Real News‎ > ‎2014‎ > ‎October 2014‎ > ‎

4th October 2014

Singapore Economy

PM: No further sharp curbs on foreign workers

Recent figures show that their numbers are right about where the government wants them, he says at NUS lecture

Source: Business Times / Top Stories

THE worst may be over for companies squeezed in recent years by the tightened policy on foreign workers.

"I do not expect any further drastic measures to tighten foreign worker numbers," Prime Minister Lee Hsien Loong said on Friday evening.

Speaking at the 60th Anniversary Lecture of the National University of Singapore Society at the University Cultural Centre in Kent Ridge, he said the latest manpower numbers indicated that foreign worker growth had eased to a more sustainable level - "and is about where we want it to be".

-By Chuang Peck Ming

Singapore Real Estate

City, non-city condo price gap narrows

Successive rounds of cooling measures have brought down median prices between homes in the city central and city fringes, suburbs

Source: Business Times / Wealth

THE price gaps for resale private condos in the city area versus those in the city fringe and suburbs have been narrowing since the market started softening in late 2011, a HSR report released yesterday said.

The gap in median prices between the Core Central Region (CCR) and Rest of Central Region (RCR) reached a high of S$610 psf in Q4 2011, but this gap has fallen to S$461 psf in the second quarter this year.

Similarly, between median prices in the city and the Outside Central Region (OCR), the price gap has fallen from a high of S$870 psf to S$712 psf over the same period.

This came as no surprise to property consultants.

-By Lee Meixian

Up to 100 years of rent-free land lures 7 S'pore food firms to Korea

They also get other perks by setting up factories in Foodpolis

Source: Business Times / Top Stories

SEVEN local food manufacturers have agreed to set up factories in Foodpolis, an initiative of the government-supported Korea National Food Cluster, which has offered 100 years of rent-free land in a bid to woo investors there.

An article by Lianhe Zaobao on Friday said that the seven inked an agreement with the South Korean government following the invitation to set up factories there.

They are: Chee Seng Oil Factory, Chop Hup Chong Food Industries, Chye Choon Foods, Fong Yit Kaya, Hock Lian Huat Foodstuff Industry, Thong Siek Food Industry and Tai Hua Food Industries.

Under the plan, which is still in the primary stage, the seven manufacturers will set up shop in Iksan city in South Korea's west coast.

The total land allocation for the seven manufacturers is about 156,000 square metres, with each factory ranging between 5,000 sq m and 100,000 sq m.

Thong Siek Food Industry, which has a 6,700 sq m factory in Singapore, is said to have been allocated 100,000 sq m in Foodpolis, while Tai Hua Food Industries was reportedly allocated 20,000 sq m.

The report said that construction of the factories is underway.

William Tan, managing director of Hock Lian Huat Foodstuff Industry, said that the Korean government had approached the Singapore Food Manufacturers' Association (SFMA) in April or May this year.

In July, the seven separately went to Korea to sign the memorandum.

Mr Tan said that there were several incentives that drew him to making the investment in Foodpolis, but the key was the rent exemption of between 50 per cent and 100 per cent for 50 years. This can be renewed for another 50 years, up to the maximum of 100 years.

The Foodpolis website said that tenant companies are eligible for 100 per cent corporate tax exemption for three years, as well as investment subsidies of up to US$4 million per company, for investments of at least US$850,000.

Foreign investors can also get employment subsidies of up to US$430 per employee for up to six months, amounting to US$430,000 per company, among other perks.

Thomas Pek, president of SFMA, was quoted as saying that the association would promote Foodpolis to its members.

Foodpolis has a total area of over 3.5 million sq m, of which some 2.3 million sq m form the food industry zone. The remaining area is devoted to ancillary facilities such as housing, education, and commercial zones for employees of tenant companies.

Development of the residential district will run in tandem with the industrial district and is expected to be completed by 2015.

The project aims to attract more than 150 companies and research institutes and position itself as an export platform to the region, with next generation food processing and food packaging technologies.

The Food Cluster is a nationally-funded project launched in 2008 by the Ministry of Agriculture, Food and Rural Affairs in an effort to tap into the huge consumer market in the North Asia region, which comprises roughly 1.5 billion people.

-By Claire Huang

15-month waiting time for EC launches stays

National Development Ministry says measure remains relevant

Source: Straits Times / Money

THERE are no plans to scrap a rule requiring developers of executive condominiums (ECs) to wait 15 months before putting the units on sale as this measure remains relevant, the Ministry of National Development has said.

Industry players argue that the policy has not had any discernible impact on taming bids for EC land. They have called for the measure to be rolled back, as subsequent moves such as stricter lending rules have been more successful in cooling the market.

But in response to queries from The Straits Times, the ministry reiterated: "The 15-month waiting period, a measure to delay new sales of EC units, is intended to encourage developers to bid more prudently for EC sites."

The objective of ECs is to provide opportunities for middle-income Singaporeans to buy "affordably priced" condos, it said.

"There continues to be a healthy demand for new EC units, which will be met as projects are launched in the coming months."

The waiting period, introduced in January last year, stipulates that developers can put an EC up for sale 15 months after buying the land or completing foundation works, whichever is earlier.

But Mr Nicholas Mak, research head at SLP International, said the resulting hiatus in EC launches did not have an immediate impact on bidding by developers.

In fact, bid prices escalated by 11.8 per cent in the six months after the measure was introduced.

It was only after the introduction of more cooling measures, such as a rule that curbed loans at no more than 30 per cent of an EC buyer's gross monthly income, that bids eventually cooled in the second half of last year, he said.

Unlike earlier measures aimed at buyers, the 15-month waiting period is targeted at developers as well as the supply of units.

Developers have expressed uncertainty at bidding for sites so far ahead of the property's launch. Market conditions could change drastically during the waiting period, they said.

Also, other changes to the rules governing the sale of ECs last December have made it much harder to make a profit.

One reason is the reduction of the cancellation fee for buyers who back out of sales agreements, from 20 per cent to 5 per cent of the unit's price, said Mr Vincent Ong, co-founder of Evia Real Estate. This crimps their profit margins, which have already been hit by a moribund property market.

"I think the risk profile of EC developers has risen tremendously over the last two years," he said. "Would I participate in this segment with these so-called discouraging factors? Unlikely... I'd rather spend time in the private market where they don't have all these restrictions."

But fresh signs have emerged to indicate that the policy could finally be showing its teeth.

Just two offers were submitted in the latest tender for a 2.8ha EC parcel in Sembawang Road on Tuesday. The top bid of $229.38 million lodged by Qingjian Realty easily topped the joint offer of $208.5 million from City Developments and TID Residential.

Mr Ong Teck Hui, national director of research and consultancy at JLL, said the situation in the EC market is the result of a difference in developers' reading of the market outlook. "With a less crowded playing field, the more confident players will see the possibility of securing sites at lower bids in absence of strong competition."

The next EC tender, for a site in Anchorvale Crescent, might give a clearer idea if Tuesday's results were just an anomaly or if the rule is starting to work, experts said.

-By Cheryl Ong

No fat profit margins? It's OK, says developer

Source: Straits Times / Money

THE latest executive condominium (EC) by Evia Real Estate is likely to be the one that yields the least profits for the firm.

And it is not a case of dwindling demand or a surge in EC launches.

Rather, despite rising costs, the developer wishes to include facilities that might be found in condos in the Nassim area - one of Singapore's poshest residential districts - at his newest "baby", Lake Life, said Mr Vincent Ong, managing partner at Evia.

Thinner profit margins are OK, he said. Although the firm expects single-digit profits from Lake Life, Mr Ong conceded: "Is it worthwhile? I don't know, quite challenging, but it's fine."

He said the days when developers could enjoy profit margins of 20 per cent were over. But the firm is able to up the ante even at an EC because it works on only one development at a time.

"I have pride," Mr Ong said. "I have a lot of fun in this trade but I have bandwidth only for one project as I do it for myself. It's my hobby and passion."

The 546-unit condo in Yuan Ching Road is in the Lakeside District, which has been earmarked as a test bed for new technologies in Singapore's drive to be a "smart" city.

In what Mr Ong terms "future-proofing", the project will feature driverless electric shuttle buses and charging stations for electric cars. Still, that is not enough. Mr Ong also cut a deal with fitness operator True Yoga, owned by friend Patrick Wee, to provide free classes at the condo.

"You want to be able to buy a country club membership and get a condo free," joked Mr Ong.

But these extras will not add to the maintenance fees for residents, he said, because the firm has already factored in a one-time payment to the operator in its project budget.

Lake Life, which opens for e-applications today, is expected to sell for about $880 to $890 per sq ft (psf), against Qingjian Realty's Bellewoods at $760 to $820 psf. Bellewoods opened its doors to the public last weekend and drew 400 applications.

Mr Ong said the firm's break-even cost was already about $800 psf, but he is "quietly confident" of sales as Jurong has not had a new EC since 1994 when Summerdale was launched.

The developer of two other ECs, Heron Bay in Upper Serangoon Road and Watercolours in Pasir Ris, has always had his fingers in the property pie. He bought six shophouses from OCBC Bank in 2008 when hardly anyone wanted to invest because of the financial crisis.

He set up the firm in 2011 with partner Leslie Lim. The company also manages a fund, focused on South Korean logistics and warehouse properties, with an asset size of $800 million.

The 53-year-old, who considers himself "semi-retired", said his latest venture keeps him active. It is a little like a homecoming. "This is something I want to do better for myself because this is where I grew up. I'm a Taman Jurong boy."

-By Cheryl Ong

Developers hold back on bidding for new EC sites

New restrictions imposed by the Government and a lower profit margin have increased the risk profile of ECs, some developers say.

Source: Channel News Asia / Business

SINGAPORE: Some developers say they will hold back on bidding for new executive condominium (EC) sites in the future unless they have very good potential, as the risk profile of ECs has gone up following a series of new restrictions imposed by the Government.

According to Evia Real Estate, which is jointly developing the Lake Life EC in Jurong, the segment now poses higher risks to developers. Mr Vincent Ong, Evia’s Managing Partner, said that the reduction of cancellation fees from 20 per cent to 5 per cent raises the risk for developers. He added that if structural changes or an economic downturn occurs, most buyers will choose to defer payment.

"For a while, maybe my consortium will take a break and focus on other opportunities. Particularly, what we like is the mixed development, Holland Road for instance," he said.

Earlier this week, a land tender for an EC site at Sembawang only drew two bids. Qingjian Realty clinched the site with a S$229.4 million bid.

Until recently, developers were aggressively acquiring sites to build new executive condominium projects, spurred by strong demand for such units.

Meanwhile, developer EL Development says it will be more cautious with EC land tenders and will only participate if the site is attractive. Location is one factor: a site located in the city fringe or at major suburban town centres are preferred.

Chris Koh, Director of Chris International, said that in the past, a site that was “not too sought after” will see about 10 bids. At present, less popular sites will likely see five bidders or fewer, he said.


An Evia-led consortium is launching Lake Life EC at Yuan Ching Road for sale via e-application this weekend. As it was able to complete foundation works earlier, Lake Life is the first EC project to beat the 15-month sale restriction stipulated by the Government.

In January 2013, the Government announced a new requirement that EC developers will also only be able to market their projects 15 months from the date of award of the sites, or after the physical completion of foundation works, whichever is earlier.

Analysts say this 15-month rule for project launch has resulted in a "bunching up" of EC launches.

Bellewoods at Woodlands was put on the market last month, with Bellewaters at Anchorvale Crescent still to come. Meanwhile, Master Contract Services - joint-developer of The Amore at Punggol - says the project is expected to be launched in December, with an indicative pricing of S$760 to S$830 dollars per square foot. Another upcoming EC project in Punggol is The Terrace, to be developed by Peak Square.

"If three plots are being launched at the same time and everyone has a 15-month period of foundation, then it creates a keen competition or interest to outbid the 15-month rule so that your launch date will not coincide with all the three of you,” said Mr Mohamed Ismail, CEO of Propnex. He added that EC developers have the same target audience, especially if “two land parcels are in the same location.”


Currently, analysts say there are about 500 unsold ECs on the market. These are mainly larger units.

Sales have slowed down after the 30 per cent mortgage servicing ratio was introduced for ECs, limiting buyers' ability to afford more expensive units.

Evia, for instance, has had to reconfigure some larger units to smaller ones, to keep them more affordable after the measure was implemented at the end of 2013.

Profit margins for residential projects in Singapore have also fallen. PropNex said developers used to enjoy a 25 per cent margin on average four years ago, and this has now dropped to about 9 per cent. Hence, many Singapore developers have been seeking growth opportunities overseas, including the UK, Australia, Japan and China. 

- CNA/dl

The new 'new Tiong Bahru'

Debbie Yong looks at the latest wave of openings that is transforming the aged estate into a trendy cafe cluster popular among the young

Source: Business Times / BT Living

WHILE up-and-coming neighbourhoods such as Everton Park and Jalan Besar have been wresting over the spotlight as the "new Tiong Bahru", the neighbourhood that first popularised the idea of heritage-chic has quietly been revamping itself to suit the times.

New businesses have been slowly trickling into once-sleepy Tiong Bahru over the last few months, accelerating the pre-war housing estate's transformation from a trendy cafe cluster popular among the young into a complete lifestyle destination.

Among the latest entrants are the Clothes Curator, a three-month-old boutique specialising in loose-fitting cotton and linen apparel for women in their late-20s to 50s, as well as fortnight-old Curated Records, which offers vinyl records from independent bands of various genres. Deeper into the neighbourhood, The Modern Outfitters is a menswear store started by entertainer Dick Lee and young tailor Clinton Zheng; Nana & Bird Kids on Eng Hoon Street specialises in homewares and socially conscious, sustainably produced products for children, and is a sister store to their two-year-old Chay Yan Road flagship store; pop-up Crateful is a collection of locally produced food; while Bloesem, a creative art studio for home decor enthusiasts now has two units along Eng Hoon Street and Seng Poh Road.

Even decades-old businesses in the area have been prompted to spruce themselves up, in keeping with the neighbourhood's growing vibrance.

Injecting new life into Havelock area

$40m makeover at Havelock II set to draw in more tenants, shoppers

Source: Straits Times / Money

THE Havelock area will get a stab of fresh energy with the introduction of Havelock II.

The former Apollo Centre, not far from Clarke Quay MRT station, was bought in April last year, and a makeover has been under way for the past two months. It will include a new facade for the iconic cascading architecture.

Also, the office-retail tenant mix will be adjusted from the current 80:20 to 45:55, said developer Guthrie GTS. The $40 million upgrade is expected to be completed by the first half of 2016.

"We see potential in the location," said a Guthrie GTS spokesman, who noted that nearby projects such as the Park Regis Hotel, the Parkroyal on Pickering and the renovated Chinatown Point have helped make the area a vibrant hub.

Moreover, the company's experience in shopping mall management has enabled it to take "some weaknesses in the old layout" and create a "friendlier and more efficient business space".

Of the 100 office and retail units offered for sale at the soft launch, half have been sold.

When completed, the project is expected to have 151 retail units and 94 office units.

Office units sold so far have ranged in size from 312 sq ft to 2,357 sq ft, with an average price of $2,228 per sq ft (psf). On the retail side, sizes have ranged from 150 sq ft to 1,335 sq ft, with prices averaging $4,657 psf.

The spokesman said end-users of office and retail units outnumbered investors three-to-one at the soft launch, based on observations made during the event and the company's experience with other commercial projects such as the Adelphi, Burlington Square and Paya Lebar Square.

In general, strata commercial projects are seeing more purchases by end-users than investors, said R'ST Research director Ong Kah Seng. Many investors are staying on the sidelines and waiting for market conditions to improve or for prices to fall, he said.

Still, he feels the investment outlook for strata office space in the Havelock area is positive. In particular, he noted, new office space is set to garner keen leasing interest from tenants who do not need to be located in the "hard-core, finance-centric" Raffles Place and Marina Bay area.

The outlook for strata shop space is fairly promising as well, he said, given the proximity to lifestyle areas such as Clarke Quay and the Singapore River.

He noted that shoppers like Havelock as it is not too crowded, adding that they "tend to be singles, professionals, managers, executives and technicians, or couples who want more interesting, quieter hangout places".

Investors looking at strata- titled shop units should be aware that their investment potential depends especially on their location, said SLP International Property Consultants research head Nicholas Mak. Other factors include unit size, the size of the whole development, the neighbourhood and the tenant mix, he added.

-By Rennie Whang

United Engineers to sell UE E&C stake for around S$230m

Southern Capital Group, a private equity firm, will pay United Engineers S$1.25 for each UE E&C share, subject to various conditions being fulfilled.

Source: Channel News Asia / Business

SINGAPORE: Local conglomerate United Engineers has agreed to sell its majority stake in engineering and construction subsidiary UE E&C for around S$230 million, exiting a major business and making itself a more attractive target to potential buyers keen on its property portfolio.

Southern Capital Group, a private equity firm, will pay United Engineers S$1.25 for each UE E&C share, subject to various conditions being fulfilled.

United Engineers has several businesses including automotives and technology. Its huge property portfolio includes the Park Avenue chain of serviced residences, UE BizHub Tower in Singapore's central business district, as well as developments in China and Malaysia.

Oversea-Chinese Banking Corporation (OCBC) and insurance subsidiary Great Eastern are currently in exclusive talks to sell their controlling stake in United Engineers to Thai billionaire Charoen Sirivadhanabhakdi, who has been on an acquisition spree in Singapore.

Mr Charoen's businesses in the Republic include food and beverage giant Fraser and Neave and property group Frasers Centrepoint.

United Engineers is worth around S$1.8 billion based on its last traded price.

- CNA/dl

UEL to dispose of listed engineering unit for S$230m

Source: Business Times / Companies

UNITED Engineers Ltd (UEL) strategy of divestments is gathering momentum. It has received an offer from a private equity firm of S$1.25 per share for its listed UE E&C, the company said late Friday night.

UEL and subsidiary UES Holdings have signed an agreement to sell their stake in the diversified engineering and construction group to Universal EC Investments and Southern Capital Group, subject to certain terms.

Under the terms of the agreement, the offerer will make a voluntary conditional offer to acquire all the ordinary shares of UE E&C, subject to certain terms, at S$1.25 a share.

-By Mindy Tan

United Engineers to sell UE E&C stake

Source: Straits Times / Money

DIVERSIFIED United Engineers has inked a deal to sell its controlling stake in integrated building solutions provider UE E&C to a private equity fund for $230.2 million.

United Engineers will sell its 68.2 per cent stake in UE E&C to a unit of Southern Capital Group at $1.25 a share.

Minority shareholders of UE E&C hoping for a windfall from a subsequent general offer are likely to be disappointed as the price works out to a discount of 2.3 per cent to the shares' last traded price of $1.28 on Sept 30.

The offer is 2.9 per cent below the volume weighted price of $1.29 in the last six months.

Those who bought the shares earlier should enjoy some gains as the volume weighted price of UE E&C was $1.17 in the last 12 months and 97 cents in the last 18 months.

Key shareholders of United Engineers - OCBC Bank, Great Eastern Holdings, Lee Foundation States of Malaya and Singapore Investments - have agreed to vote in favour of the divestment when the deal is put before shareholders later.

Together, these shareholders own 30 per cent of ordinary shares and 70 per cent of preference shares of United Engineers.

In a statement, the board of United Engineers said the deal was in line with the company's ongoing strategic review and objective of streamlining activities and businesses across the group.

"The proposed disposal unlocks value for the company's shareholders and increases the overall financial capacity and flexibility of the group so as to enable the company to strengthen and grow its other strategic business units," it noted.

According to a preconditional offer statement on behalf of the buyer, Southern Capital is a private equity firm that focuses on buyouts of middle market businesses in South-east Asia.

In Singapore, it has acquired various businesses, including Qualitas Medical Group, and was part of a consortium that acquired Mentor Media in 2006.

Once all the preconditions of the deal are met, Southern Capital's unit will make a general offer for the remaining UE E&C shares.

It intends to make UE E&C a wholly owned subsidiary.

This means the offeror will seek to delist and privatise the company should the offer cross the 90 per cent threshold for compulsory acquisition.

It will also mean a short existence for UE E&C as a listed entity, given that it began trading on the mainboard only in 2011.

The UE E&C group provides integrated mechanical & electrical engineering services that include high- and low-voltage electrical power distribution, air-conditioning and mechanical ventilation, and fire protection, alarm and sanitary systems.

It also provides a comprehensive range of services for its construction business, from design and build, civil works to general construction for residential, industrial, commercial and institutional buildings as well as infrastructural works.

UE E&C is an active player in public housing through executive condominium projects, as well as private residential property development, through taking up minority stakes in joint ventures. It also has operations in Brunei, China, Vietnam, Indonesia and Malaysia.

United Engineers shares traded last at $2.83. The stock is up 59 per cent so far this year.

Trading in its shares and those of UE E&C has been halted since Sept 30, pending the announcement.

-By Dennis Chan, Deputy Money Correspondent

Tuan Sing soars to five-year high

Source: Business Times / Companies

TUAN Sing Holdings' shares hit a five-year high on Friday just before it announced that it had priced its S$80 million 4.5 per cent notes due 2019.

The stock of the property developer rose 6.7 per cent to S$0.475, with 17.3 million shares changing hands, a much heavier volume compared to its usual trading days.

After the market closed, it said that its notes will be issued at 100 per cent of their principal amount and in denominations of S$250,000, with a fixed interest rate of 4.5 per cent per annum, payable semi-annually. These notes will be issued under its S$900 million multicurrency medium-term note programme set up in February last year. They are expected to be issued on Oct 14, 2014 and mature on Oct 14, 2019. The net proceeds from this issue will be used for financing investments and general working capital, it said.

-By Lee Meixian

The sky's the limit for Huationg's cranes

It's upgrading its business model of providing quality services and boosting its reputation as a world-class logistics provider

Source: Business Times / Singapore

CREDIT for the impressive Singapore skyline is often given to construction firms or architects. But companies in the background which supply the crucial logistics support for such building projects are mostly neglected. Huationg is one of them.

Founded in the early 1980s, Huationg (Asia) Pte Ltd has evolved from a one-man, one-machine firm to an industry leader under the leadership of Lee Chin Tiong, who continues to serve as managing director and is the company's sole shareholder.

Offering a broad spectrum of products and services ranging from machinery rental to heavy-lifting project management has allowed the company to serve a wide range of customer needs.

This has attracted clients from areas as diverse as the private and public services sector, construction, oil and gas, and the shipping, port and marine industry. Looking towards the future, Huationg is set to expand further and penetrate new markets.

-By Andre Betker, Chow Zhan Hoong Nelson, Hendri Setia Wardana & William Santosa Lim

The father of information architecture

Insatiable curiosity drives Richard Saul Wurman, co-founder of TED Conference and data pioneer, towards connecting 'various little things' into easy-to-understand and useful information throughout his life. By Anita Gabriel

Source: Business Times / Raffles Conversation

IF RICHARD Saul Wurman has his way with event hosts - and he almost always does - the American architect and cartographer whose "life is a bunch of hobbies" would saunter up to the stage in front of a packed audience with an impromptu, off-the-cuff script and not be introduced, at all.

"Just say nothing," says the unconventional 79-year old in a charmingly off-beat way, when asked by the organisers how he'd like to be presented before he speaks at the annual global IIMPact 2014 conference at the Raffles City Convention Centre recently.

"It has nothing to do with the arrogance of being famous," says the man, clad in his all-time favourite crochet-knit, striped Missoni scarf teamed with a high-necked white T-shirt and grey trousers, as he bursts into a full-throated chuckle.

Described by Fortune magazine as an "intellectual hedonist with a hummingbird mind", Mr Wurman is co-founder of TED Conference - a mind-bendingly charismatic talkshop of intellectual heroes stimulating a "greed of hope" which began 30 years ago, and which he would eventually get tired of and sell in 2001. He simply loathes wallowing in the past.

Views, Reviews & Forum

Unlock value of property to fund retirement: Aviva chief

Source: Straits Times / Money

PROPERTY is a great asset but Singaporeans need to consider how to unlock its value if they wish to have an easier life in retirement, advises insurance boss Nishit Majmudar.

The Aviva Singapore chief executive believes investors may not be getting the most out of their real estate when it comes to funding their golden years.

Much of the problem lies with people not monetising their home based on sentimental reasons. But that serves only to erode the potential gains generated over time, he said.

"We earn those returns on property but we don't want to use those returns to convert that into a good retirement, we just want to keep the property for ourselves," he told The Straits Times on Tuesday.

The need to be able to derive good returns from property also stems from the fact that it takes up a significant portion of a person's savings.

It is also one of the most common investments, with about 90 per cent of households in Singapore owning their own homes last year.

Mr Majmudar said the situation is different in the United States or Britain, where people invest between 40 and 50 per cent of their savings in equities.

"When the Americans and British retire, the appreciation they gained in equities will be used to fund their retirement.

"We invest more in property than equities. The appreciation we get in property, are we willing to use that?"

Mr Majmudar also expressed concerns about the proposal for retired Central Provident Fund (CPF) members to withdraw part of their CPF savings in a lump sum, subject to limits.

He acknowledges the money is useful for emergencies such as medical crises. But he reiterates the importance of ensuring that savings can continue to add to the pool of retirement funds.

"That lump sum of money is the result of many years of hard work and it is hard-earned savings. Will they be able to invest that money over a 20-year period and earn a good return?"

Mr Majmudar, who has been in the industry for about 30 years - with stints in India, Britain, the Philippines and Thailand - said many countries are facing the same pressures in meeting retirement funding needs.

That means helping people save enough in a low interest rate environment by ensuring they start saving early and are well-equipped to have a diversified portfolio to grow their savings - a strategy that is especially important given that people are living longer.

"We are on the right track, we have high savings, we are getting more aware of our responsibilities on what we need to do and we are beginning to see people invest at an early age."

-By Mok Fei Fei

Huge rent increase in HDB-run industrial building

Source: Straits Times / Forum Letters

MY FATHER rents a unit at AMK Autopoint - an HDB-managed industrial building for small and medium-sized enterprises in the car repair, servicing and refurbishment business.

His rental contract is ending at the end of this month, and we received an invitation to renew it in the middle of last month.

We were shocked by the increase in rental. If we were to sign a one-year contract, the rent would increase by 31 per cent. If we signed a three-year contract, there would be a 10 per cent increment each year until the third year, when there would be a 31 per cent increase over the current rate.

Landlords of private commercial properties are known to be profit-driven, but why is a government statutory board charging such high rental, which surpasses even that imposed by some private landlords?

Is this fair to small businesses, and is there a regulatory body overseeing this?

It is no wonder that the cost of running a business is ever-increasing - and this will eventually be passed on to consumers.

Also, the late notice of the increment caught us off guard, leaving us with little time to seek alternative arrangements.

-By Kee Mui Hong

Worrying signs on property front

Source: Straits Times / Forum Letters

MONDAY'S article ("Downtown home prices take a big hit") points to trouble ahead.

Technically, a property bubble occurs when there is a run-up in housing prices fuelled by demand and speculation, followed by a period when supply exceeds demand and prices plunge, with some owners desperately selling off their property assets at a loss.

This has happened in seven loss-making transactions in the downtown area in the first eight months of the year.

Unless some measures are taken, the trend may escalate as indications are that, over the next three years, more than 20,000 units are coming on-stream each year but the take-up may be less than half.

The HDB also adds to the supply equation.

A drop in HDB resale prices may worsen the problem as many who have booked new private residential units are expected to sell their current HDB flats to pay for their purchases.

The solution may not be a simple one as developers need to move their units to get their cash flow, and some industry sources say developers have started to offer promotional discounts.

This situation mirrors the United States mortgage crisis that threw financial institutions into a negative economic spiral and which took many years to fix.

Singapore, being a small open economy, cannot afford a plunge in real estate prices.

Perhaps easing the restrictions on buyers may stimulate demand, but this lends itself to the problem of individuals over-extending themselves.

Ultimately, the only solution may be to restrict developers to offloading their units on a staggered basis, and offer them a moratorium on repayment of their bank loans.

-By Anil Bhatia

Global Economy & Global Real Estate

Sichuan Sanjia in talks to sell its Iskandar site

Chinese developer's move due to stiff competition, weak interest: Sources

Source: Straits Times / Money

A CHINESE developer which has entered the Iskandar market is now looking to sell its site, The Straits Times understands.

The move comes amid a glut of property due for completion by late 2016 or early 2017, and markedly weaker buying interest in the Johor state development zone.

Sichuan Sanjia Real Estate Group had intended to launch the first residential component of its Permas Jaya waterfront site by the end of this year, said market sources.

The project was expected to have a commercial component as well.

But one to two months ago, it suspended some operations related to the Johor development, which is understood to be the firm's first foray outside China.

Sichuan Sanjia did not respond to requests for comment.

It had acquired the 1.64ha freehold site, near the Straits View condominium, for about RM44 million (S$17.2 million) in 2012.

It registered a subsidiary company in Singapore in 2008 and is understood to have scouted for premises here to house its Singapore sales gallery.

Sichuan Sanjia is said to be in talks to sell its freehold site.

"Given that it got a good price for the land, it might not have to sell at a loss," said a source.

"The market in Iskandar has weakened considerably over the past year and there seems to be more policy risks, like the reintroduction of the real property gains tax and tolls, going forward.

"It is starting to realise it missed the boat."

According to its website, the company was established in 1995, and has a registered capital of 118 million yuan (S$24.4 million) and more than 300 staff.

It has about 10 residential and commercial projects under its belt, such as Jincheng Garden and a "Sanjia D9 district".

Property consultants said it is not surprising that a developer has apparently had a change of heart.

"With so many large projects coming up, especially along Danga Bay, like Guangzhou R&F's Princess Cove, Country Gardens Danga Bay and Greenland's project, competition is stiff and buyers are hard to come by nowadays," said Mr Wee Soon Chit, executive director of Landserve in Johor.

Princess Cove is offering 3,000 homes in the first phase alone, with as many as 30,000 units in all.

-By Rennie Whang

Malaysian housing project stresses jobs, food to tackle slums

Source: Business Times / Wealth

A MALAYSIAN low-cost housing project could lift some of the world's 860 million slum-dwellers from poverty by helping to secure jobs and food as well as shelter, Malaysia's IRIS Corp Bhd said on Thursday.

In a pilot scheme, the company built a four-storey building of 32 apartments, put together like huge Lego building blocks, for US$1.5 million including the cost of buying land in Pahang, Malaysia, it said.

Too often, slum dwellers are pushed out by new construction in cities, IRIS managing director Tan Say Jim told Reuters in a telephone interview about ways to rejuvenate urban slums.

GIC among buyers of 3 UK airports: report

Source: Business Times / World

HEATHROW Airport Holdings (HAH) is set to sell three British airports for £1 billion (S$2.04 billion) to a group including Spanish infrastructure firm Ferrovial, Singapore sovereign fund GIC and Australian bank Macquarie, according to Sky News.

Quoting unnamed insiders, Sky News said on Friday that the investors would take equity stakes in the three airports - Aberdeen and Glasgow in Scotland and Southampton in southern England - in a deal which could be announced in days.

Ferrovial, HAH, GIC and Macquarie declined to comment.

-From London, UK