MORE people were taken to task last year for illegally converting their private homes into dormitories, hostels and boarding houses as accommodation for foreign workers and students.

The Urban Redevelopment Authority (URA) investigated about 700 private residential properties and is still forcing boarders to vacate the premises of 140 owners. Overcrowding is common, making safety an issue.

The other 560 owners have since stopped taking in lodgers illegally.

In 2008, the URA investigated just 400 cases.

In particular, there was an 18 per cent increase in the number of unauthorised worker dormitories over the previous year, though figures were not available.

The illegal dormitories are being exposed as more people write in to the URA with their complaints, and tip-offs are provided by the public and other government agencies.

The URA said that private apartments and landed homes are meant for residential use and should not be converted into workers’ dormitories, which need permission to operate.

Under the Planning Act, illegal conversion of premises can result in a maximum fine of $200,000 and a year in jail. If the offence continues after conviction, a fine of $10,000 a day may be imposed.

Despite URA efforts, checks by The Straits Times showed that illegal workers’ dormitories are still prevalent, especially in Little India and Tiong Bahru.

Along Marne Road off Petain Road, The Straits Times found at least two terrace houses housing more than 10 workers each.

In Tiong Bahru, there were at least three such apartments. In other units, there were workers from China and Malaysia who refused entry to The Straits Times. But shoes outside the main door and the drying laundry were signs of the multiple occupants inside.

At three units, occupants said there were eight people living inside. One said the boss had obtained the flat for them.

One landlord, who wanted to be known only as Ms Huang, said she had rented her three-room unit in Kai Fook Mansion in Tiong Bahru Road to eight Malaysians at $1,700 a month.

She said she had nine tenants at first but was told by the URA in December that she could have only eight. Ms Huang said she had not made modifications to her flat.

Private homes as ad hoc accommodation have sprung up over the last few years because of a shortage of dormitories and boarding houses.

A single worker renting a room in one of these converted homes pays about $200 compared with $160 to $180 each month for a workers’ dorm in Jurong.

In the middle of last year, the URA found that 140 units in Grangeford condominium in Leonie Hill had been subdivided into 600 units. The developer was taken to action to recover the units.

The Ministry of Manpower warned employers of foreign workers that they are responsible for the well-being of their workers, including providing acceptable accommodation while they are employed.

Employers who fail to provide acceptable accommodation for their foreign workers are in breach of the work permit conditions and may be fined up to $5,000 and jailed up to six months. Such employers could also be barred from hiring foreign workers in future.

Tiong Bahru residents interviewed said they were fine with foreign workers in their midst, but were concerned about the overcrowding in the walk-up apartments, which are about 800 sq ft to 1,000 sq ft and usually have two or three bedrooms.

Interior designer Jo Turner, 31, claimed that her ceiling sprang a leak because there were 10 workers sharing a toilet in the flat above hers.

Ms Turner, like advertising executive Eugene Yip, 38, was mostly worried about the workers cooking over an open flame. About a month and a half ago, unit 1P in Yong Siak Street, housing Chinese national workers, caught fire.

The Singapore Civil Defence Force said the fire was accidental and from an electrical source. This could have been caused by a short circuit or overloading of power outlets.

Source : Straits Times – 8 Feb 2010

SINGAPORE real estate investment trusts (S-Reits) appear to be back on the acquisition trail after facing some serious financial woes in recent times.

Several Reits here have been scouting the region, picking up good buys, now that the economy is back on an even keel.

Reits have proven very popular among investors here. They usually own a portfolio of a particular type of property and derive income from rents. Unitholders receive regular payments.

But it was a different story last March when a National University of Singapore forum on Reits noted that their overall value had plunged about 60 per cent after the onset of the global financial crisis.

Refinancing and recapitalisation risks were high. So too was S-Reit debt, estimated to amount to $4.6 billion last year.

But by September, a special report by Fitch ratings noted that S-Reits had managed to refinance most of their debt obligations and share prices were recovering.

Mr Vincent Yeo, chief executive of M&C Reit Management, the manager of CDL Hospitality Reit (H-Reit), believes the successful refinancing of loans and the flurry of capital-raising activities, particularly in the second half of last year, reflect easing credit conditions.

Credit margins, however, are still wider than before the crisis, a spokesman for Ascendas Reit (A-Reit) pointed out.

But the easing conditions seem to be enough. In the last three months, S-Reits increasingly bought assets, with most deals being done out of Singapore.

H-Reit, Keppel Land’s K-Reit Asia and Starhill Global Reit all went Down Under by investing in Brisbane and Perth. Starhill Global Reit also bought two retail properties in Kuala Lumpur.

In Japan last November, Mapletree Logistics Trust purchased a warehouse in Chiba, while Parkway Life Reit (PLife) acquired eight nursing homes.

At home, Mapletree Logistics purchased two warehouses and Frasers Centrepoint Trust proposed the acquisition of Northpoint 2 and Yew Tee Mall.

Australia, it appears, is the current favourite, said DMG and Partners analyst Jonathan Ng.

H-Reit’s $220.9 million purchase of five hotels in Brisbane and Perth is one example. The deal incorporated a 66 per cent discount and would render a net property yield of 8.4 per cent, higher than H-Reit’s portfolio yield of 5.2 per cent, said Mr Yeo.

A spokesman for Starhill Global Reit said property prices in Britain, Japan and Australia have become more attractive as capitalisation rates have reached an all-time high in the past decade.

OCBC Investment Research analyst Meenal Kumar said the best distressed deals are in the more developed markets. In Singapore, making yield-accretive purchases is more challenging and acquisition opportunities may vary according to property sub-sector.

Due to many assets being securitised in the past five years, more S-Reits are likely to look overseas for opportunities in future, said Mr Ng.

PLife has already defined Australia and Malaysia as additional core markets this year, in addition to Singapore and Japan, said chief executive of Parkway Trust Management, Mr Yong Yean Chau.

Reits will have to be mindful of how much debt they take on for acquisitions. Sticking to a debt level of 30 per cent to 35 per cent is reasonable, Mr Ng said.

Some Reits are also looking at divesting sub-optimal assets as a strategy or for the purposes of lowering debt, Ms Kumar noted.

Source : Straits Times – 8 Feb 2010