Thursday, April 29, 2010

Straits Times: Bid too high, so Beijing cancels land auction

Apr 29, 2010 
Bid too high, so Beijing cancels land auction 

BEIJING: A land auction in Beijing was cancelled after bidding exceeded a price ceiling set for the lot, as the Chinese government expands efforts to rein in the nation's property market. 

The highest price bid for the Beijing lot, zoned for residential development, at the auction on Monday was 4,718 yuan (S$950) per sq m, exceeding the 4,700 yuan per sq m limit set by the government, the Ministry of Land and Resources said on its website yesterday. 

The ministry's Beijing branch said it began setting limits on the price of land this month on a trial basis.

'Imagine a seller refuses your business because he thinks you are paying too much for his products,' Bank of America-Merrill Lynch analysts wrote in a report distributed yesterday. 

'It demonstrates the type of pressure the central government is putting on local officials to get the property market right this time; this increases the risk of potential overshooting in the property market crackdown.'

China began requiring developers to pay higher deposits for land purchases last month, and banned banks from lending to developers found to be hoarding land, as Premier Wen Jiabao pledged to crack down on real estate speculation and keep housing affordable.

Property prices in 70 Chinese cities gained a record 11.7 per cent last month compared with prices a year earlier. 

The average price of land in 105 Chinese cities rose 8.1 per cent in the first quarter from the price a year earlier, to 2,700 yuan per sq m.

The ministry's Beijing branch this month began limiting how much land developers may buy. 

Videos will also be taken of land auctions, notary personnel will observe the bidding, and contracts between Beijing's land bureau and developers for purchases of lots will be made public, according to the statement.

China's property stocks have plunged 20 per cent this year, making them the worst performers among

major industry groups after Beijing began clamping down on the property market.

China will place a moratorium on capital raising by real estate firms as part of a broader campaign to rein in property price rises, state media reported yesterday.

The move could stand in the way of about 110 billion yuan in share issues planned by 45 companies, unnamed sources close to the China Securities Regulatory Commission told the China Daily.

The suspension will allow the Ministry of Land and Resources to examine whether companies have used illegal methods to manipulate market prices, the newspaper said.



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Business Times: Sunrise may inject some assets into Reit

April 29, 2010
Sunrise may inject some assets into Reit
It has no plans to enter markets of Vietnam and China

(KUALA LUMPUR) Malaysian property developer Sunrise may consider injecting some of its property assets into a real estate investment trust (Reit) as they begin to deliver stable income, its executive chairman said. 

'We have invested considerably in a pool of investment assets over the last few years, which are now starting to bear fruit,' said Tong Kooi Ong. 

Sunrise, ranked ninth by market value among listed Malaysian developers, may consider a Reit 'at a later stage', Mr Tong said in an e-mail interview. 

This month, larger rival Sunway City said that it will inject eight retail properties into a Reit in a deal that bankers said may raise up to RM1 billion (S$429 million) for the company. 

Reits mainly invest in commercial property and pay most of the rent to shareholders as dividends, which are usually higher than yields of government bonds and offer capital gains if property prices rise. 

Mr Tong, a former banker and stockbroker, said that Sunrise has not yet planned to enter the fast-growing markets of Vietnam and China. 

'For the medium term, our overseas focus will be on Canada. We do not have plans for the moment to venture into Vietnam or China,' he said. 

Later this year, Sunrise plans to launch two projects - an office tower project in the Malaysian capital, as well as a residential project in Vancouver, Canada, Mr Tong said. 

Malaysian property developers, such as SP Setia and Gamuda, have embarked on multi-billion ringgit developments in Vietnam to tap rapid growth. Sunway City has formed property joint ventures in fast-growing China and India. 

Malaysian developers expect higher sales from home this year as the economy rebounds from last year's downturn. The stock market rally in 2009, which saw the benchmark share index jump nearly 40 per cent, is expected to further boost house buyers. 

Malaysia is one of the first in Asia to withdraw crisis measures when the central bank raised its key policy rate by 25 basis points to 2.25 per cent in March. Most economists expect more hikes later this year. 

Sunrise shares trade at 6.57 times 2010 earnings, compared with Sunway City's 10.61 times, IJM Land's 24.98 times and Gamuda's 20.31 times, according to Thomson Reuters I/B/E/S. 

Sunrise shares have risen 6.8 per cent so far this year, outpacing the 5.6 per cent gain in the property sector index . 



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Business Times: JLL S'pore posts 27% rise in Q1 revenue

April 29, 2010
JLL S'pore posts 27% rise in Q1 revenue
Managing director says S'pore business in good position for the year ahead
By KALPANA RASHIWALA 

(SINGAPORE) The improving Jones Lang LaSalle Singapore has reported a 27 per cent year on year increase in revenue for the first three months of this year.

Chris Fossick, managing director Singapore and South East Asia, said: 'The Singapore business is in a good position for the year ahead due to the strong performance of our residential project sales, office leasing, investment sales and property and asset management divisions.

'Our newly-formed Singapore residential project sales team is capitalising on the increased demand for luxury residential real estate in Singapore, and during Q1, secured marketing appointments for high-end projects including The Holland Collection, The Marina Collection and Centennia Suites,' he added.

JLL has also been able to ride on the strong recovery in the Singapore office market, retaining marketing agency appointments on the majority of the choicest office developments under construction. 

The firm's investment sales unit too has clinched a number of appointments for collectives sales this year. 'Considering that government efforts to streamline this process are under discussion, we expect to see further en-bloc activity this year,' he added.

'Following on from a remarkable performance in 2009, the property and asset management team added more than one million sq ft of space to their portfolio in a fiercely competitive market, a testament to the teams' trusted service delivery model,' Mr Fossick notes.

JLL's revenue in the Asia-Pacific region was US$136 million in Q1 2010, a 29 per cent rise from US$105 million for the same period last year. The region's earnings before interest, taxes, depreciation and amortisation for Q1 2010 was US$9 million, against a loss of US$1 million in the same year-ago period.

'Economic forecasts in the Asia-Pacific region are upbeat and recovery in the business environment is filtering through to real estate . . . however, there are concerns about inflationary pressures, particularly in the residential market, which has prompted anti-speculative measures like the introduction of a stamp duty for sellers in Singapore,' said Mr Fossick.

On Tuesday, NYSE-listed Jones Lang LaSalle Incorporated reported net income (on US GAAP basis) of US$246,000, or one US cent per share in Q1 2010. In Q1 2009, it had chalked up a net loss of US$61.5 million, or US$1.78 per share.

'Net income in the first quarter (of 2010) benefited from continued momentum from the fourth quarter of 2009 and the transition to a more variable compensation structure in a number of the firm's transactional businesses,' JLL said in its news release issued on Tuesday out of Chicago.

The firm's adjusted ebitda was US$37 million for Q1 2010, up from US$11 million in the same year-ago period. Revenue rose 18 per cent year on year to US$581 million.



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Business Times: Beijing land sale scrapped as bid tops set ceiling

April 29, 2010
Beijing land sale scrapped as bid tops set ceiling

(SHANGHAI) An auction of land in Beijing was cancelled after bidding exceeded a price ceiling set for the lot as the Chinese government expands efforts to rein in the nation's property market.

The highest price bid for the Beijing lot, zoned for residential development, at the auction on Monday was 4,718 yuan (S$945) per square metre, exceeding the 4,700 yuan per square metre limit set by the government, the Ministry of Land and Resources said on its website yesterday.

The ministry's Beijing branch said it began setting limits on the price of land this month on a trial basis.

'Imagine a seller refuses your business because he thinks you are paying too much for his products?' Bank of America-Merrill Lynch analysts led by David Cui wrote in a report distributed yesterday. 'It demonstrates the type of pressure the central government is putting on local officials to get the property market right this time; this increases the risk of potential overshooting in the property market crackdown.'

China began requiring developers pay higher deposits for land purchases last month and banned banks from lending to developers found to be hoarding land as Premier Wen Jiabao pledged to crack down on real-estate speculation and keep housing affordable. Property prices in 70 Chinese cities gained a record 11.7 per cent in March from a year earlier.

The Beijing branch of the land ministry this month began limiting how much land developers may buy, according to a statement posted to its website on April 21. Video will also be taken of land auctions, notary personnel will observe the bidding, and contracts between Beijing's land bureau and developers for purchases of lots will be made public, according to the statement.

Separately, the land ministry's Shanghai bureau said on Tuesday it had postponed the auctioning of four land plots previously scheduled for yesterday to May 7, citing a 'technical hitch.' The average price of land in 105 Chinese cities rose 8.1 per cent in the first quarter from a year earlier to 2,700 yuan per square metre, Minister of Land and Resources Xu Shaoshi said last week.

China's property stocks have plunged 20 per cent this year, making them the worst performers among major industry groups. China Vanke, the nation's biggest publicly traded developer, has fallen 28 per cent this year compared with a 12 per cent drop in the benchmark Shanghai Composite Index.

Regulators have halted share sales by property developers to give the Ministry of Land and Resources the chance to investigate if companies manipulated market prices, the China Daily reported yesterday, citing an unidentified source close to the China Securities Regulatory Commission.

Beijing will be issuing policies limiting how many homes residents of the city are allowed to buy, the Shanghai Securities News reported yesterday. The city will also 'basically' stop loans for the purchase of third homes. 



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Business Times: China suspends capital raising by property firms

April 29, 2010
China suspends capital raising by property firms
Moratorium may block 110b yuan in share issues planned by 45 companies

(BEIJING) China will place a moratorium on capital raising by real estate firms as part of a broader campaign to rein in property price rises, state media reported yesterday.

The move could stand in the way of about 110 billion yuan (S$22 billion) in share issues planned by 45 companies, unnamed sources close to the China Securities Regulatory Commission told the China Daily.

The suspension will allow the authorities to examine whether companies have used illegal methods to manipulate market prices, the newspaper said.

Beijing, wary about the risks of an asset bubble, has been trying to cool the real estate market, raising mortgage rates and down payment requirements for second homes and pushing local governments to control speculative buying.

Those steps complement general efforts to prevent the economy from overheating as it fully regained its momentum with the help of booming credit and grew nearly 11.9 per cent in the first quarter from a year earlier, the fastest since 2007.

China's banking regulator has also issued new guidelines to make it harder for property developers to obtain funding from trust companies, the 21st Century Business Herald quoted an unnamed executive at a trust company as saying.

Real estate firms seeking loans from trust firms must meet the minimum capital requirement and provide proof of their qualifications for developing a project, the newspaper said.

This would represent a clarification and tightening of rules governing the financing relationship between trust firms and property developers. Real estate firms have been turning to trust companies because they have looser capital requirements than banks.

Share prices of Chinese property firms have tumbled over the past week, dragging down the main stock index in Shanghai to its lowest level in more than half a year.

But the formation of a property bubble in China has become one of the major risks to sustainable economic growth, the Development Research Centre, a think-tank under the State Council, said yesterday.

In its report, published in the China Economic Times, it said that steps taken in recent months by the government had not yet succeeded in tamping down on surging property prices.

'If the controls are not forceful, with our country's growth and development clearly outstripping that of other countries, hot money inflows will quicken and excessive domestic liquidity will increase, progressively inflating asset bubbles,' it said. 



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Business Times: Sands eyes US$12 billion from sale of Macau assets

April 29, 2010
Sands eyes US$12 billion from sale of Macau assets
CEO raises Marina Bay Sands forecast, investment to be recouped in 5 years

(SINGAPORE) Las Vegas Sands Corp chairman Sheldon Adelson said that the planned sale of the casino operator's Macau malls and apartments may raise as much as US$12 billion and recoup their construction costs.

'It will be like US$12 billion if we add up all the apartments and all the retail in Macau,' including those in buildings still under construction, Mr Adelson, the founder and chief executive officer of Las Vegas Sands, said in an interview in Singapore on Tuesday. The company may start selling the Macau assets within 21/2 years, he said.

Sands, which Adelson describes as 'an Asian company with a presence in Las Vegas and the US', gets 73 per cent of its revenue from Macau, the world's largest gambling market. He was in Singapore on Tuesday to open the first phase of Marina Bay Sands, and raised his earnings forecast for the resort, saying that the US$5.5 billion invested in it will be recouped in five years.

Sands' casino resort on Tuesday opened 963 of its 2,560 hotel rooms, the casino, the meeting and convention facilities, parts of its shopping mall and some restaurants. A grand opening party will be held on June 23 when the second phase is unveiled, including a sky park, additional shops and more restaurants.

Asia will contribute 85 per cent of revenue once the Singapore casino 'ramps up', said Mr Adelson. Last year's sales totalled US$4.56 billion, with 27 per cent coming from Las Vegas, where the company is based.

Macau assets that Sands may sell include the Four Seasons apartments and shopping areas in the Venetian Macau casino resort and in the Four Seasons hotel, Mr Adelson said. The plan also includes selling condominiums at the St Regis, where construction is resuming.

'That is our fundamental business model - we get our money back from the sale of non-core business assets,' he said.

Still, Jonathan Galaviz, an independent strategist who follows travel and leisure in Asia, said that apartments and malls in Macau may be a tough sell to investors, given that the city isn't a proven place for housing investment, and that a huge asset bubble may be developing in Asian real estate.

'Second-home buyers in Asia tend to have an affinity for beach and costal destinations, so Macau's proposition will need to be unique in order to compete,' Mr Galaviz said in an e-mail. As for malls, 'the average length of stay for Macau's average tourist - around one night - doesn't yet lend itself to a strong and dynamic retail opportunity' . 

Sands fell US$1.51, or 5.8 per cent, to close at US$24.69 on the New York Stock Exchange composite trading on Tuesday. The stock has gained 65 per cent this year. 

Mr Adelson, who is Sands' controlling shareholder, said in December that selling the retail areas at the Four Seasons and the Venetian would raise enough money to pay Sands' debt. The company has US$12.2 billion of bonds and loans due from next year to 2015, according to data compiled by Bloomberg.

The billionaire, who previously said that the Singapore project would add more than US$1 billion in annual earnings before interest, tax, depreciation and amortisation, didn't provide a new figure apart from saying that he was raising his forecast. The return period compares with four years for the Macau project, which cost about half as much to build, Mr Adelson said.

The Marina Bay Sands in Singapore will be a 'grand slam home run', Mr Adelson said. 'Asian people just love to gamble.'

Singapore aims to lure 17 million visitors and triple annual tourism revenue to S$30 billion (US$22 billion) by 2015, helped by two casino resorts, Marina Bay Sands and Genting Bhd's Resorts World Sentosa.

The Marina Bay Sands casino, which makes up about 3 per cent of the 15,000 sq m resort, has about 600 table games and more than 1,500 slot machines.

Asia has room for five to 10 cities like Las Vegas, Mr Adelson said. The most likely countries to approve casinos in the region are Japan and Taiwan, he said. 



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Business Times: CapitaLand unveils key management changes

April 29, 2010
CapitaLand unveils key management changes
Move aimed at strengthening next level of leadership
By KAREN NG 

CAPITALAND has announced key management changes, a move that the developer says is aimed at strengthening the group's next level of leadership.

For its retail business, the group has appointed Tony Tan Tee Hieong as deputy CEO of CapitaRetail China Trust Management Limited (CRCTML), effective April 23. Mr Tan, who joined CapitaLand in 2007, retains his current position as CRCTML's head of finance. He was a key member of the CRCTML team responsible for the Reit's equity fund raising and acquisition of Xizhimen Mall in Beijing in 2008.

He also has over 17 years of experience in international treasury, finance and risk management.

At CapitaMalls Asia (CMA), Hazel Chew has been appointed financial controller, effective May 1. She currently heads the finance function of CapitaLand Commercial Limited (CCL).

Edward Bin, currently vice-president of finance at CCL, will be appointed financial controller of CCL.

Ms Chew has been with CapitaLand Group since its inception and has contributed in various capacities including appointments in corporate finance, serviced residences and commercial properties. 

For the financial services business, Lui Chong Chee, the CEO of CapitaLand Financial Limited (CFL), is leaving on June 1 to pursue his personal interests. However, Mr Lui will continue to guide CapitaLand's business in Australia as chairman and non-executive director of Australand, CapitaLand's listed unit in Australia. 

The chief investment officer (CIO) of CapitaLand Limited, Wen Khai Meng, will also oversee CFL. He will be supported by Ang Siew Yan, deputy CEO of CFL, and John Pang, managing director of CapitaLand Financial Services Limited. 

At Ascott, CapitaLand's serviced residences arm, deputy CEO Gerald Lee is leaving to pursue further studies and other personal pursuits.

Ascott has appointed Mark Chan as senior vice-president of investment, effective May 10. Mr Chan has more than 20 years of working experience in the banking and investment industry, most recently in the private banking division of UBS Singapore. His experience in private banking and capital management will help him source for more investment opportunities.



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Business Times: Non-central home prices outpace prime areas

April 29, 2010
Non-central home prices outpace prime areas
NUS index shows they climbed 1.2% in March while central region home prices dipped
By UMA SHANKARI 

(SINGAPORE) Prices of non-landed private homes outside Singapore's prime districts are now growing at a faster rate than prices in the prime districts, according to a new index compiled by the National University of Singapore (NUS).

Flash estimates for March released yesterday show that 'non-central' home prices climbed 1.2 per cent last month, taking the first-quarter rise to 4.4 per cent.

In contrast, prices in the central region - postal districts 1-4 and 9-11 - dipped 0.07 per cent in March. For Q1, they rose 1.7 per cent.

NUS's Singapore Residential Price Index also shows that overall home prices rose 0.3 per cent last month and 2.8 per cent in Q1.

This puts the overall current value of the index just 0.1 per cent below the peak in November 2007. Prices in the central region are now 9.3 per cent below that peak, while prices in non-central areas are 6.4 per cent above the previous peak in January 2008.

'The rate of price growth in the central area has slowed, but for the non-central region, we have not seen an obvious decline in the rate of growth yet,' said Associate Professor Lum Sau Kim, who leads the group that compiles the index.

In 2009, price growth in the central region outpaced that in non-central areas. Home prices grew 27.3 per cent in the central region and 19.5 per cent in non-central areas. The overall index rose 22.2 per cent.

Analysts say that the moderation in the growth of prices - seen in both the NUS index and official Urban Redevelopment Authority index - is a sign that government measures to cool the market, implemented in September 2009 and February 2010, have reined in runaway price increases.

Official data released by URA last week showed that prices of non-landed properties increased 4.9 per cent in Q1, down from 7.2 per cent in the preceding quarter.

URA's index also showed that prices in the 'core central region', which roughly correlates to the central region classification used by the NUS index, rose 4.4 per cent in Q1 - faster than home prices in the 'outside central region', which rose 4.3 per cent.

URA's index showed that prices in the mid-level 'rest of central region' rose 7.9 per cent in Q1.

The numbers from URA and NUS differ because the two indices use different methods to track prices.

NUS's index, which is compiled by the Institute of Real Estate Studies, was launched in March to serve as a resource for developing property derivatives in Singapore.

It is computed using the market values of a basket of completed properties. Uncompleted projects are not included in the basket as price movements for such projects can be different from those in the rest of the market.

But the impact of new launches on the prices of completed properties in the vicinity is factored in.

The URA index, on the other hand, includes transactions at new launches and sub-sales. The differences mean that the two indices can throw up different numbers, market watchers have said.



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Business Times: Sitting on a pot of 'collective' gold

April 29, 2010
Sitting on a pot of 'collective' gold
Developers who snagged en bloc sites earlier have reason to smile
By KALPANA RASHIWALA 

(SINGAPORE) While the market mulls over the impact that rule changes will have on collective sales, the spotlight has fallen on developers sitting on prime sites acquired during the previous en bloc boom in 2006-2007.

If the proposed changes make it tougher for prime freehold residential sites to make their way to the market, that will be good news to developers who are already holding such sites acquired earlier.

A compilation by property consultant CB Richard Ellis shows that developers currently have 26 sites in prime districts 9, 10 and 11 snapped up in collective sales in 2006 and 2007 where new projects are still to be launched.

These sites are planned for redevelopment into nearly 4,300 new homes. Outside the prime districts, developers could build a further 4,700 homes on 16 sites purchased through collective sales in 2006-2007

CapitaLand, City Developments Ltd (CDL), Wing Tai, GuocoLand and Overseas Union Enterprise are among the developers who bought prime district en bloc sale plots earlier. For instance, CapitaLand, together with its partners, acquired the Farrer Court plot and is planning a 1,715-unit redevelopment project. Hong Leong Group (including CDL) has exposure to six sites slated for development into over 600 units in locations like Leonie Hill, Anderson and Thomson roads.

These sites and projects will become more precious to developers and they will want to time their launch more judiciously if it gets tougher to replenish landbank in this segment through en bloc sales, say industry observers.

CB Richard Ellis executive director Jeremy Lake says: 'The proposed amendments are unlikely to facilitate the en bloc process significantly and as such, the number of collective sales coming to the market is likely to remain relatively limited.

'From a developer's point of view, it will be more difficult to replace landbank in prime areas so those who have such sites may think more carefully about the timing of launch of new projects on these sites as it will not be easy to find replacement land.'

Giving a more pessimistic take, a developer said: 'I don't think anyone would be too far wrong to say that en bloc sales are just about the only source of supply for prime district freehold sites. The proposed amendments to the Land Titles (Strata) Act will put the 'last nail in the coffin' for en bloc sales in the near future, and the market will be completely dried up for freehold District 9, 10, 11 land supply.'

This will create upward pressure on land prices, he added.

Putting things in perspective, DTZ senior director (investment sales) Shaun Poh says: 'En bloc sales in many developments have already been activated and these are unlikely to be affected by the proposed amendments. The supply from this source should be enough for the market for the time being.

'However, the future pipeline of en bloc sales will be affected.'

On Monday, the Ministry of Law released proposed amendments that will among other things make it harder to restart a collective sale within two years of a failed attempt. Any attempts to convene EGMs to appoint a sales committee during this period will require higher requisition levels from owners - 50 per cent by share value or total number of owners for the first re-try and 80 per cent for any subsequent attempts.

'Already it's not easy to secure requisitions for EGMs based on existing thresholds of 20 per cent by share value or 25 per cent of number of owners,' says DTZ's Mr Poh.

'Now that they're proposing to raise the threshold for restarting previously failed en bloc attempts, it's going to be more difficult for those who want to have another shot when, say, the market suddenly turns hot.'

On a more positive note, Credo Real Estate managing director Karamjit Singh notes that the instances of failed attempts that will be affected by the two-year restriction do not cover cases where owners' 80 or 90 per cent majority consent was secured but the Collective Sales Agreement (CSA) expired because a buyer could not be found in time.

'The projects that may be affected are likely to be those that had attempted an en bloc sale when they should not have, either owing to the project not being fundamentally 'enblocable' or the market was not on their side to an extent that the majority owners rejected the proposal,' he said.

MinLaw hopes its proposal will discourage repeated attempts at en bloc sales where there isn't enough support from owners.

Industry players lauded MinLaw's proposal to streamline the number of EGMs, which should speed up the process. 'We expect to see further en-bloc activity this year,' said Chris Fossick, managing director Singapore and South East Asia for Jones Lang LaSalle.

Others, however, complain that the the ministry is not doing anything to mitigate bottlenecks caused by the need to have lawyers witness signing of the CSA.

This has also jacked up legal costs. Some have suggested doing away with this requirement since those who sign are given a five-day cooling-off period.



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CNA: More enbloc sale activity expected as developers cater to midmarket segment

More en bloc sale activity expected as developers cater to mid-market segment
By Chris Howells 27 April 2010 

SINGAPORE: Analysts expect more en bloc sales activity from the city fringes and East Coast areas as developers cater to a growing mid-market segment. 

They were responding to proposals tabled in Parliament on Monday to smooth out the collective sales process. 

The new rules also seek to address the role of the Strata Titles Board and balance the interest of property owners. 

Collective sales have bounced back this year after a poor showing last year when only one deal was done. 

So far, four developments have been sold with another deal at Margate Road expected to be completed this week. 

These five sales combined are worth S$275 million versus the lone S$101 million deal done for the whole of 2009. 

Going forward, market watchers expect between 20 and 40 en bloc deals to take place this year. 

Donald Han, managing director, Cushman & Wakefield, said: "I think what we're seeing now is more on the fringe of the central areas is looking more promising right now. Those we call the rest of the central core area. The East Coast area is looking interesting right now. 

"Mainly there is a combination of investors, developers who are eager to come in and develop the mid-end segment of the market." 

Observers said such developments will likely attract small-to-mid sized developers that are currently being priced out of the government land sales programme where land prices rose up to 20 per cent last year. 

Observers said they're currently seeing appetite for en bloc sales worth under S$100 million on average and land sizes of around 15,000-50,000 square feet. 

Karamjit Singh, managing director, Credo Real Estate, said: "There's also a vacuum to satisfy larger developers demand for land in mid and prime sectors of the market because government land sale programme basically satisfies developers' demand in mass market locations." 

Market watchers expect overall land prices to rise around five to 15 per cent this year. 

They said good conditions and demand for property will drive developers into the collective market. 



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CNA: Govt to take fundamental re-look at real estate industry

Govt to take fundamental re-look at real estate industry
By Wong Siew Ying 27 April 2010 

SINGAPORE: The government is taking a "fundamental re-look" at the entire real estate industry. 

Speaking in Parliament, National Development Minister Mah Bow Tan said this includes strengthening measures to curb unscrupulous practices and abuses. 

Among the measures, the government plans to plug a loop hole on using public housing flats as collateral for loans. 

Public housing flats are not meant to be used as security for any loans other than the mortgage to finance the unit's purchase. 

Yet, Parliament was told that some owners have fallen prey to such abuses. 

"One current practice that is very common is that of credit companies filing caveats against HDB flat owners who had borrowed money from them at very high interest rates, so that when these HDB owners sell their flats, the credit card companies will get the first bite," said Halimah Yacob, Member of Parliament (MP) for Jurong GRC. 

In response, the National Development Minister said the government is working to plug the loophole. 

"Unfortunately there has been a loop hole that has allowed legal money lenders to lodge such caveats, that is the reason why my ministry is now looking at how we can prevent this from happening," said Mr Mah. 

"This is going to be done even before the regulations for the real estate agents are finalised. I am treating it as a matter of urgency because it is obvious there have been cases of abuses, people have been exploited, and in this regard the role of some rogue estate agents should also be examined. 

"We have received feedback that some moneylenders provide loans on the condition that the borrowers repay the loans from the sales proceeds of their HDB flats. We are currently working with the relevant authorities on appropriate measures to curb such abuses. 

Complaints against real estate agents have risen in the past few years, according to figures from the Consumers Association of Singapore. 

There were 1,079 cases last year, higher than 1,100 complaints in 2008 and 1,055 in 2007. 

Meanwhile, the Inland Revenue Authority of Singapore, which is the licensing body for real estate agencies, received 154 complaints against agents in the past three years. 

Mr Mah said existing rules are not enough to deal with potential abuses by errant property agents. He added that the industry needs to be better regulated, especially in the current climate where there are temptations for some agents to take short-cuts. 

He said: "We are looking into whether we should have a more formal form of registration for real estate agents, what are the mediation avenues available, if not what are the dispute resolutions mechanisms available and if not what are the punishments that can be meted out to those who flout the rules." 

A new regulatory framework is expected to be announced shortly. 



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Straits Times: Look out, moneylenders who target HDB flat sellers

Apr 28, 2010 
Look out, moneylenders who target HDB flat sellers 
Govt drafting measures to curb exploitation of cash-strapped owners
By Rachel Lin 

MND Minister Mah Bow Tan

THE Ministry of National Development (MND) has sent a clear message to moneylenders who exploit cash-strapped HDB sellers: The game is up.

It is drafting measures to crack down on these unscrupulous credit companies, which lend money to home owners on the condition that they repay the loan from the sale of their flats.

The moneylenders usually collude with real estate agents who, in return for a referral fee, link them up with home owners.

In addition, a legal loophole allows moneylenders to file a caveat on the flat, which ensures that they get first bite of the proceeds when the flat is sold.

'HDB flats are not meant for short-term profit,' MND Minister Mah Bow Tan said in Parliament yesterday. 'They are not meant to be used as collateral for loans, whether to legal or illegal moneylenders.

'My ministry is currently working with the relevant authorities on appropriate measures to curb such abuses.'

Existing measures have not been sufficient to deal with the problem, Mr Mah added.

The credit companies in question advertise openly in the newspapers, with lines such as 'legal loan for HDB sellers' or 'for HDB seller only'.

Some advertisements also state 'property agent referral welcomed'. Loans of up to $100,000 are offered, at interest rates like 1.5 per cent per month.

The matter had been flagged by Madam Halimah Yacob (Jurong GRC), who told The Straits Times later that she had received many complaints from the public. 

The problem was becoming rampant, she said. Credit companies have even sent out text messages touting their loans to home owners.

These loans eat into the amount that HDB sellers eventually get from their flats, once the repayments and other fees are accounted for. 'They're expecting $70,000, but in the end, they get only $10,000. Sometimes, they get almost nothing,' Madam Halimah said.

Mr Mah told the House that his ministry is treating the problem 'as a matter of urgency'.

Both the errant credit companies and the estate agents who collude with them will come under scrutiny, he said.

Tougher rules for moneylenders will be introduced before the MND's larger move to regulate real estate agents more tightly.

Currently, complaints against real estate agents go to the Inland Revenue Authority of Singapore (Iras) or the Consumers Association of Singapore (Case).

However, Iras is not empowered to investigate rogue agents. If the agent is a member of an agency accredited by the Singapore Accredited Estate Agencies (SAEA), Iras refers him or her to the SAEA.

If not, the case is handed directly over to the relevant estate agency.

This present system contains one major loophole, Madam Halimah pointed out to the House: 'If you are the real estate agency, I think there will be less reason for you to find fault with your own agents, because that will affect your name.'

Mr Mah agreed that such a loophole existed. The MND is thus looking into a formal registration process for estate agents, compulsory exams, avenues for mediation and dispute resolution and disciplinary measures for errant agents.

'If the whole industry is not regulated, and in the current climate especially, there are a lot of temptations for estate agents to take short cuts and indulge in questionable practices,' he said.

Last year, Iras received 44 complaints against real estate agents, down from 63 in 2008 and 47 in 2006, Mr Mah told the House. 

Case received 1,079 complaints last year, compared to 1,100 in 2008 and 1,055 in 2007. 



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Straits Times: Top bid of $148m for site near Changi Prison

Apr 28, 2010 
Top bid of $148m for site near Changi Prison 
By Esther Teo 

A RESIDENTIAL site a stone's throw from Changi Prison has received a top bid of $148.3 million as developers look to replenish depleting land banks after months of sizzling home sales.

Tripartite Developers - part of Hong Leong Holdings - made the offer for the 3.1ha site at the corner of Upper Changi Road North and Flora Drive. There were five other bidders. Tripartite tendered $321 per sq ft (psf) on potential gross floor area (GFA) for the site, which had a maximum permissible GFA of 42,951 sq m. The land parcel can potentially yield 390 units. 

The second highest bid was by Nam Hee Contractor and OPH Marymount, which came in at $143.2 million. The lowest was lodged by BBR-Tagore, whose holding company is Singapore Piling and Civil Engineering. It offered $91 million, the Urban Redevelopment Authority (URA) said yesterday.

Ho Bee Developments, Frasers Centrepoint and Sim Lian Land also bid.

The 99-year leasehold site, which is on the Government's reserve list, was launched for public tender on March 29 after a developer committed to bid at least $82 million. The tender closed yesterday.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said the top bid was fairly decent. 'The breakeven price is between $640 and $670 psf and nearby developments have been selling within that range,' he said.

A decision on the award of the tender will be made at a later date, URA said. 

If Tripartite wins the tender, it will cement Hong Leong's presence in the area, which is already home to several large condominiums developed by the group, such as The Gale and Ferraria Park.

Meanwhile, the HDB said it will make available a site at the junction of Pasir Ris Drive 3 and Pasir Ris Drive 4 for application under the reserve list of the Government Land Sales (GLS) programme. Reserve list sites are offered on top of those on the confirmed list and are triggered for tender if at least one developer lodges an initial bid that meets a minimum threshold.

The 99-year leasehold site has a land area of 20,000 sq m and a gross plot ratio of 2.1. Its proposed development is for condominium housing and it has the potential to yield 380 units, the HDB said.

The Government has released all eight sites on the confirmed list of the first half of the GLS programme this year for sale. 

Four sites have been sold while the tender for the other four will close in the next two months. Together they have a combined potential yield of 2,925 units.

Eighteen sites yielding 7,625 units were placed on the reserve list, bringing total potential supply quantum to 10,550 from the first half of the GLS programme - the highest since it started in 2001.



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Business Times: Changi site draws top bids at lower end of estimates

April 28, 2010
Changi site draws top bids at lower end of estimates
By EMILYN YAP 

THE tender for a 99-year leasehold residential site at Upper Changi Road North/Flora Drive closed yesterday on a more subdued note than other

The 3.07 hectare site, which can yield up to 390 apartments, drew bids from six developers. Hong Leong Group unit Tripartite Developers made the top offer of $148.3 million or $321 per sq ft per plot ratio (psf ppr).

A tie-up between units of Far East Organization and Orchard Parade Holdings followed close behind, with a bid of $143.2 million or $310 psf ppr.

Frasers Centrepoint was in third place with a bid of $140 million or $303 psf ppr. Sim Lian, Ho Bee and BBR-Tagore also took part in the tender.

The top bids were towards the lower end of consultants' projections at $300-$400 psf ppr. The site's distance from an MRT station could be a factor in this.

DTZ South-east Asia research head Chua Chor Hoon suggested the large supply of state land may also have dampened competition. With the release of more government land sale sites recently, developers have more choice and could be 'slightly more comfortable' , she said.

Last month, the tender for a residential site at Tampines Avenue 1/Ave- nue 10 closed with eight bidders in the fray. Sim Lian made the highest offer of $302 million or $421 psf ppr.

In the latest tender for the Upper Changi Road North site, Hong Leong's top bid is likely to translate to a breakeven cost of $650-$700 psf, said Colliers International investment sales executive director Ho Eng Joo. The selling price could range from $750-$800 psf.

Mr Ho said Hong Leong is familiar with the Pasir Ris area. It is behind seven other projects in the vicinity with names from A to G, such as Edelweiss Park, Ferraria Park and The Gale.

At The Gale - which is a freehold development - units have been sold for $743-$833 psf this month, going by caveats lodged.

Developers hoping for a project in Pasir Ris can turn to another site on the reserve list. The Housing & Development Board has made a 99-year residential plot at the junction of Pasir Ris Drive 3 and Pasir Ris Drive 4 available for application from today.

The site, which is on the reserve list, is about two hectares and can yield an estimated 380 units. It is near Pasir Ris Park and Downtown East, and is surrounded by other parcels of state residential land.



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Tuesday, April 27, 2010

CNA: HDB puts up site for condo housing in Pasir Ris

HDB puts up site for condo housing in Pasir Ris
27 April 2010 

SINGAPORE : The Housing & Development Board (HDB) will make available a state land parcel in Pasir Ris for application under the Reserve List of the Government Land Sales (GLS) Programme from Wednesday. 

The site is located at the junction of Pasir Ris Drive 3 and Pasir Ris Drive 4. 

The 20,000 square metre, 99-year leasehold site is designated for condominium housing. 

HDB said some 380 residential units can be built on the site. 

Under the Reserve List System, developers who are interested in purchasing the land can submit their application, indicating the minimum offer price to HDB. 

Upon acceptance of their application, HDB will put up the land for sale by tender. 

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Monday, April 26, 2010

Straits Times: Rise in ads seeking development sites

Apr 26, 2010 
Rise in ads seeking development sites 
By Esther Teo 

PROPERTY developers, keen to ride the buoyant market, seem to be getting more aggressive in replenishing their depleting land banks.

Some, such as Far East Organization, have taken out advertisements in publications such as The Straits Times to seek development sites of various sizes in the city area and suburbs.

They want to develop homes, office buildings and shopping complexes.

Experts say that while this is not uncommon, developers are usually more discreet. However, their depleting land banks might be prompting these developers to look beyond acquiring land through the government land sales (GLS) programme.

Singapore Press Holdings' Cats Classifieds said advertisements placed by developers seeking to acquire sites had doubled over the past year. 

Research compiled by property consultancy DTZ this month showed that out of 16 major developers in Singapore, half had fewer than 1,000 residential units left in their land banks as of Feb 28. Another five developers had between 1,000 and 2,000 units.

Many developers ran down their land banks in the recession and were suprised by the rapid rebound.

The numbers do not factor in strong March home sales - which means that many developers' land banks would have shrunk further by the end of last month.

Some experts are thus predicting more collective sales in the second half of this year.

Chesterton Suntec International' s research and consultancy director, Mr Colin Tan, said placing ads could be a more aggressive method adopted by developers to replenish their land bank rather than passively waiting on the Government to release new sites. 

'They might be looking beyond just industry people and businesses to target the layman as well in the hope of triggering collective sales... It might not just be vacant land that they're looking for,' he said.

Mr Tan added that in such cases, developers might get better price deals as they have a better understanding of how the market is moving - for example, if government sites have recently been tendered at record prices - compared to the sellers, who may be less savvy.

However, Ngee Ann Polytechnic real estate lecturer Nicholas Mak said the party with the upper hand is mostly determined on a case-by-case basis, depending on who is the savvier of the two.

Knight Frank manager of consultancy and research Ong Kah Seng noted that such advertisements could be a means of acquiring prime freehold development sites since the GLS programme offers only land with 99-year leases.

'For developers looking at high-end residential developments, collective sales and private treaties are still the main avenues to acquire prime freehold sites.'

Mr Ong, however, added that acquiring land through the GLS scheme has its advantages such as not needing to go through lengthy negotiations and the ability to start making development plans soon after the site is awarded. 

CB Richard Ellis residential executive director Joseph Tan added that developers will still participate in the GLS programme as there are many choices available and the sites do not attract development charges. If prices are reasonable, however, they may also look at private treaties and collective sales, he said.



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