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21st November 2014

Singapore Economy

Singapore retains top spot in EIU Business Environment Rankings

It scored well for its open economy and status as a regional commercial hub. 

Source: Channel News Asia / Business

SINGAPORE: The Republic has retained its title as the world’s most investor-friendly location for the 2015-19 period, according to this year’s Business Environment Rankings from The Economist Intelligence Unit (EIU) released on Thursday (Nov 20).

Singapore scored well on its open economy and status as a regional commercial hub.  It had also emerged tops for the 2014-18 ranking. Switzerland and Australia took second and third place, respectively. Hong Kong took fourth spot, and is the only other Asian city in the top 10.

The EIU ranking measures the quality of 82 countries’ business environments. Factors examined include political environment, market opportunities, and policies related to free trade,  foreign investment, and the labour market.


The emerging BRIC (Brazil, Russia, India and China) economies ranked poorly, as these are "hard places to do business" despite the attractions of their size, the report stated.

EIU also pointed to expectations of battered confidence and slow recovery in many countries. 

"The trend of continually improving business environments - underpinned by robust growth, liberal economic reforms and investment in infrastructure - has stalled, in some areas the reverse is happening. The future global business landscape will be characterised by lower cross-border capital flows, tighter regulation and less risk-taking," the report stated. 

"The economic environment will be affected by fiscal imbalances, mainly a result of weak growth. Doubts about the soundness of banks and poor access to finance cloud the outlook for financial systems. There is a rising risk of unrest in many countries and increased international tensions also mar the outlook for political stability," it added.

- CNA/xy

Global economy stumbles, but Singapore uptick still seen

Export demand is less likely a problem for growth than domestic labour market tightness and rising US interest rates

Source: Business Times / Government & Economy

The global economy - which Singapore now relies on more heavily to support growth given domestic restructuring's drag - has been handed a negative report card in a week heavy with economic data: Japan fell unexpectedly into recession, the eurozone's recovery stalled and China's factory output shrank.

-By Teh Shi Ning

Singapore out of top 10 again in IMD world talent ranking

Source: Business Times / Government & Economy

SINGAPORE is ranked only 16th in the world when it comes to talent competitiveness, due to its imbalance in optimising homegrown talent and attracting those from overseas.

According to IMD's latest annual World Talent Report, this disparity has pushed Singapore out of the top 10 rankings. It placed 17th last year - a far cry from its 2nd position in 2008, and its 10th position in 2005 (when the rankings were first compiled).

This year, IMD's World Talent Ranking is led by Switzerland, Denmark, Germany, Finland and Malaysia.

Findings show that Singapore does not fare so well in the investment and development of homegrown talent, and has the highest cost of living among 2014's sample of 60 countries.

And unlike countries such as Switzerland - which achieve a "positive balance" between investing and developing local talent, and the ability to attract and retain overseas talent - Singapore's results show a "fair degree of imbalance between the criteria covering the homegrown talent pipeline, and the ability of the country to attract overseas talent". "The county thus fluctuates in and out of the top 10 talent ranking during the period under study," said IMD.

In contrast, IMD said of Singapore's neighbour: "(Malaysia) shows that a strategy aiming at improving both the homegrown and overseas talents has a positive impact on the country's performance in the overall talent ranking."

Malaysia has steadily improved its position on the overall world ranking talent from 20th place in 2005 to the No 6 in 2010 and now No 5. It raised its scores in employee training criterion, the availability of skilled labour, and access to finance skills. At the senior management level, Malaysia improved in international experience.

The Switzerland-based business school's rankings reflect three key factors: a country's investment in and development of its homegrown talent, its ability to retain local talent and attract those from overseas, and its readiness to fulfil market demands with the available talent pool.

While some of the 20-plus indicators measured are statistical, others are drawn from an IMD opinion survey of 4,300 international executives.

As for Singapore, IMD said, the country's scores in the investment and development factor "seem low". For one, total public expenditure on education as a percentage of GDP is just 3 per cent - the second lowest of all countries measured - compared to 8 per cent in top-ranked Iceland and Israel, and 5.8 per cent in Malaysia.

It also places out of the top 10 for the implementation of apprenticeship programmes and the prioritisation of employee training, with "somewhat low" scores compared to countries such as Denmark and Germany.

And while its ability to attract foreign talent is high - it ranks third on that measure - so is its cost of living. In fact, it is the most expensive country in the sample in 2014. Said IMD: "The country's scores in the investment and development factor seem low and cost of living is high - suggesting that Singapore currently has a large pool of talent that it has nurtured and attracted, but that this pool may shrink slightly in the future."

On the bright side, however, Singapore is at the very top when it comes to fulfilling market demand with the available talent pool. Its scores are consistently high for the educational system, science in schools, university education, and management education criteria.

Despite its fluctuating performance, Singapore was still identified as one of the most talent-competitive countries - defined as those that ranked in the top 10 for five or more years from 2005 to 2014. It reached the top 10 in six of these 10 years, and was second in 2008.

Canada, Denmark and Switzerland are the only countries ranked in the top 10 every year from 2005 to 2014, while the Netherlands dropped out of the top 10 just once, in 2006.

IMD said: "The fluctuation in the overall ranking experienced by some of these countries throughout the period may be the result of cyclical economic and socio-political issues that impact, for example, immigration policies and/or investment in education. In some cases, such policies could result in the diminishing ability of countries to attract overseas talent despite strong commitment to local talent development."

-By Kelly Tay

Singapore ranks 16th in IMD's talent ranking

The city-state ranks behind countries such as Switzerland, Denmark, Germany and Malaysia in its ability to develop, attract and retain talent.

Source: Channel News Asia / Singapore

SINGAPORE: The Republic ranked 16th globally in a new report that measures the ability of countries to develop, attract and retain talent, behind countries such as Switzerland, Denmark, Germany and even Malaysia.

Announcing this on Thursday (Nov 20), the IMD World Competitiveness Center – the organisation behind the widely cited World Competitiveness Yearbook – said its talent report is based on more than 20 indicators – some statistical and others drawn from an IMD survey of 4,300 international executives.

Singapore would have ranked 17th last year had the talent report been compiled then.

IMD had ranked Singapore much higher – at number three behind the United States and Switzerland – in its World Competitiveness Yearbook that was released in May this year.

In its comments on Singapore, IMD said the city-state's scores are consistently high in areas such as the educational system, science in schools, university education and management education. But Singapore is also the most expensive of the 59 countries that were ranked in this category.

IMD said its scores suggest Singapore currently has a large pool of talent that it has nurtured and attracted, but this pool may shrink slightly in the future.

- CNA/cy

S'pore wholesale trade falls 5.7% in Q3

Source: Business Times / Consumer

Singapore's domestic wholesale trade dropped 5.7 per cent in the third quarter of 2014 compared to a year ago, the Department of Statistics said on Thursday. The fall was largely due to the general wholesale trade industry, which recorded the largest decrease of 22.7 per cent in domestic sales.

-By Kelly Tay

Singapore Real Estate

Funding for town councils based on flat types, number of units: MND

The Ministry for National Development has clarified why the Aljunied-Hougang-Punggol East Town Council received smaller government grants of S$7.3 million for FY2011 and FY2012 compared to S$26.7 million in FY2010.

Source: Channel News Asia / Singapore

SINGAPORE: The funding for town councils is based on the number of HDB flat units and flat types in an area, said the Ministry of National Development (MND) on Thursday (Nov 20). MND said this, in response to media queries on government grants for town councils.

Questions have been raised in various forums on the grants given to the Aljunied-Hougang-Punggol East Town Council (AHPETC) run by the opposition Workers' Party in comparison to other town councils run by the ruling People's Action Party (PAP). Some alleged that government grants helped PAP-run town councils run an operating surplus instead of a deficit.

This comes after Minister of State for National Development Desmond Lee highlighted AHPETC's finances recently, saying its sharp increase in service and conservancy charges (S&CC) arrears has serious implications for residents. 

MND had said AHPETC's poor performance in the annual Town Council Management Report released earlier this month (Nov 4) was of "grave public concern". The report banded AHPETC “red” in corporate governance and S&CC arrears management, as its arrears rate rose to 29.4 per cent as at end-April 2013. 

MND's replies are reproduced below.

Question: How is the S&CC Operating Grant computed?

MND Answer: The S&CC operating grant is allocated to all Town Councils (TCs) based on the number of HDB flat units and the flat types. Smaller flat types get higher grants. 

The grant enables TCs to subsidise the S&CC for residents living in 4-room and smaller flats, with more being allocated for 1-room (S$33.70 per month), 2-room (S$26.20 per month) and 3-room (S$17.00 per month) households. The grant for each 4-room household is S$9.00 per month.

This grant formula has been in place since 1999, and is applied consistently to all TCs. S&CC grants are not based on the number of voters, nor does it apply to private property residents. TCs will receive more grants if they have more and smaller HDB flat types.

Ang Mo Kio TC and Tanjong Pagar TC receive more grants than AHPETC because they have more and smaller HDB flats. Ang Mo Kio has 89,127 HDB flats, of which 39 per cent are 3-room or smaller. Tanjong Pagar has 75,050 HDB flats, of which 59 per cent are 3-room or smaller. In comparison, AHPETC has 71,760 flats, of which only 29 per cent are 3-room or smaller. Likewise, even though Chua Chu Kang has about the same number of HDB flats (71,348) as AHPETC, Chua Chu Kang receives less S&CC grant (S$4.9 million compared to AHPETC’s S$7.2 million), because only 12 per cent of its flats are 3-room or smaller.

Question: What is the difference between Operating Surplus and Accumulated Surplus?

MND Answer: The operating surplus = income – expenditure for any one year. The TC’s operating surplus for that year is not affected by the transfer to the Sinking Fund under Section 34 of the TCs Act.

The accumulated surplus is the amount of operating surplus cumulated over the years. Under Section 34 of the TCs Act, all TCs have to transfer the stipulated amount of their accumulated surplus to their Sinking Fund after an election. This is the TC’s own Sinking Fund. The TC can use this to pay for future major repair and repainting works. After GE 11, Aljunied transferred S$3.7 million Accumulated Surplus (80 per cent of total Accumulated Surplus) to its Sinking Fund, as required by law.

Question: If Aljunied had transferred its accumulated surplus to its own Sinking Fund, can MND clarify MOS Desmond Lee’s remarks about the operating surplus under Aljunied vis-à-vis the operating deficit under AHPETC? Why is it that the Aljunied TC got S$26.7 million in government grants in FY2010/2011, then a much lower $7.3 million in both FY 2011/2012 and FY2012/2013?

MND Answer: MOS Desmond Lee stated in his statement of 7 Nov 2014: “What Mr Low (Thia Khiang) also did not disclose is that Hougang managed to avoid a cash flow problem only after he merged Hougang with Aljunied after GE 2011. The two TCs’ finances were then co-mingled. Before merger, Aljunied had an operating surplus of S$3.3 million. Within two years, the merged AHPETC’s financial position has deteriorated rapidly. The operating surplus of S$3.3 million Aljunied had in FY10 had turned into an operating deficit of S$734,000 in FY12.”

MND has observed that AHPETC’s financial position has deteriorated rapidly, based on AHPETC’s own financial statements. Despite an increase in income (AHPETC’s income in FY12 was S$29.8 million, compared to $26.8 million in FY10, a 11 per cent increase), its expenditure increased more significantly (its expenditure in FY12 was S$35.4 million, compared to $27.3 million in FY10, a 30 per cent increase). Its operating deficit before grants was $5.6 million in FY12 compared to $500,000 in FY10 (1,120 per cent increase). After grants and less transfers, it ran an operating deficit of S$734,000 in FY12 compared to a surplus of S$3.3 million in FY10.

Of the S$26.7 million in government grants received by Aljunied in FY10, S$19.2 million was a one-off grant to help TCs offset the cost of the Lift Upgrading Programme. So the perceived drop in government grants after FY10 is due to the one-off grant (Hougang TC, under the Workers’ Party, also received S$5 million in FY10).

Question: Can MND share the table which AHPETC used to report its S&CC arrears for the month and the TC’s Apr 2013 report (the last instance in which MND said AHPETC reported its monthly arrears)? 

All TCs submit their S&CC arrears report monthly, using the same table. The table is simple (sample below), and has been in use by all TCs including Hougang Town Council since Apr 2008. In fact, AHPETC used the form for some months till Apr 2013 when it reported an arrears rate of 29.4 per cent. Since then, the TC did not submit the monthly returns. Based on the TC’s last reported S&CC arrears rate of 29.4 per cent, 39,000 households in AHPETC were effectively subsidising 16,000 households who did not pay their S&CC.

MND notes from AHPETC’s submission that 10,000 (63 per cent) out of the 16,000 households only started owing arrears in the last two years. AHPETC’s report also showed that the arrears rate for hawkers was 8.2 per cent while that for commercial tenants was 50.2 per cent. The TC stopped submitting the required monthly S&CC arrears report to MND after Apr 2013. We do not know AHPETC’s current arrears rate.

Question: What can MND do if a TC refuses to submit the required information? 

MND Answer: Under the TCs Act today, MND has no power to compel TCs to submit information to MND, and there is no penalty under the TCs Act if the TC does not do so. There are currently only three offences that attract fines – these relate to the misuse of TCs’ funds, contravention of TC-Lift Upgrading Programme (LUP) rules and the wilful withholding of information required by an auditor without reasonable cause. This is because the TCs are supposed to be directly accountable to their residents. MND is reviewing the TCs Act with a view to strengthen regulatory oversight over the TCs, to better safeguard residents’ interests. 

- CNA/ly

MND gives details of town council grants to refute online speculation

Source: Today Online / Singapore

SINGAPORE — The service and conservancy charge (S&CC) grants that are allocated to town councils (TCs) by the Government are based on the number of Housing and Development Board flat units and flat types, with smaller flats getting higher grants, the Ministry of National Development (MND) said yesterday.

In responding to media queries on how the grants — which enable TCs to subsidise the S&CC for residents living in four-room flats and smaller — are calculated, the ministry also said the formula has been in place since 1999 and is applied consistently to all town councils. It added that the amounts are not based on the number of voters in each TC.

The MND’s statement yesterday came in the wake of concerns about the high arrears rate at the Aljunied-Hougang-Punggol East Town Council (AHPETC). After red flags were raised, allegations were bandied about online about the size of the grants given to People’s Action Party town councils vis-a-vis that of the Workers’ Party (WP)-run AHPETC, suggesting that the former are able to post operating surpluses because they receive more in government grants. AHPETC, the online posts charged, is in deficit because it receives less.

In its response to queries about the allegations, the MND said TCs will receive more grants if they have more and smaller HDB flat types, and detailed the amounts given based on flat size. One-room flats are awarded S$33.70 per month, it said, while two-roomers are given S$26.20 per month and three-room ones, S$17 per month. For four-room households, the grant is S$9 per month. It gave several examples to explain the relationship between the percentage of small flats in a TC and the grant it receives.

Addressing another allegation — that the amount of grants given to AHPETC dropped sharply after the WP took over — the ministry said the difference was due to a one-off, S$19.2 million grant given in the 2010 financial year to offset Lift Upgrading Programme costs. This, it said, explained why AHPETC received S$26.7 million that year, compared with S$7.3 million in the 2012 financial year.

The issue of grants went on the boil after Minister of State (National Development) Desmond Lee raised concerns about what impact AHPETC’s arrears rate would have on its financial position. In a statement issued on Nov 7, Mr Lee noted that the TC’s financial position “had deteriorated rapidly” following the merger of Hougang and Aljunied during the 2011 General Election, with Aljunied’s operating surplus of S$3.3 million in financial year (FY) 2010 turning into a S$734,000 deficit in FY 2012.

His comments came after the TC received a red ranking — the worst in the MND’s colour-coded system — for its arrears rate of 29.4 per cent. It was the third straight year that AHPETC received such a ranking.

Yesterday, the ministry said that, based on AHPETC’s own financial statements, it had observed a rapid deterioration in the TC’s financial position despite an increase in income. It noted a 30 per cent increase in expenditure — from S$27.3 million in FY10 to S$35.4 million in FY12 — which outpaced an 11 per cent rise in revenue for the corresponding period.

The online reports also said that the PAP-run Aljunied TC had transferred its S$3.3 million operating surplus to the Sinking Fund after the 2011 General Election, when the WP took over Aljunied GRC. The MND clarified that a TC’s operating surplus is not affected by such transfers, which are mandatory after each election. It said the Sinking Fund, which comprises accumulated surpluses over the years, can be used to pay for future major repairs and maintenance projects.

The MND reiterated that the present Town Councils Act does not give it power to compel TCs to provide audit information to the ministry.

Only three offences attract penalties, it said: Misuse of funds, contravening rules of the Lift Upgrading Programme, or withholding information required by an auditor without reasonable cause. This, it added, is because town councils are “supposed to be directly accountable to residents”. The Act is currently being reviewed to strengthen oversight over TCs to better protect the interests of residents.

-By Kelly Ng

Policy tweaks to ensure a softer landing

Source: Business Times / Real Estate

The calls to ease the property cooling measures affecting the Singapore residential property market have gained intensity amid news of tepid property sales and falling prices. Although the government has said that prices have yet to reach a "meaningful correction", it may be worthwhile considering recalibrating some of the cooling measures, to ensure a sustainable property market in the long run and a softer landing for the real estate sector.

-By Lee Liat Yeang

TDSR running out of steam?

Source: Today Online / Business

One conclusion we can draw from the property market cooling measures is that placing limits on borrowing is more effective than levying additional stamp duties in bringing down housing prices in Singapore. However, even the loan curbs appear to be losing their effectiveness in reducing prices further.

The SRX Property Index for Private Resale Flats shows that the first Additional Buyer’s Stamp Duty (ABSD1) — imposed in December 2011 — did little to curtail resale volume and prices.

Although the foreign buyer surcharge of 10 per cent discouraged investment from overseas, diverting money originally destined for Singapore to other international property markets such as London and New York, ABSD1 actually spurred the local investment market.

ABSD1 did local investors a favour because it removed some foreign competition for private properties while creating expectations for lower prices. Singaporeans thought they could take advantage of the lower demand from foreigners to get a better price.

However, things did not go according to plan because of low interest rates. As a result of the low rates, property was a much more attractive asset class than cash and bonds. Furthermore, financing property investments was cheap. Armed with inexpensive financing and facing little competition from overseas, more Singaporeans entered the market and drove prices up.

Recognising that ABSD1 did little to discourage local demand for private property, the Government raised the additional duties in January last year. ABSD2 levied a 15 per cent tax on most foreign buyers and a 7 per cent duty on Singaporean citizens purchasing a second property.

ABSD2 reduced the monthly resale volume range of 781-to-1,439 units in 2012, excluding the Chinese New Year holiday period, to the 581-to-734 range during the first half of 2013, excluding January and Chinese New Year.

However, ABSD2 did not cause a meaningful decline in prices because sellers, believing that cooling measures would not last forever, were willing to yield a little on price, but not that much.

They knew the stamp duties had not altered the fundamental value of their homes. As such, they could justify selling at the price plateau — since prices were high and unlikely to go up. In enough instances, they resisted going below the price plateau by exiting the market and sitting on the sidelines.

The Government clearly recognised that the stamp duties, even when applied to Singaporeans, were not doing the trick. So it introduced the Total Debt Servicing Ratio (TDSR) framework in June last year in an effort to prevent Singaporeans from over-borrowing.

The framework — which requires the financial institution to ensure the home loan does not push the borrower’s total debt obligations beyond 60 per cent of his or her total income, among other restrictions — worked.

It took a while, but private resale prices finally capitulated in July this year, when the market fell 5.6 per cent from its peak in January. Since then, prices have reached a new plateau, bouncing around the 168.8 and 169.8 range of the SRX Price Index for four consecutive months. As of last month, the latest SRX Property data showed prices are down about 5.2 per cent from the peak after a slight increase of 0.4 per cent since September.

This new plateau suggests a new support for prices in the private, non-landed housing market. In other words, prices seem to be stuck at these levels. In addition, looking at the SRX Property graph (picture), resale volume since March this year seems to have achieved a new equilibrium of around 400 units per month.

This new equilibrium in resale volume, coupled with the price plateau, suggests that the TDSR might have run out of steam in terms of its effectiveness in reducing prices further.

Therefore, for prices to continue to decline, something must be introduced into the equation to alter the market’s dynamics. So, the first question is whether the Government is satisfied with a 5 per cent decline. If not, what additional policy tools are available to the authorities?

Given that the cooling measures have proven that price is a stubborn variable in the property market, if it wants the price to drop further in the private non-landed resale market, the only way is to increase supply. Demand, at its current level, is about as far down as cooling measures can push it.

-By Sam Baker, Co-founder of SRX

More homes go under the hammer in weak market

Big jump in property auctions as banks try to recover unpaid loans

Source: Straits Times / Top of The News

SINGAPORE'S weak property market has sparked a big jump in the number of auctions by banks trying to recover mortgages where borrowers have defaulted.

Figures from Colliers International show that 131 properties of all types were put up for auction sale by mortgagees, or lenders, from January to October. That was more than five times the 25 properties in the same period last year. Of that, 98 homes were put up for auction by mortgagees in that period, seven times the 14 homes in the 10 months last year.

Experts say borrowers in default have found it difficult to sell their properties on their own, as buyers remain cautious.

Some upscale homes have been hit, including Marina Bay Residences, The Sail@Marina Bay, Reflections at Keppel Bay and Turquoise in Sentosa Cove.

In prime Districts 9 and 10, units at Thong Sia Building in Orchard Road, The Verv at River Valley and Residences at Killiney were among those affected.

An auction by Knight Frank yesterday featured a 1,755 sq ft unit at Botanic Gardens Mansion in Tanglin, while an auction today by Colliers lists two 1,926 sq ft units at The Laurels in Cairnhill Road as mortgagee sales.

A JLL auction next week includes a unit at Ville Royale in River Valley and a Reflections at Keppel Bay unit.

More luxury properties are showing up in mortgagee sales as the high-end market has suffered for longer, said Century 21 chief executive Ku Swee Yong.

Some may be speculators caught by cooling measures, as values in the high-end market have fallen by as much as 25 per cent and they may be unable to service debt, said Chestertons managing director Donald Han.

Fewer suburban apartments are facing mortgagee sales, said Colliers deputy managing director Grace Ng. The lower overall price means they can service loans more easily and find buyers if they default, she added.

In all, 19 mortgagee properties have been sold for $29.6 million in the 10 months, including 11 homes worth $21.59 million. A big-ticket mortgagee sale this year was a 2,863 sq ft apartment in Draycott 8 off Stevens Road, which sold for $5 million.

Unless government curbs are relaxed, the total number of mortgagee sale properties could swell to 160 to 170 this year, five times the 32 last year, said Ms Ng. Still, this is fewer than the 195 mortgagee sale properties in 2009 and 270 in 2008.

Some believe mortgagee sales are a better bargain given the eagerness of banks to get their money back, but banks must observe a minimum price representing market value, said Mr Han.

Knight Frank auction head Sharon Lee said auctions this year have been better attended - yesterday's was a full house.

Said Mr Tan Choon Hin, managing director of group credit (retail) at UOB Group: "A bank will repossess a property only as a last resort."

If sale proceeds cannot cover the loan, the customer must work out a reasonable repayment plan with the bank for the outstanding amount, said Mr Joseph Wong, head of consumer credit risk at OCBC Bank.

-By Rennie Whang

SLP International, IP Global join hands in property marketing efforts

Source: Business Times / Real Estate

ANOTHER partnership has taken shape in the realty business here, this time involving property agency SLP International Property Consultants and property investment firm IP Global.

SLP International - which provides real estate services to both domestic and international investors in China, Singapore, Indonesia and Malaysia - will help IP Global to reach new investors in these markets through its network of sales associates and through its SLP-MORE subsidiary in Hong Kong. Under the partnership, IP Global and SLP International will also work together on property exhibitions in Singapore and Hong Kong on overseas properties.

SLP International executive director Tony Koe said: "We have seen growing demand from our clients for properties in more stable overseas markets as volatility remains in the local property market in which we operate." He added: "The partnership will provide access to a larger selection of properties in these markets for our clients, and also to expert advice and support from a leading real estate investment company."

The two companies have already undertaken joint exhibitions in Singapore in recent months. Their first joint exhibition here was on Oct 18 and 19, when IP Global exhibited Carlton House, a 90-unit development of studio, one- and two-bedroom apartments in Ilford, Greater London. This marked SLP International's inaugural marketing of a UK property here.

This month, the duo collaborated again in Singapore over the Nov 8-9 weekend to feature Newstead Central, a 149-unit development in the flourishing Newstead district of Brisbane, Australia.

SLP International has slightly over 60 registered sales agents in Singapore. Including its subsidiary SLP Realty and associate SLP Scotia, the whole SLP network has over 1,000 sales agents.

IP Global - whose focus is on property investment - has fewer than 10 sales agents under its Singapore-licensed agency IP Real Estate Investments Pte Ltd. It has invested over US$1.6 billion alongside their clients in 29 markets since 2005.

IP Global executive director Amous Lee said that the firm looks forward to working with SLP International to offer its clients a wider variety of property investment opportunities and to market its high-specification overseas properties and end-to- end services across Asia.

To get through the dry spell in the local residential market, many agencies have turned to marketing foreign homes and commercial properties; some have banded together in marketing alliances.

Project Alliance Group (PAG) was formed in July by SLP International, OrangeTee, HSR and Dennis Wee Realty while Real Alliance was formed in August comprising RE/MAX, C&H Group and More Property. JLL Singapore took a 20 per cent stake in Prop- Nex International, the project marketing arm of PropNex, in August.

-By Lynette Khoo

Ascott to launch first property in Busan

Source: Business Times / Real Estate

Capitaland's serviced-residence business unit, The Ascott, has landed a contract to manage its first Citadines Apart'hotel in Busan. The 468-unit Citadines Haeundae Busan, its biggest property world-wide, is set to open in the second half of next year. It will take Ascott's Citadines network to 79 properties across 49 cities.

-By Nisha Ramchandani

Workers' housing issues need immediate attention

More can be done to educate workers and prosecute errant employers

Source: Straits Times / Singapore

SINGAPORE is known for its squeaky-clean roads and parks pruned to perfection.

But an ugly side exists.

It is the underbelly of filthy and cramped shophouses, apartments and temporary dorms where many foreign workers live.

On Tuesday night, a spot check by foreign worker group Migrant Workers' Centre (MWC) and The Straits Times found more than 50 construction workers from Bangladesh and India cramped in two small apartments in Selegie Road.

The men slept shoulder to shoulder, amid rotting food and soiled clothes.

The Manpower Ministry (MOM) is now investigating the workers' employers for housing them in unacceptable conditions and not paying the men.

The employers face fines of up to $10,000, and/or up to 12 months in prison. But there are many more unscrupulous bosses who go scot-free for subjecting their workers to bad housing.

In recent months, The Straits Times has published several reports on unhygienic and over- crowded foreign worker housing.

At the living quarters of a Punggol Housing Board construction site, hundreds of workers use choked and broken urinals.

Over at Tuas View Square, about 5,000 workers live in more than 10 factory-converted dormitories which are infested with rats and mosquitoes.

The Government is acutely aware of the problem and has taken important steps to rectify the situation.

Nine purpose-built dorms, which come with cafeterias and basketball courts, will be built over the next two years. They will add around 100,000 beds to the existing 200,000 in about 40 big dorms.

To move workers to proper dorms, the Urban Redevelopment Authority stopped the building of temporary dormitories in a dozen industrial estates last Friday.

Non-Malaysian workers from the marine and process sectors, which include the chemicals and pharmaceutical sectors, will also not be allowed to live in public housing from next year.

But these improvements will not be felt for some time. In the meantime, concrete steps should be taken to fix the situation for the tens of thousands of workers who continue to live in deplorable conditions.

There are about 700 temporary dorms housing some 100,000 low-skilled foreign workers. The rest are housed elsewhere, such as in HDB flats, apartments or temporary quarters on worksites.

Economists and foreign worker activists said the authorities must step up checks and impose harsher penalties on errant bosses.

Nanyang Technological University economist Walter Theseira said bad bosses know that the "statistical likelihood that one will be caught for housing workers in substandard conditions from purely random checks is very low".

"The penalties are presumably not a severe enough deterrent given the low likelihood of getting caught," said Dr Theseira.

In the first six months this year, MOM conducted about 360 inspections, and took action against about 600 employers for housing violations. Some were just warned and most were fined.

MWC's chairman Yeo Guat Kwang said the authorities must detect, investigate and prosecute bosses who break the law to the fullest extent.

"Only in such an environment will it not be at all worthwhile for anyone to consider gaming or circumventing our laws, no matter what he stands to gain as a result," he said.

Mr John Gee, head of research of Transient Workers Count Too, said MOM can work with non-governmental organisations to conduct high-profile raids of bad housing places.

More importantly, workers should also be empowered to speak up against ill-treatment.

One way is for MOM to expand its Temporary Job Scheme to whistle-blowers. The scheme allows foreign workers to find a new job while waiting for their employment-related claims to be settled.

Workers should also be educated about help channels for them. MWC runs a 24-hour helpline for workers. But it is unclear if workers know about this.

Raising awareness on this front will help combat the problem.

MOM could conduct a dedicated short course to introduce foreign workers to their rights and organisations which can help them.

Currently, employment rights are covered in compulsory safety courses for foreign workers but they are not explained in detail.

Singaporeans can also help by reporting unfair treatment of foreign workers to the authorities.

Said Mr Yeo: "It takes the whole community to truly eradicate injustice to migrant workers. If all of us do our part, we can better conditions for migrant workers in Singapore."

-By Amelia Tan

Perennial's offer for PCRT 'fair and reasonable', says adviser

Independent directors, analysts recommend unit holders to accept offer, which will close on Dec 22

Source: Business Times / Companies & Markets

Perennial Real Estate Holdings' (PREH) general offer for the remaining Perennial China Retail Trust (PCRT) units via a share swap is "fair and reasonable" - in terms of both PCRT's and PREH's respective share values.

This was the recommendation of Deloitte & Touche, the independent financial adviser (IFA), to the independent directors of trust.

-By Lee Meixian

Global Logistic's co-founder Jeffrey Schwartz dies

His vision was key in making GLP the company that it is today, says CEO

Source: Business Times / Companies & Markets

Jeffrey H Schwartz, co-founder and deputy chairman of mainboard-listed Global Logistic Properties (GLP), died on Wednesday, aged 55, the company announced on Thursday. A note published on GLP's website on Nov 4 said that Mr Schwartz, who was chairman of the executive committee, had decided to take time off to focus on health-related issues but would continue to be involved in strategic decisions.

-By Chan Yi Wen

Global Logistic Properties co-founder Jeffrey Schwartz dies

Mr Schwartz, who was 55 years old, was also the deputy chairman of the Singapore-listed logistics property company.

Source: Channel News Asia / Business

SINGAPORE: Mr Jeffrey Schwartz, the co-founder and deputy chairman of Singapore-listed Global Logistic Properties (GLP), has died on Wednesday (Nov 19), the company said in a news release on Thursday morning.

Chairman Dr Seek Ngee Huat said that Mr Schwartz, who was 55 years old, was a well-respected and determined leader.

GLP co-founder and CEO Ming Z. Mei said: “We are all deeply saddened by the death of my mentor, my partner, and most importantly my closest friend. His vision was key in making GLP the company that it is today. I am honoured to continue his legacy. He will be greatly missed by our company, its stakeholders, our employees and the industry overall.”

GIC, Singapore's sovereign wealth fund, is a major shareholder of GLP.

"We are saddened to hear of Jeff's passing and wish to offer our condolences to Jeff's family and all GLP management and staff," a GIC spokesperson said.

"GIC is confident of GLP's management team and business strategies. We believe the GLP management will continue to stride ahead, at times with the memory of Jeff pushing them along, but always with an eye to the possibilities of the future."

- CNA/cy/ac

Views, Reviews & Forum

Benefits of adopting prefabrication

Source: Straits Times / Forum Letters

WE WISH to address some misconceptions on prefabrication ("Prefab construction not so productive" by Mr Aaron Ang Chin Guan; Nov 12).

First, prefabrication involves manufacturing building components such as walls, columns and even entire bathrooms and room-size apartments in factories before they are installed on-site. It enables faster construction as various trades can be done concurrently in the factory and on-site, making site progress less affected by the weather.

With a better quality-control regime in the factory, prefabricated components have better quality and less rework is expected.

To raise productivity, the Building and Construction Authority (BCA) is working with the industry to adopt the Design for Manufacturing and Assembly approach, by moving as much construction work as possible off-site to a controlled and automated manufacturing environment.

Second, we should compare the productivity of different construction methods in terms of physical output, such as area constructed per day. The BCA has been tracking and monitoring the productivity of various construction trades for many years.

An example is the use of dry wall, a prefabricated product, which can be installed much faster on-site and requires 65 per cent less manpower compared with the traditional plastered brick wall. Besides time and manpower savings, dry-wall construction generates less waste, debris and dust.

Third, all construction workers here, including those for prefab construction, are not unskilled. All new construction workers are required to pass a skill certification test conducted by BCA before entering Singapore as basic skilled workers.

Precast and dry-wall installation are trades recognised through these tests. The BCA will continue to work with the industry to build up the expertise of these skilled workers through continuing education and training, to support the industry's drive towards higher productivity.

We acknowledge that prefabrication requires land. Hence, we have been working with various agencies and the industry to develop higher-density, multi-storey Integrated Construction and Precast Hubs (ICPHs) that will optimise land usage for prefabrication.

ICPHs are highly automated, have at least twice the production capacity of open precast yards with the same land sizes, and can be energy efficient. To date, one such factory is operational and two others are under construction.

It is also important that builders and manufacturers plan, coordinate and manage the just-in-time delivery and installation of prefabricated components, to reduce the storage space required.

To enable designers, contractors and precasters to improve their capability in planning and managing projects, the BCA Academy has been conducting training courses on precast design and management. Other courses on Building Information Modelling, productive technologies and construction management also help the industry to push for higher productivity.

-By Ang Lian Aik

Group Director, Construction Productivity Centre

Building and Construction Authority

Backbone of building process

Source: Straits Times / Forum Letters

PREFABRICATION technology has become an integral technological development within the construction and building process ("Prefab construction not so productive" by Mr Aaron Ang Chin Guan; Nov 12).

Products of prefab technology like precast components have been widely and increasingly used since the 1970s.

Since then, the industry has reaped the benefits of precast technology with economies of scale from mass production of precast units and reduced workplace safety and health risks. Prefab components are usually produced off-site and not subjected to weather conditions on-site.

However, implementing precast technology successfully may not be cost-effective or a viable option for smaller projects or projects that lack repeatability of similar construction features.

We are confident that prefab technology has benefited the construction industry and has become one of the backbones of the building process. We welcome frank feedback from the public and remain open to constructive discussions on how to improve productivity.

-By Lim Jit Say

Executive Director

The Singapore Contractors Association Ltd

M'sia home prices at 5.5 times of median income

Khazanah Nasional survey finds the figure above that for Singapore, US and the UK

Source: Business Times / Real Estate

CLSA Capital eyes local consumers for HK retail property

Source: Business Times / Real Estate

Oakland apartment rent growth highest in US

Businesses and residents, priced out of neighbouring San Francisco, are drawn to an increasingly vibrant scene

Source: Business Times / Real Estate

Blackstone to Acquire Japan Apartments for $1.61 Billion

Source: Bloomberg / Luxury

Blackstone Group LP (BX) agreed to buy GE Japan Corp.’s residential-property business for more than 190 billion yen ($1.61 billion) to expand its apartment holdings in Japan.

The business being acquired owns and operates more than 200 properties with more than 10,000 residential units, mainly in Tokyo, Osaka, Nagoya and Fukuoka, Blackstone said in a statement yesterday. The New York-based company, the biggest U.S. single-family rental-home landlord, said it’s making the purchase partly with its new Asia real estate fund.

International buyers have been flocking to Japan’s residential market after Prime Minister Shinzo Abe took office in 2012 with a pledge to end the deflation that’s depressed real estate prices. The yen has declined 14 percent in the past four months against the dollar, making properties less expensive for overseas buyers.

“This investment is very positive for the Japanese market,” said Masahiro Mochizuki, an analyst at Credit Suisse Group AG in Tokyo. “The weak yen has made Japanese properties cheap. Overseas buyers can secure the return with low interest rates.”

The acquisition size is about 45 percent of the portfolio of Japan’s biggest residential REIT, Advance Residence Investment Corp., which has 423.1 billion yen of assets under management.

Residential Fundamentals

Blackstone, the world’s biggest private-equity property investor, is expanding acquisitions in residential real estate on the expectation that demand for rental housing will continue to exceed supply with increasing household formations. It’s spent more than $8 billion to acquire foreclosed houses in the U.S. through its Invitation Homes unit.

“We continue to believe strongly in the residential sector’s fundamentals, especially in Japan’s major cities,” Alan Miyasaki, senior managing director at Blackstone, said in the statement.

U.S. rental homes represent the biggest investment in Blackstone’s current $13.3 billion real estate fund. Blackstone also agreed to buy apartment blocks in Madrid after Spanish home prices tumbled.

Blackstone had raised about $4 billion of an Asian property fund targeted at $5 billion as of early June, according to a presentation by Jon Gray, the firm’s global head of real estate, at a June 12 investor meeting.

‘Very Large’

“Long term, Asia will grow to be a very large piece of our business,” Gray said at the meeting.

The announcement of the Japan deal was made after the close of regular U.S. trading. Blackstone shares, little changed at $32.86 in New York yesterday, have gained 33 percent, with dividends reinvested, in the past year.

Apartment rents in Tokyo’s five central wards rose 2.9 percent in the second quarter from a year earlier, according to Savills Plc, a property broker. The average occupancy rate for residential properties owned by Japanese real estate investment trusts in the Tokyo prefecture was 96.3 percent in the second quarter, having stayed higher than 95 percent since the third quarter of 2010.

“The favorable balance between supply and demand is likely to be supported by rising construction costs and increased competition for developable sites in the lead-up to the 2020 Olympics,” to be held in Tokyo, Will Johnson, head of research for Savills’s Japan unit, wrote in a Sept. 16 report.

The sale is part of General Electric Co. (GE)’s global plan to reduce its equity investments in real estate as it builds its debt business, said Francois Trausch, chief executive officer of the Asia-Pacific region at GE Capital Real Estate, a unit that oversees assets of about $36 billion.

-By Hui-yong Yu and Kathleen Chu

Amazon Leases Offices on Manhattan’s 34th Street

Source: Bloomberg / News Inc. (AMZN), the world’s biggest online retailer, leased 470,000 square feet (44,000 square meters) at a midtown Manhattan property owned by Vornado Realty Trust (VNO)that’s across the street from the Empire State Building.

The agreement, at 7 W. 34th St. in the Herald Square shopping district, is for 17 years, New York-based Vornado said in a statement yesterday. No additional details were provided.

Amazon’s lease would be for all of the office space in the building, according to CoStar Group Inc. (CSGP), a Washington-based research firm that tracks real estate deals. The Seattle-based retailer has been looking for a New York base of operations for about two years. In 2012, Amazon expanded its offices at 1350 Avenue of the Americas in Midtown to 92,500 square feet.

“We have leased this building primarily as corporate office space and we intend to sublease to other tenants the ground-floor retail space,” said Kelly Cheeseman, a spokeswoman for Amazon.

Wendi Kopsick, a spokeswoman for Vornado at Kekst & Co., said the real estate company would have no comment beyond the statement.

-By David M. Levitt

Brookfield Property Drops Plan to Buy New Jersey’s Revel

Source: Bloomberg / News

Brookfield (BPY) Property Partners LP dropped plans to buy the shuttered Revel Casino in Atlantic City, New Jersey, in a new setback for the state’s shrinking gambling industry.

The Toronto-based investment company announced the decision yesterday in an e-mail. Brookfield was unable to win a reduction in electricity payments, according to two people with knowledge of the matter who weren’t authorized to speak publicly and asked not to be identified.

Brookfield, which owns the Atlantis resort in the Bahamas and the Hard Rock Hotel & Casino in Las Vegas, had planned to reopen Revel as a casino. The company outbid Florida developer Glenn Straub who later challenged the auction process. The Toronto-based investment company won bankruptcy-court approval to buy the resort for $110 million last month. The property, built at a cost of $2.4 billion, closed in September.

“I am sorry to hear that the Brookfield transaction was not completed,” Mayor Don Guardian said in a statement. “Although Brookfield would have been a good fit for Atlantic City, we will continue to attract new investors.”

Revel had a contract to purchase power and other utility services for $3 million a month from ACR Energy Partners LLC, a joint venture between South Jersey Industries Inc. (SJI) and DCO Energy LLC that built a plant at the site.

Don Lockwood, a spokesman for South Jersey Industries, said ACR Energy Partners had no involvement in talks between Brookfield and bondholders of the joint venture.

More Competition

Stuart Moskovitz, an attorney for Straub, said it was too early to say if his client would maintain his offer for Revel. The developer is continuing with his appeal of the auction.

The real estate company’s departure from the deal was reported earlier by the Press of Atlantic City.

Casinos in Atlantic City have been closing with the decline in gambling in the seaside resort town and competition from neighboring jurisdictions. The win for casinos in Atlantic City fell 4.4 percent in October and is down 3.3 percent for the year to date, the state Division of Gaming Enforcement said on its website on Nov. 13.

This week, Cordish Cos. and Greenwood Gaming & Entertainment Inc., two closely held real estate developers, won a license to open a casino in Philadelphia, within sight of the homes of the city’s professional sports teams.

The award spells more competition for Atlantic City and other casinos in the northeastern U.S. Live! Hotel & Casino will be the fifth in the greater Philadelphia area and the 13th in Pennsylvania, a state, which passed New Jersey in 2012 to become the second-largest U.S. gambling hub after Nevada.

Taj Mahal

The Trump Taj Mahal has said it will close on Dec. 12 unless union workers drop their appeal of a bankruptcy court ruling that let the casino terminate their contract. It would become the fifth Atlantic City casino to close this year.

Stockton College recently reached an agreement to buy the former Showboat casino, which closed earlier this year, and reopen the property as a satellite campus.

The bankruptcy case is In re Revel AC Inc., 14-bk-22654, U.S. Bankruptcy Court, District of New Jersey (Camden).

-By Christopher Palmeri and Michael Bathon

Caisse de Depot Looking for Infrastructure, Real Estate Assets

Source: Bloomberg / Luxury

Caisse de Depot et Placement du Quebec, Canada’s second-largest pension-fund manager by assets, is looking for infrastructure and real-estate assets, Chief Executive Officer Michael Sabia said.

“Around the world today we’re looking for great infrastructure, we’re looking for great real estate,” Sabia said today in an interview with Bloomberg TV. “For an investor like us, we’re interested in these assets over a 10 to 15 year period.”

Manhattan is an example of a real-estate market that appreciates steadily in the long term even if temporarily affected by periods of economic slowdown, he said.

The Caisse oversees pensions for retirees in the French-speaking province of Quebec, with a dual mandate to maximize returns and foster economic growth.

Infrastructure -- an investment category that includes airports and gas distribution networks for the pension fund -- returned 11 percent for the Caisse in 2013.

-By Jeremy van Loon

Euro Area’s Third Housing Bust Abates as Dutch Prices Stabilize

Source: Bloomberg / Luxury

Dutch architect Rien de Ruiter describes himself as a survivor after the housing-market bust that cost half of his colleagues their jobs.

“The situation was disastrous. I’ve been in this business for 35 years and I had never seen a crisis like this,” de Ruiter, who designs housing projects in cities including Rotterdam and Amsterdam, said in a Nov. 13 interview. “Only since this summer have I seen the number of orders picking up.”

Along with Spain and Ireland, the Netherlands was hit with a housing collapse in the depths of the euro region’s crisis that sent economic growth tumbling. The recession crippled the nation’s major banks and left the country with record unemployment and mounting consumer debt.

Recent data show that stabilization is taking hold. While prices remain about 20 percent below their 2008 peak, they’ve shown annual increases in every one of the past six months. The Central Bureau of Statistics will publish data for October today.

The 2.2 percent year-on-year price increase in October, published today, is adding to the picture seen by de Ruiter’s firm, Klunder Architecten, as it pursues new construction projects and transforms office space into housing.

“Confidence in the housing market has increased substantially this year,” said Philip Bokeloh, an economist at ABN Amro Bank NV in Amsterdam. “The interest rate is very low, and of course also the economy is recovering.”

Dutch Expansion

The Dutch economy grew 0.2 percent in the third quarter after expansion of 0.6 percent in the previous three months. It exited a recession in the first quarter of 2013 after a slump largely caused by the housing market. Gross domestic product will rise 0.9 percent this year and 1.4 percent in 2015, according to forecasts from the European Commission.

A measure of confidence in the housing market has risen for the past 22 months to a record, according to the Dutch Home Owners Association and Delft University. Their index has jumped from 51 in December 2012 to 103 last month, the highest since the series started in 2004.

Property activity is also strengthening. There were 116,550 houses sold in the Netherlands in the first 10 months of the year, an almost 40 percent increase on the same period a year earlier, according to statistics office.

Incentives Ending

There are one-time factors that may be driving the increase. In addition to low interest rates, buyers are taking advantage of government incentives before they end next year, according to Bokeloh.

A fund that let homebuyers borrow cheaply from municipalities is almost exhausted and will not be renewed, while a measure allowing buyers or home owners to receive a tax-free gift of as much as 100,000 euros ($125,400) to finance a new house or to pay down an existing home loan will come to an end this year.

In addition, Finance Minister Jeroen Dijsselbloem and Housing Minister Stef Blok have announced lower loan-to-income limits on the size of mortgages.

“The big difference between now and before the crisis is that we have to work twice as hard for half the amount,” architect de Ruiter said. “During the crisis years we made losses, at least we’re able to break even now.”

-By Corina Ruhe

Marcato Urges Dillard’s to Spin Off Real Estate Into REIT

Source: Bloomberg / News

Marcato Capital Management LLC, the $3 billion activist hedge fund firm run by Mick McGuire, is urging Dillard’s Inc. (DDS) to spin off its real estate assets into a real estate investment trust.

The San Francisco-based firm owns a 4.9 percent stake in the department store operator, according to a statement today. Should Dillard’s create a REIT, the value of the companies could climb to a combined $193 a share, a 75 percent increase from current prices, Marcato wrote.

Dillard’s shares rose 9.3 percent to close at $121.04 in New York.

Back in April, McGuire called the 76-year-old company the “least expensive retailer we see,” and said its shares could rise to $155. Dillard’s closed at $95.89 that day and is up 26 percent since.

Dillard’s, based in Little Rock, Arkansas, operates almost 300 stores in 29 U.S. states, mostly in suburban shopping malls in the Midwest, Southeast and Southwest.

REITs, whose primary income streams are from real estate, don’t pay federal income taxes. In exchange, they’re required by the Internal Revenue Service to distribute at least 90 percent of their taxable earnings to shareholders in the form of dividends.

Sears REIT

Sears Holdings Corp. said on Nov. 7 that it may sell 200 to 300 stores to a newly formed real estate investment trust and lease them back. The move is seen as part of an attempt to wring money from its real-estate holdings after nine straight quarterly losses. Hoffman Estates, Illinois-based Sears would continue to operate the stores in those sites, and the plan could extend to include most of its locations. Under the plan, shareholders could purchase stock in the REIT.

Dillard’s isn’t the first target that Marcato has urged to explore options regarding real estate. In May, the firm urged Life Time Fitness Inc. to accelerate its growth plans, and three months later the gym operator said it was starting a process to explore a potential conversion of its assets into a REIT.

In another activist campaign this month, Marcato said InterContinental Hotels Group Plc’s shares may double if the lodging operator agrees to a merger or acquisition by a competitor.

-By Stephanie Ruhle, Kelly Bit and Craig Giammona

Additional Articles of Interest - Local & Overseas Real Estate