IN A striking sign of how the property sector has rebounded, a site that failed to sell two years ago when it attracted an offer of just $61 million has now received a bid of $164 million in a new tender.

Eight developers placed bids for the suburban plot that can accommodate residential and commercial development.

The top offers for the site at the junction of Choa Chu Kang and Woodlands roads were all in a fairly tight range, with Far East Organization’s Dollar Land Singapore on top with a bid that beat market expectations.

It offered nearly $164 million, or $436.65 per sq ft (psf) of gross floor area, about 10 per cent more than the $148.28 million or $394.80 psf offered by second-placed Chip Eng Seng’s CEL Development.

Sim Lian Land was next with $138.89 million or $369.79 psf.

Other bidders included a joint venture between Frasers Centrepoint and NTUC FairPrice Cooperative, and Soilbuild Group Holdings, which came in last with a bid of just $71.23 million.

CBRE Research had expected bids to range from $135 million to $150 million.

The $164 million bid could reflect a price of $50 million to $70 million for the commercial podium, with the developer possibly selling the apartments for around $700 psf to $800 psf, consultants said.

In April 2008, the site attracted just two bids of $61 million and $45.68 million when its sale tender closed. The bids were rejected as being too low.

The site, to be co-located with the Ten Mile Junction LRT station on the third storey of the podium block, will be near the future Bukit Panjang MRT station, part of the future Downtown Line 2 and due for completion by 2015.

Property consultants said the results showed that demand for land was still fairly strong, particularly coming after the Government’s recent measures to pre-empt a property bubble.

The Government has imposed a duty on sellers who offload property within a year of purchase, and lowered the maximum loan-to-value amount buyers can borrow from 90 per cent to 80 per cent.

Knight Frank chairman Tan Tiong Cheng said: ‘The top three bidders are the more experienced players familiar with the suburban market.

‘Their bids suggest they would think the recent measures would not affect prices in the longer term.’

With fewer sources of private land, developers are chasing government sites as they need to replenish land banks, said Colliers International executive director (investment sales) Ho Eng Joo.

He said the cooling measures will affect the sales market more than developers’ demand for land.

In the short term, some potential buyers will want to wait and see if prices will fall, experts said.

But those who are already planning to buy will likely go ahead.

Ms Christina Sim, Cushman and Wakefield’s director of investment and capital markets, said the one-year timeline for the seller’s duty is relatively short and unlikely to affect the market much.

Still, an analyst who declined to be named said: ‘The latest announcement begs the question – what conditions would qualify as a stable market? If transactions are above 1,000 units a month, that’s probably a warning sign.’

Source : Straits Times – 24 Feb 2010

Development charges, which are paid to enhance or intensify the use of some sites, are headed north for residential use at the upcoming DC rate revision effective March 1, say property consultants.

They cite the increase in private home values since last year as well as aggressive land bids for residential sites at state tenders in the past six months.

On average, DC rates for landed and non-landed residential use could rise about 5 to 10 per cent. However, consultants are predicting that rates for commercial, industrial and hotel use could remain flat.

The upcoming DC rate revision will also be monitored by those trying to embark on collective sales, especially for sites whose redevelopment would involve sizeable DC payment. DC is part of total land cost to a developer. If the DC rate increases significantly and the value of the site remains constant, the developer will offer owners less for the site, explains CB Richard Ellis executive director Jeremy Lake.

‘The problem today is that there’s already a price gap between owners’ and developers’ expectations. This will be compounded if there’s a significant hike in DC rates, in the case of sites with a significant DC component. The current environment (of rising private residential price expectations) is not conducive to owners reducing asking prices,’ he adds.

‘Hence for en bloc sites with significant DC component, the exposure to DC volatility can be very unhelpful in a rising market, whereas sites with zero or low DC component are fairly immune to DC volatility and those are good sites to work on.’ Mr Lake reckons that the next DC rate revision on Sept 1 may be more keenly watched – than the March 1 update – as a higher number of en bloc sale efforts are likely to be at a more advanced stage then.

DC rates – which are revised on March 1 and Sept 1 each year – are specified by use groups (such as landed and non-landed residential, commercial and hotels) across 118 geographical sectors throughout Singapore. The review is conducted by the Ministry of National Development in consultation with Chief Valuer, who takes into account current market values.

Colliers International is projecting 8 to 10 per cent rise in average DC rates for non-landed residential use from March 1. The biggest hikes of up to 20 per cent are likely to be in places like Serangoon Avenue 3, Upper Thomson Road and Sengkang West Avenue where winning land bids at state tenders have been at substantial premiums of 48-86 per cent to land values imputed from the Sept 1, 2009 DC rates for these geographical sectors, says the firm’s director Tay Huey Ying.

Suburban locations could see a bigger rise in DC rates than upmarket locations as last year’s rebound in home sales and prices was led by the mass market segment, she argues.

Private-sector land deals too point to higher DC rates. For instance, the Parisian site at Angullia Park was sold in October at $2,058 psf per plot ratio – about 70 per cent above the DC-rate implied land value for the area.

DTZ’s SE Asia research head Chua Chor Hoon reckons that non-landed DC rates will go up 15 to 25 per cent from March 1. Jones Lang LaSalle’s associate director (research and consultancy) Desmond Sim predicts 10-15 per cent hikes in non-landed residential DC rates in mass-market suburban locations, outpacing a 5-8 per cent rise in prime districts.

As for landed residential DC rates, he forecasts a 10-15 per cent increase across all geographical sectors, with a bigger increase likely for Sentosa Cove and Good Class Bungalow Areas.

CB Richard Ellis executive director Li Hiaw Ho notes that the official price indices for detached, semi-detached and terrace houses rose 20-odd per cent from July to December 2009. In addition, 2009 saw the highest total value of GCB sales at $1.64 billion. He forecasts an average 5-10 per cent rise this round for landed rates.

Mr Li forecasts DC rates for commercial and industrial use will remain unchanged or even fall very marginally.

Colliers’s Ms Tay, who is projecting an up to 5 per cent climb in average DC rate for industrial use, says: ‘The government is unlikely to make significant upward adjustments to DC rates for industrial use group in general in the upcoming review given the nascent recovery of the manufacturing sector and the industrial property market. Also, JTC Corp industrial land rents have not been adjusted since they were revised downward in January 2009, says Ms Tay.

She reckons commercial DC rates will remain largely unchanged as office rents have remained weak.

Source : Business Times – 24 Feb 2010

SINGAPORE real estate is ‘exceptionally attractive’ from a yield and capital appreciation perspective, says Bank Sarasin chief investment officer Burkhard Varnholt.

He dismisses fears of a bubble, even in the wake of new measures here to quell speculation.

Last Friday, the government announced the imposition of a new seller’s stamp duty for those buying residential properties from Feb 20, and a reduction in the loan to value limit for home loans from 90 per cent to 80 per cent. New private home sales had rebounded sharply last month.

‘Even though concern for monetary tightening in Asia is widespread, fundamentally I continue to view markets like Singapore as exceptionally attractive . . . I think real estate prices can double over the next three to five years and maintain attractive yields.

‘That’s based on comparing property prices in Singapore against global peers, and the expected capital inflow from the rest of Asia into the Singapore market in the next few years.’

Dr Varnholt says the crisis in Greece has made central bankers in developed markets wary of how stimulus is withdrawn.

‘The combination of cheap money and strong growth in the east, as well as weakness in the west, with the sustainable recovery in corporate and non-financial earnings and balance sheets – I think those make a powerful case for real assets, for real estate and equities.’

His preference in Asia, he adds, is for real estate over equities ‘because for the first time in many years, Asian equities have become more expensive than the MSCI World’.

For Sarasin clients, he is recommending real estate funds, as single real estate purchases are ’something the clients should do themselves because of the lack of liquidity’.

‘Travelling the world, I can’t see a bubble yet and for the foreseeable future in a place like Singapore . . . which has the quality of life, business friendliness, political and economic stability.’

Dr Varnholt remains positive on the prospects for emerging markets, but the bank’s ‘roadmap’ for investments differs markedly from last year when its balanced portfolio’s exposure to emerging markets were at a high of 55 to 60 per cent.

This year, the allocation has been cut drastically to about 10 per cent, thanks to valuation concerns. ‘We shifted our equity exposure from emerging markets to super-competitive western blue chip companies that benefit from cheap currencies and leverage on the boom in Asia and the emerging markets,’ he says, citing companies such as Coca-Cola and Nestle.

These defensive companies pay an ‘extraordinarily’ attractive dividend yield against low corporate and sovereign bond yields.

He sees a number of key risks in the horizon. One is a ’super’ spike in commodity prices caused by resources bottlenecks. A second risk is China’s ‘ballooning’ money supply growth which is likely to prompt more tightening measures.

Meanwhile, China’s reserves held in US bonds have shifted substantially to short dated bonds. In this context, the bank maintains a weighting in gold as an insurance against a dollar crisis, even though the latter is not its base case.

A third risk, is that the housing market globally is likely to have more downside as in many markets, prices look expensive based on price to income and price to rent ratios.

Still, the current cycle remains positive for equities, he says. The recovery in non-financial earnings will lead into 2011. ‘The environment is not too hot or too cold. It’s historically one of the best environments for equities,’ he says.

Source : Business Times – 24 Feb 2010

The two latest HDB Build-to-Order or BTO projects – Punggol Crest and Treegrove@Woodlands – are seeing strong demand.

The number of applications received so far was four times the number of units available. The more popular ones are the bigger flats.

There were some 2,600 applicants for 270 4-room units at Punggol Crest. The 372 4-room units on offer at Treegrove saw 2,390 applicants.

But the 2-room units at Punggol Crest are less popular. So far only 75 people applied for the 240 units.

The selling price for the Punggol Crest flats ranges from S$90,000 for a 2-room flat to S$301,000 for a 4-room flat.

For the Treegrove project, the price ranges from S$64,000 for a studio apartment to S$288,000 for a 4-room flat.

Applications for the two BTO projects close later Wednesday.

Source : Channel NewsAsia – 24 Feb 2010

Las Vegas Sands said it plans to open the first phase of its US$5.5 billion Marina Bay Sands development on 27 April 2010.

Sheldon Adelson, chairman and chief executive officer of Las Vegas Sands, said the integrated resort will immediately go to work by hosting its first event – the Inter-Pacific Bar Association’s annual conference – just days after opening its doors.

The second phase will open on June 23 as part of the grand opening. This will include the opening of the SkyPark and Event Plaza.

The dates were announced in a statement by Las Vegas Sands on its website.

In October, one of the property’s two state-of-the-art theatres will welcome Disney’s The Lion King. The second theatre, which will also open later this year, will be home to a variety of special events and famous headline acts.

The iconic Marina Bay Sands museum is expected to open by December. It will not only feature international blockbuster exhibitions, but it will also serve as a symbolic welcome to guests – with its unique lotus-inspired design – from around the globe.

Source : Channel NewsAsia – 24 Feb 2010

CONSTRUCTION and property group United Engineers yesterday reported a net profit of $52.2 million for 2009, a significant jump from $6.0 million in 2008.

The company’s revenue rose 13 per cent to $703.7 million in 2009, from $624.6 million in 2008, mainly due to the progressive recognition of revenue from residential development projects The Rochester in one-north and Park Central @ AMK in Ang Mo Kio, as well as an engineering project for the Marina Bay Sands integrated resort.

Gross profit rose 12 per cent to $162.0 million in 2009 as revenue increased.

The bottom line was also boosted by a $6 million increase in ‘other income’ to $10.6 million, mainly due to fair value gains from the group’s short-term investments. It also recognised a surplus of $745,000 on the revaluation of investment properties, compared with a deficit of $570,000 in 2008.

Earnings per share was 22.1 cents compared with 2.7 cents in 2008.

But the main boost for the net profit came from a $32.7 million fall in ‘other expenses’ to $17.7 million mainly due to 2008’s provisions for the Fusionopolis project, a $9.3 million impairment charge on available-for-sale investments and $6.9 million fair value losses on short-term investments.

The group had cash and cash equivalents of some $308 million as at end-December 2009.

United Engineers said that it will continue to execute several large-scale building and infrastructure projects over the next 12 months.

But while existing projects will keep the company busy, it ‘will face stiffer competition in replenishing its order books due to the challenging environment brought about by the economic slowdown in Singapore and the countries it operates in’, United Engineers said.

The company’s stock gained 4 cents, or 2.1 per cent, to close at $1.99 yesterday.

Source : Business Times – 25 Feb 2010

I REFER to Mr David Goh’s letter on Tuesday (‘They don’t go far enough in curbing excess’) about the new measures to curb property speculation. While the causes of the property price spike mentioned are valid, the proposed solutions may not be in Singapore’s best interests.

Raising the interbank interest rate too quickly could put the Singapore economy out of sync with the rest of the world. Our competitiveness may be hampered.

In addition, it must be noted that raising interbank interest rates has widespread ramifications. It should be undertaken only if it is deemed beneficial for the economy at large, and not just to curb speculation in a specific market.

There were also suggestions to ban collective sales of properties that are less than 30 years old, and requiring developers to redevelop en bloc properties within three years of acquisition. These measures would be detrimental to the free market principles that Singapore has thrived on.

I agree that the authorities should intervene in the property market as justified by the exuberance shown.

However, the two proposed solutions seem like an attempt to micro-manage the industry, which could hurt our free-market, business-friendly image.

Business activities, including property development, and prices should largely be established by free market participants.

The Government should not be deciding optimal property prices or which properties to acquire and when to develop them. Its role is to act in a counter-cyclical manner in terms of broad policy direction, so as to guide the market away from extreme booms and busts.

The latest steps by the Government seem moderate and considered. If the property market heats up further, an escalation of macro measures can be introduced subsequently. Drastic measures must be avoided as they can plunge the market into disarray.

Loke Hon Yiong

Source : Straits Times – 25 Feb 2010

MINORITY owners have had a key victory in yet another court fight over the failed $500 million Horizon Towers en-bloc deal.

An assistant registrar in the High Court yesterday threw out a bid by two former members of the sales committee to halt an action against them by the owners.

The three sets of minority owners are suing the two – ex-committee chairman Arjun Samtani and ex-member Tan Kah Gee – over costs incurred when they tried to block the collective sale.

They want to be reimbursed for more than $800,000 in costs. This includes the cost of hiring lawyers to advise them and other administrative costs.

The sum is expected to be partially offset when the costs awarded to the owners by the Court of Appeal last year, after the en-bloc deal was quashed, are assessed.

The owners argue that both committee members were ‘key players in the process leading up to the commencement, facilitation, management and finalisation of the collective sale process’, according to court documents.

Lawyers for the committee members countered that the minority owners’ suit should be struck off as the action was ’scandalous, frivolous (and) vexatious’. They also pointed out that the Court of Appeal awarded costs last April in a case that dealt with all outstanding issues of reimbursement.

But the minority owners argued that the new case is different from the one settled last year.

In that case last year, costs were awarded for the minority owners’ conduct in opposing the proposed sale by the consenting majority owners.

The present action is different as it is based on what they claim is the lack of good faith in the collective sale deal struck by Mr Arjun and Mr Tan as members of the sales committee.

They allege that this ‘lack of good faith’ resulted in minority owners having to put in a great deal of effort and spend a lot of money to oppose the sale.

In effect, they claim there was a breach of fiduciary duties and they want to be compensated for the costs from the resulting damages.

Mr Kannan Ramesh, who is acting for the owners, said in his submissions: ‘The causes of action in both cases are appreciably different.’

At a closed-door hearing yesterday, assistant registrar Leong Weng Tat ruled in a reserved judgement that the suit by the minority owners should proceed.

Mr Arjun and Mr Tan, represented by Mr N. Sreenivasan and senior counsel Tan Cheng Han respectively, can appeal to the High Court against the decision, otherwise the case will advance to a full hearing. Lawyers say either way, the case may eventually go to the Court of Appeal.

The Horizon Towers collective sale spanned more than two years and involved two Strata Titles Board hearings and two High Court hearings before being thrown out by the Court of Appeal last year.

Source : Straits Times – 25 Feb 2010

SINGAPORE’S second integrated resort, the Marina Bay Sands (MBS), will open on April 27.

Like its counterpart on Sentosa, MBS will open in phases, with the casino, some hotel rooms, restaurants, part of the shopping mall and convention centre opening first.

Unlike Resorts World Sentosa (RWS), however, MBS has detailed when its various attractions will open.

In a statement yesterday, the resort said its first major event, a meeting of lawyers worldwide for the Inter-Pacific Bar Association’s 20th annual conference, will be held on May 2 to 5, just days after it opens.

It added that a grand opening ceremony has been planned for June 23, when the Skypark and several other attractions will begin to accept visitors.

Other areas of the resort, such as its theatres and museums, will throw open their doors progressively till the end of the year.

However, MBS added a caveat to its statement: The timeline could change if there are construction delays, for example. Getting regulatory approval is another factor, it added.

Casino Regulatory Authority spokesman Vivian Heng said it received MBS’ casino licence application in November last year, and the clearing process is under way.

Yesterday’s announcement comes after three years of work, including several delays. MBS was originally slated to open last December, but construction woes – the resort said it suffered a shortage of sand and other materials – led to the opening date being pushed back twice.

At one stage, there were even questions about whether MBS’ parent company, Las Vegas Sands (LVS), could complete the US$5.5 billion (S$7.7 billion) project, given the battering it took during the global financial crisis.

At its low point, there were fears that the company could go belly-up because of its debts. Several analysts questioned then whether LVS was using the delays to paper over its financial woes.

But Mr Sheldon Adelson, chairman and chief executive officer of LVS, stressed several times that MBS was ‘probably the company’s most important project’.

Yesterday, Mr Adelson said: ‘Despite the challenging, and at times unprecedented economic conditions companies like ours recently faced, our dedication to completing this development never wavered, not even for a second.’

Analysts and industry experts contacted yesterday welcomed the announcement of an opening date, saying MBS would add a different dimension to Singapore.

They agreed that while the two integrated resorts (IRs) will help Singapore become more attractive to tourists, give a boost to the economy and create a wealth of jobs, MBS will add extra wattage to the cityscape by injecting a dose of glitz, glamour and culture.

Singapore hopes to attract 17 million visitors, who will spend $30 billion, to the country by 2015. The two IRs are also expected to add some $5.4 billion to the economy yearly, and create at least 20,000 jobs.

CIMB-GK regional economist Song Seng Wun said that while RWS will draw leisure travellers and families – an important segment of the tourism market, no doubt – the Marina Bay IR will pull in movers and shakers with fatter wallets and influence worldwide.

MBS will also add to Singapore’s nightlife and cultural scene too, with such world-class shows as The Lion King, said National Association of Travel Agents Singapore chief executive Robert Khoo.

But analysts were quick to point out that both sides have their own strengths, and will do a good job of appealing to their own market segments.

One group that had an opposite reaction was travel agents, who feel RWS, not Marina Bay, will be the game-changer for them, since their business covers mainly leisure travellers.

But convention organisers were rubbing their hands with glee.

Mr Edward Liu, president of the Singapore Association of Convention and Exhibition Organisers and Suppliers, said MBS’ opening is something that the local meetings, incentives, conventions and exhibitions (Mice) industry has been looking forward to with great anticipation.

Its location and the number of attractions under one roof mimic the Las Vegas business model, a proven winner, he said.

He has already booked two mega- events at the IR.

Shares of Genting Singapore, which owns RWS, ended 1.5 cents lower at 94 cents yesterday after the announcement.

LVS shares opened slightly higher in early trading on the New York Stock Exchange, despite a recent trend of pressure on Las Vegas casino operators due to fears of falling room rates and worries over MGM Mirage’s newly opened US$8.5 billion, 6,000-room CityCenter project.

April 27: Phase One opening with 963 hotel rooms, part of shopping mall and convention centre, three of six celebrity-chef restaurants and other dining outlets and the casino
May 2 to 5: Hosting of its first event, the Inter-Pacific Bar Association 20th Annual Conference
June 23: Phase Two opening with the sky garden – Sands SkyPark – its event plaza in front of Marina Bay, the rest of the retail mall, more dining outlets and nightlife offerings. Grand opening celebration is also scheduled.
October: Disney’s The Lion King to open at one of its two theatres
Later in the year: Second theatre to host a variety of special events; headline acts to open
December: Marina Bay Sands museum to open

Source : Straits Times – 25 Feb 2010