Tuesday, November 24, 2009

CNA: Jalan Ampas industrial site up for collective sale

Jalan Ampas industrial site up for collective sale
By Tan Hui Leng, Channel NewsAsia 18 November 2009 

SINGAPORE: Owners of a freehold industrial site at No.6, Jalan Ampas, off Balestier Road, have put their property up for collective sale. 

The property is one of the 15 industrial buildings in the Balestier area that the Urban Redevelopment Authority (URA) has said it is prepared to consider re-zoning for residential use. 

Credo Real Estate, the marketing agent for the site, is not disclosing the reserve price but said it expects offers of around S$27 million to S$30 million. 

The existing development, spanning about 28,000 square feet, holds a three-storey strata-titled development, comprising four terrace factory units built in the 1980s. 

When it is re-zoned, the site may be redeveloped into a high-rise residential development with a gross plot ratio of 2.8. This may yield some 100 apartments with an average size of 780 square feet. 

The developer will, however, have to pay a development charge of S$18.7 million for changing the use of the site. Credo said that after factoring in the development charge, the indicative price range translates to S$586 to S$625 per square foot per plot ratio. 

At this range, it said, the developer should be able to break even at about S$950 psf to S$1,000 psf. 

Credo said it is upbeat that the site can attract significant interest from developers as it is located near Shaw Plaza. 

The en bloc tender opened on Wednesday and will close at 3pm on December 10. 

Team Marshe
Martin Koh/ Sherry Tang
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CNA: Starhill Global REIT to buy Perth retail property for some S$148m

Starhill Global REIT to buy Perth retail property for some S$148m
By Irene Chan, Channel NewsAsia 18 November 2009 

SINGAPORE: Mainboard-listed Starhill Global REIT, which owns shopping malls on Orchard Road, plans to buy a retail property in Perth called "David Jones Building," for around S$148 million. 

It will buy the property from Australian real estate firm, Centro, via a special purpose unit trust structure established in Australia. This would be Starhill Global's first investment in Australia. 

Meanwhile, the property trust also entered into an agreement with Starhill REIT of Malaysia to indirectly buy interests in Starhill Gallery and Lot 10 Shopping Centre on Kuala Lumpur's main shopping street, Bukit Bintang, for about S$423 million. This would be through an asset backed securitisation structure. 

The two properties in Kuala Lumpur comprise total net lettable area of some 554,000 square feet. 

With these proposed acquisitions, Starhill Global's portfolio size is expected to grow to S$2.5 billion. 

Starhill Global said the deals are expected to be completed in January, and will be funded by a combination of debt and proceeds raised from its recent rights issue. 

The acquisitions are expected to be accretive to the property trust's distribution per unit.

Team Marshe
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CNA: Upgrading works for Holland & Bt Panjang unaffected by past investment loss

Upgrading works for Holland and Bukit Panjang unaffected by past investment losses
18 November 2009 

SINGAPORE: The Holland-Bukit Panjang Town Council said upgrading works will continue despite huge investment losses reported in 2008. 

Over 90 per cent of blocks in the Holland and Bukit Panjang districts have commenced lift upgrading programmes. 

The latest financial report showed the town council achieved an accumulated surplus of S$1.81 million. 

"Our town council is very prudent in terms of our investment portfolio. So presently, most of our funds are in fixed deposits and government bonds and we shall see how the global situation is, before we make the decision to invest in other forms of investment," said Dr Teo Ho Pin, chairman, Holland-Bukit Panjang Town Council. 

In 2008, the Holland-Bukit Panjang Town Council incurred a huge investment loss in its sinking funds - the heaviest among all the town councils. 

Sinking funds were utilised for upgrading works like repainting, roof works, and fixing water tanks. 

However, the losses did not end there - some minibond investments are still being processed. 

Team Marshe
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Straits Times: Property tax on HDB flats going up

Nov 19, 2009 
Property tax on HDB flats going up 
One-off rebate to cushion rise; one- and two-room owners will pay nothing
By Jessica Cheam 

HOMEOWNERS: be prepared to pay higher property taxes next year.

In line with the rally in home prices, the taxman is revising upwards the value of Housing Board (HDB) homes. 

The Inland Revenue Authority of Singapore (Iras) announced yesterday that the annual values (AV) of all types of HDB flats will be raised with effect from Jan 1. 

This will mean a hike in property taxes for 2010.

The property tax rate in Singapore is currently set at 10 per cent of a property's AV, although owner- occupied residential properties enjoy a concessionary 4 per cent tax rate.

To soften the impact, a one-off rebate is being introduced to help HDB homeowners adjust to the increase. 

With this new rebate and ongoing GST rebates, low-income households who live in one-room or two- room flats will not have to pay any tax for 2010, Iras said. 

Industry analysts yesterday said that Iras's latest move was 'not totally unexpected'. HDB resale prices have risen a hefty 31.2 per cent in the past two years, and a further 3.8 per cent in the first nine months of the year.

'As HDB resale flat prices have exceeded the property peak of 2007, this was inevitable,' said Ngee Ann Polytechnic real estate lecturer Nicholas Mak.

What was more surprising, however, was the timing of the announcement.

'There are households who are still reeling from the recession, and unemployment is still high. It could have come a bit later when the job market has recovered,' said Mr Mak.

Iras last revised AVs on Jan 1, 2008.

It said yesterday that it reviews all property AVs annually, including HDB flats, to 'ensure that they reflect prevailing market rental values for the purpose of determining property tax'. 

AVs of HDB flats were not revised last year, despite HDB rentals increasing by between 31 per cent and 37 per cent in 2008 relative to 2007, it said. 

This adjustment was deferred in view of the uncertainty in market rental trends caused by the economic recession. Iras added that there was evidence of rental value declines due to the negative economic outlook at the time.

However, market sentiment has since changed dramatically. Iras noted that HDB rentals stabilised after a moderate decline from late 2008 to the middle of this year, and have since begun to rise. 

As a result, current values of HDB rentals, as well as resale prices, are still significantly higher than levels seen in 2007. 

'The AVs of HDB flats will, therefore, have to be adjusted beyond the last revision in January 2008,' said Iras.

But to help HDB homeowners adjust to the rise, the Government is granting a new property tax rebate to all HDB owner-occupiers for property tax payable in 2010 - set at 50 per cent of the property tax payable and capped at $120. Low-income households will be assisted because flats with a property tax of $50 and below will not need to pay property tax next year.

The average three- room HDB owner-occupier will face an increase, after rebates, of $72 for the year.

The rise will be about $97 for four-roomers, $107 for five-roomers and $103 for executive HDB flat owners.

PropNex chief executive Mohamed Ismail said the rebates will help cushion the blow. He pointed out that HDB owners have enjoyed higher rentals and resale values over the past two years, so the increase in taxes was 'to be expected'.

HDB homeowner Lim Chye Boon, 48, said he had expected the tax increase to come 'at some point' so was not too bothered.

But for Mr Kenny Koh, 27, who has just bought his five-room flat in Sengkang, it was not welcome news.

'I just spent so much money buying my new home and now have to pay more again,' he said. 'But at least, the rebate helps a bit.'

Team Marshe
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Straits Times: Laguna Park man's fine quadrupled

Nov 19, 2009 
Laguna Park man's fine quadrupled 
By Selina Lum 

HE HAD laughed off his $1,200 fine for mischief, telling reporters that he spends much more money on karaoke a night.

Lee Kok Leong's words came back to bite him yesterday, when a judge quadrupled the fine to $4,800.

Justice Chao Hick Tin told him: 'I hope you are truly sorry this time round and not leaving this court and muttering something else after I give my sentence.'

The former chairman of the Laguna Park management committee told reporters in April, after he was fined for putting glue in his neighbours' locks, that he was not at all sorry for what he had done.

After his disparaging remarks made the news, the prosecution dragged him back to court to appeal for a stiffer sentence because he had mocked the criminal justice system.

Deputy Public Prosecutor Lee Jwee Nguan asked for a 'sentence of sufficient gravity' to deter Lee and like-minded individuals, although he stopped short of pressing for a jail term. 

For his acts of mischief, Lee could have been fined up to $10,000 and jailed for up to a year on each charge.

His lawyer, Mr Ramesh Tiwary, countered: 'Everything said and done, does he really deserve to go to prison because he told some reporters, 'I can afford it'?'

The judge said those remarks were 'wholly deplorable'. 'This is not conduct which the court condones,' he added. 

Justice Chao asked Lee, 63, if he was a grandfather. When Lee said yes, the judge continued: 'We are supposed to act more responsibly.

'I would expect things like this to be said by a youngster trying to 'act hero'...but I don't expect such things to be said by you, especially after serious proceedings in court.'

Justice Chao said he decided against sending Lee to jail on account of his age and medical condition. Lee suffers from depression and obstructive sleep apnoea, for which he needs a machine to sleep. 

He also has a lesion in his brain; doctors have yet to determine if it is benign or malignant.

Said Justice Chao: 'I hope this will be the last lesson you learn from the court and do not act in a manner as foolish as this.' Lee said: 'I promise I won't do it again.'

In August last year, Lee had glued the locks of two neighbours - against the backdrop of disputes over whether the condominium should be sold en bloc.

He was caught in the act by a surveillance camera installed by a neighbour.

Yesterday, Mr Tiwary said his client's acts of mischief were 'exceedingly silly' because he knew the cameras were there. The judge agreed, saying: 'This whole thing is silly. It's absurd.'

Lee kept mum when reporters approached him after his sentence. Staring blankly ahead, he drew a circle with his forefinger around his mouth.

Team Marshe
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Straits Times: Parkway hospital opening delayed

Nov 19, 2009 
Parkway hospital opening delayed 
Move saves group $100m in building costs; green features will be added
By Jessica Jaganathan 

MEDICAL group Parkway Holdings has pushed back the opening date for its hospital in Novena to make savings on construction costs and to tweak its design.

Work on the 350-bed hospital, which has yet to be named, began a year ago and was to have been completed in time for a July 2011 opening. Delaying its debut to early 2012 will save $100 million for the group, said Dr Lim Cheok Peng, the chief executive of Parkway Holdings. 

The savings come from the economic downturn depressing the cost of cement and steel; overall, construction costs here have fallen by 15 per cent to 20 per cent in the past year.

The hospital which was projected to cost $700 per sq ft (psf) to build will now cost $500 psf, Dr Lim said. 

Cost reasons aside, the group has delayed work on the hospital so it can work pro-environment features into its design, and be in the running for the Green Mark Platinum award given by the Building and Construction Authority.

Winning the award would bag the hospital 2 per cent more gross floor area. 

The hospital's revamped design will include a solar garden and energy-efficient lighting. 

Parkway raised buzz by bidding $1.2billion to secure the 1.7ha plot on Irrawaddy Road for this, its fourth hospital. Critics have speculated that with the high bid, the single-room- only hospital would have to charge higher fees and so contribute to rising health-care costs.

Dr Lim told The Straits Times that the group will keep costs in check in several ways - by proceeding with facelifts to its ageing Mount Elizabeth and Gleneagles hospitals in stages, sharing manpower across its hospitals both here and in Malaysia and offering competitive health packages in its hospitals here.

This year, for example, in response to the economic downturn, it began offering 40 fixed-price packages for procedures in cardiology, gynaecology and in general and orthopaedic surgery at its hospitals here. Priced 20 per cent to 30 per cent lower than the average cost of comparative procedures here, the packages cover in-patient care, facility and doctor's fees.

About 3,000 such packages have been sold, said Dr Lim.

Parkway's other cost-saving moves enabled it to offer these packages, he said, citing salary cuts, directors giving up their fees, the renegotiation of contracts and group purchasing.

So far, the group has saved $15 million.

'Based on that, we are able to pass savings back to the patients,' he added.

Parkway posted a revenue of $259 million in the third quarter, 8 per cent more than the July to September period last year. Salaries for its senior management will be restored by the first quarter of next year if the group's fourth- quarter numbers continue to be healthy, said Dr Lim. Meanwhile, Parkway aims to start selling the first 200 medical suites at its Novena hospital in first quarter of next year. 

The first 80 will go for about $3,500 psf, which puts them between the average of $3,100 psf at the upcoming Farrer Park Hospital and the $4,803 to $5,295 psf range transacted at Mount Elizabeth Hospital last year. 

Parkway is also pushing ahead with its expansion, especially in Malaysia, where it owns two hospitals and manages another nine under the Pantai group. 

Aside from a 60-bed hospital coming up in Perak, it is looking at setting up one in Johor's Iskandar Development Region in five years - a rival to Singapore healthcare player Health Management International' s Regency Specialist Hospital, which is up and running there. 

These Iskandar region hospitals hope to mop up Singapore's demand for health care, especially now that the Government has decided to extend Medisave coverage for treatment in accredited overseas hospitals. At home, Parkway will expand its executive health screening service for corporate clients and Parkway Shenton clinics, and open at least two to three clinics a year in newer housing estates.

Team Marshe
Martin Koh/ Sherry Tang
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Straits Times: YTL plans to restructure Reits portfolios

Nov 19, 2009 
YTL plans to restructure Reits portfolios 

KUALA LUMPUR: YTL Corp, Malaysia's biggest builder, says it will restructure its 8 billion ringgit (S$3.3 billion) property trust and hotel portfolio into distinct units ahead of acquisitions.

Its Singapore-listed Starhill Global Reit will become retail-centric, buying two Malaysian malls and the David Jones Building in Perth, Australia. Kuala Lumpur-listed Starhill Real Estate Investment Trust will focus on the hotel and hospitality industry, YTL chief executive officer Francis Yeoh told reporters in Kuala Lumpur yesterday.

'This will benefit both Reits in terms of pursuing growth and development strategies in a single, focused class of assets,' Mr Yeoh said separately in a statement.

The restructuring will see assets under the Singapore trust significantly grow, while those under its Malaysian counterpart will initially shrink before other YTL hotel assets are potentially injected.

The trusts have underperformed this year. Singapore's Starhill Global Reit, previously known as Macquarie Prime Real Estate Investment Trust, has risen 39 per cent this year compared with a 56 per cent surge in the benchmark Straits Times Index. It currently owns two shopping malls in Singapore's Orchard Road, plus seven properties in Tokyo and one in Chengdu, China.

The Singapore trust will pay 1.03 billion ringgit to buy Starhill Real Estate Investment Trust's interests in Starhill Gallery and Lot 10 Shopping Centre in Kuala Lumpur, the statement said. It will also acquire the David Jones Building, one of just two retail pedestrian malls in Perth, from Centro Properties Group for $148 million, YTL said.

The purchases will increase the Singapore trust's portfolio size to about $2.5 billion.

Team Marshe
Martin Koh/ Sherry Tang
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Business Times: Balestier factory en bloc after rezoning

November 19, 2009
Balestier factory en bloc after rezoning

(SINGAPORE) The owners of a terrace factory building off Balestier Road have put up their property for an en bloc sale following the Urban Redevelopment Authority's (URA) decision in 2008 to consider rezoning the site for residential use upon redevelopment.

The freehold property is being marketed by Credo Real Estate with a price tag in the region of $27 million to $30 million.

About $18.7 million is payable as development charge (DC) for the rezoning of the site. After factoring the DC payable, the estimated price tag reflects a per square foot per plot ratio (psf ppr) price of $586 psf ppr to $625 psf ppr. Breakeven for the project is at about $950 psf to $1,000 psf.

The three-storey strata-titled development at 6 Jalan Ampas comprises four terrace factory units built in the 1980s. They belong to four unrelated owners. The building sits on a corner rectangular- shaped land measuring just over 2,586 square metres. Tan Hong Boon, Credo's deputy managing director, said that the URA issued a circular in July 2008 to say that it had completed a review on a cluster of 15 industrial buildings at Jalan Ampas/Lorong Ampas, and was prepared to consider rezoning the properties to residential use at a gross plot ratio of 2.8 upon redevelopment. Based on this rezoning, the site may be redeveloped into a high-rise residential development comprising some 100 apartments with an average size of 780 square feet.

The tender for the launch closes at 3pm on Dec 10. Credo said that the site is about 50m from Shaw Plaza, a shopping mall that houses a major supermarket, a multiplex cinema, banks and fast food eateries such as McDonald's.

A new development in the same vicinity, Prestige Heights, was recently launched at a median sale price of $1,322 psf. 

Team Marshe
Martin Koh/ Sherry Tang
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Business Times: Holiday Inn Park View completes overhaul

November 19, 2009
Holiday Inn Park View completes overhaul

(SINGAPORE) The Holiday Inn Park View, which opened here in 1985, has been renamed Holiday Inn Singapore Orchard City Centre as part of a $25 million refurbishment exercise.

Its signage, reception area, guest rooms and food and beverage outlets have been overhauled. Despite the downturn, the decision was made to go ahead with renovating the 319-room hotel over a 15 month period. This was done in conjunction with InterContinental Hotels Group's Holiday Inn global relaunch programme.

'We're long term players. For us to refurbish in slightly more difficult economic times actually makes greater sense. If you do it in good times, you essentially take rooms out of the inventory,' said Aron Harilela, director of Hong-Kong based property developer The Harilela Group, which owns the Holiday Inn in Singapore as well as other properties in Asia, Europe and the Americas. 

The group also owns three transit hotels here at Changi Airport, as well as a 20 per cent stake in Thomson Medical Centre. 

Looking ahead, The Harilela Group is expanding its portfolio with the launch of two hotels in Tier 2 and 3 cities in China - the first of which will open in the second quarter of 2010 and the second in Q3 2011.

The two hotels, each costing US$15 million, will be funded by a mix of debt and equity. 'We're looking to do five hotels in China. There's a big market for internationally branded, standardised products,' said Dr Harilela, adding that land in Tier 1 cities tends to be priced exorbitantly.

Meanwhile, the Holiday Inn has out-performed the industry this year, according to general manager Shantha de Silva, with occupancy rates in the mid-80s, down from the low 90s in 2007-08.

Room rates this year have come down about 20 per cent compared to last year but remain in the low $200s.

'We've been trading fairly robustly even, this year,' said Mr de Silva. Business travellers make up 60-70 per cent of the clientele.

And Mr de Silva is confident that the hotel industry is likely to pick up soon. 

Team Marshe
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Business Times: Mapletree starts work on south China project

November 19, 2009
Mapletree starts work on south China project

(SINGAPORE) Mapletree Investments yesterday unveiled plans for the US$342 million first phase of its Nanhai Business City, a mixed-use development in Foshan City, China.

Twenty high-rise apartment blocks with about 2,000 residential apartments and a four-storey retail mall called VivoCity@Nanhai will be developed in phase one, Mapletree said.

Nanhai Business City is the group's first commercial project in south China and its largest project so far. 

The project is being developed by a Mapletree- sponsored private real estate fund called Mapletree India China Fund, which holds 80 per cent of a joint venture company set up to develop the project. The remaining 20 per cent is held by local Chinese partner Pan Shun Ming, who is chairman of Southern Packaging.

Nanhai Business City is the Mapletree fund's third investment in China.

Mapletree celebrated the ground-breaking ceremony for phase one yesterday. This phase, expected to be completed by 2013, involves the development of 10 hectares of land into the high-rise residential blocks and retail mall. 

The residential component will also have facilities such as a recreation centre, gymnasium, cafe, basketball court, indoor and outdoor swimming pools and themed gardens. The first batch of 270 units will be ready for sale in the third quarter of 2010.

VivoCity@Nanhai, the four-storey retail mall, will have about 100,000 sq metres of gross floor area. Mapletree said the mall will incorporate the 'successful attributes' of its VivoCity shopping mall in Singapore.

The entire Nanhai Business City will cover more than 35 ha and will be developed in four phases over the next five to eight years.

'Our investment in Nanhai Business City underscores the importance of South China as an investment location for Mapletree, particularly, the Nanhai district in Foshan City,' said Mapletree chief executive Hiew Yoon Khong.

He said Mapletree is evaluating several other suitable investments in China and India for its US$1.16 billion Mapletree India China Fund, which was set up to fund the group's expansion in these countries.

Team Marshe
Martin Koh/ Sherry Tang
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Business Times: Laguna Park en bloc sale called off

November 19, 2009
Laguna Park en bloc sale called off
Over at Meyer Place, owners to start inking deal soon to lower reserve price

(SINGAPORE) The en bloc sale of Laguna Park has been called off for now as the sales committee found it a race against time to get the minimum consent level from owners at a proposed lower price - said to be $967 million or $704 psf per plot ratio, down from the original $1.2 billion or $844 psf ppr reserve price - before the Collective Sale Agreement (CSA) expires next month.

But over at Meyer Place, owners will soon begin signing a supplemental agreement to their original CSA at a lower price of $59 million, down from the original $65 million. BT understands the sales committee is expected to sign an agreement soon for the freehold property's sale to a joint venture involving property and construction companies - subject to securing at least 80 per cent consent from owners at the lower price.

Meyer Place's CSA expires around mid-March 2010.

'The tender for Meyer Place closed on Oct 28 with four expressions of interest received and we are now negotiating with one of these parties,' says Christina Sim, director, investment, capital markets at Cushman and Wakefield, the marketing agent for the property.

The lower proposed reserve price of $59 million works out to $1,048 psf ppr including an estimated $3 million development charge (DC), down about 9 per cent from the $1,150 psf ppr based on the original $65 million reserve price.

Based on the revised price, the breakeven cost for a new development on the site could be $1,550 to $1,600 psf.

Laguna Park's sales committee decided to call off the estate's en bloc sale last week. 'While it did begin the process of getting owners to sign a supplemental agreement to lower the reserve price, the committee felt it was a race against time as the existing CSA expires next month,' said Karamjit Singh, managing director of Credo Real Estate, the marketing agent for the property.

Laguna Park comprises 528 units.

'It would probably be better if owners begin a fresh en bloc initiative next year and sign a fresh CSA which will give them a new 12-month period to find buyers,' Mr Singh said.

Laguna Park, which has a land area of 677,463 sq ft, failed to find a buyer after its tender closed last month. Although two bids were submitted, no buyer made the downpayment to seal the $1.2 billion deal at the time. Mr Singh said yesterday that although signing of a supplemental agreement at the lower price had started last month, so far no conditional agreement had been inked with any potential buyer for a sale at the lower price.

The unit land price of $704 psf ppr based on the revised $967 million price tag includes payment to the state to intensify the site's use and top up its lease to a fresh 99-year term.

Meyer Place has a freehold land area of 28,167 sq ft and was completed in the early 1990s, comprising 28 apartments - 24 units in a 13-storey block and four in a conservation house.

The property is zoned for residential use with a 2.1 plot ratio - the ratio of maximum potential gross floor area to land area.

Although Meyer Place is a relatively new development, it has redevelopment potential as its plot ratio in the 2008 Master Plan has not been fully utilised. 'The apartment block could be torn down and rebuilt into smaller units,' said Cushman's Ms Sim.

Market watchers point out that the buyer of Meyer Place could also seek to enlarge the plot by purchasing surrounding properties. Just in front of Meyer Place, at No. 40 Meyer Road, is a small apartment block with a site area of about 6,000 sq ft. There is also another plot behind Meyer Place housing two old bungalows at 18D and 18E Fort Road - adding up to more than 20,000 sq ft of land - that could potentially be purchased and amalgamated.

Last month, Roxy-Pacific signed an agreement to buy Dragon Mansion for $100.8 million or $863 psf ppr including DC - lower than the owners' previous asking price of $120 million or $1,020 psf ppr. Signing by owners of a supplemental agreement to the original CSA at the revised price is still in progress. The majority owners have up to January next year to make an application for a collective sale to the Strata Titles Board.

Team Marshe
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Business Times: Australia property market less attractive

November 19, 2009
Australia property market less attractive
High taxes, rapid asset price recovery to blame, says LaSalle CIO

(SYDNEY) High taxes and a rapid asset price recovery have made the Australia property market less compelling for funds seeking high returns, with more attractive options in Japan and Singapore, according to a top executive of LaSalle Investment Management. 

Ian Mackie, LaSalle's chief investment officer for Asia-Pacific, told Reuters in an interview that the Australian government's plan to cut withholding tax for foreign investors is a much-needed step to bring it into line with other regional countries. 

'The tax situation puts, in my opinion, Australia at somewhat disadvantage when comparing with other countries in the region,' Mr Mackie said, 'because the after-tax result of the investment is penalised harder in Australia than it is in Japan, Korea, Hong Kong or Singapore.'

The Australian government plans to cut the tax next July to 7.5 per cent from 30 per cent. Elsewhere in Asia, the tax rates range from 5 to 10 per cent. 

Mr Mackie said that the speed of the recovery in Australian property prices compared to those in other countries meant limited opportunities for high-return investors, while a strong Australian dollar is also an obstacle because it has boosted hedging costs. 

'We still see opportunities here but the pricings recovered so much faster. They didn't go down as much as another countries did and recovered much faster,' he said. 'Maybe for us in Australia, the window is closing faster.'

Prices for Australian office buildings were less than 20 per cent lower than a year ago in the second quarter, while those in Singapore and Tokyo were still down more than 30 per cent. Office vacancies in Australia are also stabilising. 

LaSalle Investment Management, the investment arm of real estate services firm Jones Lang LaSalle, has US$3 billion available to invest in Asia after raising an opportunity fund last year, and Mr Mackie said that most of the funds have not been deployed yet. 

Jones Lang's chief financial officer, Lauralee Martin, told Reuters in an interview last week that its Asian business will drive growth next year as the region powers a global economic recovery. 

Mr Mackie said that he sees some opportunities in suburban retail assets in Singapore and in the logistic sector in Japan. In particular, Japan offers handsome spreads between low borrowing costs and yields on buildings. 'You've got 300 basis points of difference, which substantially leverage up the returns.'

He said that Singapore, as well as Thailand and Hong Kong, has seen sharper declines in property values, creating better chances to outperform Australian properties. 

Team Marshe
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Business Times: Frasers launches 2nd property in Scotland

November 19, 2009
Frasers launches 2nd property in Scotland
Fraser Suites Edinburgh is its 12th project in Europe

(SINGAPORE) Frasers Hospitality said yesterday it has launched Fraser Suites Edinburgh, its second property in Scotland and 12th in Europe.

The inner-city property, which has 75 suites, is in St Giles Street, just off Edinburgh's famous Royal Mile. 

The project features a restored 130-year-old facade plus contemporary interiors and services. Some original features retained in the Grade B-listed building include high ceilings and ornate cornices.

Frasers Hospitality' s chief executive Choe Peng Sum said: 'The experience of developing Fraser Suites Edinburgh has given us valuable insights into the potential of bringing historic buildings back to life for a whole new generation of business and leisure travellers.'

A Frasers statement yesterday said the opening of its latest project caps a record growth year. So far this year, the group has opened 740 individual serviced residences in six countries.

Frasers' first project in Europe was Fraser Suites Kensington which opened in 2007. Today, it owns and manages eight properties in key locations in London, two in Paris, including one on the Champs Elysees, as well as Fraser Suites Glasgow.

For 2010, Frasers said it expects to achieve another record year, including debuts in new markets such as India and Budapest and the opening of new properties in the existing markets of Japan and China.

Frasers' global footprint currently extends across North Asia, Southeast Asia, Europe, the Middle East and Australia. Another 5,655 residences are on the drawing board and the company expects to have more than 10,600 residences in its portfolio by end-2012. 

Team Marshe
Martin Koh/ Sherry Tang
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Business Times: Blueprint to boost interior design sector

November 19, 2009
Blueprint to boost interior design sector
Trade group lays out plans to raise standards in the industry

(SINGAPORE) Interior design is not just about running after contractors or drawing layouts - and an association believes it is time to hammer out higher standards for the industry here.

'I probably didn't draw a living room for 20 years,' says Nicholas Merrow-Smith, client manager at Davenport Campbell (Singapore) who became president of the Interior Design Confederation Singapore (IDCS) in April.

And he wants to show that interior designers can do more. IDCS hopes to raise the level of innovation in the industry and has several suggestions on how this can be done.

Among its initiatives are an accreditation scheme for interior designers, a professional development programme and more collaborations with foreign design firms or other design disciplines.

The proposals have won the support of some practitioners in the wider design industry. Singapore Institute of Architects president Ashvinkumar Kantilal is one who thinks that IDCS is heading in the right direction. 

'The (interior design) industry needs to self-regulate and widen the members' knowledge base,' he says, suggesting skills upgrading programmes in the form of courses and seminars.

Financially, the interior design industry is in fine shape, with plenty of work. But according to Mr Merrow-Smith, it lacks creativity and diversity, and this is especially clear when it is seen against its foreign counterparts. 

He cites an example - interior design firms here tend to focus on traditional real estate, while those overseas can be multi-disciplinary, even taking on projects such as theatre design.

And interior designers abroad are going into research, he adds. For example, there are studies on how the design of office space can get employees to buy into their companies' values.

'What we're trying to do is to show people that the design portfolio is much wider,' says Mr Merrow-Smith. And if design firms raise their standards, there is also a chance for them to secure better work, he adds. 

IDCS is kicking off its efforts with a conference this month, called Design Value: Beyond the Tangible, to highlight how design can be a strategic tool. 

It will be attended by players from global firms such as Gensler and Hassell, who will share their experience of how workplace and leisure space designs can influence people's performance and behaviour.

In the longer term, IDCS will try to facilitate partnerships between interior design outfits and other design industries such as architecture.

DP Architects director Tai Lee Siang trusts that greater collaboration among the various design sectors will help strengthen the Singapore brand of design.

IDCS also hopes to set up a professional development programme by the middle of next year. With the course, interior designers can undergo continual training and conduct industry-related research.

The next - and tougher - step would be to establish an accreditation programme for interior design firms. There is no such assessment system in place now. 'Some firms do very good work, but it's certainly not across the board,' Mr Merrow-Smith says.

Some interior design firms see benefits from accreditation. The group managing director of Nota Group, Ong Sheng Keat, reckons: 'In Singapore, a large proportion of the market is dominated by business-minded contractors or decorators who see the profession as another form of trade mainly due to the lack of enforced certification' .

Altered Interior director Thierryson Chua also supports accreditation for firms in the industry, but believes a scheme could be more effective if the government was involved. If IDCS oversees the scheme, it will have to be 'super active' in organising events and attracting members, he says.

IDCS could not disclose its membership size because an auditing session is under way. But Nota Group's Mr Ong says IDCS has been seen as exclusive and inclusive - 'exclusive in the sense that it only admits genuine practising interior design professionals as members, yet inclusive because it will attempt to convert the non-professionals' .

IDCS is aware of the hurdles to implementing its plans and it is getting help from the government. For instance, it has secured funding capped at $435,000 over three years.

The association also spoke to representatives from about 50 interior design firms and related companies. According to Mr Merrow-Smith, they are supportive of its initiatives.

'We don't expect the whole industry to step up,' he says. But 'we'd like to see a core body of people who are serious about pushing the envelope, innovating, and doing things differently' .

Team Marshe
Martin Koh/ Sherry Tang
93833992/ 98444400

Business Times: China faces asset-bubble risk: central bank adviser

November 19, 2009
China faces asset-bubble risk: central bank adviser
Low interest rates, weakening dollar, capital inflows add to dangers, he warns

(HONG KONG) China is among the emerging markets facing risks of property and commodity market bubbles, central bank adviser Fan Gang said, joining officials from the region in expressing concern about surging asset prices. 

'The real risk is really asset bubbles,' Mr Fan, who heads the National Institute of Economic Research, said at a business conference in Hong Kong on Tuesday.

A 'Chinese asset bubble would be something very dangerous, that would cause the overheating' elsewhere as well, he said. 

Low interest rates sustained by the US Federal Reserve, a weakening dollar and capital inflows to emerging markets have added to the dangers, Mr Fan said. He becomes the latest voice indicating that the seeds of the next financial crisis may be being laid in Asia in the wake of liquidity injections by the world's central banks. 

'When there is too much money around looking for good opportunities and emerging markets are the only places where growth is happening, over liquidity will lead to asset bubbles in equities, real estate and commodities, ' Mr Fan said. 'That's something we really need to watch.'

Emerging economies 'might overheat and experience financial turmoil', Bank of Japan governor Masaaki Shirakawa said in Tokyo on Nov 16.

Liu Mingkang, China's top-banking regulator, said the day before that low US interest rates and the dollar's depreciation present 'new, real and insurmountable risks to the recovery of the global economy'.

A 'double-digit' economic growth rate wouldn't be good for China, Mr Fan, the academic member of the People's Bank of China's monetary policy committee, told property developers at the Hong Kong conference. Gross domestic product (GDP) may be able to climb 8 per cent to 9 per cent next year, he also said. 

China's government has encouraged a US$1.3 trillion credit boom this year, helping growth accelerate while at the same time aiding an 81 per cent climb in the Shanghai Composite Index of stocks. 

China's economy grew 8.9 per cent in the third quarter from a year earlier, the fastest pace in a year, as stimulus spending and record lending growth helped the nation lead the world out of recession.

The median projection of economists surveyed by Bloomberg News is for GDP to jump more than 10 per cent in the final three months of 2009. 

Mr Fan said that while the Chinese property market isn't 'crazy', there is excessive speculation. High savings are fuelling that speculation, Mr Fan said, urging consideration of taxes on luxury properties. Levies are important to balance demand, he said. 

China's southern city of Shenzhen is 'a pioneer' by introducing a property tax, Mr Fan said. The average sale price of Shenzhen homes exceeded 20,000 yuan (S$4,050) a square metre in September, a record high, Huang Yu, executive vice-rector at China Index Academy, said at the same conference yesterday. In Beijing, the price was about 14,700 yuan a square metre, she said.

The academy compiles real estate data, including the China Real Estate Index System. 'In the next 10 years, there will be demand for 1.2 billion to 1.4 billion square metres of homes a year,' she said.

The total area of homes sold this year may reach 900 million square metres, from 600 million square metres in 2008. 

Home prices in 70 major Chinese cities climbed 3.9 per cent from a year earlier in October, the most in 14 months, the government reported on Nov 10. 

Consumer-price inflation isn't likely in coming months, with stable food prices providing a restraint, Mr Fan also said. 

He said China must continue its stimulus measures in 2010 to sustain growth, even as he rejected the prospect of a double-dip slowdown in the expansion. The United States may see a renewed slump, he also said. 

China should maintain a 'moderately loose' monetary policy next year as government stimulus wanes and private investment and external demand remain weak, the State Information Centre said on Nov 16. 

Team Marshe
Martin Koh/ Sherry Tang
93833992/ 98444400

Business Times: Property tax rebate for HDB owner-occupiers

November 19, 2009
Property tax rebate for HDB owner-occupiers
Set at 50% of tax payable, it is capped at $120; zero tax for one and 2-room HDB owners

THE government will grant a new property tax rebate to all HDB owner-occupiers next year to help them adjust to the increase in annual values (AVs).

The Inland Revenue Authority of Singapore (Iras), which reviews the AVs of all properties, did not revise AVs for HDB flats on Jan 1 this year, given the uncertainty in market rental trends due to the recession.

HDB rentals have since stabilised after a moderate decline and have begun to rise. As a result, current values of HDB rentals, as well as HDB resale prices, are significantly higher than 2007 levels. Iras will therefore revise the AVs of all HDB flat types from Jan 1, 2010. The last AV revision for HDB flats was done last year, based on rental values in 2007. 

The new rebate granted to HDB owner-occupiers will apply to property tax payable next year after deducting the 1994 GST Rebate, which is available to all residential property owner-occupiers.

The new rebate is set at 50 per cent of the payable property tax and is capped at $120. To provide additional help to owner-occupiers of smaller HDB flats, the rebate will be the lower of $50 or the actual property tax amount.

With the new property tax rebate for HDB owner-occupiers and the ongoing 1994 GST Rebate, all one and two-room HDB owner-occupiers will continue to pay zero property tax next year.

For average three-room HDB owner-occupiers, the increase in property tax next year, after deducting the special rebates, will be $72 for the year. For four-room HDB owner-occupiers, the average tax increase will be $97 for the year and for five-room HDB owner-occupiers, the average tax increase will be $107 for the year as a whole. For executive HDB owner-occupiers, it will be $103.

Owners of HDB flats will receive their valuation notices and property tax bills by Jan 1 next year. Property tax for 2010 is payable by Jan 31 next year.

Iras encourages HDB flat owners to use the Giro payment scheme to enjoy up to 12 interest-free monthly instalments. Application forms can be downloaded from www.iras.gov. sg.

Team Marshe
Martin Koh/ Sherry Tang
93833992/ 98444400

Business Times: GuocoLand sells office block for 1b yuan

November 19, 2009
GuocoLand sells office block for 1b yuan
Buyer of Shanghai development is area's district govt

MALAYSIAN tycoon Quek Leng Chan's Singapore unit GuocoLand has inked a deal to sell a 24-storey office tower being built in Shanghai's Putuo District for one billion yuan (S$202.6 million) to a state-owned enterprise of the area's district government.

As the physical completion of the building and the completion of the transaction are expected to take place in May next year, profit from the sale is likely to be booked in the fourth quarter of the group's current financial year ending June 2010. GuocoLand did not specify the profit quantum.

The office tower is being developed under the first phase of the Guoson Centre Changfeng, which is being built on a 50-year leasehold site that the group picked up in 2005 for 1.4 billion yuan.

Besides the office block, the other components of the project's first phase are 354 small office, home office (Soho) units, a mall, a 443-room hotel and 347 serviced apartments.

The first phase is slated for completion next year.

The project's second phase will see another three office towers and additional retail space being developed.

Guoson Centre is located at the Changfeng Ecological Business District in Shanghai's Putuo District, at the intersection of three primary economic zones - Hongqiao, Gubei and Zhongshan Park.

GuocoLand sold the office block to Shanghai Putuo District State Asset Management Co. The latter's vice-general manager, Zhao Yongsheng, noted that the Changfeng Ecological Business District, with a total planning area of two million square metres of office space, is a major business hub for priority development in Shanghai.

The company decided to buy the office tower from GuocoLand 'as part of our real estate portfolio, in line with the Putuo District Government's ongoing efforts to attract large domestic and multinational corporations to set up their headquarters in Changfeng Ecological Business District'.

GuocoLand posted net profit of $12.4 million for the first quarter ended Sept 30, 2009, against a $2.8 million net loss in the same year-ago period.

Gross profit was driven largely by contributions from property development projects in China. 

Team Marshe
Martin Koh/ Sherry Tang
93833992/ 98444400

Business Times: MI-Reit manager hits out at rival CIT's proposal

November 19, 2009
MI-Reit manager hits out at rival CIT's proposal
Subordinated loan likely more pricey than MI-Reit's cost of equity

THE battle for control of MacArthurCook Industrial Reit (MI-Reit) continued yesterday with MI-Reit's manager Nicholas McGrath slamming a rival proposal from Cambridge Industrial Trust (CIT) as 'entirely ingenuous'.

MI-Reit is asking unitholders to approve next Monday a $430 million rescue package involving a share placement to 'cornerstone' investors, a rights issue, and $215 million in new loans.

The troubled Reit needs the money to refinance $226 million in loans and meet a $90 million obligation to buy the 1A International Business Park (IBP) property, both by the end of the year.

But CIT, which bought a 9.76 per cent stake in MI-Reit after the announcement of the rescue package and is angling to take over management of MI-Reit, said the recapitalisation exercise destroyed value for unitholders as the discount to net asset value was too steep.

Non-sponsor existing unitholders post-transaction would be left with just 40 per cent of total holdings, CIT said, from over 70 per cent at present.

It is instead proposing itself as manager of MI-Reit and has pledged an 'initiative to take advantage of an enlarged pool of assets to benefit all investors', Chris Calvert, chief executive officer of its manager, said on Tuesday.

He said MI-Reit investors would benefit from access to a subordinated loan facility which CIT holds, and which it could use to fully pay off its $90 million obligation to buy the IBP property.

But in an interview yesterday with BT, Mr McGrath said a subordinated loan would likely be more expensive than MI-Reit's cost of equity and much higher than the 350 to 450 basis points over Sibor that it will pay for its negotiated term loan.

Mr McGrath added that MI-Reit's aggregate leverage would increase, while CIT, with just $13 million in cash, has little debt overhead to increase its own gearing. 'Any which way you put it, they will need to do capital raising and so far they've said nothing about that,' he said.

He admitted that an orderly sale of MI-Reit's assets - which has been suggested in some quarters, as its units are trading far below net asset value - might realise close to market value, or about 90 cents per unit. 'But I'm entirely uncomfortable with losing control of the process,' Mr McGrath said, adding that if creditors force a quick firesale, investors might be left with nothing. 

The steep discounts were necessary because the Reit had to urgently raise a minimum of $125 million - twice its market capitalisation in June - to rebalance its capital structure so that it could take on new loans, Mr McGrath said.

In a report released on Tuesday, Phillip Securities analyst Lee Kok Joo said that whatever the outcome of the extraordinary general meeting on Monday, 'the risk is more on the part of CIT unitholders rather than MI-Reit unitholders' but said the proposal opens up the possibility that MI-Reit unitholders' stakes would not be heavily diluted.

According to its calculations, MI-Reit offers a potential FY2011 distribution per unit (DPU) of 1.89 cents, which translates into a dividend yield of 11 per cent based on the rights price of 15.9 cents, if the proposed transactions go through. 'For investors who are not keen, we maintain our 'sell' recommendation, ' Phillips said.

Team Marshe
Martin Koh/ Sherry Tang
93833992/ 98444400

Business Times: CIMB seeks to set up private real estate funds here

November 19, 2009
CIMB seeks to set up private real estate funds here
Forms JV with S'pore firm to invest in Aussie property

(SINGAPORE) The real estate division of Malaysia's CIMB Group is looking to set up private real estate funds in Singapore to invest in Australian property.

CIMB has formed a joint venture with Singapore-based TrustCapital Advisors - CIMB-TrustCapital Advisors Singapore, or CIMB-TCA - which is now raising equity to invest in office properties in Melbourne and Sydney.

TrustCapital Advisors' managing director Chris Cheah told BT the target is for the JV to grow total assets under management in Australia to A$3 billion (S$3.87 billion) in five years. Several funds will be set up and at least one will be listed, he said.

Mr Cheah owns 50 per cent of TrustCapital Advisors, which has a 30 per cent stake in CIMB-TCA. The remaining 70 per cent is owned by CIMB Real Estate.

With the setting up of CIMB-TCA, Singapore has become CIMB's international headquarters for private real estate funds outside Malaysia. The group has another JV, with Singapore's Mapletree Investments, to run its Malaysia-focused private real estate funds.

For this newest JV, CIMB will provide A$20 million of seed money. The JV company will tap CIMB's private and investment banking units to raise equity for its funds, Mr Cheah said.

The first fund CIMB-TCA sets up will target completed office buildings in Australia. Mr Cheah said Australia was picked as the first market to enter because it is 'safe'.

'If you look at the global economies right now, I think the Australian economy is one of the strongest,' he said. Occupancy rates for Australian office space stand at more than the 90 per cent generally. And the market also provides good returns - broadly speaking, office buildings offer yields of 7 per cent or more per year, said Mr Cheah.

He is also very familiar with the Australian market - as the former head of property for Australia's ANZ bank. His partner David Tan, who owns the remaining 50 per cent of TrustCapital Advisors, is the former CEO of APL Japan Trust and led Singapore-listed CapitaCommercial Trust before that.

CIMB Group is Malaysia's second-largest financial services group.

Team Marshe
Martin Koh/ Sherry Tang
93833992/ 98444400