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2nd September 2014

Top Stories

Singapore’s third Green Building Masterplan launched

The masterplan will place greater emphasis on encouraging tenants and occupants to adopt green practices.

Source: Channel News Asia / Singapore

SINGAPORE: National Development Minister Khaw Boon Wan on Monday (Sep 1) launched the third Green Building Masterplan to guide Singapore’s green building journey over the next five to 10 years.

The masterplan, developed by the Building and Construction Authority (BCA), was launched at the opening ceremony of the International Green Building Conference and the BEX Asia Expo. Both events are being held as part of the Singapore Green Building Week.


The masterplan will focus on tenants and occupiers which, together with building owners, will be able to tap on the S$50 million Green Mark Incentive Scheme to adopt more energy-efficient measures in their premises, Mr Khaw said.

The scheme will help to fund up to half of the retrofitting costs of energy-efficient improvements to buildings and premises – subject to a maximum of S$3 million for building owners and S$20,000 for occupants and tenants. This will help the stakeholders, since they have fewer resources to implement such improvements, the BCA said.

One developer said the masterplan's focus on tenants is a timely one. Mr Rod Leaver, CEO of Lend Lease Asia, said: "There was a gap in creating green buildings. Unless you actually got tenants on board and got them to understand, and educated them on the importance of energy efficiency, you could take a very green building and take it into a grey building over the long term." 

Mr Khaw noted that the first and second masterplans had previously focused on greening new buildings and existing buildings, but the third masterplan will take Singapore's greening efforts "beyond the building structures and hardware" and focus more on end-users, aiming to change behaviours and practices.


New awards have also been introduced - the Green Mark Pearl and Pearl Prestige Awards - to recognise building owners and developers which have worked with their tenants to reduce energy consumption.

This could be through implementing a green clause in lease agreements and achieving Green Mark certification for at least half of the tenant spaces. The Green Mark is a rating system that assesses a building's environmental impact. The awards will be given out at the BCA Awards next year.

Lend Lease, which currently operates three malls, said all its tenants have signed leases which focus on saving energy and reducing electricity costs.

Dr John Keung, CEO of the Building and Construction Authority, said: "That is where the building owner and tenants have to work together. They have to look at those areas where they can do a lot more to achieve the kind of energy efficiency required. If you get the design right from day one, the payback period is quite short."

A S$52 million fund has also been set up for research in developing, testing and showcasing new solutions for green buildings in the tropics.

Mr Khaw said: "We need more opportunities to bring solutions from the lab to the real world - in actual buildings. We must make it easier and faster for these solutions to be adopted when we build or retrofit existing buildings."

Separately, new initiatives for the public sector will also be rolled out under the new masterplan. These include requiring existing public sector buildings with more than 5,000 square metres of gross floor area to be Green Mark certified.

BCA said about 400 public sector buildings, including community centres, schools, police stations and museums will, be affected by these requirements. Government events and functions would also need to be held at Green Mark-certified venues. 

- CNA/cy/by

Development charges for non-landed residential sites fall

Source: Today Online / Business

SINGAPORE — Charges that developers have to pay to enhance the use of land will be lowered for almost half of the geographical sectors in the non-landed residential segment for the next six months — the first decline since March 2012 — amid a slowing property market as a result of repeated rounds of government curbs.

Analysts said the downward revision in development charge (DC) rates for the segment in the half-yearly review is not surprising, given the recent moderation in private home prices.

The DC rates for non-landed residential sites will drop by between 2.8 and 5 per cent for 55 of 118 sectors in the period from September to February, compared with the previous six months, the Urban Redevelopment Authority (URA) said yesterday.

Property consultant Colliers International’s calculations show this works out to an average decrease of 1.6 per cent across the segment.

The biggest decline of 5 per cent is seen in two sectors, encompassing areas such as Prince Charles Crescent, Alexandra Road, Tanglin Road and Telok Blangah Heights.

The DC rates for the other 63 sectors remain unchanged.

Mr Ku Swee Yong, chief executive officer of Century 21, said: “This downtrend is not unforeseen. The URA price index has been falling, especially for the Core Central Region. Several new launches in those areas, where the chief valuer has lowered DC rates, also did not do so well.”

Similarly, Ms Chia Siew Chuin, director of research and advisory at Colliers International, said: “Tender bid prices of Government Land sales sites have become more conservative. At the same time, there are no successful residential collective sales so far this year,” she said.

As for land for commercial use, DC rates will increase by an average of 2 per cent, with 26 of 118 sectors set to see hikes of 5 to 11 per cent, while the rates for the remaining 92 sectors will stay unchanged.

Mr Ku said: “The retail segment continued to show strength, as seen in shops in certain HDB estates and landed neighbourhoods, where rentals have remained resilient.” Meanwhile, DC rates for the landed residential and industrial segments remain unchanged, while charges for the hotel and hospital segments are up by an average of 9 per cent islandwide.

-By Lee Yen Nee

DC rates for non-landed residential use dip on weaker home prices

No change for landed and industrial use; 9% average rise for places of worship, hotels

Source: Business Times / Top Stories

THE authorities have trimmed development charge rates for non-landed residential use by an average of 1.6 per cent from Monday. This is not surprising given the weakening in non-landed private home prices, say analysts.

Landed residential DC rates were left untouched as were the rates for industrial use. For commercial use, DC rates were raised 1.9 per cent on average.

DC rates - which are payable for enhancing the use of some sites or building bigger projects on them - will go up by an average of 9 per cent each for two use groups: one which includes hotels and hospitals, and the other, places of worship and civic and community institutions.

-By Kalpana Rashiwala

Development charges for condos fall

Drop reflects weak residential market; but rates for commercial land up sharply

Source: Straits Times / Money

DEVELOPMENT charges - the rates developers pay the Government to enhance land use - have fallen for the first time in almost 18 months for residential sites earmarked for non-landed homes such as condominiums.

However, these rates shot up for commercial land, places of worship, civic institutions, as well as hotels and hospitals.

Development charges, which can be a significant cost in a redevelopment, are revised after regular half-yearly reviews based on land prices and market deals.

They fell by an average of 2 per cent for non-landed homes, on the back of flagging property sales since the start of the year.

The new fees were released by the Urban Redevelopment Authority (URA) yesterday.

They are applied when the value of a site goes up because of a re-zoning or when a taller building can be erected after a change in the site's plot ratio.

Consultants said they expected the dip in the rates for non-landed residential plots, given the 2.1 per cent slip in the official residential price index in the first half of the year.

Bids for land sold under the Government Land Sales programme have also been conservative, noted Ms Chia Siew Chuin, director of research and advisory at Colliers International, unless the plot is in a popular area.

Moreover, the collective sale market has screeched to a halt this year, she said.

However, the dip in development charges is not expected to boost the acquisition of land significantly, because the risk of shrinking profits from falling property prices is still far greater, noted Mr Nicholas Mak, research head at SLP International.

This was because "the reduction in the development charge rate would only increase the developer's return on investment of the residential project by 1 per cent, assuming all other factors remain unchanged".

Non-landed residential plots in Prince Charles Crescent, Alexandra Road, Tanglin Road, Henderson Road, Depot Road and the Telok Blangah area recorded the sharpest dips of 5 per cent.

On the other hand, experts were surprised by the 9 per cent hike in fees for land slated for hotels, hospitals, places of worship and civic institutions - the highest average across all segments.

After all, hotel deals this year have paled in comparison with the "landmark year of transactions" last year, said Dr Chua Yang Liang, head of research Southeast Asia at Jones Lang LaSalle (JLL).

The increase in charges for land for places of worship and civic institutions was also the first hike in five years, JLL noted.

"We believe that the upward revision in both (categories) is for the overall harmonisation of development charge rates with other use groups," said Dr Chua.

For the commercial sector, charges rose by an average of 2 per cent, with the highest increases in places such as Balestier Road, Thomson Road and the Novena area.

This was largely thanks to the uptick in strata-sales activity at Balestier towers, Dr Chua added. Construction group Low Keng Huat, for instance, had in July forked out about $64 million for 36 units at the mixed-use project in Balestier Road.

The rates were unchanged for landed residential and industrial sites.

Though there were transactions for industrial land in the review period which showed that development charge rates were "trailing behind land prices", there were also plots of industrial land being sold for less than the land value imputed by the development charge for the area, said Ms Chia.

For instance, the highest bid for a plot in Tuas South Avenue 7 was 22.7 per cent lower than the land value imputed by its development charge.

The new development charges will take effect on Monday.
-By Cheryl Ong

Next target: Building owners and tenants

Third Green masterplan aims to change their usage attitudes, practices

Source: Business Times / Top Stories

[SINGAPORE] Under the third Green Building Masterplan, Singapore will focus its efforts for the next five to 10 years on working with end-users of commercial buildings to improve energy efficiency, Minister for National Development Khaw Boon Wan said on Monday at the opening ceremony of the International Green Building Conference 2014.

Unlike the first two masterplans, launched in 2006 and 2009 respectively, where emphasis was on the greening of new and existing buildings, now, Singapore wants to move beyond building structures and hardware and work towards changing the behaviour and practices of building owners and tenants, to improve the energy efficiency of commercial buildings.

Mr Khaw said that Singapore is "on track" to achieve its target of greening 80 per cent of its built-up area by 2030.

But the twin global challenges of climate change and intensified urbanisation are "complex issues without simple solutions" and "they require all of us in the global community to work together to find practical answers".

To incentivise end-users, in particular Small and Medium-sized Enterprises (SMEs), the Building & Construction Authority of Singapore (BCA) will co-fund up to 50 per cent of the retrofitting cost for energy improvements, as part of the S$50 million Green Mark incentive scheme.

"BCA is incentivising the building owners and tenants who are SMEs as they have lesser resources to undertake energy efficiency improvements to their buildings and premises," said BCA's chief executive officer John Keung. "The grant will provide greater support to help the SMEs kick-start their journey in greening their operations."

For owners of larger-sized buildings to qualify for the incentive, they have to have at least 30 per cent of their tenants that are SMEs.

The newly-launched BCA Green Mark Pearl Award and the Green Mark Pearl Prestige Award also serve to recognise developers, building owners and landlords who are leaders in the green building initiative. These awards will be given out to commercial offices, retail malls, and business park developments.

To qualify, amongst other criteria, at least 50 per cent of the buildling's net lettable area must be occupied by tenants under the Green Mark Occupant-Centric Schemes for the Green Mark Pearl Award, and 70 per cent for the Green Mark Pearl Prestige Award.

Another initiative under the third masterplan includes the S$52-million fund for the Green Buildings Innovation Cluster (GBIC), which will be set up to develop, test, monitor and showcase new green building solutions that are relevant to the tropics.

To further BCA's efforts to establish Singapore as a global leader for green buildings in the tropics and sub-tropics, MOUs were signed with three foreign partners at the opening ceremony to facilitate sharing of best practices and collaboration of green building initiatives.

The partners involved are Sri Lanka's Ceylon Institute of Builders, Tanzania's National Housing Corporation, and the Ikatan Nasional Konsultan Indonesia. Currently, 13 MOUs have already been signed with foreign parties.

In 2005, Singapore took the first step in its green building journey when the BCA Green Mark Scheme was launched, to rate the environmental sustainability of buildings in the tropics.

At the end of the first year, there were only 17 building projects in Singapore that had met the BCA Green Mark standards.

Today, the number of buildings has grown to more than 2,100, or, over a quarter of the country's total built-up area.

-By Chan Yi Wen

$50m fund to help SMEs turn their buildings eco-friendly

Source: Straits Times / Top of The News

SMALL and medium-sized enterprises (SMEs) will get help to make their buildings and premises more energy-efficient under a new $50 million scheme.

Up to half the retrofitting cost of energy-efficiency measures will be funded, with SME building owners getting up to $3 million, and tenants a maximum of $20,000.

The initiative comes under the Green Mark Incentive Scheme for Existing Buildings and Premises, one of several new plans in the third Green Building Masterplan.

This road map for eco-friendly buildings was launched yesterday at the Singapore Green Building Week opening ceremony.

"This third masterplan aims to change behaviour and practices," said National Development Minister Khaw Boon Wan.

Previous masterplans in 2006 and 2009 focused on physical aspects of new and existing buildings. But about half of a building's energy consumption hinges on its tenants' activities, said the Building and Construction Authority (BCA).

The third masterplan therefore focuses on encouraging energy-efficient behaviour in building tenants and occupants.

The Green Mark Incentive Scheme for Existing Buildings and Premises, for instance, is open to tenants and building owners that are SMEs, or owners of buildings where at least 30 per cent of tenants are SMEs.

The new masterplan also includes a new award to recognise developers and building owners who have encouraged tenants to reduce energy consumption.

The Green Mark Pearl Award is for projects where the building has a high rating under the BCA's Green Mark scheme for eco- friendly buildings and where a minimum number of tenants are also Green Mark-certified.

The masterplan also aims to maintain Singapore's position as a leader in green buildings in the tropics and sub-tropics.

To this end, a $52 million research and development centre, known as the Green Buildings Innovation Cluster, will be set up.

Singapore's public sector will take a stronger lead as well.

For instance, existing public sector buildings with a gross floor area of over 5,000 sq m will have to be Green Mark-certified.

Office space will have to be leased from buildings with high Green Mark ratings upon the next lease renewal, and government events will be held in Green Mark-certified venues.

Yesterday, the BCA signed agreements with partners in Sri Lanka, Tanzania and Indonesia to collaborate in areas such as capability building. An inaugural report on commercial buildings' energy efficiency was also released.

The BCA Building Energy Benchmarking Report showed that from 2008 to last year, energy consumption rose by 14 per cent - less than the 20 per cent growth in gross floor area.

Energy efficiency improved by 5 per cent over the period, and Green Mark buildings were more energy-efficient than those without the certification.

-By Janice Heng

Experts back options for lease buyback

They say this will attract more seniors to the scheme, but call for safeguards

Source: Straits Times / Singapore

More elderly flat owners are likely to be interested in the Lease Buyback Scheme if they have a choice of how many years of their lease to retain and how many to sell back to the Government, said property experts.

But they also warned about allowing too much flexibility and suggested pegging such options to the flat owner's age.

On Sunday, National Development Minister Khaw Boon Wan said that the Government is looking at ways to create more flexibility in the Lease Buyback Scheme.

Currently, the scheme lets Housing Board flat owners keep 30 years of their lease and sell the rest back to the HDB.

The sales proceeds are used to top up their Central Provident Fund (CPF) Retirement Accounts, with any extra being received in cash.

Mr Khaw said his ministry is studying whether elderly flat owners may be given the option to retain more or fewer years on their flat's lease.

A longer lease would mean that flat owners do not have to worry about outliving the 30 years.

A shorter lease would let them get more cash upfront.

Details of the changes are set to be announced this week.

Experts were upbeat about the the proposed move, but highlighted the need for safeguards.

Offering a shorter lease to an 80-year-old, for instance, will free up more cash for these older flat owners who might have more medical costs, said R'ST Research director Ong Kah Seng.

But allowing too short a lease to be left on the flat runs the risk that flat owners will outlive it.

"I believe that there should be a minimum cap on how many years the owner can retain, and the cap should be adjusted according to their age," said OrangeTee managing director Steven Tan.

If too much flexibility is offered, he added, some might take advantage of it by keeping a very short lease and counting on the Government to not evict them.

The Government has guaranteed that no elderly Singaporean will be made homeless under this scheme.

"But this guarantee will cost taxpayers' money to fulfil" if many flat owners do outlive their leases, noted SLP International Property Consultants' head of research Nicholas Mak.

Mr Ong thought that the target age should rely on projections by medical, elder-care and sociology experts on possible life expectancies in the coming decades.

The Lease Buyback Scheme is one of several options which four-room flat owner Teo Hup Seng, 71, is considering.

The retiree, who lives with his 66-year-old wife, welcomed the option of keeping a shorter lease: "It would be good if they allowed it. Thirty years is more than enough for us."

-By Janice Heng

Singapore Real Estate

Suburban shoebox units: Bottom falling out of sector?

Experts say flood of new homes next year likely to put pressure on rentals

Source: Straits Times / Money

Shoebox apartments outside the city centre could lose their cachet once the flood of new homes hits the market next year.

Experts note that tenants are enjoying greater choice, and that will only get better as the pool of available real estate deepens.

That trend spells bad news for suburban shoebox homes, which have a limited appeal given their location and relatively cramped living space.

Of the 53,900 new condo units expected to come on the market in the next 30 months, the experts point out, most will be small or shoebox apartments - with a floor area of up to 506 sq ft.

Landlords of such flats in less accessible locations will likely find it "challenging" to let out their units.

Since 2009, when shoebox units became popular, the bulk of transactions in this category has been outside the city centre, noted Ms Lee Lay Keng, regional head of research at DTZ.

Of the 12,097 shoebox units sold since 2009, about 47 per cent were in city fringe areas and around 37 per cent in the suburbs.

"Owners of such units for investment would not be as successful at getting the kind of rentals they want going forward.

"There will be pressure on vacancies, as they will be facing competition from the broader market too," said CBRE research head Desmond Sim.

There are no official figures on the number of shoebox units on the market, but the Urban Redevelopment Authority (URA) in September 2012 projected that there were about 2,400 completed units as at 2011, with the figure rising to 11,000 by the end of next year.

These small homes featured heavily at newly launched projects from 2009 to 2012, including the 293-unit Alexis in Alexandra Road, the 138-home Parc Imperial in Pasir Panjang Road and the 72-unit Suites@Guillemard in Lim Ah Woo Road.

Though they tend to have a higher price per sq ft (psf) due to their small size, investors find the total quantum "more palatable, especially amid tightened financing", said Ms Chia Siew Chuin, director of research and advisory at Colliers International.

Rental yields of shoebox units typically range from 3 to 4 per cent, trumping the 2 to 3 per cent yields for residential developments islandwide.

While the quantum price may seem attractive, investors looking to buy shoebox apartments should bear in mind that rents are expected to soften in line with the flood of newly completed condos, experts said.

Ms Lee also noted that room for capital appreciation for shoebox units appears limited as median prices - on a psf basis - have risen by about 24 per cent in the four years since the second quarter of 2009, against the 50 per cent gain for condos islandwide.

After tighter property financing rules were imposed in the second quarter of last year, median prices of shoebox units fell by 5 per cent against a 2 per cent decline for non-landed homes.

Despite this, there were 710 shoebox units sold in the first half of the year, according to caveats lodged with URA.

"Shoebox units will continue to appeal to singles and couples without children, as well as expats on local employment terms or with smaller housing budgets," said Ms Chia.

-By Cheryl Ong

Dormitory business 'is here to stay'

TA Corporation investing $114m for Tuas site to build 9,200-bed facility

Source: Straits Times / Money

While there are plenty of empty beds in workers' dormitories around the island, one development firm still sees plenty of potential in the business.

TA Corporation has backed its judgment by shelling out $113.9 million for a 37,170.5 sq m site in Tuas that will be used to build a 9,200-bed facility, making it one of the largest dormitories in Singapore.

Chief executive Neo Tiam Boon told The Straits Times yesterday: "It's clear that the Government is looking at doing more for the welfare of foreign workers here, especially after the Little India riot.

"And building purpose-built worker dormitories with more liveable conditions - which could help stamp out illegal squatters - is definitely in line with that."

The firm's move seems counter to market trends.

It was reported last month that purpose-built dormitories are becoming less popular with companies, with at least 5,000 beds vacant out of the 200,000 available.

Employers are choosing to move their workers into cheaper makeshift shelters instead.

But Mr Neo pointed out that the figures mean that only 3 per cent of the beds are not being utilised, which is not out of the ordinary.

"We've had past experiences managing these dormitories, and they have always seen an (overall) occupancy rate of about 95 to 97 per cent," he noted.

The rest of the beds could be under repair, he pointed out. "It's not possible to achieve 100 per cent occupancy."

Mr Neo also said that even as policy curbs on foreign labour continue to bite, the number of workers from overseas is still going up, although at a slower rate.

"The dormitory business is here to stay," he said, adding that he expects it to grow into a recurring revenue driver and contribute about 10 per cent, or $35 million, to the company's overall revenue.

TA Corporation also has its sights set on expanding its existing businesses in the region, especially in emerging markets such as Cambodia and Myanmar, said Mr Neo.

In March last year, its subsidiary Que Holdings was appointed distributor of Shell's automotive and industrial lubricant products in Myanmar.

The firm is also building a concrete pre-cast components manufacturing plant in Malaysia's Iskandar region that is expected to enter commercial production by the second half of next year and complement TA Corpor- ation's core construction business.

-By Jacqueline Woo

30% space savings at new warehouse

Source: Straits Times / Money

A fully automated storage system at a new $95 million warehouse owned by Pan Asia Logistics will help the firm save space and improve productivity.

The system will deliver space savings of about 30 per cent for the four-storey warehouse in Tuas Bay Drive, which was officially opened yesterday.

About 40 per cent of the company's lower-skilled workers will be re-trained to operate the system in higher-skilled roles, with a corresponding increase in wages, the logistics firm said yesterday.

Previously, manual handling "gave rise to human error and was labour-intensive".

The new warehouse is the company's second facility in Singapore, complementing its headquarters in Changi North Way.

The firm, which was founded here in 2002, received a Capability Development Grant from enterprise development agency Spring Singapore to implement the storage system.

The grant provides funding support of up to 70 per cent of qualifying project costs for initiatives in areas such as human capital development, productivity and technology innovation.

Technologies such as those used in Pan Asia Logistics' new warehouse "may require a large commitment, but the gains in terms of improving business operations, empowering employees with better jobs and serving customers better, can be reaped over the long term", said Ms Kee Ai Nah, the group director of industry development at Spring Singapore.

Real Estate Companies' Brief

New CEOs for CapitaMalls Asia, CapitaLand China

Changes come after CapitaMalls Asia CEO Lim Beng Chee quits

Source: Business Times / Companies

A LEADERSHIP transition is in place at Asia real-estate giant CapitaLand as it announced new chief executive officers (CEOs) for two units following the departure of a key executive.

Current CEO of CapitaLand China, Jason Leow, 47, will assume the role of CEO of CapitaMalls Asia (CMA) with effect from Sept 15.

He will take over from Lim Beng Chee, 46, who has decided to take a personal sabbatical and will leave CapitaLand by the end of the year.

At CapitaLand China, deputy CEO Lucas Loh, 47, will succeed Mr Leow as CEO, also with effect from Sept 15.

-By Claire Huang

New CEOs for CapitaLand China and CapitaMalls Asia

Source: Straits Times / Money

Two units of property giant CapitaLand will have new chief executives later this month.

Mr Jason Leow, 47, the chief executive of CapitaLand China, will be appointed as chief executive of the group's shopping mall arm, CapitaMalls Asia (CMA), with effect from Sept 15.

He will take over from Mr Lim Beng Chee, 46, who will leave CapitaLand by Dec 31 to go on a personal sabbatical.

Mr Leow began his career with CapitaLand in 1994 and has been based in China for the last 13 years. He was appointed chief executive of CapitaLand China in 2009, growing the residential and integrated development businesses, including the development and operations of the eight Raffles City projects in China.

Mr Lucas Loh, 47, the deputy chief executive of CapitaLand China, will succeed Mr Leow as chief executive of CapitaLand China from Sept 15.

He joined the group in 2001 and has been based in China since 2004, and was appointed deputy chief executive in 2012.

The two new chief executives will report to Mr Lim Ming Yan, CapitaLand's president and group chief executive.

He thanked the outgoing CMA chief executive, who had planned to take a break after working for more than 15 years in the group. He added that the departure of Mr Lim Beng Chee will be a loss to the group, but remains confident that "CapitaLand will maintain its leadership position in this sector".

The management changes reflect CapitaLand's strong management bench and "belief in nurturing internal talent" for succession planning, he added.

-By Rachael Boon

Croesus acquiring Tokyo shopping mall for 11b yen

Source: Business Times / Companies

CROESUS Retail Trust (CRT) is acquiring a big shopping mall in Greater Tokyo for 11 billion yen (S$131.8 million). The purchase price represents a discount of 5.2 per cent to the independent valuation of the mall. The acquisition will be financed via a combination of bank debt, proceeds from the fixed rate notes issued by CRT in January this year as well as a private placement that will be offered to institutional and other investors.

Charoen 'eyeing UE's property assets'

Talks to buy UE seen as part of plan to expand his real estate portfolio here

Source: Straits Times / Money

Thai beer baron Charoen Sirivadhanabhakdi is eyeing United Engineers (UE), which will allow him to expand his property portfolio in Singapore, a market he knows well, say analysts.

Mr Charoen is in the midst of talks with OCBC Bank and its concert parties about buying their combined stakes in UE, a property, engineering and construction group, and its WBL Corp unit.

Analysts told The Straits Times yesterday that the tycoon may be aiming to expand his foothold outside Thailand and sees a chance to do that by snapping up UE, which holds a sizeable property portfolio in Singapore.

"He probably wants to have a more diversified portfolio outside of Thailand..." said Voyage Research analyst Ng Kian Teck.

"Exploring opportunities in Singapore may interest him because he already has assets here, and he would have been scouting around to see (what is) available for sale."

Mr Charoen's net worth is about US$11.3 billion (S$14 billion), according to Forbes. He controls mainboard-listed developer Frasers Centrepoint Limited, which came as part of the package when he took over beverage giant Fraser & Neave (F&N) in a $13.75 billion buyout early last year.

His privately held TCC Group is also one of the biggest land owners in Thailand, and holds assets outside the country.

TCC owned the InterContinental Hotel in Bugis before injecting it earlier this year into the recently listed Frasers Hospitality Trust.

DMG analyst Goh Han Peng said Mr Charoen may be particularly interested in investment properties that "can generate recurring income with scope for capital appreciation".

Frasers Centrepoint wants to grow the share of its revenue from investment properties, according to a Business Times report earlier this year. It noted that investment properties comprise 30 per cent of the group's revenue with development projects bringing in the other 70 per cent.

Frasers Centrepoint group chief executive Lim Ee Seng had said in the report that the developer was eyeing "commercial assets, particularly suburban malls, offices and even business parks".

This could fit in with UE's portfolio of properties, which range from offices and shops to serviced apartments and light-industrial space. These assets include its flagship UE Square in River Valley, estimated to be worth $550 million, and UE Bizhub Tower at 79 Anson Road, which has an estimated value of $340 million.

UE also has four serviced residences under its Park Avenue arm. Its investment properties could be worth nearly $2.07 billion combined, and its residential developments about $627 million, according to a CIMB report last week.

Another reason Mr Charoen is eyeing UE could be a good working relationship with the sellers, market watchers said.

OCBC and its concert parties, which are insurer Great Eastern and the bank's founding Lee family, together hold an estimated 34 to 36 per cent of UE, and have worked with Mr Charoen before.

The three parties sold their stakes in Asia Pacific Breweries and F&N to Mr Charoen for $3.2 billion in 2012, setting the stage for his F&N buyout - one of the biggest corporate takeover sagas in recent history.

Analysts said neither OCBC nor Mr Charoen was likely to feel pressured into inking a deal over UE. "It's not a case where one side has to sell and the other has to buy. They can both walk away from the deal," Mr Ng said.

If Mr Charoen does acquire UE, the deal would add to a lengthening overseas buying spree.

In June, Frasers Centrepoint launched a successful takeover bid for Sydney-listed Australand Property Group - formerly a CapitaLand unit - at A$4.48 per share, which valued the firm at about A$2.6 billion (S$3 billion).

Companies backed by Mr Charoen have announced US$4.5 billion worth of acquisitions this year, according to Bloomberg.

However, analysts said this was probably not because of uncertainty in Thailand. "The recent acquisitions are made with expansionary purposes... rather than being a defensive move to diversify out of Thailand," Mr Goh said.

-By Melissa Tan

Views, Reviews & Forum

Overcoming emotional barriers to lease buyback

Source: Straits Times / Forum Letters

LAST Thursday's article ("Emotional barriers to retirement adequacy") gave a few reasons for the unpopularity of the Lease Buyback Scheme.

One is that older flat owners may prefer to bequeath their property to the next generation, for sentimental reasons.

These owners should realise that their children may need to sell the flat anyway if they already own one, since the Housing Board forbids any person from owning more than one HDB unit.

Those who sign up for the Lease Buyback Scheme can still leave behind a bequest for their children, since the proceeds of the lease sale are mostly in the form of a top-up to their Retirement Accounts that are used to buy Central Provident Fund Life plans.

Upon the death of the CPF member, the bequest amount from CPF Life is distributed to their next of kin either through CPF nomination or intestacy laws.

The article also mentioned other options for flat owners to monetise their property, such as subletting and downsizing.

In fact, these are the only options for five-room HDB flat and private property owners. But they are not sustainable in the long term as they create downward pressure on the rental market and property prices, given Singapore's ageing population and shrinking working population.

Many Singaporeans are asset-rich but cash-poor ("Asset-rich, cash-poor retirees speak up"; Nov 30, 2013), and if the Government extends assistance to these asset-rich millionaires, it would translate to an undue burden on the working population.

There is an urgent need to solve this asset-rich, cash-poor imbalance at the government and individual levels.

-By Wilfred Ling

Allow seniors to sell their private property after buying HDB flat

Source: Today Online / Voices

I fully support the idea of senior citizens downgrading from a private property to a Housing and Development Board (HDB) flat to finance and enhance their sunset years. (“Loosen HDB policy to help elderly be more financially independent”, Sept 1)

However, the proposal to allow them to keep their private property without having to sell it when they downgrade is not going to fly with the authorities. Perhaps the rules could be amended so seniors who own a private property can buy an HDB flat, provided they sell the private property within six months of possessing the flat.

Currently, private owners must first sell their private property and wait three years before they can apply for an HDB flat or an executive flat, even for one on the resale market. This deters them from downgrading as they would need to rent a property during the three years before they are eligible for public housing.

-By Harry Chia

Global Economy & Global Real Estate

GIC, Brigade to invest S$309m in south Indian property sector

Source: Business Times / Property

[NEW DELHI] Indian developer Brigade Enterprises and Singapore's sovereign wealth fund GIC have agreed to jointly invest 15 billion rupees (S$309 million) in residential real estate projects in south India, the companies said.

Brigade and GIC will invest in acquiring land and building homes and for mixed-use projects, the companies said in a statement on Monday.

Sovereign wealth funds and other long-term investors are eyeing opportunities in India's real estate sector, as property prices continue to drop on the back of the slowest economic growth in a decade for the country.

India last month paved the way for the setting up of real estate investment trusts (Reits), a move to boost foreign investment in the property sector.

-From New Delhi, India

GIC, Indian developer in $310m property partnership

Source: Straits Times / Money

NEW DELHI - Indian developer Brigade Enterprises and Singapore sovereign wealth fund GIC have agreed to jointly invest 15 billion rupees (S$310 million) in residential real estate projects in southern India, the companies said.

Brigade and GIC will invest in acquiring land for the building of homes and mixed-use projects, the companies said in a statement yesterday.

Sovereign wealth funds and other long-term investors are eyeing opportunities in India's real estate sector, as property prices continue to drop on the back of the slowest economic growth in a decade for the country.

India last month paved the way for the setting up of real estate investment trusts, a move to boost foreign investment in the property sector.

Funds including the Blackstone Group, Canada Pension Plan Investment Board, Abu Dhabi Investment Authority and Qatar Investment Authority are among those seeking to invest in the Indian property market.


Hotel Clover to open hotels in Shanghai and Bangkok

It officially launches its arts-themed Hotel Clover The Arts in Singapore

Source: Business Times / Property

[SINGAPORE] Homegrown hospitality brand Hotel Clover officially launched its arts-themed Hotel Clover The Arts last Thursday.

It is one of four boutique hotels in Singapore under the two-year-old Hotel Clover brand, owned by Singa Group of Companies.

The Hotel Clover chain has been expanding rapidly, both locally and overseas.

Its overseas expansion plans include opening of a 320-room hotel a stone's throw away from Shanghai's upcoming Disneyland and a 359-room hotel in Bangkok.

-By Jan Lee

Draghi's QE stance impacts Australia mortgages

Lower home-loan rates in turn boost domestic demand Down Under

Source: Business Times / Property

[SYDNEY] European Central Bank president Mario Draghi's shift towards quantitative easing is reverberating 17,000 kilometres away in lower Australian mortgage rates.

Mr Draghi's Aug 22 comment that he will "use all the available instruments" to stabilise prices added to an already benign interest-rate environment that sent relative yields on Australian financial debt to seven-year lows. That's helping banks trim mortgage rates, providing the Reserve Bank of Australia (RBA) with a de facto easing even as investors bet it will keep policy unchanged on Tuesday for a 13th month.

Lower home-loan rates are putting more cash in consumers' pockets, aiding RBA governor Glenn Stevens's efforts to rebalance growth towards domestic demand as mining investment wanes. The spread between financial debt and government notes touched 102 basis points in July, the narrowest since October 2007, Bank of America Merrill Lynch data shows. The gap averaged 6 basis points less than for US banks in the past year.

"The likely action from the ECB will add to a very low interest-rate environment globally," said Susan Buckley, Brisbane-based managing director for global liquid strategies at QIC Ltd, which oversees about A$70 billion (S$81.7 billion). "You've got another major central bank potentially buying paper in the market, so that's going to help bank funding generally speaking globally and that flows through to Australia."

-From Sydney, Australia

China house prices fall at slower pace in August

Source: Business Times / Property

[BEIJING] China's home prices fell at a slower rate in August than the previous month, an independent survey showed on Monday, as more local governments loosened purchasing restrictions to prop up sales.

The average price of a new home in 100 major cities was 10,771 yuan (S$2,200) per square metre last month, down 0.59 per cent from July, the China Index Academy (CIA) said.

It was the fourth month-on-month decline in a row, but the rate of the fall was slower than the 0.81 per cent recorded in July, according to CIA data.

All of China's 10 biggest cities continued to post month-on-month decreases, with the average price in Beijing dropping 0.05 per cent to 32,719 yuan per square metre.

-From Beijing, China

China's Property Slump Spurs Record Loans to Builders

Source: Bloomberg / News

Cash-strapped Chinese developers are borrowing a record amount in the offshore loan market this year, adding to the highest debt loads since 2005.

Homebuilders in the world’s second-largest economy got $5.9 billion from foreign banks, up 39 percent from the same period last year, according to data compiled by Bloomberg. Builder debt has soared to 128 percent of equity, the highest since 2005, according to a Bloomberg Intelligence gauge of 84 companies. New home prices fell in July in almost all cities the government tracks and developers are missing sales targets.

“Higher leverage on the balance sheet will give developers a higher financial burden,” said Agnes Wong, credit strategist at Nomura Holdings Inc. in Hong Kong. “That means that if presales are not going as quick as they expect it can translate into trouble more easily than before.”

Premier Li Keqiang is allowing builders to expand financing channels in a bid to stem the slowdown in an economy that derived 16 percent of its growth from property development last year, according to the World Bank. Sino-Ocean Land Holdings Ltd., whose free cash flow in 2013 dropped to a third of the previous year, led the borrowing with an $800 million loan.

Sales Slide

China’s home sales fell 10.5 percent in the first seven months of the year compared to the same period in 2013 to 3 trillion yuan ($488 billion), Moody’s Investors Service said in an Aug. 29 report. New construction declined 20 percent across the country, according to an Aug. 7 report from Fitch Ratings.

Central China Real Estate Ltd., Poly Property Group Co. and Yuexiu Property Co. Ltd. were among companies taking loans offshore this year.

Pressure on real estate companies was underscored by the collapse in March of Zhejiang Xingrun Real Estate Co. Developers including China Vanke Co., the nation’s biggest, and Greentown China Holdings Ltd., the largest in the eastern province of Zhejiang, have cut prices since then to boost sales.

The slump comes as economic growth is set to cool to 7.4 percent this year, the slowest in more than two decades, according to the median estimate of economists surveyed by Bloomberg. The Purchasing Managers’ Index, a gauge of manufacturing, fell to 51.1 for August from 51.7 in July, data today showed. The yuan has fallen 1.4 percent against the dollar this year, making it the worst-performing major Asian currency.

New Channels

Standard & Poor’s has reduced ratings for six Chinese property companies and increased them for two this year. That compares with two upgrades and two downgrades in 2013, according to Bloomberg-compiled data.

The three-year facility by the Beijing-based Sino-Ocean Land, whose projects include the Ocean Landscape residential development in the capital, pays a fixed 3.1 percent coupon. That compares with the 4.5 percent yield on the company’s 2019 dollar bonds, according to prices compiled by Bloomberg.

Lenders in Asia are extending more credit to high-yield companies as they seek to increase returns as central banks in the U.S., Europe and Japan keep benchmark interest rates near zero.

“Banks often will understand the credit better and will be able to get ancillary business from the same company so they can price a little bit cheaper,” Hong Kong-based Sonia Li, head of syndicated loans of JPMorgan Chase & Co. in Asia, said in a phone interview on Aug. 19.

Costs Decline

Cheaper borrowing from global banks that until five years ago didn’t lend to high-yield developers from China is a positive development, Owen Gallimore, the Singapore-based credit strategist at Australia & New Zealand Banking Co., said in a phone interview on Aug. 20.

Chinese real estate companies have increased dollar-denominated bond issuance to $16.5 billion this year, up 38 percent from the same period in 2013, Bloomberg-compiled data show.

“Funding and liquidity have also been boosted this year by the strong offshore bond primary market, syndicated loans, and regulatory re-opening of the onshore bond market,” Gallimore said. “Defaults are therefore not likely to spike.”

Property sales may improve for the remainder of 2014, helped by a rise in mortgage lending and selective loosening of purchases restrictions, Moody’s said in its Aug. 29 report.

Concerns Mount

The rise in loan funding is cause for concern because it reduces the claims that global bond investors have on the assets of Chinese developers, Nomura’s Wong said. The trend comes just as companies issue more expensive debt in the local market, expanding their overall liabilities, she added.

The overseas borrowing also adds to debtloads exacerbated by increased issuance of securities that have no set maturity dates. Chinese companies are selling a record number of the so-called perpetual notes that can be booked as equity this year, sidestepping government efforts to reduce the world’s biggest corporate borrowings.

That may drive up developers’ financing costs in part because the securities “generally start with a base dividend rate of about 8 percent per annum,” according to an Aug. 29 report by Robert Hing Fong, an analyst in the China team of Bloomberg Intelligence. Agile Property Holdings Ltd., which borrowed $520 million from foreign banks this year, had 4.48 billion yuan of the notes as of June, according to the report.

Chinese property companies may need to raise funds to cushion against any worse-than-expected sales slumps this half, Du Jinsong, an analyst at Credit Suisse Group AG, said in an interview Aug. 28.

The latest sign of demand for fresh funds in the industry came last week when Country Garden Holdings Co., controlled by China’s richest woman Yang Huiyan, announced plans for a share sale. The developer plans to raise HK$3.18 billion ($410 million) in a discounted share sale to refinance debt, including notes maturing in September, according to an Aug. 27 filing.

“On one hand it is definitely good that they are still able to get bank money,” Wong at Nomura said about Chinese builders in general. “But on the other hand they now have higher debt sitting on the balance sheet.”

-By Christopher Langner

Overseas debt load piling up for China builders

Source: Business Times / Property

[SINGAPORE] Cash- strapped Chinese developers are borrowing a record amount in the offshore loan market this year, adding to the highest debt loads since 2005.

Homebuilders in the world's second-largest economy got US$5.9 billion from foreign banks, up 39 per cent from the same period last year, according to data compiled by Bloomberg. Builder debt has soared to 128 per cent of equity, the highest since 2005, according to a Bloomberg Intelligence gauge of 84 companies. New home prices fell in July in almost all cities the government tracks and developers are missing sales targets.

"Higher leverage on the balance sheet will give developers a higher financial burden," said Agnes Wong, credit strategist at Nomura Holdings in Hong Kong. "That means that if presales are not going as quick as they expect it can translate into trouble more easily than before."

Premier Li Keqiang is allowing builders to expand financing channels in a bid to stem the slowdown in an economy that derived 16 per cent of its growth from property development last year, according to the World Bank. Sino-Ocean Land Holdings, whose free cash flow in 2013 dropped to a third of the previous year, led the borrowing with an US$800 million loan.

-From Singapore

China Stock Rally Defies Construction Slowdown: Chart of the Day

Source: Bloomberg / News

Chinese stocks are decoupling from steel prices by the most in three years as equity investors bet Asia’s largest economy will withstand a property slowdown.

The CHART OF THE DAY tracks the Shanghai Composite Index against a gauge of the most liquid steel contracts traded in the city. The stock measure has rallied 12 percent since its March low. Steel reinforcement-bar futures have fallen 10 percent in the period to their lowest level since trading started in 2009. While fixed-asset investment growth slowed in the first seven months to the weakest since 2001 and sales of buildings plunged in July by the most in four years, the nation’s exports surged 14.5 percent in the biggest increase since April 2013.

Rising overseas demand for Chinese goods supports Premier Li Keqiang’s 7.5 percent goal for economic expansion this year. Li also ordered targeted stimulus to help areas of the economy including agriculture, railways, low-income housing and small businesses, following a first-quarter slowdown. New home prices fell in July in almost all cities the government tracks.

The property market slump “shouldn’t halt growth in the rest of the economy,” Donna Kwok, senior China economist at UBS AG, said by phone from Hong Kong. “Firstly because the export recovery is holding up, and secondly as government policies are helping to prop up other parts of the economy such as infrastructure, SMEs, agriculture, and what they can within the property sector.”

Steel prices are tumbling as state-owned producers maintain output at the same time as demand weakens. The nation’s steel industry has excess capacity of between 180 million metric tons and 240 million metric tons, the China Daily reported Aug. 7, citing the country’s trade association. Baoshan Iron & Steel Co., the nation’s largest listed producer, reported a 15 percent drop in net income for the first half of the year.

Chinese exports probably grew 10.7 percent last month, according to a Bloomberg survey of economists before the data is released on Sept. 8. That would be the second-fastest pace since November.

-By Richard Frost and Alex Davis

Mexico’s Geo Cleared to Get Bridge Loans to Restart Homebuilding

Source: Bloomberg / Luxury

A Mexican court cleared the way for homebuilder Corp. Geo SAB (GEOB) to receive bridge loans from banks including Citigroup Inc. as part of the company’s efforts to emerge from bankruptcy.

The judge on Aug. 29 rejected an effort to block the financing, Orlando Loera, senior adviser to Mexico City-based Geo, said yesterday in a telephone interview. Banco Santander SA, Banco Bilbao Vizcaya Argentaria SA, HSBC Holdings Plc and Grupo Financiero Banorte SAB also will provide loans under the plan, Loera said. They could total as much as 1 billion pesos ($76 million), Loera said in June.

Geo, which defaulted on its bonds and halted most construction last year after a shift in government policies led to a dropoff in homebuilding subsidies, agreed in March to give creditors 88 percent of the company under a reorganization plan. The company’s $400 million of dollar bonds due in 2022 rose 0.15 cents today to 9.61 cents on the dollar, the highest price on a closing basis since Aug. 19, at 11:31 a.m. in Mexico City, according to data compiled by Bloomberg.

The bridge loans will be used for homebuilding, Loera said in June.

-By Ben Bain