year 2006.

Excluding revaluation gains, CapitaLand’s H1 2008 net profit would have been $345.3 million, down 19.7 per cent from H1 2007, which Mr Liew termed a ‘commendable result’.

Overseas contribution to earnings before interest and tax rose 10.4 per cent year-on-year to $695.8 million in H1 2008. The increase came mostly from China, chiefly due to fair value gain of $297 million (at earnings before interest and tax or Ebit level) for Raffles City Shanghai, which is being sold to the Raffles City China Fund. However, this was partly offset by a lower contribution from Australia. CapitaLand booked a $24.1 million provision for its share of foreseeable losses on Australand’s residential development projects.

The group’s finance cost rose 43.7 per cent to $270.5 million in H1 2008. Gross debt rose to $11.6 billion as at June 30, 2008, from $8.6 billion a year earlier. Net debt to equity ratio increased from 0.43 as at end-June 2007 to 0.68 as at end-June 2008.

Serviced residences giant The Ascott Group, which CapitaLand took private earlier this year, posted an 87.3 per cent year-on-year drop in Ebit in Q2 2008 to $17.9 million, while H1 2008 Ebit fell 66.3 per cent to $57.4 million. The Q2 2007 figure had included a gain from the sale of Master Golf and Country Club. The deconsolidation of Ascott Residence Trust, which was listed last year, also contributed to the lower H1 2008 Ebit. However, Ascott’s Q2 revenue rose 12.5 per cent to $120.5 million, due largely to the group’s serviced residence operations in Europe and China. The group sold $138 million of its serviced residences portfolio in H1 2008 and hinted that it was studying further divestments.

CapitaLand China Holdings’s revenue fell 63.9 per cent in Q2 2008 and 49 per cent in H1 2008 because of the re-scheduling of launches of a few projects (in Foshan, Chengdu and Ningbo) from H1 2008 to H2 2008. However, the China business posted posted respective year-on-year Ebit gains of 120.4 per cent and 113.3 per cent in Q2 and H1 respectively due largely to the fair value gain from the revaluation of Raffles City Shanghai and better operating performance of commercial properties.

The group’s assets under management stood at $21.1 billion as at June 30, 2008, up from $17.7 billion as at Dec 31, 2007.

The group had $3.4 billion cash as at June 30, 2008 - down 21.4 per cent from a year earlier - and that is in addition to the $12 billion balance investible amount in its private equity funds as at the same date - giving it a sizeable warchest for potential acquisitions.

CapitaLand hopes to list its Malaysia retail Reit on Bursa Malaysia by end-2008. CapitaLand chief investment officer Kee Teck Koon said: ‘We’re looking at an asset size of about RM$2 billion (S$841 million) (based on the three malls we have purchased for this Reit - Gurney Plaza, Mines Shopping Fair and Sungei Wang Plaza). This will make it the largest Reit in Malaysia in terms of asset size.’

Group revenue fell 12.3 per cent in Q2 to $820.1 million. For the first-half, revenue slipped 7.7 per cent to $1.45 billion.

CapitaLand’s net asset value per share stood at $3.68 as at June 30, 2008, up from $3.54 as at Dec 31, 2007. The counter closed 23 cents lower yesterday at $5.47. No interim dividend was declared, as was the case in the previous corresponding period.

Source : Business Times - 2 Aug 2008

CDL MD says it’s not sustainable to have long-term govt subsidies

Depending on the government for more subsidies to encourage developers to go green is not sustainable, said City Developments managing director Kwek Leng Joo.

‘I don’t think it’s sustainable to look to the government for grants and subsidies on a long-term basis,’ said Mr Kwek, who was speaking to reporters on the sidelines of the memorandum of understanding signed between the company and NUS School of Design and Environment’s Master of Science, Environmental Management (MEM) programme to work on green solutions for the building sector.

‘We have to make our own plans and it’s not a one-way street,’ he said, adding that while the returns may not be ‘direct and apparent’ now, green buildings will become more attractive to buyers who can lower their utility bills through green features such as photovoltaic cells when their prices fall over time.

City Developments currently audits the green practices of its contractors and those who score better stand a higher chance to bid for tenders for subsequent projects.

But Mr Kwek added that smaller developers are less likely to be able to influence construction and architectural firms to go green because they have little influence over the supply chain.

‘Perhaps if you are a very small developer. . . then you will not be in the position to influence, to help direct the other players in the whole value chain,’ said Mr Kwek. ‘But we can take up that role and we’ve been doing it.’

During the event, Tommy Koh, who chairs the MEM advisory committee, said he had proposed to the government in 1992 about the potential of solar energy, but the idea was shot down because it was not seen to be commercially viable.

‘How wrong they are,’ said Prof Koh, adding that Singapore is just at the beginning of its ‘green journey’.

‘We’ve not done a bad job in balancing the need to provide adequate housing for 4.6 million people and having room for garden, parks and nature,’ he said.

‘But we’ve also done some bad things. We’ve largely destroyed our mangrove forest. We need to reclaim land because we need additional space but in the process, we’ve destroyed most of our coral reefs,’ he added.

Source : Business Times - 2 Aug 2008

CapitaLand plans to launch in second-half 2008 a freehold condo named Urban Resort with about 70 units on the Silver Tower site in Cairnhill. The average price will definitely be above S$3,000 psf, CapitaLand Residential Singapore CEO Patricia Chia told reporters after the group announced Q2 net earnings.

‘I will be quite disappointed if it’s below S$3,000 psf,’ CapitaLand Group president and CEO Liew Mun Leong said.

The property giant has also sold 11 of the 40 units released so far at Latitude at Jalan Mutiara in the River Valley area at an average price of S$2,400 to S$2,500 psf. Over at Tong Watt Road, it has sold close to 30 of 80 units released recently at The Wharf Residence; prices range from S$1,500 to S$1,900 psf.

The project has a total 127 units. Latitude comprises 127 units in total.

CapitaLand leads a consortium that will redevelop Farrer Court.

Source : Business Times - 1 Aug 2008

Email lushhome@gmail.com for information or private preview.

There is a need to meet the immediate demand for dormitory facilities for foreign workers, so some vacant government buildings will be converted into transitional dormitories even as permanent ones are being built.

Acting Manpower Minister Gan Kim Yong said this at the opening of the second Singapore Petrochemical Project Dormitories and Safety Training and Security Centre on Jurong Island.

Channel NewsAsia understands from the National Development Ministry that one of the sites for transitional dormitories is the former View Road Hospital building in Woodlands. Others are at Simpang (Simpang Residences) and recently tendered sites at Cochrane Crescent and Changi East.

Mr Gan noted that the demand for housing foreign workers has increased as more workers are needed to support the growth in various industries.

More land has already been set aside to build the dormitories and since February last year, both the Building and Construction Authority (BCA) and the Jurong Town Council have released 11 dormitory sites to provide some 65,000 additional housing spaces.

The phased construction of dormitories in these new sites will be completed by 2010.

On Jurong Island, ExxonMobil’s new dormitories have been built to cater for some 9,000 workers. At the opening ceremony, Mr Gan also took the opportunity to emphasise the need for workplace safety.

He said while the Manpower Ministry can set mandatory training requirements for workers in high-risk work areas, it cannot provide continuous safety education and re-education for workers. That, ultimately, is the employer’s responsibility.

He added that the need to be vigilant on the workplace safety and health front is even more critical during periods of high workload and tight business deadlines.

Mr Gan said: “It is important for us to ensure that the safety message filters down to every level of the workers. Sometimes when the economic activity is high, workers tend to be in a hurry and safety tends to be neglected.

“Sometimes complacency will set in and that will lead to accidents. These accidents, many of them are avoidable.”

ExxonMobil’s workers go through extensive safety and security courses conducted in seven different languages.

Mr Gan said: “We have to ensure that their (foreign workers’) health is looked after, the place is hygenic and it doesn’t create public health problems. It is also important for us to ensure that their morale is high and will be able to be productive, if they are given proper housing.”

Source : Channel NewsAsia - 1 Aug 2008