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15th April 2014

Top Stories

Perception gap persists on retail rentals: MP

Source: Today Online / Singapore

SINGAPORE — While official data point to retail rental increases that are broadly in line with inflation, the on-the-ground perception is that some landlords have raised rents by much more than that, with some asking for double when leases are up for renewal.

Member of Parliament Denise Phua (Moulmein-Kallang) made this point yesterday when she asked Minister of State for Trade and Industry Teo Ser Luck how the numbers are compiled after he said in Parliament that, based on data from January 2012 to May 2013, the median increase in rentals upon renewal was in line with inflation.

“No matter what the Government says, that perception seems to be persistent,” said Ms Phua, who said that “there seems to be quite a number of data points that suggest that retailers, when they negotiate for tenancies which expire” were asked for rental increases of as much as 100 per cent.

Mr Teo replied: “Of course there are different experiences and practices between landlords and tenants because of the contractual arrangements. Also at different locations they will experience different commercial practices.”

About one in 10 tenants experienced cumulative increases in rental of more than 50 per cent, and these tended to be those renewing their leases after more than four years, or who had units in more attractive locations, he said.

Mr Teo added that the Government is looking into publishing more comprehensive rental data for retail and industrial space by this year.

In compiling data on rentals, the intent as much as possible is to look for “the sources which make sense, maybe geographical points, how high or how low the rental index is in that area”. But this will not include data so specific that it relates to individual buildings, Mr Teo said.

He was initially responding to a parliamentary question by MP Lee Bee Wah (Nee Soon) on whether the ministry is able to take steps to moderate rentals for SMEs to help them cope with rising operating costs.

To do this, he said, the government will be releasing an average of 500,000 sq m of multiple-user factory space annually for the next three years — almost double the annual space demanded for the past three years.

Govt to raise supply of shop, factory space in next 3 years

This is to ensure enough supply for businesses planning for the long term

Source: Business Times / Singapore

THE government will make more factory and shop space available over the next three years to ensure there is enough supply for businesses as they plan for the long term.

Minister of State for Trade and Industry Teo Ser Luck said in Parliament yesterday that an average of 500,000 sq m of multiple-user factory space will come on-stream each year for the next three years.

This, he said, is nearly double the average annual demand for such space in the last three years, and is expected to moderate industrial rentals further.

Industrial rentals, he noted, remained largely stagnant from 2000 to 2006, before seeing an uptick in 2007 and then declining during the global financial crisis that followed.

-By Lee U-Wen

Good news for SMEs: Rents likely to drop

Source: Straits Times

Retailers and industrialists can expect rents to decline in the coming years, said Minister of State for Trade and Industry Teo Ser Luck yesterday. In the next three years, about 500,000 sq m of multiple- user factory space will become available each year.

Singapore Economy

MAS keeps S$ strong as inflation threat stays

Q1 GDP advance estimates disappoint, but economy expected to pick up

Source: Business Times / Top Stories

[SINGAPORE] Growth in the first quarter was a disappointingly slow 5.1 per cent compared with a year earlier, but economic activity is expected to pick up to a moderate pace for the rest of the year. Inflation, however, remains a sticky problem.

In light of this, the central bank has decided to keep the Singapore dollar appreciating along the same "modest and gradual" path it has stuck to since April 2012 - to ward off persistent wage pressures that will push core inflation higher.

The Monetary Authority of Singapore's (MAS) core inflation measure - which excludes more volatile car and home prices - has risen to an average of 2 per cent year-on-year over the five months from October 2013 to February this year, from 1.6 per cent in the first nine months of 2013.

"This was predominantly due to a more significant pass-through of wages and other business costs," the central bank said. And despite the strengthening currency and subdued price pressures abroad, import prices in Singapore dollars also rose slightly in recent months, it said.

Market economists had accurately predicted both the policy decision, as well as the lower 2014 headline inflation forecast. MAS downgraded this to 1.5-2.5 per cent from an earlier 2-3 per cent given that the large supply of new housing units implies a weaker outlook for imputed rentals and car prices should "add negligibly" to inflation.

But this lower headline inflation forecast remained "subservient" to elevated core inflation when it came to the policy decision, as OCBC currency strategist Emmanuel Ng put it.

Indeed, MAS warned that though imported inflation will be benign, domestic costs - particularly wage pressures from the tight labour market - could mean that sequential core price increases will be slightly higher than the historical average this year.

"Firms are expected to continue to pass on accumulated costs, which could lead to broad-based price increases across the economy," MAS said.

The policy trade-offs of the central bank's decision this round were fewer, as the economy is expected to trot out a modest pace of recovery, notwithstanding the uncertain start in Q1.

Advance estimates released by the Ministry of Trade and Industry (MTI) show that Q1 GDP growth came in weaker than the market had expected, moderating in both year-on-year and sequential terms.

The economy expanded 5.1 per cent in Q1 compared to a year ago - lower than Q4's 5.5 per cent - as a slowdown in the services sector dragged down gains from the manufacturing sector.

Overall GDP fell short of the consensus forecast. The 18 private sector economists polled by Bloomberg had a median year-on-year growth forecast of 5.4 per cent.

Growth in the services sector eased to 4.7 per cent compared with a year ago, lower than the 5.9 per cent growth seen in Q4. This was due to slower expansion in the wholesale & retail trade, and finance & insurance sectors.

Despite the slip, Mizuho economist Vishnu Varathan believes that the services sector will remain a key pillar of growth this year. And DBS's Irvin Seah expects Q1 GDP to be adjusted upwards in May, "given the current conservative estimate in terms of (services') growth momentum".

The manufacturing and construction sectors, however, performed better. Manufacturing grew at a faster pace of 8 per cent in Q1, boosted by higher biomedical and chemicals output. The latter benefited from public construction projects, and grew 6.5 per cent year-on-year.

Despite the weaker-than-expected showing in overall Q1 GDP, both the government and private sector economists remain sanguine about growth prospects this year.

Notwithstanding Q1's weaker performance, MAS said that "the level of economic activity should stay on a broad upward trajectory for the rest of the year".

Economists Michael Wan of Credit Suisse and Francis Tan of UOB agree. They say that Singapore's trade-related sectors should expand as the global economy - and particularly the US and Europe - stages a stronger recovery.

Still, the MAS warned that "overall growth will be capped by supply-side constraints, particularly in the labour market".

The government has maintained its 2014 growth forecast of 2-4 per cent, even as it warned that "the growth profile could be uneven". Economists' projections are largely at or beyond the upper end of this band, with growth forecasts ranging from 3.5-4.3 per cent.

While the next policy review is not due till October, economists from ANZ and Credit Suisse believe the hurdle for easing monetary policy is "still extremely high". Mr Wan noted that the tightness in the labour market showed no signs of easing, given that a fresh round of foreign manpower restrictions are due in July, with more to come in 2015 and 2016.

-By Kelly Tay & Teh Shi Ning

MAS cuts inflation forecast, but wage pressure remains

Source: Today Online / Business

SINGAPORE — A large supply of newly-completed homes will put a lid on housing rentals and help ease inflation this year, but the persistently tight labour market will continue to pile pressure on consumer prices as businesses pass on higher wage costs.

This was highlighted yesterday by the Monetary Authority of Singapore (MAS) in its latest semi-annual monetary policy statement, as the central bank maintained a modest and gradual appreciation for the Singapore dollar exchange policy band.

“This policy stance, which has been in place since April 2012, was assessed to be appropriate taking into account the balance of risks between external demand uncertainties and rising domestic inflationary pressures,” the MAS said.

“The outlook for the global economy has brightened, anchored by improving prospects in the G3 (the US, eurozone, Japan) as a whole. Against this backdrop, Singapore’s trade-related sectors should grow at a moderate pace,” it added.

“Nevertheless, overall growth will be capped by supply-side constraints, particularly in the labour market … Wage pressures will persist and firms are likely to pass on business costs to consumer prices,” it warned.

Credit Suisse analyst Michael Wan said: “The central bank remains concerned about the resultant impact on wage growth and underlying price pressures. While headline inflation has come down and could continue to moderate, the underlying inflationary pressure in the economy is still there and may remain so for the next two years.”

Against this backdrop, MAS maintained its 2 to 3 per cent forecast for full-year core inflation, which excludes accommodation and private road transport costs. This reflects the uptrend since last year, when core inflation accelerated from the 1.6 per cent average between January and September 2013 to the 2 per cent average between October and February this year.

But overall inflation is expected to be tamer, with the all-items consumer price index forecast at 1.5 to 2.5 per cent this year, a downward revision from the MAS’ previous 2 to 3 per cent estimate. The revision was made due to expectations of lower rentals this year, when around 24,000 public housing units and 20,000 private homes will be completed.

-By Wong Wei Han

MAS ready to intervene to curb currency volatility

HSBC sees Singapore dollar outperforming the other Asean currencies

Source: Business Times / Top Stories

[SINGAPORE] The Monetary Authority of Singapore (MAS) made clear yesterday that it "stands ready to curb excessive volatility" in Singapore's currency, backing the market's view that the central bank has been intervening in the currency markets in recent weeks.

Analysts highlighted the explicit mention of this, which has not surfaced since MAS' policy statement of April 2010 when fears of a eurozone collapse caused turmoil in global financial markets, and said it was made in the light of potential volatility.

This was probably prompted by anxieties about market volatility when the US Federal Reserve ends the tapering of its quantitative easing programme and the fed fund rate starts to rise, as well as geopolitical tensions in Ukraine, and concerns over growth in China, said Maybank's FX research team.

Hence, while MAS deemed it appropriate to stick to its policy stance of a "modest and gradual" appreciation in the Singapore nominal effective exchange rate (S$NEER) - the value of the Singapore dollar relative to currencies of its major trading partners and competitor - it stressed that it would "continue to be vigilant over developments in the external environment, including in the financial markets".

-By Teh Shi Ning

Singapore Real Estate

Residences dominate Q1 investment activity

Colliers and DTZ see total real estate investment volume falling 13-20% in '14

Source: Business Times / Property

RESIDENTIAL investments made up a significant 41 to 45 per cent of real estate investment activity in Q1, according to various property consultants' research reports, but overall this is expected to come in lower this year.

This is because of a number of factors. Firstly, the combined effects of cooling measures and the Total Debt Servicing Ratio framework have softened demand and led to weaker transaction volumes in the private residential market, which have dampened the residential en bloc sales market. Secondly, the government has moderated its supply of residential sites in H1 2014 due to the large pipeline supply - though the cut in land sales is across the board, extending also to commercial and hotel sites.

The third factor is the interest rate increases, expected to kick in when the United States begins tapering its quantitative easing programme next year, which could raise financing costs and become a drag on investment activity.

According to a DTZ Research report released yesterday, in the first three months of this year total real estate investments rose 24 per cent quarter on quarter to $4.7 billion, with residential and office investments accounting for $3.7 billion, or nearly 80 per cent of the overall volume.

-By Lee Meixian

Strong interest in Hong Leong condo

Source: Business Times 

The first-day preview of Hong Leong Holdings' Commonwealth Towers drew a crowd of more than 1,500 people on Sunday. The turnout was so large that Hong Leong had to extend the preview hours - originally scheduled fromnoon until 8pm - by another two hours.

Developing green buildings a matter choice

Vanke chairman also accepts NUS's invitation to be a professor of practice

Source: Business Times / Property

[SINGAPORE] The chairman of China's top developer Vanke yesterday shared the story of his journey in pioneering green homes in China at a seminar at the National University of Singapore (NUS), where he also accepted the university's invitation to be a professor of practice.

Wang Shi, who will share his experience at the NUS Business School and the NUS Department of Real Estate, joins NUS's group of practice-track professors such as former CapitaLand chief executive Liew Mun Leong.

At the seminar organised by the two NUS faculties yesterday, Mr Wang, recently a visiting scholar at Harvard, said that the move towards developing green buildings at Vanke boiled down to one word - "choice".

Inspired by his mountain-trekking adventures and a trip to the Amazon, the avid trekker made that choice to go green at a time when there were no government incentives or subsidies to do so. He said: "If we don't change now, we will eventually be forced or penalised to change by regulation. While the market is still good and investment in research and development is still affordable, adjustment is less painful."

-By Lynette Khoo

Govt mulls allowing some couples to co-rent larger PPHS flats

Source: Channel News Asia / Singapore

SINGAPORE: The government is considering allowing some couples to co-rent larger flats under the Parenthood Provisional Housing Scheme (PPHS), National Development Minister Khaw Boon Wan said.

He said more than 900 of the 1,150 PPHS flats have been taken up, but there are still some larger flats available.

He added the number of applications per month peaked at 409 last September but has since dropped to 81.

Mr Khaw was responding to a parliamentary question from Hougang SMC MP Png Eng Huat, on whether the National Development Ministry would consider lowering rental rates to encourage take-up for the bigger flat types.

Mr Khaw said PPHS rents are 40 to 60 per cent lower than market rents in the vicinity.

He added the cost of providing PPHS flats includes retrofitting them before they are rented out, as well as maintenance costs.

PPHS was extended to all married and fiancé-fiancée couples who booked uncompleted Build-To-Order flats last year.

Separately, Mr Khaw said the ministry does give priority to families with children in their new flat applications.

This is done through the Third Child Priority Scheme and the Parenthood Priority Scheme.

Mr Khaw said: “Under both schemes, a fixed quota of flats is set aside for these families. This ensures a better chance of success, as compared to giving them more ballot chances.

“HDB also does not restrict the priority given to families with children to only four-room or larger flats. This is to allow them to choose the flat type that best suits their budgets and needs.” 

- CNA/xq

Govt could let couples co-rent larger PPHS flats: Khaw

Source: Today Online / Singapore

SINGAPORE — After peaking at 409 applications last September, the number of applications for the Parenthood Provisional Housing Scheme (PPHS) has dropped to 81 and the Government is looking at allowing couples to co-rent the larger flats still available under the scheme.

More than 900 of the 1,150 flats under the scheme have been taken up and some larger units under the initiative are still available, said Minister for National Development Khaw Boon Wan in Parliament yesterday.

“We are considering allowing some couples to co-rent these larger flats,” Mr Khaw told the house.

He was responding to questions about the scheme from Hougang Member of Parliament Png Eng Huat, who also wanted to know about the formula for calculating rents.

Mr Khaw said rents under the scheme are 40 per cent to 60 per cent lower than market rents in the vicinity and the cost of providing flats includes the cost of retrofitting the units before they are let out as well as the cost of managing and maintaining the properties.

Introduced in March last year as part of the marriage and parenthood package, the scheme provides an option for couples who need temporary housing at affordable prices, while waiting for their new Housing and Development Board flats to be ready.

-By Amanda Lee

Real Estate Companies' Brief

CapitaLand makes $3.06b offer for CMA

It plans to delist CMA to enhance strength in integrated projects

Source: Business Times / Top Stories

[SINGAPORE] In a move to simplify its group structure and enhance its strength in integrated projects, CapitaLand has launched a $3.06 billion voluntary cash offer for CapitaMalls Asia (CMA) to privatise the 65.3 per cent subsidiary.

Delisting CMA will make the group more nimble, enabling it to react faster to increased opportunities in integrated projects here and in China, CapitaLand chief executive Lim Ming Yan said yesterday.

The offer price of $2.22 per share represents a 23 per cent premium to CapitaMalls' closing share price of $1.80 last Friday. It is also at a 27 per cent premium to the past one-month volume weighted average price (VWAP) of CMA shares and a 20.7 per cent premium to CMA's net asset value per share as at Dec 31.

Arthur Lang, CapitaLand group chief financial officer, described it as a "fair price", one which reflects an attractive premium for minority shareholders.

The offer, funded by internal resources and borrowings, factors in the growth of CMA since its listing in 2009 and the dividends paid out to shareholders over the years, he said.

CapitaMalls, which manages 105 shopping malls, derived 43 per cent of its revenue from China last year, 32 per cent from Singapore and the rest, mostly from Japan and Malaysia.

The deal is immediately earnings accretive to CapitaLand's shareholders and raises the return on equity from 5.4 per cent to 6.7 per cent.

Analysts responded positively to the offer yesterday; at least one "outperform" rating was issued.

Standard Chartered analyst Regina Lim, who reiterated the "outperform" call, said investors may switch to CapitaLand from CMA to access the latter's well-differentiated retail platform.

"We believe the transaction is a good way to redeploy the cash that CapitaLand received from the divestment of Australand," she said, in a reference to CapitaLand's March sale of its remaining 39.1 per cent stake in Australia's Australand Property Group for around A$849 million.

OCBC property analyst Eli Lee said the offer price is "decent", given that it represents a 21 per cent premium to book value and a reasonable 8 per cent discount to revised net asset value.

"CMA's shares have mostly traded below its IPO price ($2.12) since its listing in 2009, due to various structural and macro-economic headwinds, and this provides an opportunity for investors to exit at a reasonable valuation," he said.

The trend here and in China now leans towards integrated projects - those comprising hotel or serviced residence, retail, office and residential components; some pure residential players in China have also moved into mixed developments, CapitaLand's Mr Lim observed.

The individual components of an integrated project complement one another: pre-sales of residential units generate cashflow to fund the shopping malls and offices, and serviced residences provide the traffic to the malls and higher returns for tenants.

It is not easy for a single business unit like CMA to undertake such projects, he said. Yet, at the same time, having the shopping mall entity listed "makes it more cumbersome for (CapitaLand) to undertake such projects".

Post-delisting of CMA, CapitaLand's structure will be further streamlined. The number of listed entities in the CapitaLand group will be cut from eight to six, Mr Lim said. Development activities will be undertaken by CapitaLand, while most of its stabilised assets will be held in listed Reits.

There will be no downstream offer for the Reits - CapitaMall Trust and CapitaRetail China Trust - where CMA remains their sponsor with respective deemed stakes of 27.6 per cent and 37.1 per cent.

Morgan Stanley and Credit Suisse are advising CapitaLand on the transaction.

CapitaLand's offer for CMA shares will turn unconditional when 90 per cent of all CMA shares are obtained. CMA said yesterday that its board of directors will form a committee to appoint an independent financial adviser to advise the board on the offer.

-By Lynette Khoo

CapitaLand offers S$3.06b to buy out shopping mall unit

Source: Today Online / Business

SINGAPORE — CapitaLand has offered to take its shopping mall subsidiary private by buying over the rest of the shares it does not already own for about S$3.06 billion, in a move that will allow it to better navigate its core markets amid an increased focus on mixed developments.

CapitaLand, South-east Asia’s largest listed developer, said yesterday it has bid S$2.22 a share for CapitaMalls Asia (CMA), a 23 per cent premium to its closing price last Friday. Trading in the shares of both companies was halted yesterday.

CapitaLand owns 65.3 per cent of CMA, which assets include ION Orchard and Plaza Singapura. The purchase will be funded through a combination of internal cash resources and borrowings.

President and Group Chief Executive of CapitaLand Lim Ming Yan said integrating CMA into the group operations is a strategic move that will allow CapitaLand to be more nimble in reacting to changing conditions in its core markets in Singapore and China.

“The market has changed. A few years ago we saw pure play residential players, but when you look at the market now, companies are already starting to move into mixed developments and going into different asset classes,” said Mr Lim at a media briefing yesterday.

Mr Lim added CapitaLand and CMA had over the past two to three years collaborated on several mixed developments, but that the cooperation was “cumbersome” as both are separately listed entities.

“The fact that CMA is listed (separately) means we have to observe certain corporate governance requirements and all these make it a bit more cumbersome (and) slower for us to respond to the market,” he said.

“Given that going forward we are seeing more of these opportunities, I would say it makes sense for us then to … collapse into one entity, it will allow the group to be more nimble, we can react faster to the competition.”

Analysts generally favoured the move. Standard Chartered’s Head of Asian Property Research, Ms Regina Lim, told Bloomberg: “CapitaLand is doing a lot more integrated projects compared with when they did the listing of CapitaMalls, so the deal is a good investment by CapitaLand.”

CMA was listed in Singapore in November 2009 after a S$2.8 billion initial public offering, the nation’s second-largest IPO at the time.

Privatising CMA will also allow CapitaLand to have more flexibility to access and allocate capital across its different business units and direct its resources in a manner that “best enhances shareholder returns”, the company said.

The deal will raise CapitaLand’s earnings per share for its 2013 financial year by about 21.5 per cent and improve the return on equity as at end-December from 5.4 per cent to about 6.7 per cent on a pro forma basis.

“The transaction unlocks shareholder value … as it is expected to be immediately accretive. There will also be revenue and costs synergies achieved through the delisting of CMA, which comes from reduced listing costs and flexibility to mobilise services and sources within the group,” said Mr Lim.

-By Lee Yen Nee

CapitaLand Offers S$3.06 Billion to Buy CapitaMalls Asia

Source: Bloomberg / News

CapitaLand Ltd. (CAPL), Southeast Asia’s biggest developer, offered to buy the rest of its mall unit for about S$3.06 billion ($2.4 billion) to consolidate some businesses and boost returns.

The developer bid S$2.22 a share for CapitaMalls Asia (CMA), the Singapore-based company said in a statement to the stock exchange today, a 23 percent premium to the last closing price on April 11. Trading in shares of both companies was halted before the announcement.

CapitaLand, which owns 65.3 percent of CapitaMalls Asia -- whose Singapore malls include ION Orchard and Plaza Singapura along the city’s famed Orchard Road shopping strip -- sold shares in the unit in 2009, raising S$2.8 billion. The latest deal will help CapitaLand’s increased emphasis on mixed-use developments, those that include residential, commercial and retail projects, according to Standard Chartered Plc.

“CapitaLand is doing a lot more integrated projects compared to when they did the listing of CapitaMalls, so the deal is a good investment by CapitaLand,” said Singapore-based Regina Lim, head of Asian property research at Standard Chartered.

Such projects include Project Jewel, a new development at Singapore’s Changi airport where a parking lot is being turned into a shopping mall and hotel, and the Atrium@Orchard, which has retail and office space along Orchard Road.

Cheaper Offer

CapitaLand’s offer works out to about 1.2 times CapitaMalls Asia’s book value, which is cheaper than the 1.5 times book value when it listed in 2009, according to brokerage UOB Kay Hian Pte.

“The move will be near-term negative, but longer-term positive,” said Vikrant Pandey, an analyst at UOB Kay Hian in Singapore. “While this will help reduce the holding company discount that market applies in valuing CapitaLand, investors will ascribe deeper discounts for subsequent listings that CapitaLand intends to do.”

Taking the unit private would raise the earnings per share of CapitaLand Group by about 22 percent for the year ended Dec. 31, and improve the return on equity of the group to 6.7 percent from 5.4 percent for the same period, the developer said in the statement.

Changed Market

“The market has changed,” CapitaLand President Lim Ming Yan said at a press conference in Singapore today. “Earlier companies were pure play residential, now companies are emerging that are doing mixed developments which include homes, offices and malls. This move will help us compete better.”

CapitaMalls Asia owned 105 shopping malls valued at S$34.3 billion as of Dec. 31, the company said in a presentation in March. The mall owner reported a 17 percent increase in fourth-quarter profit to S$216.4 million from a year earlier. CapitaMalls Asia holds S$1 billion in cash with a net gearing of 22 percent, according to a Feb. 14 report from OCBC Investment Research.

CapitaLand completed the sale of its entire stake in Sydney-based Australand Property Group last month. The developer will use part of the about A$1.28 billion ($1.2 billion) from the sale to invest in Singapore, China and to repay debt, it said.

‘Good use’

“CapitaLand is putting the divestment proceeds from Australand to good use as there is an accretion to earnings and return on equity,” Lim at Standard Chartered said.

Standard Chartered has a buy rating on CapitaMalls because the stock is undervalued, Lim said.

CapitaLand shares declined 3.6 percent this year to April 11 when they closed at S$2.92. CapitaMalls Asia fell 7.9 percent this year to S$1.805 last week.

Singapore malls contributed 55 percent to its profit for the year ended Dec. 31 at S$405 million, followed by China, where its malls helped add S$262 million, or 35 percent of the company’s profit, CapitaMalls said. Malls in Singapore and China accounted of 86 percent of the company’s assets.

CapitaLand in February said fourth-quarter profit fell 46 percent after it recorded a loss on the sale of a stake in Australand and lower revenue from its Singapore home sales. Net income declined to S$142.9 million in the three months ended Dec. 31, from S$262.7 million a year earlier.

-By Pooja Thakur

Wheelock, HPL trading halt fuels market talk

Source: Business Times / Companies

SHARE trading in both Wheelock Properties (S) and Hotel Properties Ltd (HPL) was halted yesterday, sparking market speculation on what is afoot for the companies. Wheelock has a one-fifth stake in HPL.

Among the few scenarios swirling in the market yesterday, one has it that HPL could be taken private. Alternatively, say market watchers, a long-speculated scenario may finally start to play out: Wheelock could participate in a co-development of some of HPL's prized assets in the Orchard Road belt: such as the Hilton and Four Seasons hotels, Forum and HPL House.

This speculation has been fuelled on and off ever since Wheelock acquired a 21 per cent stake in HPL in 2006 from GuocoLand. It paid $1.80 per HPL share for a total of $171.4 million.

Last year, Wheelock sold its 17.93 per cent stake in SC Global to its chairman Simon Cheong, who took the luxury residential developer private.

-By Kalpana Rashiwala

Distributable income up at Keppel Reit

K-Green Trust posts 9.4% increase in Q1 profit

Source: Business Times / Companies

KEPPEL Reit posted a record quarterly distributable income of $55.1 million, up 5.5 per cent year on year, for its first quarter ended March 31, 2014.

This translated into a distribution per unit of 1.97 cents for the quarter, unchanged from a year ago. Net property income rose 14.7 per cent to $39.5 million.

The commercial Reit said yesterday that this was due to improved performances from Ocean Financial Centre and Prudential Tower, as well as the additional income from 8 Exhibition Street in Melbourne, in which it acquired a 50-per-cent stake in last August.

A better performing Marina Bay Financial Centre Phase One - which comprises the office towers 1 and 2 as well as Marina Bay Link Mall - also helped Keppel Reit's share of results of associates climb 12.6 per cent to $16 million.

-By Lee Meixian

Cache in deal with DHL to develop warehouse

Source: Business Times / Companies

CACHE Logistics Trust has entered into an agreement with DHL Supply Chain Singapore to develop and lease a build-to-suit warehouse in Tampines LogisPark at an estimated total development cost of $105.1 million. The development will comprise two blocks with a total net lettable area (NLA) of around 928,100 sq ft, said the real estate investment trust's manager, ARA-CWT Trust Management (Cache) yesterday. The Reit will fund the development with internal funds and bank borrowings, with aggregate leverage expected to rise from 29.1 per cent at end-2013 to around 34.8 per cent on completion of the development. Cache's total deposited property will also increase by 8.6 per cent to $1.17 billion.

First Reit declares 14.4% rise in Q1 DPU

Source: Business Times 

First Real Estate Investment Trust (First Reit) posted a 14.4 per cent increase in its distribution per unit from 1.74 cents to 1.99 cents, for the first quarter ended March 31, 2014. Distributable income grew 22.3 per cent to $14.2 million. Net property income for the quarter surged 29.6 per cent to $22.2 million, while gross revenue grew 28.3 per cent to $22.5 million.

CCM agrees to form JV with Spanish firm

Source: Business Times

CCM Group (CCM) has agreed to form a joint venture with Spanish architecture firm, ART Proyectos Y Arquitectura SL (ART). CCM's wholly owned property subsidiary, CCM Property Pte Ltd, will hold 51 per cent of the joint venture firm, while ART will hold the remaining 49 per cent

Views, Reviews & Forum

Closing the rural-urban infrastructure gap

Modernisation worldwide needs to be part of a strategy for long-term growth

Source: Business Times / Editorial & Opinion

CONSIDER a simple statistic. Every month in the developing world, more than five million people migrate to urban areas, where jobs, schools and opportunities of all kinds are often easier to find. But when people migrate, the need for basic services - water, power and transport - goes with them, highlighting the boom in infrastructure demand.

The reality is evident from Kenya to Kiribati - everywhere where rapid urbanisation, the need to support trade and entrepreneurship, and efforts to confront the challenges of climate change have exposed a wide infrastructure deficit. And it is a deficit that confronts advanced economies as well.

Simply put, infrastructure construction and modernisation worldwide needs to be part of a strategy for long-term global growth. That is why G-20 finance ministers, meeting recently for the first time this year in Sydney, Australia, singled out investment in infrastructure as one of the elements vital to ensuring a strong, sustainable and balanced recovery.

But, with G-20 finance ministers preparing to meet again soon in Washington, DC, a note of caution is in order: Simply increasing infrastructure investment is not enough to foster growth and job creation.

-By Bertrand Badre

Old Parliament House tour a 'lived' history experience

Source: Straits Times / Forum Letters

IT IS heartening to see the "sense of place" as described by Mr Mike Sharrocks being manifest in the many heritage buildings and key spaces conserved by the authorities in the last 30 years or so ("Retain more heritage buildings, key spaces"; last Wednesday).

A fine example is the Old Parliament House, which was transformed into The Arts House 10 years ago.

The building's conversion into a living art space aimed to create a thriving arts community. Being a latent work of art itself, this heritage building enhances the arts, culture and literature in Singapore.

It was a treat for the senses when I attended a "Night Walk with the Storyteller" event recently at The Arts House to mark its 10th anniversary.

Experienced storyteller Kamini Ramachandran led several of us on a tour of the history, heritage and culture at the Old Parliament House.

Different levels of the iconic 200-year-old building, previously inaccessible to the public, showcased how and where history was made since the colonial period.

Through the oral mode of storytelling and with the aid of printed texts, the night walk was a "lived experience" that should be repeated more often for the benefit of Singaporeans.

Literature is so vital to preserving our rich heritage but we sometimes underestimate its importance in history. It is sad that the popularity of this "language of the soul" has declined over the years - for the poor excuse that it does not translate into monetary gains.

I hope literature will gain more traction as we become a more gracious society. Without literature, we will be left with ignorance, prejudice and stereotypes.

-By Dr V. Subramaniam

Consult public to conserve built heritage

Source: Straits Times / Forum Letters

ACCORDING to United States urban geographer Joel Kotkin, there are three great characteristics of cities: safe, busy and sacred ("Hotel Singapore or the Sacred Place?"; April 5).

In response to the article, Mr Mike Sharrocks called for the need to retain more heritage buildings and key spaces beyond perceived historical, religious and architectural values ("Retain more heritage buildings, key spaces"; last Wednesday).

As Singapore negotiates its position in the globalised world, it is imperative for urban planners to maintain a balance between the search for a unique identity and economic development by involving stakeholders in their planning.

Conservation of our built heritage has been an integral part of urban planning in Singapore.

So far, more than 7,000 historic buildings have been gazetted for conservation, including historic districts in Chinatown, Kampong Glam and Little India, and colonial bungalows.

However, as Mr Sharrocks mentioned, buildings with presumably less historical value are being demolished. These include shophouses, hawker centres and neighbourhood libraries.

In Queenstown, Singapore's first satellite estate, pockets of vacant land were freed from demolished flats, hawker centres, emporiums and shophouses in the town centre in the past two decades to facilitate rejuvenation and redevelopment.

The well-loved Tah Chung Emporium and Margaret Drive Hawker Centre were demolished in 1999 and 2011 respectively, even though there was no imminent development.

While some residents were unhappy with the abandoned town centre, others were frustrated with the lack of common amenities and key spaces.

Gazetting three historical sites last year - Queenstown library, a former wet market at Commonwealth Avenue and Alexandra Hospital - could not reverse Queenstown's reputation as a ghost town.

Conserving or retaining the town centre would have contributed to overall urban design heritage and the character of the community.

This is why urban planners must consult the immediate stakeholders. We ought to consider the opportunity costs incurred while we anticipate new and modern additions to our cityscape.

-By Kwek Li Yong

Global Economy & Global Real Estate

Sejong city showcases S. Korea's tech prowess

Source: Straits Times

Seibu prices IPO at low end of range

Price is set at 1,600 yen a share, valuing the company at 547.4b yen

Source: Business Times / Property

[TOKYO] Seibu Holdings, operator of Japan's biggest hotel chain, priced a 44.5 billion yen (S$547.8 million) initial public offering at the bottom of its planned range after two IPOs flopped last month.

The price was set at 1,600 yen a share, according to a filing yesterday. The deal values the company at 547.4 billion yen, about 33 times projected profit for the year ended March.

Seibu, which had disagreements with its biggest shareholder Cerberus Capital Management, sold the shares at 30 per cent less than an indicative price announced last month.

Takashi Goto, president of the hotel and rail operator, has pushed to proceed with the IPO, while Cerberus said that it wanted to wait for a higher price and ultimately decided not to offer any shares in the sale.

-From Tokyo, Japan

Beijing grade-A office prices rise in Q1

Source: Business Times / Property

[BEIJING] Bucking the trend of a cooling down property market across China, rents and sales price of grade-A office space in Beijing edged up in the first quarter, said real estate consulting company DTZ.

Beijing's average grade-A office rents climbed to 301.03 yuan (about S$61) per square metre in the first quarter, up 0.7 per cent from the previous quarter, the company said in a latest report.

In the first three months, the overall average sales price for grade-A office space in Beijing saw a 0.7-per-cent increase over the prior quarter to 63,936 yuan psm.

"Looking forward, we expect about 300,000 square metres of new office space to be launched by the end of 2014, which will help meet the demand. However, leasable space in core districts is still rare and we expect rents to increase steadily in 2014," it noted.

-From Beijing, China

London home prices rise amid shortage

Source: Business Times / Property

[LONDON] Asking prices for London homes rose to a record this month as values increased in all but one of the capital's 32 boroughs, according to Rightmove Plc.

Prices in the UK capital climbed 3.6 per cent from March to an average £572,348 (S$1.2 million), taking the gain from a year earlier to almost 16 per cent, the website operator said in an e-mailed report yesterday. Across England and Wales, values rose 2.6 per cent to £262,594 also an all-time high, amid a lack of property for sale in southern England.

Britain's housing market is being fuelled by strengthening economic growth, record-low borrowing costs and official incentive programmes.

In London, where cash-rich buyers and overseas investors seeking safe assets are also stoking demand, rising house values are spilling into surrounding areas, according to Rightmove.

-From London, UK

China firms may buy back US$ bonds

Source: Business Times / Property

[SINGAPORE] Chinese property developers with the option to repurchase US dollar-denominated bonds later this year may opt to do so amid falling yields, according to Western Asset Management Co.

Shimao Property Holdings, a residential and hotel builder in China, is considering buying back its 2017 notes, which have a call option in August, as it considers a syndicated loan, Tammy Tam, an investor relations official at the company, said yesterday.

Country Garden Holdings, controlled by China's richest woman Yang Huiyan, has 11.25 per cent 2017 securities which it may redeem at any time and from time to time on or after April 22 in whole or in part. KWG Property Holding's 12.5 per cent bonds can be bought back in August.

Faced with dwindling funding options onshore as sales of property-related trusts drop in the wake of the collapse last month of Zhejiang Xingrun Real Estate Co, a builder in a city south of Shanghai, China's developers are looking at more cost-effective ways of servicing their debt.

-From Singapore

Growthpoint Buys Stakes in Two Property Companies in Retail Push

Source: Bloomberg / News

Growthpoint Properties Ltd. (GRT) will become the biggest shareholder in two property operators as South Africa’s biggest real-estate company seeks to expand its business with retail and office offerings.

As part of a 4.66 billion rand ($444 million) share-swap deal, Growthpoint will acquire 34.9 percent in Acucap Properties Ltd. (ACP) and 31.5 percent in Sycom Property Fund (SYC), the Johannesburg-based company said in a statement today. Acucap shares gained as much as 5.6 percent in Johannesburg trading while Sycom surged 11 percent. Growthpoint fell 1.9 percent.

The deal will give Growthpoint access to a portfolio of retail and office real estate worth 18.4 billion rand as the country’s fragmented property market is consolidating. South Africa’s Ascension Properties Ltd., Delta Property Fund Ltd. and Rebosis Property Fund Ltd. said in February they are considering a three-way merger, while Redefine Properties Ltd. (RDF) is in talks with Fountainhead Properties Ltd. to discuss a possible takeover.

“The past few years, we have had a listing boom and it’s natural for consolidation to happen,” Geoff Noble, a portfolio manager at Grindrod Asset Management, said in a phone interview from Durban. “The bigger the entity, the more favorable rates they have from financial institutions.”

Growthpoint is offering 1.9 of its shares for each of Acucap’s and 1.102 for each of Sycom’s. Acucap already holds 34.4 percent in Sycom, according to data compiled by Bloomberg. Growthpoint said it will issue about 191 million shares at 24.36 rand each on April 23 and May 13.

Growthpoint is exploring options to take control of the whole merged entity, Chief Executive Officer Norbert Sasse said in an e-mailed statement.

-By Kamlesh Bhuckory