Real News‎ > ‎2014‎ > ‎December 2014‎ > ‎

27th December 2014

Singapore Real Estate

Brisbane deal marks Wee Hur's 1st foray into Aussie property projects

Source: Straits Times / Money

CONSTRUCTION firm Wee Hur Holdings has acquired a plot of land in Brisbane for A$51.3 million (S$55.1 million), marking its first foray into property development in Australia.

To complete the deal, the company will need to acquire an additional 2,194 sq m of land for A$5.2 million, bringing the total acquisition amount to A$56.5 million and the total land area to 1.91ha, the firm said in a statement on Thursday.

Wee Hur is making the acquisition through its wholly owned Australian subsidiary, Wee Hur (Buranda).

The acquisition is part of the intended development under the preliminary development approval, the mainboard-listed company said in the statement.

The land is at the Buranda locality of Woolloongabba, a suburb about 3km south-east of the central business district of Brisbane, the capital city of the state of Queensland, Australia.

Woolloongabba is home to the Brisbane Cricket Ground, known as the "Gabba", and Princess Alexandra Hospital, a leading Brisbane hospital and a teaching hospital of the University of Queensland.

Wee Hur intends to use the land for a mixed-use development comprising residential, retail and office units.

The land was acquired from an unrelated and independent party.

The firm intends to fund this acquisition by internal resources.

The development will be carried out in several phases and construction is expected to commence in the third quarter of next year.

TEE Land buys Sydney hotel

Source: Straits Times / Money

PROPERTY developer TEE Land is buying a second hotel in Sydney as it moves to deepen its presence in developed markets.

A joint venture company, Potts Point Hospitality, will be formed by TEE Land subsidiary TEE Hospitality and Peter & Jan Clark (Levey Street) and Kenmooreland to buy the A$23.2 million (S$25 million) Diamant Hotel. The entity will be 55 per cent owned by TEE Hospitality.

The Diamant is a four-star, 76-room hotel near the nightclub area of Kings Cross. A sale of land contract has been signed.

"The acquisition is part of the group's strategy to build up a portfolio of recurring income-generating assets in developed markets such as Australia and New Zealand that provide short- to mid-term accommodation to end users," TEE Land said.

The deal, which will be financed by internal funds and bank borrowings, follows TEE Land's purchase in May of Quality Hotel CKS Sydney Airport. That deal was also conducted via a joint venture with Peter & Jan Clark and Kenmooreland.

It announced last month that it had bought the Thistle Guest House in Christchurch, New Zealand, for NZ$780,000 (S$798,000).

Singapore-based real estate developers are facing a weaker market at home, with demand being dampened by government cooling measures.

TEE Land has 15 residential projects here, with two more to come. The company also has a residential portfolio in Thailand.

"The group expects the property market in Singapore to remain muted and challenging," it said when announcing its results for the quarter to Aug 31.

"The New Zealand and Australia property markets are expected to remain relatively stable. The group continues to take a long- term view and will capitalise on opportunities in these places as and when they arise."

-By Wong Wei Han

Rentals of shoebox units may fall 5%-10%: Analysts

Rentals for shoebox apartments in Singapore are expected to fall by five to ten per cent in the coming years due to an increase in supply.

Source: Channel News Asia / Singapore

SINGAPORE: Rentals of shoebox units could fall by five to ten per cent in the coming years due to an expected increase in supply, said property analysts.

Shoebox units are small apartments - they include one-bedroom or studio units and are often bought as investments.

About 6,200 shoebox units will be completed in the next two years. Property consultant SLP International said this is a record number - compared to the 3,000 units on average per year for the last decade.

SLP said shoebox units within the city centre or near MRT stations would command better rentals compared to others.

Nicholas Mak, executive director of research & consultancy at SLP International, said: "Those shoebox developments that are located away from the city or MRT stations, I think they will not be doing very well in terms of their rental demand.

"And furthermore, if they are located within the suburban areas where typically family units are in more demand, such developments may actually languish in the rental market."

- CNA/al

Pitfalls plague strata-titled malls

Multiple owners spell woes in terms of collective sales and maintenance

Source: Straits Times / Money

Supply of strata-titled shops set to increase

THE blue seven-storey building sticks out like a sore thumb - algae-covered walls, peeling paint and sleazy pubs occupying its floors.

The Ming Arcade, on the corner of Cuscaden Road in the Orchard Road shopping district, is a poster child for the woes besetting many strata-titled commercial blocks.

The 32-year-old mall, which sits on 1,127 sq m of prime development land, has been put up for collective sale at least three times but without success.

The owners of the 88-unit complex, which is next to the Forum Shopping Mall, are keen to sell their units to a single buyer and move on but there have been no takers.

Having too many decision-makers has been the weakest link as the owners' efforts to sell were thwarted when Hotel Properties, which holds 52 per cent of the building, reversed its backing for a collective sale.

A common problem at strata-titled malls, which number around 55, is the difficulty of getting large groups of people to agree on issues varying from a price for a collective sale to the upkeep of the property. Such malls are usually owned by many people, or subsidiary proprietors as they are called, unlike those run by professional operators like CapitaMalls Asia.

More strata units have been built in recent years, prompting experts to warn about the pitfalls of operating in and owning shops at these developments.

As Mr Chan Kok Hong, managing director at Savills Property Management, put it: "It's every unit owner for himself."


BACK in the 1960s when Singapore took steps to develop its shopping scene as the population and middle class grew, the concept of shopping malls popped into the head of developers, said Mr Chan.

High Street, North Bridge Road and Orchard Road were the only main shopping streets then, so local developers adopted the idea of malls from the United States and Australia.

People's Park Complex was the first strata-titled mall, developed by Mr Ho Kok Cheong, who was embroiled in a massive corporate fraud case in 2005 and died a bankrupt a year later.

"It was the flavour of the day then; developers were not that financially strong to be able to build the whole mall and retain full ownership," said Mr Chan.

"Ho Kok Cheong laid his hands on the site but was not really very rich.

"So he got many people to buy units to finance it and he made the money from there."

It was more a case of profits rather than creating a successful retail offering.

"It's a good business decision. When a developer builds a strata mall, he's not thinking about the future of the mall; he wants an instant profit," added Mr Chan.

Lack of teeth

THESE malls have a management council made up of subsidiary proprietors to represent owners.

It has powers to manage the strata-titled development, as the Building and Construction Authority's Building Maintenance and Strata Management Act stipulates.

A professional managing agent is usually engaged to advise the management council on the running and maintenance of the strata development.

Mr Teo Poh Siang, managing director of property consultancy and managing agent Wisely 98, noted that a management council is required by law only to oversee that the "common property" at these malls, such as corridors, lifts and escalators, are in working condition.

"Its purpose is to collect and oversee funds to do what is necessary to just maintain the common property," said Mr Teo.

Falling into disrepair

WHILE this means that the building's lifts, lights and escalators are likely to be working, the management council might not be motivated or have the resources to keep the mall in pristine condition.

Strata-titled malls, which happen to include many of Singapore's oldest properties, often fall into disrepair and pale in comparison with flashy new-style malls managed by professionals.

Management councils, said Mr Teo, do not have the objective of making a profit, unlike institutions such as real estate investment trusts (Reits).

With a duty to deliver quarterly results and dividends to its unitholders, it is in the interest of Reit managers to ensure that malls are not run-down.

The multiple owners at strata malls also do not always see eye to eye on the lengths they are willing to go to maintain the property, said Mr Chan.

"There will be those who say 'just do the minimum'.

A representative from Ming Arcade's management council told The Straits Times that problems crop up when owners' contributions need to be increased in the face of escalating maintenance fees.

Management councils typically oversee two accounts - the maintenance and sinking funds - to which all owners contribute. The maintenance fund is set aside for regular services such as cleaning and security, while the sinking account is for longer-term projects such as replacing faulty structures in the building.

Getting refurbishment works done can be like trying to herd cats - the works can be carried out only if a majority of the owners agree. Some owners sit on the management council.

"Owners with many units and a larger share naturally will incur higher costs. So they're not willing to approve it when voting for more contributions. And the resolution will not be passed because they have the majority stake," he said.

Problems aplenty

MORE problems arise because management councils cannot control how units are used.

The lack of vision has left these malls evolving organically and taking on a character of their own. Singapore's shopping scene, as a result, is a mixed bag of glitzy malls and dingy complexes.

"Orchard Road starts with steetwalkers and ends with streetwalkers," in the words of a prominent industry player and professional mall manager, referring to Orchard Towers in Claymore Road and Orchard Plaza in Kramat Lane. Both are famous for their seedy nightclubs and bars.

Bukit Timah Shopping Centre, for example, was popular with shoppers in its heyday but has become a pale shadow of its former self with a proliferation of maid agencies today.

A key reason is that owners have different priorities.

"Say you own a shop and someone walks up to you and says he wants to pay $5 per sq ft (psf) each month, and the next agent says he'll pay you $10 psf, you'll go for $10 psf. You won't care whether he sells food in there or is a hairdresser," said Mr Chan.

Different rental expectations also mean that leases can be haphazard at strata-titled malls. At Ming Arcade, for instance, monthly rents can vary from $3 psf to $4.20 psf.

Mr Leonard Tay, associate director of research and advisory at Colliers International, said the success of a retail mall lies "fundamentally" in its ability to attract shopper traffic.

"That is usually generated and sustained by having a good mix of tenants comprising complementary trades, as well as a well- planned positioning that is in line with the demographic profile of its catchment population," said Mr Tay.

Institutional malls are in a "better position" to manage this because it has a single point of control in terms of marketing, management of tenants or property, added Mr Desmond Sim, research head of CBRE South-east Asia.

However, if the strata mall's management council believes in keeping up the condition of the complex, the outcome can be appealing.

An optometrist, who wanted to be known only as Mr Yew, has been at Bukit Timah Plaza since 1978. He noted that the centre's management council has taken the initiative to organise festive promotions such as freebies or lucky draws to attract shoppers. Newer tenants such as sandwich chain Subway have also been introduced to the mall to attract younger shoppers to invigorate the retail offerings.

Differentiation and flavour

THE common gripe among shoppers is a lack of differentiation among retailers at "cookie cutter" malls run by professionals.

Although electronics mall Sim Lim Square has come under scrutiny for its tenants' questionable sales tactics, the complex is best known for its array of computer parts not found at chain outlets.

Strata-titled malls can have a distinct and unique positioning when a handful of retailers in the same trade congregate, noted Mr Tay. Lucky Plaza, for example, is known for its Filipino shops and patrons while Golden Mile Complex is a popular hangout for Thais.

Strata malls, with a wider selection of goods, also provide alternatives for consumers.

Ms Jam Alarma, a Filipino executive in a relocation firm, said she frequents Lucky Plaza to remit money home, or to dine at Jollibee, a Filipino fast food joint found only at that mall.

Smaller retailers and entrepreneurs find rents of strata units more manageable than those run by Reits, and such malls give them a place to thrive.

Mr Raymond Koh, whose musical instrument store The Pianoman's Shop is in Bukit Timah Plaza, said tradesmen like him "do not like to touch those malls" as there are also restrictions on opening hours and operating days.

Back in fashion

WITH more mixed developments in the pipeline - Junction Nine in Yishun Avenue 9, ARC 380 in Jalan Besar and Alexandra Central in Jalan Bukit Merah are all under construction - the supply of strata-titled shops will only increase.

Strata-titled shops will account for about 15 per cent of the total retail space available by 2019 with 345,000 sq ft - or about 1,300 strata units - expected to be completed in the next 12 months, according to estimates from Chestertons.

To keep up with the times, a two-tiered management corporation scheme has been introduced: A main council on the first tier and one or more subsidiary councils on the second. The subsidiary councils govern the retail and residential components separately and remove any conflicts between the different stakeholders.

But the experts cautioned that history can only repeat itself at these newer malls. Yield-hungry investors who have flocked to snap up units after being driven out from the residential market by cooling measures should be prepared to lower their expectations, they said.

The concern is whether there is enough demand to meet the supply and if the retail mix at the newer strata malls would work out better compared with their older counterparts, said Mr Chan.

"There's no light at the end of the tunnel. You're going to have shopping centres with a hodge-podge of retailers again. The same problems will come back."

-By Cheryl Ong

Isetan to close shop at Wisma Atria

Japanese department store operator Isetan said it will cease its own retailing operations at Wisma Atria from Q2, 2015 but will continue housing tenants and providing necessary facilities management.

Source: Channel News Asia / Business

SINGAPORE: Japanese department store operator Isetan has announced plans to stop its own retailing operations at its Wisma Atria store from the second quarter of 2015.

In a stock exchange filing on Friday (Dec 26), Isetan said it intends however, to continue retail activities and food and beverage services at the premises "by housing tenants and providing the necessary facilities management".

While it will endeavour to lease out all floors of the premises, Isetan added that it may not be able to achieve full tenancy, because of market conditions or commercial reasons. This could mean that Isetan may continue operating retail activities in that part of the premises until tenants are found. 

Isetan Orchard has been at Wisma Atria since 1986. 

Isetan said it will continue to operate its own department store operations in the Orchard Road shopping belt via its Isetan Scotts Store in Shaw House. It also has other four stores in the suburbs - at Tampines, Katong, Serangoon Central and Jurong East - and Isetan reiterated that it is committed to its long-term purpose of running department stores and supermarkets.

Isetan posted a net loss of S$2.93 million for Q3.

- CNA/dl

The story of a Polish architect in Singapore

Source: Straits Times / Opinion

SINGAPORE will be celebrating its 50th year of independence next year. With an array of anniversary programmes and festivities, one can expect next year's events in Singapore to be nothing less than extraordinary. As recently named by travel guide Lonely Planet, Singapore is one of the world's top places to visit in 2015.

Singaporeans have many reasons to celebrate and plenty of achievements to be proud of.

In the course of just one generation, the Little Red Dot, as it is famously referred to, grew to become, among other things, a modern metropolis and a global business centre.

The success of Singapore is acknowledged worldwide and Singaporeans have earned the respect and admiration of the world for their resilience and extraordinary achievements.

Such recognition resonates strongly in my country, Poland.

Notably, a few months ago when the Minister of Foreign Affairs of Poland, Mr Grzegorz Schetyna, took office, he referred to Singapore in his inaugural speech as among the selected countries with which Poland would like to extend and deepen bilateral ties.

In recognition of their role in the success of Singapore, special tribute is paid to the pioneer generation who contributed to Singapore's achievements since the early days.

One individual who played a less-known role in Singapore's early development is my compatriot, Krystyn Olszewski.

He was a Polish architect and town planner who contributed with his craft and expertise to building modern Singapore in its initial years as an independent state.

He was a Pole by birth but Singaporean at heart. He spent here in Singapore a total of 15 active years of his professional career and contributed to the current design of the Lion City in many ways: from the comprehensive long-term city plan for the island's development to the local project of the Singapore Science Park and the design details of the first MRT stations.

A Pole among Singapore's pioneers, one may say.

A graduate from the department of architecture of the Warsaw University of Technology, with extensive international experience in regional, urban and transport planning, Mr Olszewski first came to Singapore in 1968 at the invitation of Mr Lee Kuan Yew.

He was a member of a United Nations team of consultants to the State and City Planning Office and was appointed chief designer of Singapore's Comprehensive Long-Term Concept Plan. The plan was officially announced in 1971 and most of its fundamental proposals have since been successfully implemented, leading to Singapore as we know it now.

It envisaged the development of new townships in a ring formation around the central water catchment area, a network of expressways and a mass rapid transit system to provide islandwide interconnectivity, and a new international airport to be located in Changi. The main features of the plan can already be found on the map drawn and signed by Mr Olszewski in 1969.

On April 9, 1971, The Straits Times quoted Mr Olszewski as a stern advocate of moving the international airport to Changi, in expectation of rapid development of air traffic and the airport's growth.

In the article, Mr Olszewski also suggested a new traffic arrangement in the city centre, with different levels of pedestrian and motor traffic, special pedestrian lanes and areas as well as a rail-based MRT system. At the same time, appreciating the beauty of Singapore's central area, he urged for preservation and rehabilitation of parts of Chinatown, retaining the liveliness of the Singapore River and controlling the height of buildings around.

Subsequently, Mr Olszewski acted as UN planning consultant to the Urban Renewal and Development Sub-project when he originated the concept of Marina City. He was also a planning consultant with Jurong Town Corporation and designed the masterplan of the Singapore Science Park in Kent Ridge. He also did pioneering studies on the environmental impact of industrial development.

In 1984, he assumed the position of senior architect with the Mass Rapid Transit Corporation and was responsible for the architectural design and implementation of seven of the elevated MRT stations. It was with great satisfaction that he could witness in 1987 the commencement of MRT system operations - the idea he had helped to put on paper 17 years earlier.

Singapore's 50th anniversary is an excellent opportunity to celebrate Singapore's planners and builders. I would like to express a deep hope that Mr Olszewski, whose ideas and designs helped to shape some of the most successful urban features of Singapore, will not be forgotten on that occasion.

I believe that, for example, a street in the city centre that he helped to reshape - or one of the MRT stations that he designed - could be named after him, even if his Polish surname seems difficult to pronounce.

To make it easier, I can suggest a simple method that Mr Olszewski came up with to help his Singaporean friends remember and pronounce his name: He would tell them, all you need to remember is just three English words and say it as if it was one word: "All-chefs-ski".

-BY Zenon Ko Sinak-Kamysz for The Straits Times

Companies' Brief

Local Reits register solid returns for 2014

But possible rise in interest rates next year could spell more volatility

Source: Straits Times / Money

2014 has been a relatively solid year for the local real estate investment trust (Reit) sector, although prospects of higher interest rates next year could result in more volatility in Reit unit prices.

The 28 Reits listed here have a total market value of $59.7 billion and averaged year-to-date total returns of 12.9 per cent.

Indicative dividend yields averaged 6.1 per cent, according to a report by SGX My Gateway on Wednesday. The Reits also have posted an average price gain of 6.3 per cent so far this year, the report said.

A year ago, the 25 Reits listed had a total market value of $50.5 billion, while indicative dividend yields averaged 6.1 per cent.

The FTSE ST Reits Index, which tracks 33 local trusts, has had total returns of nearly 16 per cent so far this year, outperforming the Straits Times Index's 7 per cent gain. This compares with a drop of 4.5 per cent a year ago.

Despite the US Federal Reserve's dovish stance on monetary policy at its meeting last week, a hike in the Fed Funds target rate is expected by the second quarter of next year. "This would likely influence the Singapore Government 10-year bond yield and Sibor to increase, and could result in volatility in the share prices of S-Reits," OCBC Investment Research noted in a report last week.

But most Reits have buffered up their balance sheets to keep gearing ratios at relatively comfortable levels, and have also put in place hedging strategies, OCBC said.

Trusts here have been tightening their belts on expectations that interest rates could rise over the next few years, which would have major repercussions as borrowing costs are a major component of their expenses.

While the brokerage has maintained a neutral call on the sector, it is overweight on office and retail Reits. It has buy calls on CapitaMall Trust, Frasers Centrepoint Trust and Starhill Global Reit.

Reits are popular among investors as they can offer higher yields than regular property stocks through tax-exempt dividends and a requirement to distribute at least 90 per cent of taxable net income to unitholders.

MayBank Kim Eng, which has a buy call on CapitaCommercial Trust (CCT), cited "23 per cent of pre-commitment leases signed to date for CapitaGreen, and GIC renewing leases at Capital Tower next year with significant rental reversion".

"GIC (CCT's top 10 tenant contributing 5 per cent of monthly gross rental income) will be renewing its leases at Capital Tower next year, with significant reversion, given its low base, according to management. CCT stands to benefit from higher office spot rents given its favourable lease expiry profile," the brokerage said.

It also said CCT's balance sheet remained strong, "with a low gearing of 28 per cent, and 80 per cent of borrowings are on fixed rates".

Its portfolio occupancy also remains strong at 99.4 per cent.

Meanwhile, OCBC downgraded its call on Suntec Reit to a "hold", saying it is expected to be "a beneficiary of the robust momentum in Singapore's prime office sector, although rental growth is likely to moderate from 2015".

"The momentum for prime office space in Singapore remains robust, as illustrated by the 3.3 per cent quarter-on-quarter and 14.7 per cent year-on-year increase in grade A rentals in third quarter 2014, based on data from CBRE.

"Notwithstanding this positive environment, we believe the pace of rental increase would moderate next year. Growth is expected to ease further in 2016, given the large pipeline of supply coming on stream," the brokerage said.

"The situation appears less sanguine for Suntec Reit's retail segment which, in our view, is underpinned by headwinds facing Singapore's retail sector. This has resulted in the relatively lacklustre committed occupancy rate of 60 per cent (as at Sept 30) for Suntec City Mall's Phase 3 development. We see downside risks to our full year 2015 gross revenue and distribution per unit forecasts if the situation remains sluggish," it said.

-By Grace Leong

PLife REIT sells Japan nursing homes for gain of S$12.3 million

PLife REIT which owns Mount Elizabeth Hospital, Gleneagles Hospital and Parkway East Hospital, sold seven nursing homes in Japan for S$88.3 million.

Source: Channel News Asia / Business

SINGAPORE: Parkway Life Real Estate Investment Trust (PLife REIT) has sold seven nursing homes in Japan for ¥7.95 billion (S$88.3 million) as part of a plan to divest assets of less strategic value.

PLife REIT said in a statement on Friday (26 Dec) it expects to recognise an estimated divestment gain of approximately S$12.3 million.

"The proceeds received from the divestment will further strengthen PLife REIT's balance sheet and provide greater financial flexibility to seize other attractive investment opportunities offering better value," the trust said.

PLife REIT owns the Mount Elizabeth Hospital, Gleneagles Hospital and Parkway East Hospital in Singapore. It also holds various healthcare assets in Japan, including a pharmaceutical product distributing and manufacturing facility in Chiba Prefecture, as well as part of the Gleneagles Intan Medical Centre Kuala Lumpur in Malaysia. 

- CNA/ek

PLife Reit sells seven nursing homes in Japan

Trust expects gain of $12.3m from its maiden divestment

Source: Straits Times / Money

THE manager of Parkway Life Real Estate Investment Trust (PLife Reit) has divested seven nursing homes in Japan for $88.3 million.

The Reit sold the properties - in Tokyo, Osaka, Kanagawa and Fukuoka - to a special purpose vehicle of global investment firm Fortress Japan Investment Holdings.

The deal, the trust's maiden divestment, has been completed, with the payment made in cash yesterday after relevant adjustments were made for security deposits and allocations of taxes, expenses and revenues.

The sale price is 8.3 per cent above the latest valuation, 16.1 per cent above the net book value of $75.7 million as at Dec 31 last year, and 28.1 per cent above the original purchase price of around $68.9 million.

PLife Reit is expected to recognise an estimated divestment gain of about $12.3 million over the net book value.

The proceeds from the divestment will strengthen PLife Reit's balance sheet and give it more flexibility if other opportunities offering better value arise, said Parkway Trust Management, the trust's manager.

Mr Yong Yean Chau, the manager's chief executive, added: "The divestment, which sees us divesting those assets of less strategic value, resonates well with our recycling strategy to rebalance and strengthen the overall quality and growth potential of PLife Reit's Japan portfolio.

"As a first mover in the market, PLife Reit is well positioned to take advantage of the growing elderly care health-care market in Japan, which has of late spurred increased competition from private sector investors, resulting in a more robust and exuberant investment market."

This divestment capitalises on a unique opportunity for PLife Reit to realise the seven properties at a good price, Mr Yong added, as the trust strengthens its Japan portfolio mix.

"As we remain competitive in making our acquisitions, the divestment proceeds will enable us to acquire other attractive assets which would serve to enhance the overall value and growth potential of PLife Reit," he said.

PLife Reit is one of Asia's largest listed health-care Reits by asset size.

It has 37 assets in Japan, including a pharmaceutical product distributing and manufacturing facility in Chiba prefecture and 36 nursing home and care facility properties in various prefectures.

-By Yasmine Yahya Assistant Money Editor

IPC sells two Japan hotels for 2.69b yen

Source: Business Times / Companies & Markets

Property player IPC Corporation said that it will sell its two hotels in Sapporo, Japan to GK Sapporo Holdings Tokumei Kumiai for 2.69 billion yen (about S$29.61 million). The buyer is a wholly owned subsidiary of Ichigo Group Holdings.

Stamford Land sells Dulwich Hill site for A$51m

Source: Business Times / Companies & Markets

Developer Stamford Land has sold its freehold Dulwich Hill site in New South Wales, Australia for A$51 million (S$55 million). The 10,132 sq m site was sold to an Australian real estate fund after being acquired for A$23.7 million less than a year ago.

Board changes at JTC and Competition Commission

Source: Straits Times / Money

CHANGES have been made to the boards of the Competition Commission of Singapore (CCS) and JTC Corporation (JTC).

The Permanent Secretary for the Ministry of Communications and Information, Mr Aubeck Kam, will be the new chairman of CCS, replacing Mr Lam Chuan Leong.

Mr Lam, a veteran civil servant who served in the Administrative Service for 35 years, is stepping down after 10 years at the helm of CCS.

Mr Kam is a current board member of the CCS.

He will have two new board members after Senior Counsel Aedit Abdullah resigned on Nov 11 following his appointment as a Judicial Commissioner of the Supreme Court, according to a Ministry of Trade and Industry (MTI) announcement yesterday.

Mr Andrew Tan, chief executive of the Maritime and Port Authority of Singapore, and Chief Prosecutor Mavis Chionh, from the Attorney-General's Chambers, are joining Mr Kam on the board.

The MTI has re-appointed Raffles Medical Group executive chairman Loo Choon Yong as JTC chairman, while three other board members have also been re-appointed: former KPMG managing partner Danny Teoh, Wong Partnership deputy managing partner Tan Chee Meng, and Mr Augustin Lee, Deputy Secretary of the Manpower Ministry.

The JTC board has three new members: Former CapitaLand deputy CEO Olivier Lim, HSBC Singapore CEO Guy Harvey-Samuel and Urban Redevelopment Authority CEO Ng Lang. Mrs Ong Choon Fah, DTZ's South-east Asia chief operating officer, is stepping down from the board.

Four board members of the Singapore Tourism Board have also been re-appointed: Sentosa Development Corporation CEO Mike Barclay, PricewaterhouseCoopers Singapore assurance partner Deborah Ong, Microsoft Operations managing director Jessica Tan and Allen & Gledhill partner Christina Ong.

All the appointments are with effect from Jan 1.

-By Mok Fei Fei

Views, Reviews & Forum

High-rise living, heightened consideration

Source: Straits Times / Opinion

IT SURELY is astonishing that the Housing Board should be compelled to turn to legislation to deal with recalcitrant residents who refuse it entry to carry out repairs of ceiling leaks. The problem involves some upper-floor residents who find all manner of excuses to obstruct the HDB, although both upper- and lower-floor flat owners are responsible for fixing leaky ceilings. This is an eminently sensible arrangement, and one whose equitable nature would be obvious if the obstinate residents were to suffer from ceiling leaks themselves.

Yet, many of them are callous towards their neighbours just one floor below, to an extent that would rank as almost unbelievable on the index of unsociability. Perhaps some of them disagree that they should be made to share the cost of repairing the ceilings of those below, forgetting that leaks tend to arise from above, and that the HDB offers a generous subsidy to assist flat dwellers in such cases.

As a result of such uncooperative attitudes, which can cause leaks to worsen, about 2,800, or a substantial third of ceiling-leak cases each year, take more than three months to resolve. Bemoaning the delay, National Development Minister Khaw Boon Wan is proposing an amendment to the law to enable the HDB to carry out work promptly. The move would be welcomed not only by affected residents but also by Singaporeans generally who believe that civilised high-rise living requires a heightened consideration of the twinned rights and responsibilities that are part and parcel of shared spaces. Certainly, privacy is an important element of such living, but it cannot be the paramount consideration when inter-floor disputes infringe the basic comfort of residents severely. That is when the HDB should intervene. Its effectiveness would be enhanced by the new law.

Seeking recourse to a new law is an opportune moment for introspection. Singapore's public housing programme covers the overwhelming majority of the population. Given its representative scale, it reflects the social lay of the land from its peaks to its plateaus and its troughs. Most HDB residents are responsible neighbours, for otherwise the public housing experiment would have been a social failure. However, there are also the uncaring and the downright unreasonable. Some make life unbearable for others, as did the Pasir Ris man who, for five years, banged on his walls and ceiling at all hours with what sounded like a solid object.

Greater control of what goes on within a flat would give the HDB the power to prevent a handful of residents from injuring the ambient comfort and security that are associated with public housing here.

How to get upper-floor residents to cooperate

Source: Straits Times / Forum Letters

IT IS imperative that the Housing Board be authorised to enter flats where ceiling repair work needs to be done ("HDB should have access to flats for ceiling repairs: Khaw"; Tuesday).

Currently, it may take months for the HDB to gain access if the upper-floor neighbours are uncooperative. In the meantime, the lower-floor residents have to bear with leaking ceilings.

At the same time, we must put ourselves in the shoes of the upper-floor neighbours, who may fear that they would be inconvenienced and their property adversely affected when repair work is carried out.

It does not help that they are required to pay part of the repair cost. They may deem it unfair since they are not the ones affected by the leak.

Perhaps the HDB can absorb 75 per cent of the cost while the lower-floor resident pays the remaining 25 per cent. In this way, the upper-floor neighbour need not fork out any money.

This could go a long way towards getting upper-floor neighbours to cooperate in such matters.

-BY Jeffrey Law Lee Beng

Offer loans for repairs involving fittings, fixtures 

Source: Straits Times / Forum Letters

THE Housing Board bears half of the repair costs of ceiling leakages and spalling concrete, with the other half shared equally by the upper- and lower-floor flat owners ("HDB should have access to flats for ceiling repairs: Khaw"; Tuesday).

If the repairs involve the removal and replacement of fixtures and fittings, however, the HDB will not cover the additional cost, which can be quite substantial.

To ease the financial burden on residents, the HDB ought to consider introducing a special financial loan scheme.

The sum to be repaid can be split into affordable instalments, so repairs of leaking ceilings can be carried out with minimal delay.

-By Mak Seck Hong

Global Economy & Global Real Estate

Lone Star Buys HeidelbergCement Bricks Unit for $1.4 Billion

Source: Bloomberg / News

HeidelbergCement AG (HEI) agreed to sell its brick and roof-tile business to Lone Star Funds for $1.4 billion, as it looks to cut debt and return its focus to core products such as cement and aggregates.

The sale of Hanson Building Products includes North American assets outside of western Canada as well as operations in the U.K., the Heidelberg, Germany-based cement maker said in a statement today. The price includes a payment of as much as $100 million from Lone Star that’s dependent on the performance of the business in 2015.

The sale of the unit has been timed to take advantage of a recent recovery in U.K. construction markets, making building materials more attractive to private equity buyers. Lone Star has targeted unwanted building-products businesses, buying a gypsum-wallboard maker from France’s Lafarge SA last year.

“This is well ahead of expectations on price and close to what the chief executive officer talked about before he entered an official sale process,” London-based Berenberg analyst Robert Muir, who recommends buying HeidelbergCement shares, said by e-mail, adding that the price represents about 14 times the division’s earnings before interest, taxes, depreciation and amortization.

Debt Cutting

HeidelbergCement CEO Bernd Scheifele is trying to cut debt after his company joined a debt-fueled acquisition spree by cement and concrete makers, which sought rapid global expansion and diversification into markets such as building products.

It purchased Hanson Plc, a British building materials company, for about $18.3 billion in 2007 with returns from the deal damaged by the subsequent financial crisis. Heidelberg’s current market value is 11 billion euros ($13.4 billion).

Construction orders in the U.K. during the third quarter increased by 3.2 percent year-on-year, according to the Office for National Statistics. Scheifele said last month that U.K. brick sales were particularly strong. U.S. construction spending in October rose 1.1 percent from September, though housing market data show a recovery has yet to gain steady traction.

-By Andrew Noel and Alex Webb

New-Home Sales in U.S. Unexpectedly Fall to Four-Month Low

Source: Bloomberg / Luxury

Purchases of new U.S. homes unexpectedly declined in November to a four-month low, underscoring a lack of momentum this year in residential real estate.

Sales dropped 1.6 percent to a 438,000 annualized pace last month following a 445,000 rate in October that was weaker than previously estimated, Commerce Department figures showed today in Washington. The median estimate of 73 economists surveyed by Bloomberg called for a 460,000 pace in November.

Strict bank lending standards and rising property prices have bridled the industry this year following a pickup in 2013. Further growth in employment opportunities and persistently low borrowing costs may help provide a spark for the housing market in 2015.

Housing “will get back in tune in 2015 with these continued low mortgage rates and more job growth,” said Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh, whose forecast for a sales pace of 440,000 was the closest in the Bloomberg survey. “I don’t see any fundamental weakening going on here, it’s just more of the very slow back-and-forth in housing improvement.”

Another report from the Commerce Department showed more income is being generated as the job market improves. In November, personal income climbed 0.4 percent, the most in five months. Household spending accelerated as well.

Economists’ estimates ranged from a November sales rate of 425,000 to 480,000 after a previously reported 458,000 pace in October.

Stocks Climb

Stocks rose, with the Dow Jones Industrial Average climbing above 18,000 for the first time. The Dow advanced 71 points, or 0.4 percent, to 18,030.4 at 10:13 a.m. in New York. The Standard & Poor’s 500 Index gained 0.2 percent to 2,083.43.

New-home purchases were down 3.7 percent from November 2013 on an unadjusted basis, today’s report showed. The median price of a new home increased 1.4 percent last month from a year ago to $280,900.

Purchases decreased in three of four regions in November, with a 12 percent slump in the Northeast and a 6.4 percent decline in the South. Sales fell 6.3 percent in the Midwest and rose 14.8 percent in the West.

The supply of homes at the current sales rate increased to 5.8 months from 5.7 months in October. There were 213,000 new houses on the market at the end of November, the most since May 2010 and up from 210,000 a month earlier.

Existing Homes

Sales of new properties, which are tallied when purchase contracts are signed, are considered a more timely measure of the market than sales of previously owned dwellings, which are counted when a sale is final.

Purchases existing homes fell 6.1 percent to a 4.93 million annual rate last month, the weakest since May, from a 5.25 million pace in October, figures from the National Association of Realtors showed yesterday in Washington. Meanwhile prices continued to rise, with the median value increasing 5 percent from a year earlier to $205,300 last month.

That may make it harder for low-income and first-time buyers to enter the market, even with mortgage rates at the lowest levels since May 2013.

The average rate for a 30-year fixed mortgage was 3.80 percent in the week ended Dec. 18, according to Freddie Mac in McLean, Virginia. That’s the lowest level since then-Fed Chair Ben Bernanke signaled that the central bank could start to slow its monthly pace of bond purchases if the economy showed sustained gains, setting off an increase in interest rates.

Toll Brothers

“We all think the combination of the price increases from the builders and that shock of the move in rates so quickly chilled the market,” Douglas Yearley, chief executive officer of Toll Brothers (TOL)Inc., said on a Dec. 10 earnings call. “And so from the summer of 2013 until the late summer of 2014, business was good, but business was flat.”

Still, Horsham, Pennsylvania-based Toll Brothers and other homebuilders remain optimistic, with confidence among those companies hovering close to a nine-year high this month, according to the National Association of Home Builders/Wells Fargo sentiment gauge.

“We’ve seen some signs of pretty significant improvement since the end of the summer,” Yearley said. “I think the buyers are still a little bit skittish, and we’re working through this recovery, but as we’ve said, it’s going to be a bit bumpy.”

Fed policy makers are closely monitoring economic data as they debate when to raise their benchmark interest rates following the worst recession in the post-World War II era.

Home Construction

Commerce Department data last week showed that the pace of U.S. home construction slowed in November, with housing starts declining 1.6 percent to a 1.03 million annualized rate. Building permits also fell, showing construction is also unlikely to surge in the immediate future.

Sustained labor-market improvement, pent-up demand and a growing population will also lure buyers into the market in the coming year, Stephen Stanley, chief economist at Amherst Pierpont Securities LLC in Stamford, Connecticut, wrote in a note to clients yesterday.

“2014 was close to a lost year for the housing recovery,” Stanley said. “With the pace of household formation beginning to creep back toward normal, the demand for homes is likely to firm.”

-By Victoria Stilwell

Greentown Surges in Hong Kong on Stake Sale to Building Firm

Source: Bloomberg / Luxury

Greentown China Holdings Ltd. (3900), whose chairman ended a share sale to a rival developer, surged the most in 2 1/2 years in Hong Kong after it agreed to sell 24 percent of the company to a state-owned construction group.

The shares of Greentown, based in Hangzhou in eastern China, rose 21 percent, the most since June 2012, to close at HK$7.65. They resumed trading today after the stock was suspended on Dec. 22. The shares had dropped 10 percent on Dec. 19 when Greentown said the plan to sell a same-sized stake to Sunac China Holdings Ltd. (1918) was terminated.

Greentown, founded by chairman Song Weiping, will sell the shares instead to China Communications Construction (1800) Group, the parent of the nation’s biggest building firm, for HK$6 billion ($773 million), or HK$11.46 per share, an 81 percent premium to the closing price on Dec. 19. The construction firm will become one of the two largest shareholders and Song’s holding will drop to 10 percent from 22 percent.

China Communications Construction may increase its stake in Greentown in the future, said China International Capital Corp. analysts Eric Zhang and Cheng Yang in a note.

“We do not rule out the possibility that it would eventually become Greentown’s largest shareholder and turn Greentown into its real estate platform,” they said, referring to the state-owned company. They have a buy rating on Greentown.

Song had said he was wrong to sell a stake to Sunac as the two firms “don’t blend,” paving the way for the termination of the agreement reached in May.

China Communications Construction will get two out of four executive board seats, with one of them being a co-chairman role, according to an exchange filing today.

Hong Kong’s Wharf Holdings Ltd. (4), which bought shares in Greentown in 2012, will continue to hold 24 percent of the Chinese developer, while Greentown Chief Executive Officer Shou Bainian will have his stake cut by half to 8.1 percent.

-By Michelle Yun

GM Sells NY Hudson Riverfront Site for 1,177 Residences

Source: Bloomberg / Luxury

SunCal and Diversified Realty Advisors bought the site of a former General Motors assembly plant on the Hudson River north of New York City to build properties including 1,177 residences and a hotel.

SunCal expects to break ground next year at the site in Sleepy Hollow, about 30 miles (48 kilometers) north of New York City, and open the first residences in 2017, said Frank Cappello, president of the company’s eastern region. The purchase was completed yesterday in New York, he said.

“Westchester County is so supply-constrained that this is a very unique opportunity to develop anything of scale,” Cappello said in a telephone interview. “We’ve been targeting real estate where it’s not hard to predict that people want to live there, but it’s hard to create the homes and other uses.”

The land, a 97-acre (39-hectare) parcel, sold for $39.5 million, according to a person with knowledge of the deal, who asked not to be named because the terms aren’t public yet. Cappello declined to discuss the price. Bill Grotz, a General Motors spokesman who confirmed the property was sold, also declined to discuss details of the transaction.

“We support the redevelopment of former GM sites and are pleased with the positive outcome achieved in Sleepy Hollow,” Grotz said in an e-mailed statement.

Housing Mix

Housing at the project, to be called Lighthouse Landing, will be apartments, condominiums and townhouses, according to Cappello. The hotel will have 140 rooms. The development, located between the Metro-North Hudson Line railroad tracks and the river, will have 135,000 square feet (12,500 square meters) of retail space and 35,000 square feet of offices, according to documents filed today with the Westchester County Clerk. The developers will set aside about 45 acres of open space, including 16.1 acres on the waterfront, according to the documents.

“It strikes every hot button that a developer would want,” Jonathan Stein, managing partner of Summit, New Jersey-based Diversified Realty, said in a telephone interview, citing the proximity to the rail line, the Hudson River and New York City. Stein has been working to buy and develop the site since 1999, a process delayed by a public reviews, lawsuits between government agencies and the financial crisis that led to GM’s bankruptcy.

In the area that includes Westchester, the median sale price of an existing single-family home was $489,000 in the third quarter, up 1.4 percent from a year earlier, according to the National Association of Realtors.

California, Texas

SunCal, based in Irvine, California, acquires and develops major residential properties and commercial developments. It has communities under development in California, Georgia, Nevada,Texas and Virginia.

Diversified Realty’s existing portfolio and project pipeline includes the operation and development of over 6,000 residential units and 600,000 square feet of commercial space across New York, New Jersey, Pennsylvania, Maryland and Connecticut.

Sleepy Hollow was the setting of stories by author Washington Irving, who wrote in “The Legend of Sleepy Hollow,” published in 1820: “The whole neighborhood abounds with local tales, haunted spots and twilight superstitions.”

-By John Gittelsohn

Property company Immofinanz offers Russian tenants temporary FX peg

Source: Business Times / Real Estate

Additional Articles of Interest