Real News‎ > ‎2014‎ > ‎October 2014‎ > ‎

30th October 2014

Singapore Economy

Singapore still best place to do business: World Bank

Source: Business Times / Government & Economy

Singapore is the best country to do business in, topping for a ninth straight year a World Bank ranking that showed improvements by the UK and China while Japan declined. "Doing Business report measures a slender segment of the complex organism that any modern economy is," said World Bank chief economist Kaushik Basu in a forward to the report.

Singapore Real Estate

2 mega private residential projects get URA's provisional nod in Q3

The projects at Sims Drive and Upper Serangoon View will have more than 1,000 units each

Source: Business Times / Real Estate

Two mega private residential projects of over 1,000 units each are among the projects that secured provisional permission from Urban Redevelopment Authority (URA) in the third quarter. A unit of Singapore-listed GuocoLand received the planning authority's nod to build a 1,024-unit condo, Sims Urban Oasis, on a 99-year leasehold site fronting Sims Drive, Aljunied Road and Pan Island Expressway.

-By Kalpana Rashiwala

Singapore-led consortium bags US$1.4b Myanmar airport project

Group to design, construct, operate and maintain Hanthawaddy International Airport

Source: Business Times / Transport

A Singapore-backed consortium - which includes construction firm Yongnam and Changi Airport Planners and Engineers (Cape) - has snagged a US$1.4 billion bid to construct Yangon's second international airport as the city prepares for growing tourist arrivals.

-By Nisha Ramchandani

CDL tenants can track electricity use with online system 

Source: Straits Times / Money

AN ONLINE monitoring system launched yesterday lets business owners better keep track of their energy consumption so that they can reduce electricity use.

The automated meter reading (AMR) portal initiative was jointly developed by City Developments (CDL) and Tuas Power Generation.

The system provides half-hourly updates of a CDL commercial tenant's energy consumption and can be accessed via mobile devices such as smartphones or tablets.

Tenants can also get an analysis of their electricity use to find ways to lower energy consumption.

CDL is rolling out the AMR portal at eight of its commercial buildings: City Square Mall, Central Mall, Fuji Xerox Towers, King's Centre, Manulife Centre, Republic Plaza, Tampines Concourse and Tampines Grande.

The move is part of the developer's efforts to encourage tenants to embrace environmentally friendly designs, fittings and lighting fixtures.

It has also set up a dedicated team of ambassadors to advise tenants on issues like conserving energy and water.

About 60 per cent, or some 300, of CDL's commercial tenants have signed a pledge to manage and reduce their energy consumption.

CDL said its green efforts over the years, including upgrading chiller plants and using energy-efficient lighting, have enabled it to achieve, on average, annual energy savings of 14 million kilowatt hours, or about $3.6 million.

CDL group general manager Chia Ngiang Hong said yesterday: "With our commercial tenants on board, we can attain a greater reduction in energy consumption for the entire building.

"This will result in utility savings for the tenant and landlord as the tariff rate continues to rise."

-By Mok Fei Fei

Renovation contractors hit by slow property market in Singapore

Some firms have seen business drop by up to 50 per cent compared to three or four years ago when the property market was booming, said the Renovation and Decoration Advisory Centre. 

Source: Channel News Asia / Business

SINGAPORE: Refurbishment businesses have been affected by the slow property market in Singapore. According to the Renovation and Decoration Advisory Centre (RADAC), which represents about 80 industry players, some firms have seen business drop by up to 50 per cent compared to three or four years ago when the property market was booming.

Homeowners seem to have a smaller appetite for lavish renovation works as well, with industry players saying homeowners in Singapore are now more selective about the kind of renovation works to undertake.

Affordability is the key issue, with property cooling measures like the Additional Buyer's Stamp Duty and loan restrictions taking a heavier toll on finances. Such measures have already softened the property market considerably.

Slower home sales naturally mean there is a shrinking pool of homeowners who want to customise a unit to their own unique tastes. It also means renovators have to fight harder to win the attention of customers.

Some contractors who have been struggling against the competition have had to close down. "With this consolidation of marketplace, there are companies who have folded up, because they find that their income is not able to match their ongoing expenses, despite how modest their expenses can be," said Edward Tan, executive director of RADAC.

Making conditions even tougher - especially for small, family-run renovation contractors - is the tight labour market in Singapore. "With the problem of getting labour and increased costs, contractors may think that their service level may not be good enough," added Mr Tan. "And because they have been around for so long, they may want to retire."


For those battling on, adapting to changes has been key. Renovation matchmaking website Kluje, which is linked to around 500 industry players, said refurbishment outfits are responding to changing tastes.

Kluje's co-founder and chief operations officer, Andrew Esmonde-White, noted that homeowners are taking up smaller renovation packages costing below S$10,000, and keeping away from lavish refurbishment projects costing S$100,000 and above. "So they will actually look at cheaper options on the tiling and maybe not even replace the tiles if they are actually really good. Then it is just general painting, they won't go for any structural changes to save money," he added.

Kluje expects this trend to continue, with contractors who are able to modify their operations more likely to thrive if the slowdown in the renovation sector persists. 

- CNA/ac

Construction firm, director fined for failing to declare GST on property sale

Junling Construction & Engineering and director Cheah Wai Fun had failed to account for S$96,600 collected as tax in the company's GST returns. In total, both the company and Cheah will have to pay more than S$386,000 in penalties and fines.

Source: Channel News Asia / Singapore

SINGAPORE: A construction company and its director were each ordered to pay more than S$193,000 in penalties and fines for failing to account for GST on a property sale.

In a press release issued on Wednesday (Oct 29), IRAS said the company, Junling Construction & Engineering, had sold a non-residential property at Woodlands Industrial Park on Feb 9, 2011. The buyer paid the company S$1.38 million for the property and S$96,600 for GST.

Cheah Wai Fun, a director at the construction company, was responsible for filing GST returns and issuing tax invoices for the company. He failed to account for the S$96,600 collected as tax in the company's GST returns.

In total, both the company and Cheah will have to pay more than S$386,000 in penalties and fines.

For making incorrect GST returns, offenders face a penalty that is double the amount of tax undercharged and a fine not exceeding S$5,000 or a jail term of up to three years, or both.

- CNA/ac

Companies' Brief

Property, fair-value gains boost Yoma Q2

Source: Business Times / Companies & Markets

Yoma Strategic Holdings' net profit for the fiscal second quarter ended Sept 30 more than trebled to S$10.8 million from S$3.3 million a year ago, thanks mainly to strong sales of residences and land development rights (LDRs) in Myanmar and fair-value gains on completed properties. With plans to enlarge its land bank in Myanmar and open KFC outlets in Myanmar, the group is confident of sustaining its growth, said group executive chairman Serge Pun.

-By Lynette Khoo

CIT's S$100m 4-year bonds sold at 3.50%

Source: Business Times / Companies & Markets

Cambridge Industrial Trust (CIT) yesterday sold S$100 million four-year senior unsecured bonds, the Royal Bank of Scotland said. Orders were in excess of S$165 million, allowing the company to price them at 3.50 per cent from the initial price guidance of 3.75 per cent, said RBS, the sole lead manager and bookrunner.

-By Siow Li Sen

CDL Hospitality 

Source: Business Times / Companies & Markets

CDL Hospitality Trusts' 9M14 results are in line with our estimate, with revenue and DPU (distribution per unit) accounting for 74 per cent of our full-year forecast. However, the higher revenue was offset by the operational cost of Jumeriah Dhevanafushi (acquired on 31 Dec 2013) and higher interest cost, resulting in 1.1 per cent year-on-year dip in DPU.

Evergrande looking into refinancing dollar bonds due in 2015

Source: Business Times / Real Estate

Evergrande Real Estate Group, the Chinese developer which has the industry's two biggest single dollar bonds outstanding, is considering refinancing one of them that is due next year. The Guangzhou-based builder must repay US$1.35 billion of 13 per cent notes in January. Moody's Investors Service cut its outlook on the company to negative from stable on Oct 9, citing increased refinancing risk and investments in non-property businesses.

Crane rental firm plans to raise $6.8m in Catalist listing 

Source: Straits Times / Money

A LOCAL crane rental company is looking to raise about $6.8 million by listing on the Singapore Exchange's Catalist board.

But no shares of MS Holdings will be made available to retail investors at its initial public offering (IPO). It is offering 27 million shares at 25 cents apiece to institutional investors only.

MS Holdings mainly rents out mobile and lorry cranes for short-term use, which can range from four hours to a day. 

Chief executive Jovan Yap, 34, said in an interview yesterday that short-term rental brings in higher profit margins than longer-term rental.

The firm's customers come from sectors such as construction, logistics, offshore and marine.

The listing is expected to raise net proceeds of about $3.8 million, which the firm plans to use mainly to grow its crane trading business. That involves buying secondhand cranes in Singapore, Europe or Japan, refurbishing and then selling them to crane rental companies in emerging markets such as Malaysia, said Mr Yap, who is also executive director.

"Not many people are willing to repair and refurbish cranes."

MS Holdings is a family business set up by Mr Yap's grandfather in the early 1960s. Mr Yap's parents are still involved in the business.

Mr Yap joined the firm in 2001, starting as a crane attendant earning $400 a month. His elder sister, Ms Ivy Yap, is the business development director.

Mr Yap told The Straits Times that the firm wanted to be listed mostly for better branding, which he said would help it attract talent and expand further. It would also give the firm more avenues for fund-raising, he noted.

Mr Yap added that he was not worried about the dismal state of the Singapore stock market, saying: "There's no correct timing."

Since the fund-raising amount was not very large, it would be more cost-effective to do the IPO by placement, he said.

MS Holdings will debut on the Catalist on Nov 7.

-By Melissa Tan

Olivier Lim back as Australand chairman

He'll head new independent board for the former listed firm as part of good corporate governance

Source: Business Times / Real Estate

Olivier Lim is said to be getting back one of his old appointments: chairmanship of Australand Property Group. Mr Lim, who was formerly group deputy CEO of CapitaLand, had served as Australand's chairman until CapitaLand divested its investment in the company earlier this year. Frasers Centrepoint later launched a takeover of Australand and has taken it private.

-By Kalpana Rashiwala

Global Economy & Global Real Estate

S'pore-KL bullet train may miss 2020 deadline

Source: Business Times / Transport

Malaysia said the high-speed rail link between Kuala Lumpur and Singapore may miss a 2020 deadline even after using government land as much as possible to avoid property-acquisition disputes. The project may take six to seven years to complete once construction starts by 2016, Land Public Transport Commission chairman Syed Hamid Albar said on Tuesday. The agency has been "inundated" with proposals to participate, including those from French, Japanese, Chinese and German companies, he said.

St Pancras Place to open for sale in S'pore this weekend

IP Global and SLP announce they have almost sold out Carlton House in Ilford

Source: Business Times / Real Estate

The sale of St Pancras Place in London's King's Cross will be launched on Nov 1-2 in an exclusive exhibition at the Shangri-La hotel in Singapore. Already, 25 apartments and two townhouses, making up more than half of its total 46 units, have been pre-sold to a mix of Singaporeans, Hong Kongers and Londoners, Richard Levene, Colliers' director of international properties, South-east Asia told BT.

-By Lee Meixian

India Eases Rules for Property Development by Foreigners

Source: Bloomberg / News

India eased rules for foreign investment in property development and construction, as Prime Minister Narendra Modi pushes ahead with his plan to boost economic growth, develop smart cities and build every citizen a home by 2019.

Companies now need a minimum project-size of 20,000 square meters to invite overseas investors instead of the 50,000 square meters mandated earlier, India’s cabinet said late yesterday. A previous condition on the minimum size of plots for housing construction was removed. The cabinet also halved the paid-up capital requirement for projects to $5 million.

The decision follows Modi’s steps this month to scrap subsidies on diesel fuel and move toward ending a 40-year state monopoly on mining and selling coal. He swept to power in May on a campaign pledge to allow more overseas funding in sectors that create jobs and growth in Asia’s third-largest economy.

“The measure will aid developers and boost the government’s long term reform on affordable housing and smart cities,” economists at Nomura Holdings Inc., including Sonal Varma in Mumbai, wrote in a research report. “This should boost growth in the construction sector, which is critical for India’s infrastructure development plans.”

India has attracted foreign direct investment of $23.7 billion for the construction of houses and towns since April 2000, about 10 percent of total inflows. India conditionally permits overseas companies to fully own local units.

‘Immediate Breather’

Finance Minister Arun Jaitley allocated 71 billion rupees ($1.2 billion) in his budget to modernize towns into “smart cities”. In August, Modi’s administration also raised the foreign investment cap in railway infrastructure and defense companies to 49 percent from 26 percent.

Shares in Sobha Developers Ltd., Housing Development & Infrastructure Ltd, DLF Ltd. and Unitech Ltd. rose more than 4.5 percent today, compared with a 0.7 percent gain in the benchmark S&P BSE Sensex (SENSEX) as of 1:30 p.m. in Mumbai.

The relaxation of rules “is expected to provide an immediate breather to the cash-strapped real estate sector,” Neeraj Bansal, a partner at KPMG India, said by e-mail. “In near term, we expect the policy to support housing and commercial office projects in metro cities such as Delhi and Mumbai, where project size is generally small, yet requires heavy investment, due to expensive land parcels and high construction cost.”

The cabinet yesterday also approved raising the minimum support price for wheat by 50 rupees to 1,450 rupees per 100 kilos.

-By Bibhudatta Pradhan and Abhijit Roy Chowdhury

GLP expands Japan development venture

Group and Canadian partner will each inject additional equity of US$138m

Source: Business Times / Companies & Markets

Modern logistics facilities provider Global Logistic Properties (GLP) is expanding its fund management platform in Japan, hot on the heels of a similar move in Brazil in the same week. GLP said on Wednesday that it is injecting additional equity to expand its equally-owned joint venture in Japan with Canada Pension Plan Investment Board (CPPIB).

-By Lynette Khoo

Prime residential property in KL up for en bloc sale

Source: Business Times / Real Estate

Mortgage securities stare down end of QE3 as rally persists

Market defies forecasts for slump tied to wind-down of Fed's stimulus programme

Source: Business Times / Real Estate

JPMorgan Chase drops plans to build HQ on West Side Manhattan

It's staying on the East Side after failing to strike a land deal with Related Cos

Source: Business Times / Real Estate

NYC’s Park Avenue Avoids Blow as JPMorgan Chooses to Stay

Source: Bloomberg / Luxury

The decision by JPMorgan (JPM) Chase & Co. to keep its headquarters on Manhattan’s Park Avenue saves the Midtown neighborhood from what would have been a deep blow.

The biggest U.S. bank occupies about 11 percent of the office space in the submarket, and about 3 percent of the larger area surrounding Grand Central Terminal, according to data from Cushman & Wakefield Inc. A departure by JPMorgan theoretically could have driven the vacancy rate on Park Avenue to as high as 26 percent from the current 15.2 percent, the brokerage said.

JPMorgan two days ago reversed course and broke off talks to move its headquarters to the Hudson Yards district on Manhattan’s far west side, which would have greatly accelerated development in that area. The bank would have joined Time Warner Inc., luxury-handbag maker Coach Inc., cosmetics maker L’Oreal SA and the city’s first Neiman Marcus department store, all of which have agreed to take space in the once-gritty industrial zone near the Hudson River.

The bank’s decision to remain at its headquarters at 270 Park Ave. is “a very positive development for the Grand Central area,” said Michael Cohen, tri-state regional president of Colliers International, a real estate brokerage with offices in New York. “I’d be hard put to think of anybody that has a greater concentration of space within five to 10 blocks of Grand Central.”

In the past couple of years, Citigroup Inc. and UBS AG decided to move some employees from their Park Avenue buildings to other Manhattan locations.

The Grand Central submarket without JPMorgan would be 14.7 percent vacant, up from the current 12 percent, according to Cushman data.

Corporate Campus

JPMorgan owns its Park Avenue tower as well as nearby 383 Madison Ave., which the bank inherited when it bought Bear Stearns Cos. in 2008. It also has offices in other buildings in the area, designed as a corporate campus in the early 2000s after Chase Manhattan Corp.’s acquisition of J.P. Morgan & Co.

The bank had sought more than $1 billion in city and state incentives to move to the far west side, a request that New York Mayor Bill de Blasio called a “non-starter.”

JPMorgan’s commitment to its concentration of offices around Grand Central isn’t firm, a person with knowledge of its plans said. While the bank is staying put for now, it still intends to move Manhattan jobs to other places, as it has done recently to Delaware, New Jersey and Brooklyn, said the person, who asked not to be named because the matter is private.

As for Related Cos., principal developer of the Hudson Yards area, Cohen said the company is probably better off without the bank. Finding several smaller tenants would yield more revenue than a single user, he said. JPMorgan had proposed taking about 4 million square feet (372,000 square meters) at the $20 billion project.

It’s unlikely that Related Chairman Stephen Ross has any regrets, Cohen said in a telephone interview. “He already has tremendous momentum over there.”

-By David M. Levitt

New Florida condos bank on wealthy US buyers now

Future owners will be expected to pay big downpayments to finance construction

Source: Business Times / Real Estate

U.K. Mortgage Approvals Fall More Than Forecast to 14-Month Low

Source: Bloomberg / Luxury

U.K. mortgage approvals fell more than economists forecast in September, adding to evidence central bank measures to cool the property market are taking hold.

Approvals fell to 61,267, the lowest since July 2013, from 64,054 in August, the Bank of England said in London today. That compared with the median forecast of 24 economists for a reading of 62,000. Net lending on homes rose 1.8 billion pounds ($2.9 billion), the least since January.

Britain’s property market is cooling and Hometrack Ltd. said London has hit an “inevitable” slowdown after a surge in values to a record. The Bank of England has imposed tougher mortgage rules to keep lending in check, and policy makers said this month that house-price growth is slowing to a “more sustainable pace.”

Today’s data also showed the effective interest rate on outstanding mortgages fell 2 basis points to 3.2 percent in September, the lowest since the series began in 1999. The rate on new secured loans rose 1 basis point to 3.22 percent.

Business lending fell 710 million pounds in September from August. Lending to small and medium-sized companies fell 157 million pounds. It was down 2.2 percent compared with a year earlier.

Net consumer credit rose 915 million pounds in September from the previous month.

M4, a broad measure of money supply, fell 0.7 percent in September from August and dropped 2.5 percent from a year earlier. The annual decline is the biggest since November 2012. An underlying measure of M4 rose 3.5 percent on a three-month annualized basis.

-By Jennifer Ryan