Real News‎ > ‎2015‎ > ‎January 2015‎ > ‎

24th January 2015

Singapore Economy

Urban Lab launched to help address urban challenges

Urban Lab, a new dedicated exhibition space, has been launched to help address urban challenges and create solutions for a more sustainable environment.

Source: Channel News Asia / Singapore

SINGAPORE: A new dedicated exhibition space was launched on Friday (Jan 23) to help address urban challenges and create solutions for a more sustainable environment.

The Urban Lab - located at the Urban Redevelopment Authority's Singapore City Gallery - kicked off the initiative by featuring an exhibition on "future cities", which brings together the Swiss-Singapore perspectives in addressing urban challenges.

Highlights included studies on transportation planning and making walking more accessible in Singapore.

The Urban Lab will have exhibitions and outreach programmes all-year round where visitors can view diverse research ideas and solutions on how cities are planned using 3D geospatial mapping and visualisation tools.

An MOU was also signed to develop an integrated land use transport model for Singapore. The model, called MATSim Singapore, simulates various travel patterns and commuter behaviours, and is expected to be completed by October this year. The MOU was signed by URA, Singapore-ETH Centre, and the Land Transport Authority.

Senior Minister of State for National Development Lee Yi Shyan said: "We live in a time of rapid innovations. In fact, embracing innovation has become a key strategy in overcoming space constraints and achieving high quality standards of living.

"We encourage test-bedding of new ideas. We empower cross-disciplinary research and development. We strive to nurture an innovative eco-system involving the public, private and the people sector." 

- CNA/al

Inflation hit poorest households most in H2 2014

Source: Business Times / Government & Economy

Singapore's poorest households were hit hardest by inflation in the second half of last year because of higher food prices. As the bottom 20 per cent of households by income devote a larger share of expenditure to food, they felt the effects of higher food prices most keenly. For them, consumer prices rose by 1 per cent.

-By Kelly Tay

Singapore Real Estate

Prices of private homes down 4% in 2014

Further slide expected this year, although consultants do not see a hard landing

Source: Business Times / Real Estate

2014 MUST have felt like a recession year for property players, with sales of private condos plunging to a fresh low since the global financial crisis in 2008 and overall prices of all private residential properties marking their first annual fall. 

A government-engineered slowdown of the property market had led prices of private landed and non-landed homes to sag 4 per cent for the full year, with the fourth quarter down 1.1 per cent from the preceding quarter.

Q4 data from the Urban Redevelopment Authority (URA) shows that the drag on the overall private residential price index came from both landed and non-landed (private condos) categories.

Prices of landed homes fell 5.3 per cent over the course of last year as these properties become even less affordable given the lending curbs while prices of non-landed private homes slipped 3.5 per cent. At the same time, sales of private condos dived 44 per cent from 2013's level to 12,723, of which 2,635 were sold in the last quarter.

Chia Siew Chuin, director of research and advisory at Colliers International, said that the broad-based declines in prices point to "the widespread effectiveness of the multiple dosages of cooling measures, particularly, the strict financing curbs of the total debt servicing ratio (TDSR)".

"Various headwinds are expected to keep a lid on home buying demand in 2015," she said, citing a surge in new home completions, rising interest rates, and a lacklustre leasing market.

On a quarter-on-quarter basis, prices of landed homes declined 1.3 per cent in Q4 while non-landed private homes fell one per cent.

It turns out that city-fringe private condos in the Rest of Central Region (RCR) suffered bigger price declines than those in the Core Central Region (CCR). RCR prices fell 1.4 per cent in Q4, followed by CCR, down 0.9 per cent; and Outside Central Region (OCR), down 0.8 per cent.

These translated to full-year declines of 5.3 per cent, 4.1 per cent and 2.2 per cent respectively. Suburban condo prices in OCR held up better due mainly to a wider demand base stemming from their affordability, consultants say.

Still, consultants do not expect a hard-landing for prices this year.

Colliers expects overall private home prices to slip a "steeper but measured" 5-8 per cent this year. Also assuming that cooling measures are not lifted, Knight Frank is projecting a 4-6 per cent drop in overall private home prices this year.

"For OCR, we expect the price fall of mass market homes to accelerate in the first quarter, with high unsold inventory and anticipated weakness in the HDB resale market affecting upgraders' demand for private residential properties," said Knight Frank head of research and consultancy Alice Tan.

Knight Frank also expects developers' sales this quarter to range from 2,000 to 2,500 units. CBRE Research has pegged its full year forecast at 7,500-8,000 units.

Developers sold 1,376 new condo units in Q4, taking their total sales for the year to 7,316 - half of what they sold in 2013. Resales of private condos in the secondary market, which have contracted since 2010, stood at 4,860 units in 2014 - below 2008's level and marking a 27 per cent year-on-year fall.

JLL national research director Ong Teck Hui pointed out that 2014 ended with 19,941 units completed (such as in d'Leedon, Seastrand, Parc Vera, Terrasse, and The Miltonia), which is 52 per cent more than the 13,150 in 2013.

This has led to a rise in the vacancy rate of completed private residential units (excluding ECs) to 7.8 per cent at end-Q4, from 7.1 per cent at end-Q3.

"If it trends towards 10 per cent," Mr Ong said, "it would reach the high vacancies recorded during the 2004-2005 period when rents were depressed. The increased supply of completed units is exacerbating the softening in the leasing market, with the rental index falling by one per cent in Q4 and by 3 per cent for the whole year."

For private non-landed homes, URA data shows rents falling 2.6 per cent last year, with the biggest drop of 3.7 per cent in the CCR, where higher rents tend to be out-of-reach for tenants with tighter housing budgets.

Ms Chia said: "The increasingly competitive leasing market could prompt landlords, particularly those with older developments or developments in less attractive locations, to lower their rent expectations in order to secure tenants."

-By Lynette Khoo

Private property prices down 4% last year: URA

The fourth quarter of 2014 marked the fifth straight quarter of declining prices, according to figures released by the Urban Redevelopment Authority.

Source: Channel News Asia / Singapore

SINGAPORE: Private residential property prices fell 1.1 per cent in the fourth quarter of 2014 - a larger decline than the 0.7 per cent slide in the previous quarter, and the fifth consecutive quarter of price decline, according to figures released by the Urban Redevelopment Authority (URA) on Friday (Jan 23).

For the whole of 2014, prices fell by 4 per cent - the first year of overall price decline since 2008, URA said.

Mr Colin Tan, director and head of research and consultancy at Suntec Real Estate Consultants, said: "When the TDSR (Total Debt Servicing Ratio) was introduced to curb loans, people felt that prices would come down a lot quicker, but they have not.

“I think this has a lot to do with the holding power and the fact that interest rates, while creeping up, have not risen to a significant level. You feel that generally prices are also plateauing, which means we may be quite near the bottom."

Prices of non-landed private residential properties declined in all market segments. In the Core Central Region (CCR), prices fell 0.9 per cent, higher than the 0.8 per cent decline in the previous quarter. Prices in the Rest of Central Region (RCR) fell 1.4 per cent, compared to the 0.4 per cent decline in the previous quarter. In Outside Central Region (OCR), prices fell 0.8 per cent, a greater slide than the 0.3 per cent decline in the previous quarter, according to URA.

For the whole of 2014, prices in CCR, RCR and OCR fell by 4.1 per cent, 5.3 per cent and 2.2 per cent respectively.

Prices of landed properties fell 1.3 per cent in the fourth quarter compared to the 1.8 per cent decline in the previous quarter. For the whole of 2014, prices of landed properties fell by 5.3 per cent, URA said.

Rentals of private residential properties fell 1 per cent in the fourth quarter, higher than the 0.8 per cent decline in the previous quarter. For the whole of 0214, rentals fell 3 per cent, compared to the 0.9 per cent increase in 2013.

Developers launched 1,592 uncompleted private residential units (excluding Executive Condominiums) during the fourth quarter, up from 1,294 units in the third quarter. For the whole of 2014, 7,693 units were launched, significantly lower than the 15,885 units launched in 2013.

Developers sold 1,376 private residential units (excluding ECs) during the quarter, down from the 1,531 units sold in the previous quarter. For the whole of 2014, developers sold 7,316 units, significantly lower than the 14,948 units sold in 2013.

For ECs, 2,505 units were launched last year - all during the fourth quarter - and 1,578 units were sold.

Overall resale transactions fell to 4,860 units for the whole of 2014, down significantly from the 6,671 units in 2013. The number of transactions fell from 1,377 in the third quarter to 1,151 in the fourth quarter.

URA data also revealed the vacancy rate of completed private residential units (excluding ECs), went up from 7.1 per cent in the third quarter of 2014 to 7.8 per cent at the end of the fourth quarter.

- CNA/cy/ms

HDB, private home prices slide in 2014

Values of both types of home fell for full year, for the first time in 13 years

Source: Straits Times / Top of The News

FOR the first time in 13 years, both public and private housing prices lost ground for the full year in 2014 - and analysts expect even steeper price falls this year.

Cooling measures sent values of private properties down 1.1 per cent in the fourth quarter, taking the full-year slide to 4 per cent, the Urban Redevelopment Authority said yesterday.

Prices of HDB resale flats fell 1.5 per cent in the three months ended Dec 31, HDB data showed yesterday. For the full year, HDB resale prices sank 6 per cent.

This is the first time since 2001 that both public and private home prices have fallen over a full year.

The stagnating market is likely to worsen this year, analysts said, though not dramatically.

Since the third quarter of 2013, HDB resale flat prices have fallen more quickly than those of private homes. That is set to continue as a surging supply of new public flats and buyer curbs weigh on the market. The HDB's move to ramp up its building programme to meet demand from first-time buyers will flush the market with 16,900 Build-To-Order (BTO) flats this year, said HDB, after 22,455 were offered last year.

A mortgage servicing ratio, which limits monthly housing payments at 30 per cent of the buyer's gross monthly income, has hit many, while newly minted permanent residents can buy an HDB flat only after three years.

"HDB sellers are more willing to compromise because of their weaker bargaining position as some may need to dispose of their flats before moving into their new homes," explained Dr Lee Nai Jia, head of research at DTZ Singapore. "Developers, in contrast, have enjoyed healthy profits from the previous years and are in no hurry to slash prices, lending support to the private market."

The private market faces a "perfect storm" of factors that point to further softening in prices.

An overhang of new home completions at 24,796 units this year looms over the market amid tightened immigration policies.

Vacancy rates at private homes rose to 7.8 per cent in the fourth quarter, up from 7.1 per cent in the preceding quarter - which in itself was a nine-year high. This was exacerbated by a sharp fall of 3 per cent in rentals in the last quarter over a 0.9 per cent increase in the preceding quarter.

Expectations are also high for the United States Federal Reserve to hike interest rates in the second half of the year, posing more risks to highly leveraged home owners in a flailing rental market.

"These headwinds are expected to persist through the year, amid uncertainty in the global economic arena," said Ms Chia Siew Chuin, director of research and advisory at Colliers International.

It is against this backdrop that buyers might decide to "wait and see" this year, said Ms Christine Li, research head at OrangeTee.

A Ministry of National Development spokesman said yesterday that "property market cooling measures are intended to keep the market stable and sustainable" and that the price decline over the past year has been "mild".

Market watchers have placed their bets on a slip of 5 to 8 per cent for both HDB and private home prices this year.

-By Cheryl Ong

Price, rental rises recorded for office, retail sectors

But divergence seen ahead, with retail space heading south

Source: Business Times / Real Estate

Commercial properties offered some cheer against the backdrop of a bleak residential market, with office and retail segments registering price and rental increases last year. Data from the Urban Redevelopment Authority (URA) released on Friday showed a 9.8 per cent climb in rents and a 4.5 per cent rise in prices for the office sector over the whole of 2014. For retail space, both rents and prices grew 0.9 per cent last year.

-By Lynette Khoo

Prices of office space fare well in 2014

Source: Straits Times / Money

COMMERCIAL property prices were the only bright spot last year as the residential property market remained bogged down by cooling measures and tepid demand.

Prices of office space picked up 2.4 per cent in the fourth quarter, improving on the rise of 1.6 per cent in the preceding quarter, figures from the Urban Redevelopment Authority showed.

This marked the highest quarterly rise since the third quarter in 2011, bringing the full year's hike in prices to 4.5 per cent.

In comparison, private property prices sank 4 per cent while HDB flat resale values fell 6 per cent last year.

"The market's performance has been underpinned by the tightness of available office space through the past year," said Mr Desmond Sim, research head at CBRE South-east Asia.

Vacancy rates, which have eased in the last three years, were 5.4 per cent in the fourth quarter.

Significant office building completions last quarter included the 700,000 sq ft Grade-A office tower CapitaGreen in Market Street, jointly developed by CapitaCommercial Trust, CapitaLand and Mitsubishi Estate Asia, as well as WestGate Tower in Boon Lay Way, which added 305,000 sq ft of net lettable area.

However, office rents slowed to a rise of 1.7 per cent, after registering three straight quarters of growth exceeding 2 per cent.

But that did not stop rents from picking up by 9.8 per cent for the full year, outpacing the 1.3 per cent increase in 2013.

A supply of about 1.15 million sq ft of office space will come on stream this year, rising to 1.6 million sq ft next year and 4.7 million sq ft in 2017, as projects such as GuocoLand's Guoco Tower are on track for completion.

This will likely check rental growth, turning the market in favour of tenants, CBRE said.

On the retail front, prices rose 1.5 per cent in the fourth quarter, over a slide of 0.2 per cent in the preceding three-month period. This came despite a dip in transactions, as just 72 caveats were lodged for strata-titled units in the last quarter - down 56.6 per cent from the third quarter.

Ms Chia Siew Chuin, director of research and advisory at Colliers, noted that prices were still underpinned by the limited supply of prime shop space for sale.

Rents rose 0.5 per cent, up from an increase of 0.1 per cent in the same period.

"Demand for retail space by new start-ups and for expansion is matched by tenants' resistance to rent increases, in a highly competitive market where the challenges of labour shortages and elevated occupation costs prevail," said Ms Chia.

In the hotel space, 13,298 rooms were in the pipeline last quarter, compared with the 12,134 rooms in the third quarter.

-By Cheryl Ong

Rents in CBD set to rise amid supply squeeze

Prime office rents up 15% in 2014, trend to continue: CCT Management

Source: Straits Times / Money

SINGAPORE'S prime office rents are set to extend gains this year as the number of new properties coming onto the market is limited, according to CapitaCommercial Trust (CCT) Management.

"The market is looking good as the supply is very tight this year, so the rise in rentals will continue," Ms Lynette Leong, chief executive officer of CCT Management, said in an interview.

The company runs the biggest office real estate investment trust (Reit) in Asia outside Japan.

Singapore's prime office rents posted their biggest increase in at least four years in 2014.

The office rent index rose 9.8 per cent last year, its largest gain since 2010, when it was up by 12 per cent, according to data from the Urban Redevelopment Authority.

Ms Leong said prime office rents rose 15 per cent last year, and will rise again this year, though she declined to give a specific prediction.

Companies involved in social media, technology and commodities are taking up space in Singapore's Central Business District (CBD), offsetting the cutbacks by investment banks, she said.

CCT, the listed Reit, reported a net property income of $50.6 million for the quarter ending on Dec 31, rising by 3 per cent from a year earlier.

The trust's monthly average office rents rose 5.9 per cent to $8.61 per square foot last year.

Ms Leong said the Reit-management company has been signing longer leases on commercial properties in readiness for any softening in rents, when a large supply of office space comes onto the market from 2016.

For example, leases on the trust's new CapitaGreen tower in the CBD are for four years, rather than the usual three, she said.

About 1.15 million sq ft of new office space will come on stream this year, rising to 1.6 million sq ft next year and 4.7 million sq ft in 2017, according to real estate broker Knight Frank.

Some 69 per cent of CapitaGreen tower is leased at rentals ranging from $9.80 per square foot to $16 per square foot, Ms Leong said.

CCT is partly owned by CapitaLand, South-east Asia's biggest developer.

It is the biggest office Reit in Asia, by market value, after Japan's Nippon Building Fund and Japan Real Estate Investment, according to data compiled by Bloomberg.

The trust, whose units rose 21 per cent last year, yesterday rose two cents to $1.925.

-By Bloomberg

Vacancy rate for private homes at 10-year high

Experts say more units completed and fewer expats coming to S'pore

Source: Straits Times / Money

THe vacancy rate for private homes is at its highest level in nearly 10 years - the result of rising completions and curbs on foreigners coming here to work, experts say.

About 7.8 per cent, or 24,062 completed private residential units, were vacant at Dec 31 last year, according to figures released by the Urban Redevelopment Authority (URA) yesterday.

That was an increase from 7.1 per cent or 21,569 vacant units in the third quarter of last year and the highest vacancy rate recorded since 8.4 per cent in the fourth quarter of 2005.

The vacancy rate includes sold and unsold units, but most of the completed units would have been sold as they were launched before the introduction of the total debt servicing ratio, said Mr Alan Cheong, Savills Singapore research head.

"(The high vacancy rate) is symptomatic of supply coming on stream faster than demand. And the structure of demand has been changing... Whereas, for the past 30 or 40 years, one expatriate could be mapped onto one apartment, one expatriate may now be taking up a smaller apartment or a room."

Housing stock rose by a net 6,304 units in the fourth quarter of last year - a historical quarterly high, said a URA spokesman.

Last year, 19,941 private residential units were completed, up 52 per cent from 13,150 in 2013.

Another 21,359 units are pegged for completion this year, and 20,919 next year.

"It's quite a great magnitude; vacancy rates could rise further if leasing demand does not pick up," said Mr Ong Teck Hui, JLL national research director.

Large projects completed in the fourth quarter included 1,715-unit d'Leedon, 473-unit Seastrand and 452-unit Parc Vera.

As most new completions are condos, the non-landed segment's vacancy rate rose to 9.1 per cent in the fourth quarter from 8.2 in the third quarter, said Mr Ong.

The vacancy rate for landed homes was 3.4 per cent in the fourth quarter, down slightly from 3.5 per cent in the preceding quarter.

The completions have put pressure on rents, which fell 1 per cent for the fourth quarter and 3 per cent for the full year - a reversal of four straight years of rising rents. Rents added 0.9 per cent in 2013 and 2.14 per cent in 2012.

Across different residential types, rents for semi-detached homes fell the most at 7.6 per cent for the year, and non-landed homes the least at 2.6 per cent.

Non-landed rents fell 3.7 per cent in the central region, 2.5 per cent in the suburbs and 0.2 per cent in the city fringe from a year back.

Rents are set to fall by up to 8 per cent this year, with the drop most pronounced in the central region as firms keep cutting back on housing allowances, said Mr Ong Kah Seng, R'ST Research director.

The market could head towards a 10 per cent vacancy rate this year, said Mr Cheong. "With cooling measures in place, we are heading into a period of uncertainty and sailing into a storm."

Yet even if measures are relaxed now, demand may not come back, he said. For example, many multinational corporations will not be pushing as many staff to Asia as their home economies have not recovered for some time, and they are facing slower demand in Asia owing to China's slowdown, he said.

"As long as Singaporeans hold a job, we can take 10, 11 per cent vacancy rates. But if another global crisis hits and unemployment goes up, rents will start to crash and there will be foreclosures. In fighting asset inflation, we have also increased risk."

-By Rennie Whang

The strong draw of property

Keppel Land lists factors that it says will benefit its portfolio of properties in China, Vietnam and Indonesia

Source: Business Times / Companies & Markets

Keppel Land sees several external factors that will benefit its portfolio of properties in China, Vietnam and Indonesia going forward. These are the three main markets outside Singapore it operates in. It shared this at its postponed results briefing on Friday. In China, for instance, mortgage relaxation for second-home buyers and lower mortgage rates will improve affordability for home buyers.

-By Lee Meixian

Prices of Q4 resale HDB flats down 1.5%, volume up 2.7%

Source: Business Times / Real Estate

Resale prices of Housing & Development Board (HDB) flats fell 1.5 per cent in Q4 2014 quarter-on-quarter, even as resale transactions of such flats rose 2.7 per cent, from 4,513 cases in Q3 to 4,635 cases in the October-December period.

-By Claire Huang

HDB resale prices down 6% last year

The number of resale transactions for the year fell 4.3 per cent to 17,318.

Source: Channel News Asia / Singapore

SINGAPORE: Prices of resale flats fell by 6 per cent in 2014 - the second straight year of decline - while the number of resale transactions declined 4.3 per cent, according to figures from the Housing and Development Board (HDB).

HDB on Friday (Jan 23) announced that the Resale Price Index (RPI) fell by 1.5 per cent in the last quarter of 2014, from 139.1 in the third quarter to 137 in the fourth quarter. The number of resale transactions rose 2.7 per cent from 4,513 to 4,635 cases in the fourth quarter.

But overall for the year, resale transactions still registered a record low - with just 17,318 cases recorded in 2014. This is the lowest since HDB started releasing such data from the first quarter of 1997.

Subletting transactions rose 16.2 per cent from 8,923 in the third quarter to 10,365 in the fourth quarter. The total number of HDB flats approved for subletting increased by 0.9 per cent, from 47,707 units in September 2014 to 48,120 units in December 2014.

Some property analysts said they expect HDB resale flat prices to continue to soften by another 5 to 8 per cent in 2015. They added this may attract more to buy from the resale market.

Ms Christine Li, head of research and consultancy at OrangeTee, said: “If you look at the prices now compared to say two years ago, two years ago, people were typically paying maybe S$30,000 for a five-room flat in terms of cash over valuation. In today's market, they do not have to pay cash over valuation.

“I think for 2015, the full-year price decline will be probably between 5 and 8 per cent because the economy is still healthy and we are not seeing a decline in the buying sentiment.

"People are not coming into the market because of the loans but there is genuine demand for HDB flats, because if you look at the resale market, most of the flats are in very good locations. So, if the prices come to a more reasonable level, there will be interest from the buyers and upgraders." 

HDB said it will launch 16,900 Build-To-Order (BTO) flats this year, which will include flats in new areas such as Bidadari and Punggol Northshore.

- CNA/cy/ms

Five-room flat at Pinnacle@Duxton goes for over $1m

Source: Straits Times / Top of The News

A FIVE-ROOM Pinnacle@Duxton flat has broken the $1 million mark in the resale market, joining a small but growing group of public housing units that have crossed the seven- digit mark.

The 107 sq m unit located above the 40th floor went for $1,028,000 this week, according to SRX Property.

This is the most that a resale unit in the premium public housing project has fetched so far.

Units there are prized for their central location, and those on higher floors are known for their views, said DTZ agent Stephanie Tok, who helped broker this transaction. The project has seven 50-storey blocks.

Both the buyer and seller declined to comment on the deal.

At the project's launch in 2004, new four-room flats were priced from $289,200 to $380,900, and five-roomers from $345,100 to $439,400.

At least nine other Pinnacle@ Duxton flats have been resold since this became possible last December, when owners began to meet the five-year minimum occupation period.

But prices have varied greatly. Of the two other five-roomers that have been sold, a 106 sq m unit located no higher than the sixth floor went for $918,000. Another unit of the same size, but above the 30th floor, fetched $980,000.

Four-room prices ranged from $835,000 for a 95 sq m unit above the 30th floor, to $955,000 for a 97 sq m unit above the 45th floor.

The latter is the highest per sq ft price among Pinnacle@Duxton units, at $915 psf.

The $1.03 million five-room unit went for $894 psf.

As this is a unique, premium project, experts do not expect its sky-high prices to have much effect on the overall sluggish Housing Board resale market.

"Even if Pinnacle@Duxton resale flats were to continually exceed the $1 million mark, it will not lead to an increase of flat buyers' interest for HDB resale flats and recovery in resale flat prices," said R'ST Research director Ong Kah Seng.

But there could be an influence on prices for other prime units in mature estates such as Bishan and Marine Parade, said SLP International Property Con- sultants' head of research Nicholas Mak. Bishan is home to several rare maisonette units, one of which holds the current record resale price of $1.09 million.

-By Janice Heng

More renting out entire HDB flats as resale market cools

Source: Straits Times / Top of The News

MORE people are renting out their entire Housing Board flats amid a cooling resale market, with many upgrading to private housing.

The number of subletting approvals last year jumped by about a fifth, from 30,074 in 2013 to an all-time high of 36,228 last year, HDB data released yesterday shows.

In the last quarter alone, 10,365 approvals were granted.

There were also 48,120 fully sublet units at the end of last year - a 5.4 per cent increase from the 45,674 units at the end of 2013.

An HDB spokesman told The Straits Times that flat owners' "desire to monetise their flats" and "availability of alternative accommodation" are among factors influencing the rise in subletting approvals.

Property agents and analysts say many flat owners upgrading to private homes are unwilling to sell off their HDB units, partly for investment reasons.

"They are keen to keep a second property for investment," said OrangeTee's director of research Christine Li. "They know that once they let go, they cannot buy back another one."

She was referring to rules introduced in 2010 which do not allow private home owners to buy an HDB flat unless they dispose of their existing private properties.

"This makes sense from an investment angle," said ERA Realty's key executive officer Eugene Lim, noting that the rate of returns for leasing HDB flats is "very attractive" compared to that of condominiums, due to their relatively lower purchase price.

DWG agent Benedict Lim agreed: "An average three-room HDB flat can already fetch about $2,100 to $2,500 a month depending on location."

He further noted that some flat owners sublet their units after moving to live with their family members or getting posted overseas for work.

The weakening housing market has also played a part, according to R'ST research director Ong Kah Seng. "The resale market now is very cold and makes it hard to fetch a good price," he said. "It makes more sense for people to hold on to their HDB flats and rent it out instead. They hope to have the best of both worlds."

Such is the case for administrative assistant Chris Lee, 60, who lives with her husband in a condominium in Clementi. The couple let out their three-room Tanglin Halt flat for about $1,800 a month to a family of four.

"My husband is retired, so we need the extra income," said Madam Lee. "It really does help with our property taxes and conservancy charges."

-By Yeo Sam Jo

More, new space planned for startups

Second LaunchPad is in planning stage; three new blocks will be added to the first facility

Source: Business Times / Real Estate

The government is planning to set up a second LaunchPad for startups even as it expands the first one - JTC LaunchPad @ one-north - with the construction of three new blocks. The existing LaunchPad at Ayer Rajah Crescent - which comprises blocks 71, 73 and 79 and is jointly spearheaded by JTC Corporation and Spring Singapore - offers facilities such as co-working, incubation, and startup space for entrepreneurs.

-By Mindy Tan

Family wins case to install grille in condo balcony for child's safety

Source: Straits Times / Top of The News

THE Strata Titles Board has ruled in favour of a family who were twice refused permission to install a grille in the balcony of their 13th-level condominium unit after seeing their four-year-old daughter try to climb over it.

It held that the management corporation of 7 One North Residences (ONR) in Buona Vista was wrong in refusing permission to a family to install grilles above the glass wall of their 13th-level balcony.

In judgment grounds of the test case, released this week, it said: "The children's safety must be paramount, even if the grilles may affect the appearance of the building or if they constitute an alteration on common property and therefore are prohibited under ONR's by-laws."

Dr Sujit Singh Gill's application was turned down twice by the ONR's management corporation (MC), which claimed it would affect the building's unique and uniform appearance.

The MC suggested instead that grilles be placed at the edge of the living room to prevent child access to the balcony.

Dr Singh applied to the board last July to overrule the MC.

At issue was the rationality of the MC's decision and whether it could bar the installation based on the relevant building regulations.

The MC's lawyers, Mr Subramaniam Pillai and Ms Venetia Tan, argued that the grilles did not keep up the building's appearance as provided under ONR's by-laws and would obstruct maintenance of the glass wall, among other things.

Lawyers Toh Kok Seng and Daniel Chen for Dr Singh countered that the relevant ONR by-laws took effect only last July and Dr Singh could not have been aware of them as he had bought the unit in 2010. They argued that the ONR by-laws had to be consistent with the prescribed 2005 Building Maintenance (Strata Management) Regulations, which allow owners to install safety structures or devices to prevent harm to children - even if they affect the building's appearance under certain circumstances.

The board comprising Mr Alfonso Ang, Mr Chua Koon Hoe and Mr Lim Gnee Kiang found that the MC had been "unreasonably difficult" with Dr Singh's request and had ignored the concerns for children's safety, as provided for under the 2005 regulations. It added that the grilles would have minimal impact on the building's appearance.

The board made clear that children's safety must be the overriding concern and the MC should support other such applications.

It called for the MC to provide guidelines for the installation of such safety devices to ensure they keep to the rest of the appearances of the building.

"Having grilles is not an attempt to abdicate parental responsibility. Instead, it serves as a safety precaution from leaning or climbing over the balcony glass wall. After all, it only takes a split second for the child to climb and fall over the glass, especially since it is only waist-high and easy to climb over," said the board.

Law firm Lee & Lee said on its case update website that "this is the first case in which the prescribed by-law of the Building Maintenance (Strata Management) Regulations 2005 has been considered in depth and will undoubtedly be of consequence to most, if not all, management corporations in Singapore".

-By K.C. Vijayan, Senior Law Correspondent

Companies' Brief

Property stocks rally on merger talk, ECB move

Real estate index sees its biggest one-day percentage hike since April

Source: Straits Times / Money

TALK of mergers and the huge European Central Bank (ECB) money-printing move have ignited property stocks beaten down by cooling measures and the slowing market.

Bargain hunters were out in force yesterday and sent the FTSE ST Real Estate Holding and Development Index shooting up 18.2 points, or 2.3 per cent, to 804 points - the biggest one-day percentage hike since last April.

The surge left the index up 5.9 per cent for the week, to cap five consecutive trading sessions in the black.

Individual counters have also staged an impressive comeback, adding gains of between 2.4 per cent and 15 per cent for the week.

Bigger players in particular, like CapitaLand, City Developments (CDL) and UOL, have consistently made it to the Singapore Exchange's top gainers list this week.

The gains yesterday highlight the trend: CapitaLand rose 14 cents, or 4.1 per cent, to $3.56; CDL added 21 cents, or 2 per cent, to $10.53; and UOL rose 26 cents, or 3.7 per cent, to $7.27.

It is a far cry from the doom and gloom that surrounded the sector recently, with property cooling measures like the total debt servicing ratio continuing to bite.

As a sign of just how bad things have been, only 230 private homes were sold last month, the lowest since January 2009, the dark days of the financial crisis.

Analysts have forecast demand to stay muted this year, with an expected supply glut adding to worries.

While that has not changed, the investment climate has improved for property stocks.

OSK-DMG property analyst Ong Kian Lin said the €1.1 trillion (S$1.7 trillion) quantitative easing (QE) measures to be undertaken by the European Central Bank are a major factor.

"Once the QE starts, there's a lot of hot money, and investors tend to park the money in real estate because it is tangible, concrete, always there and property prices will likely hold up better," said Mr Ong.

UOB-Kay Hian analyst Vikrant Pandey said that the negatives for developers have likely been priced in by the market already, and valuations of the developers are looking cheap.

"Their share prices are generally trading at a discount of about 30 per cent to 40 per cent of their RNAV (revised net asset values), compared with the long-term average of a 15 per cent discount," he said.

Keppel Corp's offer to privatise its property unit Keppel Land has also given a fillip to other property stocks.

Some of the index funds will have to replace Keppel Land with other property stocks if it is delisted, noted CLSA senior research analyst Wong Yew Kiang.

Keppel's move could also be the start of a new wave of merger and acquisition activity.

"If the parent company thinks this part of business is undervalued, it could take it private," said Mr Wong.

"Some of the developers may also factor in the QC (qualifying certificate) ruling, where they may want to avoid paying hefty taxes by privatising as a Singapore company."

Under current rules, a developer has to finish selling units within two years of completing a project, or face extension charges.

Such conditions are imposed on developers whose directors and shareholders are not all Singaporeans.

Market rumours suggest Wing Tai, Ho Bee, UOL and Wheelock Properties could be the target of takeovers or buyouts.

-By Mok Fei Fei

Frasers Centrepoint Trust Q1 DPU up 10%

Source: Business Times / Companies & Markets

Frasers Centrepoint Trust (FCT) on Friday reported a 10 per cent increase in distribution per unit (DPU) from a year ago to 2.75 Singapore cents for its first quarter ended Dec 31. Gross revenue for the quarter rose 18.3 per cent year-on-year to S$47.2 million, and net property income (NPI) increased 16.2 per cent to a record S$32.9 million.

-By Fiona Lam

Q1 payout up 10% at Frasers Centrepoint Trust

Higher rents and mall acquisition boost gross revenue to $47.2m

Source: Straits Times / Money

HIGHER rents and the acquisition of Changi City Point sent the the first-quarter payout at Frasers Centrepoint Trust (FCT) to record levels.

The distribution per unit (DPU) for the three months to Dec 31 was 2.75 cents, up 10 per cent from levels a year earlier.

The trust manager said yesterday that distributable income rose 17.1 per cent to $26.6 million.

The real estate investment trust (Reit) was able to increase gross revenue by 18.3 per cent year on year to $47.2 million, thanks to the addition of Changi City Point on June 16 last year.

Higher rents at Causeway Point also contributed, with rates up 9.1 per cent. Because of the higher rents, first-quarter revenue from Causeway Point came to $20.1 million, up 4.9 per cent from what was achieved a year earlier.

Net property income (NPI) grew 16.2 per cent to $32.9 million despite an increase in property expenses, which rose 23 per cent to $14.3 million. The reasons included higher maintenance costs and the addition of Changi City Point to the portfolio.

The trust manager reported yesterday that the overall occupancy rate for the portfolio came in at 96.4 per cent. It attributed this to transitional vacancies at Northpoint, Changi City Point and Bedok Point, caused mainly by ongoing lease renewals.

Most of the malls saw an increase in revenue and net property income for the first quarter.

The exception was Bedok Point, whose revenue fell 12.5 per cent to $2.57 million and NPI dropped 24.2 per cent to $1.38 million. The company said factors included lower rental rates for new and renewed leases, with falls of 1.3 per cent.

The lower rents came as the trust made adjustments to Bedok Point's tenant mix in order to find a "niche" for the mall. It is focusing on educational services on the upper floors, while bringing in new food and beverage outlets.

Dr Chew Tuan Chiong, the chief executive of the trust manager, said: "FCT continues to achieve a consistent performance, with an average rental reversion of 7.7 per cent for the leases that were renewed in (the first quarter of this year), which account for about 49 per cent of the total expiring net leasable area in financial year 2015.

"This is a good start for the year, and we will continue to focus our efforts on the remaining leases due to be renewed later in the year."

The Reit manager said that "while industry sources expect 'a standstill in retail rents' in 2015, barring any unforeseen circumstances, we are confident of sustaining FCT's performance".

-By Michelle Lee

Keppel Corp moves to take KepLand private

Offer seen positive for KepLand shareholders but less clear-cut for Keppel Corp investors

Source: Business Times / Stocks

KEPPEL Corp on Friday put paid to rife market speculation by launching an offer to take its subsidiary Keppel Land private. INFOGRAPHIC: Taking back the land

But while the acquisition target was Keppel Land, much of the market scrutiny fell on Keppel Corp as analysts and investors asked questions about the bid.

Keppel Corp, which owns 54.6 per cent of Keppel Land, is using a two-tier price approach in its bid for the remaining shares it does not own.

The base offer price is S$4.38, valuing Keppel Land at S$6.8 billion. This is a premium of 25 per cent over the one-month volume weighted average price of the shares.

If acceptance levels exceed the 90 per cent threshold, turning the offer into a compulsory acquisition, the offer price would be raised to S$4.60 per share - a 31 per cent premium over the one-month value weighted average price - and valuing the real estate company at S$7.1 billion.

This, said Keppel Corp CEO Loh Chin Hua at a media and analyst briefing, was the premium that the conglomerate was willing to pay to take the real estate group private. Keppel Corp will not be revising the offer price.

"We have offered what we believe to be a fair and compelling price," said Mr Loh.

Keppel Corp will have the right to receive any distribution that may be declared, paid or made by Keppel Land on or after the purchase date. As an illustration, assuming that the settlement date falls after the books closure date for a S$0.14 dividend per share that has been proposed, the offer price received by the accepting shareholder will then be $4.24 and S$4.46 based on the base offer price and the higher offer price respectively.

Keppel Corp, which could pay as much as S$3.2 billion for the shares it does not own, will fund this through a combination of internal cash and borrowings. If successful, the move lifts the group's net gearing level from 0.11 to 0.41, a level that Keppel Corp says it is comfortable with, with room for more acquisitions.

By bringing in Keppel Land more deeply within the fold, the group would be able to allocate capital more efficiently, giving the group better risk-adjusted returns.

There will also be synergies between the group's core businesses that could be better achieved without compliance and regulatory hurdles, including the development of townships such as Tianjin Eco-city and data centres, said Mr Loh. Acknowledging that there remains more headwinds in the property market, Mr Loh said that the deal was not predicated on a quick recovery.

"We're doing this because we believe in the long-term fundamentals of the property industry, particularly in Asia, where Keppel Land is most exposed to. We believe that the urbanisation trend will continue. There will be more people moving to cities."

A privatisation will raise Keppel Corp's full-year 2014 pro-forma earnings per share by 13 per cent, from S$1.04 to S$1.18.

The immediate market reaction was that the move was positive for Keppel Land shareholders, but not so clear for Keppel Corp shareholders.

Analysts covering Keppel Land noted that the offer is priced above their own target prices over a one-year horizon.

UOB Kay Hian analyst Vikrant Pandey, who has a target price of S$4.30 for the counter, said: "Property developers have been trading at a very deep discount to RNAV (revised net asset value).

"We believe that's one reason why the parent is looking at potential privatisation. I think it's a fair offer to be given at this stage, though some long- term investors might want to hold for a higher price because it's still below the book value."

DMG & Partners Research analyst Ong Kian Lin agreed that the offer price, above his target price of S$4.05, is "quite reasonable in this current market". From Keppel Land shareholders' point of view, synergy doesn't matter, as they're just looking for a smooth exit, he added.

For Keppel Corp, however, analysts and investors seemed mostly unconvinced about the motivation behind the acquisition.

"Generally, investors are still not clear as to the exact reason on the privatisation because they already have a majority stake," said an analyst. "It's really up to Keppel Corp to show what else they can do to derive additional value."

Many saw the move as a defensive one to diversify the group's earnings at a time when the outlook for its offshore and marine division - which accounts for 55 per cent of its bottom line - is uncertain.

"It's about capital allocation, increasing exposure to property when the offshore business is a bit volatile," said Jefferies analyst Abhijit Attavar.

A flood of jackup and deepwater rigs that will enter the market over the next two years is exacerbating an already pressured market, as oil companies shave capital expenditure and put projects on hold.

With a "significant number" yet to be chartered, the situation is "unsettling", Mr Loh said when giving his outlook for the sector, even as he reiterated that the group has a strong order book stretching into 2019.

"While we believe that the current oil price will eventually recover to a level that would make economical most of the offshore oil fields that our rigs operate in, there is still some uncertainty how quickly the new equilibrium will be reached."

The decision to pump money into property, rather than into the offshore and marine sector where assets can now be picked up on the cheap, worried analysts, who wondered if it signalled a more bearish outlook for the sector than the company had let on.

"If today everyone is just so afraid of expanding into that particular segment, and they'd rather put the money somewhere else, it speaks of what they expect the outlook for the offshore side," said one analyst.

Asked why the group was not investing in the offshore and marine business, where the return on equity was higher than the property division, Mr Loh said: "This is the fallacy of allocation of capital. When a business is doing well and generating good return on equity like Keppel Offshore & Marine, it doesn't mean that you do even better by sinking more capital into it . . . It's a cyclical business. You can destroy value by investing more."

Questions were also raised over what seemed to be a dilution of Keppel Corp's exposure to the rig-building business, the reason why many investors bought into the stock in the first place.

Asked whether the investor base could now be diluted, Mr Loh said that Keppel Corp had been a conglomerate with a multi-business approach over the past few decades. "We have executed this strategy very well, we believe that this is one of the core tenets for Keppel . . . This transaction, if nothing else, (emphasises) that we believe in this approach that has served us so well."

Noting that the top 20 per cent of conglomerates in the world trade at a premium to their net asset values, Mr Loh expressed an ambition for Keppel to be the same.

In the short term, however, analysts warned that the impact could be just the opposite.

"From a stock perspective, conglomerates typically trade at a discount when they have more than one business . . . that's the key concern for the company now," said another analyst.

In the longer term, analysts posit that Keppel Corp could consolidate Keppel Land with its direct holdings of Harbourfront, Keppel Bay and its 65 per stake in Tianjin Eco-city, and relist the combined entity.

"Ultimately, if they can do it with some synergistic effect as a consolidated company, the valuations would be higher. It does make sense for them to relist it again if it becomes a more powerful entity," said an analyst.

Keppel Corp and Keppel Land last traded at S$8.10 and S$3.65 respectively. The trading halt for both counters will be lifted on Monday morning.

-By Andrea Soh & Lee Meixian

Keppel Corp launches bid to take Keppel Land private

Keppel Corp, the world's largest maker of offshore oil rigs, currently owns 54.6 per cent of Keppel Land, a major Singapore property developer.

Source: Channel News Asia / Business

SINGAPORE: Keppel Corporation on Friday (Jan 23) launched a voluntary unconditional cash offer for all the remaining shares of subsidiary Keppel Land.

Keppel Corp, the world's largest maker of offshore oil rigs, currently owns 54.6 per cent of Keppel Land, a major Singapore property developer.

Keppel Corp said it is offering a base offer price of S$4.38 for each Keppel Land share. A higher offer price of S$4.60 per share will be paid if Keppel Corp is entitled to exercise its rights of compulsory acquisition. This values the developer at between S$6.8 billion and S$7.1 billion. 

Explaining the rationale for the offer, Keppel Corp CEO Mr Loh Chin Hua said Keppel Corp wants to be a strong conglomerate with sizeable contributions from its three core businesses. "This is a sound and well-timed investment in a business which has been integral to Keppel Corp and is in core markets like Singapore, China, Indonesia and Vietnam - where we hold a long-term positive view," he added.

At S$4.38, the offer represents a 20 per cent premium over Keppel Land's last traded price of S$3.65 before the counter was suspended from trade.

Keppel Corp said it believes the offer price is "fair and compelling" and it does not intend to revise it.

Mr Chan Hon Chew, chief financial officer of Keppel Corporation, said: “We believe what we have offered for the remaining stake in Keppel Land in this current depressed property market is fair, this offer will be funded through a combination of internal cash and borrowings of Keppel Corporation."

Keppel Corp said the move is not predicated on short-term recovery in the property market, but rather in its belief in the long-term prospects of the real estate market in Asia, as well as the trend of urbanisation where more people will be moving to the cities.

It added that privatising Keppel Land would also help to drive collaboration across its core businesses - namely offshore and marine, property and infrastructure.

There are also other benefits. Mr Loh said: "It is actually highly accretive to us and it is a business that we already know for over 30 years.

"One of the rationale would be that if the privatisation does succeed, if we can do that, the group itself, in terms of our financial strength, in terms of our credit, we would be able to give that advantage, not so much in more debt, but more in terms of lower cost in debt."

Commenting on the offer, Voyage Research said if it is successful, it could help drive earnings growth for Keppel Corp, and it is also a way to diversify its business.

Mr Liu Jinshu, lead analyst at Voyage Research, said: "If you look at current oil prices, I think the offshore and marine sector may be under some form of margin pressure, especially new investments in say certain oil projects that were to decline or withdrawn due to low oil prices. 

“So from this perspective, we can argue that Keppel Corp is diversifying away from its reliance on offshore and marine and ‘beef up’ its earning base by fully acquiring Keppel Land."

Based on an offer document despatch date of Feb 13, 2015, Keppel Corp said the earliest closing date permitted under the takeover code is by Mar 13, 2015.

Keppel Corp said the trading halt is expected to be lifted for both companies on Monday, and analysts expect the stocks to be actively traded.

- CNA/ac/ms

Keppel moves to take property arm private as it dreams big

It may shell out $3.2b for KepLand in one of the biggest privatisations

Source: Straits Times / Top of The News

RIG builder Keppel Corp is seeking to take its Singapore Exchange-listed property arm private as it sets its sights on becoming one of the world's top conglomerates.

Ending several days of intense speculation over why both it and Keppel Land had halted trading on Wednesday, Keppel Corp said yesterday that it will offer $4.38 per share of KepLand.

This is about 20 per cent above KepLand's last traded price of $3.65 on Tuesday, and well above most analysts' target prices for the stock.

To sweeten the deal, it will bump up the price to $4.60 apiece if it manages to buy the whole company, it added in a Singapore Exchange filing.

It also said it does not intend to revise its bid. Its offer was less than KepLand's net asset value per share, a widely used measure of a company's worth, of $4.95 as at Dec 31 last year.

The higher price of $4.60 values KepLand, the developer of projects such as Reflections at Keppel Bay, at around $7.1 billion.

This means that Keppel Corp, which owns about 54.6 per cent of KepLand, may end up shelling out up to $3.2 billion for the shares it does not already have - making this deal one of the biggest privatisations in recent years.

Keppel Corp chief executive Loh Chin Hua told a packed briefing held at the Marina Mandarin hotel yesterday that the move reflected the conglomerate's "multi-business approach".

"In recent times, with the boom in oil and gas, there was often a constant call on us to see whether we could become more of a pure play," he noted. "This transaction, if nothing else, is really an emphasis on the fact that we believe in this multi-business approach that has served us so well.

"Many people have asked, 'Is this because you're a property guy?' And the answer is actually: Yes, I used to come from the property side, but Keppel has been in property longer than I have been in property."

He said that while conglomerates may often suffer from a so-called "conglomerate discount" on their share price, the top 20 per cent worldwide are traded for well above their net asset value.

Keppel aims to become one of those, he said, "and the ability for us to allocate capital freely within the whole group is a very important element".

But Mr Loh said that he had no plans to privatise mainboard-listed Keppel Telecommunications & Transportation as well.

Keppel Corp's last traded share price of $8.10 on Tuesday was already above its $5.73 net asset value per share as at the end of last year.

The move to bring KepLand back into the fold was also not based on any expectations of a quick recovery in the property market, which is facing headwinds, he said.

However, he added that he believed the long-term prospects of the property industry in Asia were solid.

Mr Loh added that taking over KepLand was a "low-hanging fruit in terms of the risk we have to take", since it was already part of the group and was a familiar business.

The deal would not prevent Keppel Corp from seizing other acquisition opportunities, and it will continue to pay out "reasonable" dividends to shareholders, he said.

Trading in Keppel Corp and KepLand shares, suspended ahead of the announcement of this move, resumes on Monday.

-By Melissa Tan

Keppel Corp. Offers $2.4 Billion to Buy Out Real Estate Unit

Source: Bloomberg / News

Keppel Corp. (KEP), the world’s biggest builder of offshore oil rigs, offered to buy out its real estate unit Keppel Land Ltd. (KPLD) for as much as S$3.23 billion ($2.4 billion), saying it will help diversify revenue.

The rig builder will offer as much as S$4.60 a share for the developer’s stock, the company said in a statement to the Singapore stock exchange today. That’s a premium of 26 percent based on Keppel Land’s last trading price of S$3.65 on Tuesday in the city. Shares of both companies were halted from trading from Jan. 21. The rig maker already owns 54.6 percent of the real estate company.

“It’s a good price,” said Wilson Liew, deputy head research at AmFraser Securities Pte. in Singapore. “Keppel Corp. could be doing this to offset weakness in its other businesses.”

Keppel has restructured its assets in telecommunications and infrastructure businesses last year through mergers and pulling them into trusts. CitySpring Infrastructure Trust, a Singapore piped-gas supplier backed by Temasek Holdings Pte., and Keppel Infrastructure Trust said in November they will merge to form Singapore’s biggest infrastructure-focused business trust.

The plunge in crude prices in 2014 to five-year lows has increased concerns that demand for drilling rigs and floating production facilities may weaken. As projects from the Arctic Ocean to the Middle East come under scrutiny, spending in the oil industry may fall 20 percent this year, according to analysts at Sanford C. Bernstein.

Minimum Offer

“We’re doing this because we believe in the long-term fundamentals in property, especially in Asia,” Keppel Corp. Chief Executive Officer Loh Chin Hua said in a briefing today. “We believe urbanization will continue. We believe it will be a good investment for the group longer term. We have not been shy about taking bold moves, if it’s the right one.”

Keppel Corp. will offer a minimum of S$4.38 per share and in the event it gets 90 percent of the developer, the offer price will be raised to S$4.60 a share, the company said.

Based on the offer terms, a full privatization of Keppel Land would raise fiscal year 2014 earnings per share of Keppel Corp. by 13 percent to S$1.18 per share from S$1.04, the company said in the statement.

Offshore, Marine

Taking Keppel Land private will enable Keppel Group to better streamline its organizational structure, and allocate capital and resources across its core businesses to optimize risk-adjusted returns and enhance shareholder returns, the company said.

“It’s probably got to do with having a bigger balance sheet to perhaps take on bigger projects in the future,” Ng Soo Nam, Singapore-based head of Asian equities at Threadneedle Asset Management, which oversees about $150 billion globally, said by phone. “There’s got to be a stronger reason than just valuation to take Keppel Land private.”

No offers will be made for Keppel REIT and Keppel Philippines properties, the company said.

The offshore and marine operations made up for 64 percent of Keppel Corp.’s revenue last year, while property contributed 13 percent, according to Keppel Corp.’s annual earnings. Net income from the offshore operations accounted for 55 percent of the total in that period with property at 26 percent.

If the offer is completed, the offshore contribution will be 48 percent and property will rise to 35 percent, Keppel said in a separate statement.

New York Purchase

“Offshore and marine will still be good for us in the medium- to long-term,” Loh said.

Keppel Corp. has yards around the world to make rigs and repair ships -- from Singapore to Indonesia, China, Brazil and Azerbaijan. The company won S$5.5 billion of new orders last year. Its order book was S$12.5 billion at the end of 2014, lower than S$14.2 billion at the end of 2013.

Keppel Land’s core markets of Singapore and China made up 89 percent of sales at the end of 2014, while it is expanding into growth markets such as Indonesia and Vietnam, according to the company.

In July, the developer made its maiden investment in the U.S. with a prime residential project in New York City.

The company is also a key office developer in Singapore with buildings including the Marina Bay Financial Centre, the Ocean Financial Centre and One Raffles Quay in the island’s central business district.

-By Kyunghee Park, Pooja Thakur and Joyce Koh

CapitaMall shares rise to 1 1/2-year high

Manager warns of headwinds in Europe, China but sees SG50 celebrations as a counter to external economy

Source: Business Times / Companies & Markets

CapitaMall Trust, the largest listed mall owner in Singapore and typically seen as a defensive play, reported a steady set of results on Friday and saw its trading counter rise four cents to a 11/2-year high of S$2.25 a unit. This is even as Wilson Tan, the CEO of CapitaMall Trust Management, which manages the real estate investment trust (Reit), warned of headwinds to Singapore's economy and retailers for the year ahead.

-By Cai Haoxiang

CapitaMall Trust posts DPU of 2.86 cents

CapitaMall Trust's (CMT) distributable income for the same quarter ended Dec 31 rose 5 per cent on-year to S$99.1 million.

Source: Channel News Asia / Business

SINGAPORE: CapitaMall Trust (CMT) posted a higher fourth-quarter distribution per unit (DPU) of 2.86 cents, up 5.1 per cent from the same quarter a year ago.

In a news release issued on Friday (Jan 23), CMT's manager said that its distributable income for the same quarter ended Dec 31 rose 5 per cent on-year to S$99.1 million. This brings CMT's DPU for the full year to 10.84 cents, a 5.6 per cent increase over the DPU of 10.27 cents for 2013.

CMT Management CEO Wilson Tan said in a statement that CMT's "portfolio of malls continued to enjoy high occupancy of 98.8 per cent as at Dec 31, 2014.

"For the quarter under review, we continued to reinvent and make our malls relevant. Bukit Panjang Plaza completed the food and beverage block and Level 2 opened with additional dining options, including popular choices such as Suki-ya, Eighteen Chefs and Siam Kitchen," he said.

For FY2014, CMT's gross revenue grew 3.3 per cent on-year to S$658.9 million, while net property income increased 2.2 per cent to S$448.4 million from the previous year.

- CNA/ac

Joint ventures boost CapitaMall Trust

Raffles City, Westgate help lift Reit's distributable income in Q4 to $99.1m

Source: Straits Times / Money

STRONG performances from joint ventures have helped boost fourth-quarter distributable income at CapitaMall Trust (CMT).

According to the trust manager, distribution per unit (DPU) for the three months to Dec 31 was 2.86 cents, a rise of 5.1 per cent. DPU for the full year climbed 5.6 per cent to 10.84 cents.

Distributable income rose 5 per cent in the fourth quarter to $99.1 million, and grew by 5.4 per cent in the full year to $375.3 million.

The rise in distributable income was underpinned by strong turnover from CMT's joint ventures: Raffles City Singapore and Westgate. CMT has a 40 per cent interest and a 30 per cent interest in the two malls respectively.

Net property income (NPI) from the two joint ventures surged 37.5 per cent in the fourth quarter, reaching $20.5 million. For the full year, NPI from the ventures climbed 27.7 per cent to $81.7 million.

The higher NPI was thanks to the contribution from Westgate, which commenced operations in December 2013.

This offset the fourth-quarter decrease in NPI from the real estate investment trust's (Reit) wholly owned assets, which saw a fall of 4.1 per cent to $106 million owing to high operational expenses, despite fourth-quarter revenue rising 2.2 per cent to $165.2 million.

Operational expenses rose 15.9 per cent to $59.2 million in the fourth quarter and climbed 5.8 per cent to $210.5 million in the full year, because of rising manpower and marketing costs.

Notwithstanding the sharp rise in expenses, full-year NPI for the Reit's portfolio still managed to rise 2.2 per cent to $448.4 million.

CMT posted revenue of $658.9 million for the full year, gaining 3.3 per cent on the previous year, thanks to higher occupancy in Plaza Singapura and Atrium@Orchard, along with the completion of asset enhancement works at IMM Building (Phase I) and Bugis Junction.

Mr Wilson Tan, chief executive of the trust's manager, said: "Our portfolio of malls continued to enjoy high occupancy of 98.8 per cent as at Dec 31, 2014. For the quarter under review, we continued to reinvent and make our malls relevant."

The Reit anticipates a changing retail environment and cautious consumer spending this year, with growing competition from e-commerce transactions.

As a result, the mall owner has taken steps to create "an environment that continues to be conducive for shoppers", with ongoing asset enhancement works for Bukit Panjang Plaza, Tampines Mall and IMM Building.

The Reit has also taken measures to combat competition from e-commerce, such as by introducing J.Avenue Online in September last year, a platform that allows shoppers to make online purchases from JCube.

CapitaMall Reit units closed four cents higher at $2.25 yesterday.

-By Michelle Lee

Ascott Reit's units rise after solid fourth quarter

Source: Straits Times / Money

THE units of Ascott's real estate investment trust, Ascott Residence Trust (Ascott Reit), are up after a solid set of fourth-quarter results.

Ascott Reit units closed 1.5 cents higher at $1.285 on Thursday, and closed another 0.5 cent up at $1.29 yesterday.

That represents a 1.57 percentage increase since the Reit's financial results came out before the market opened on Thursday.

Gross revenue was up 13 per cent for the three months to Dec 31 to $95 million, and rose by the same amount in the full year to $357.2 million.

Distribution per unit for the three months to Dec 31 was 1.76 cents, up 13 per cent from 1.56 cents the previous year - after adjustment for the effects of a rights issue and excluding one-off items.

Various research reports remained upbeat about the Reit's future.

A recent JP Morgan report noted that Ascott Reit offers earnings stability through fixed-rental agreements and long-staying clients in Asia, for instance.

Europe makes up 33 per cent of its asset value and 43 per cent of its gross profit, so this naturally raises concerns over potential downsides from the ongoing economic slowdown, noted the report.

However, JP Morgan said the risks are overplayed as Europe's rental income is structured with high fixed rental agreements.

Ascott Reit has a long history with Europe. In 2010, it diversified its portfolio by acquiring 26 properties in Europe.

As at Dec 31, the Reit's portfolio comprised 90 properties with 10,502 apartment units in 37 cities across 13 countries in the Asia-Pacific region and Europe.

A DBS study released yesterday said that Britain, Spain and Belgium were performing more strongly, "owing to a combination of lower expenses, stronger demand and impact of past refurbishments".

A separate report by OCBC on Thursday said that despite the macroeconomic challenges, the Reit's operational performance is likely "to remain healthy, given its resilient extended-stay business model".

-By Rachael Boon

Views, Reviews & Forum

Stricter rules on show-flats needed

Source: Straits Times / Forum Letters

I BOUGHT a condominium unit and collected my keys last month.

When I saw the actual unit, I was disappointed as it was very different from the show-flat in the developer's sales office.

Some walls were not displayed in the show-flat, so the sitting room was smaller than I thought as part of it turned out to be balcony space.

Also, some doors were not included in the display unit. In my apartment, the junior master bedroom door swings into the frame of the adjoining bathroom door.

When I pointed out this design flaw to the developer, I was told there was nothing to be done about it except install a stopper.

Another major problem was that the developer had laid marble tiles for the washbasin and shower areas in the bathroom of the master bedroom.

Considering how the bathroom will get wet when one is using it, there is always the risk of slipping on the marble floor.

I asked the developer if this was safe, and was told it had been approved by the Government.

Despite my complaints, the developer said it would not change the tiles. Instead, it suggested I use anti-slip mats or hire a contractor to roughen the floor.

This is on top of the smaller issues, such as uneven floor tiles on the balcony and uneven timber flooring.

I bought the unit as I thought the developer was reputable and produced high-quality units. I was clearly wrong.

I hope there will be stricter rules on show-flats, and that home buyers will be more cautious before purchasing a home.

-By Tsang Ngai Wing Guen (Ms)

Global Economy & Global Real Estate

Home-Sales Winning Streak Ends, First-Time Buyers Go Missing 

Source: Bloomberg / Luxury

A three-year winning streak for sales of previously owned homes in the U.S. ended in 2014 as some investors stepped out of the market and first-time buyers failed to fill the void.

Purchases totaled 4.93 million last year, down 3.1 percent from the 5.09 million houses sold in 2013, figures from the National Association of Realtors showed Friday in Washington.

The share of American homebuyers making their first purchase dropped in 2014 to its lowest level in almost three decades, according to the Realtors group. At the same time, employment gains, growing consumer confidence, mortgage rates at historically low levels and government efforts to lower purchasing costs probably will help bolster demand in 2015.

“Demand has been pretty sideways,” said Jay Feldman, an economist at Credit Suisse in New York. “There are various positives and I don’t see any big negatives for housing. The improving labor market and low mortgage rates will support the housing recovery.”

Stocks fell, trimming the first weekly gain of 2015, as weaker-than-forecast results at companies from United Parcel Service Inc. to Kimberly-Clark Corp. offset confidence that central banks will support global growth. The Standard & Poor’s 500 Index declined 0.6 percent to 2,051.82 at the close in New York. The S&P Homebuilding Supercomposite Index retreated 1 percent.

Survey Results

Purchases climbed a less-than-forecast 2.4 percent in December from the prior month to a 5.04 million annual rate, the report showed.

The median forecast of 76 economists in a Bloomberg survey called for sales of previously owned homes to rise to a 5.08 million pace in December. Estimates ranged from 4.93 million to 5.25 million. The November reading was revised down to 4.92 million from a previously reported 4.93 million.

First-time buyers accounted for 29 percent of all purchases in December, down from 31 percent a month earlier, the report showed. A separate survey from the group showed they made up 33 percent for all of 2014, the fewest since 1987.

“First-time buyers are still missing in action,” Lawrence Yun, NAR chief economist, said at a news conference today as the figures were released. The market in 2014 was “mildly disappointing.”

Falling interest rates, more jobs and higher levels of confidence indicate “pent-up demand continues to build,” he said. “2015 should be a better year.”

Supply, Prices

A lack of supply and rising prices are probably among reasons younger and first-time buyers have yet to enter the market. Those issues are also driving out investors, who led the early stages of the recovery.

The median price of an existing home advanced 6 percent in December from the same period a year earlier, to $209,500, the Realtors’ report showed. In 2014, it was the highest in seven years.

The number of previously owned homes on the market fell to 1.85 million, the second-smallest reading for any December since 1999.

Investors made up 17 percent of all buyers in December, down from 21 percent in the same month in 2013.

Another report Friday showed prospects for economic growth were improving. The Conference Board’s index of leading indicators, a gauge of the outlook for the next three to six months, increased 0.5 percent in December, after a revised 0.4 percent gain in November, the New York-based group said.

An improving job market and plunging gasoline prices continue to support consumer spending that makes up almost 70 percent of the economy. A strong domestic market is buffering the U.S. against global weakness as Federal Reserve policy makers prepare to meet next week to discuss if and when to raise interest rates.

Rosier Outlook

It’s “more or less consistent with our expectation for continued expansion as we turn the corner here into 2015,” said Tim Quinlan, an economist at Wells Fargo Securities LLC in Charlotte,North Carolina, who’s among the top LEI forecasters over the past two years, according to data compiled by Bloomberg. “If there’s something that has shifted over the last year or so, it’s that the consumer spending outlook is a little bit brighter.”

More jobs and a drop in mortgage rates will help. The labor market is coming off its best year since 1999, with almost 3 million jobs added and an unemployment rate of 5.6 percent, a more than six-year low.

The average rate on a 30-year fixed mortgage was 3.63 percent in the week ended Jan. 22, according to data from Freddie Mac in McLean, Virginia. It reached a low of 3.31 percent in November 2012.

Easier Credit

Credit conditions continue to ease. The proportion of banks reporting loosening standards for prime mortgages in the past two quarters was the highest since the Fed began record-keeping in 2007, according to the central bank’s October survey of senior loan officers.

The federal government is also trying to make it cheaper to buy. President Barack Obama unveiled a plan earlier this month aimed at boosting homeownership for borrowers with lower credit scores by reducing the premiums they pay on Federal Housing Administration mortgages. The agency’s loans are meant for lower-income borrowers, who have been largely shut out of the housing recovery. The move, which will go into effect on Jan. 26, would help the typical first-time homebuyer save about $900 in their annual loan payment, according to the FHA.

Minneapolis-based U.S. Bancorp (USB), the nation’s largest regional lender, is among companies encouraged by the recovery in housing. Chief Executive Officer Richard Davis said the outlook for the mortgage business is “really nice,” in part because Americans are putting money into home improvements.

Home Improvements

“People who have houses now feel that they’re no longer under water and they’re willing to invest in them,” he said during an earnings call on Jan. 21. “People who have houses that are now above water are willing to use it as collateral for something else, like a small business, and housing prices slowly but surely are recovering.”

While increasing property values hurt affordability for some prospective buyers, they give homeowners the ability to sell their dwellings, which will help boost supply.

-By Shobhana Chandra

London Home-Value Gains Slow as High Prices Deter Buyers

Source: Bloomberg / Luxury

London’s home-value gains slowed to an annualized rate of about 5 percent during the fourth quarter as high prices and restrictions on mortgage lending cooled the market, Hometrack said.

Prices in the U.K. capital climbed 14.7 percent in December from a year earlier, the research company said in a statement today. U.K. home price growth, which was 8.3 percent during the period, has plateaued and will slow in 2015, according to the statement.

Bank of England Governor Mark Carney in June placed restrictions on mortgage lending to cool the housing market and prevent an unsustainable buildup of consumer debt as soaring prices stretched affordability. The slowdown has been more pronounced in London, where prices have climbed 55 percent in five years, Hometrack said.

High house prices, “mortgage affordability tests and loan to income caps on a proportion of lending are all acting as a constraint on what buyers can spend on housing in London,” Hometrack Director of Research Richard Donnell said in the statement. “After the strength of the recovery, a period of lower growth looks inevitable.”

Demand for U.K. mortgages fell the most since 2008 in the fourth quarter, according to the Bank of England, as more stringent lending criteria made it harder for homebuyers to get loans. Lenders had expected an increase in demand, the central bank said on Jan. 6.

-By Patrick Gower and Neil Callanan

California Backs Surfers as Billionaire Khosla Risks Property

Source: Bloomberg / News

The state is threatening to step in to ensure Californians’ God-given right to surf.

The State Lands Commission may use powers never employed in its 77-year history, seizing private land for public use to end a battle between surfers and billionaire venture-capital investor Vinod Khosla, who has been locking a gate at his beach property along California’s Pacific Coast.

“This is the route he’s chosen, and it’s unfortunate because certainly this is a property that hopefully can be available for those who want to come and enjoy it,” said Betty Yee, California’s controller and a commission member who would help make the eminent-domain decision. “My hope is that it can get resolved through negotiations.”

Khosla’s campaign to keep the public off the 89 acres he owns on the crescent-shaped coastline marks the latest salvo in an income-inequality battle in which long-time residents are being priced out by the San Francisco Bay Area’s technology elite. The influx of highly paid tech workers and wealthy executives has generated resentment among those already worried about the area’s soaring cost of living.

“I live here, and I want to be able to bring my kids here,” said Krishneil Maharaj, a 35-year-old information technology project manager who recalled scattering his grandmother’s ashes at a family ceremony at the beach a decade ago. “I don’t think one man should be able to cut off access to this beautiful spot.”

No Easement

Khosla, 59, has argued in court filings that the beach is privately owned, that there is no easement for the public to use the area and that development permits required by coastal regulations don’t apply to him. He wants to stop public access because it’s not economically feasible to pay an attendant to collect parking fees and tend the beach, according to a 2009 filing with the San Mateo County Superior Court.

Khosla, founder of a Menlo Park, California-based venture-capital firm, declined to comment on the possiblity of state action. Jeff Essner and Dori Yob, attorneys at Hopkins & Carley representing Khosla in the beach dispute, didn’t return calls seeking comment.

To try to resolve the impasse, officials last month invited Khosla to begin talks to sell the state a right of way on his $32.5 million property providing public access to and along Martins Beach, a popular surf spot about 33 miles (53 kilometers) south of San Francisco.

Beach Access

A patchwork of laws governs access along U.S. coastlines, with the boundary based on a formula referencing the tide line, including the mean high-water and low-water lines, said Ben Sherman, a spokesman for the National Oceanic and Atmospheric Administration. Under the California Constitution, land that’s seaward of the mean high tide line is considered public land and access is enforced by the state Coastal Commission.

In earlier fights in Southern California, entertainment mogul David Geffen and Santa Barbara News-Press owner Wendy McCaw tried unsuccessfully to block public access to shorelines near their homes.

“In California, the public owns the beach; we like that,” Rob Caughlan, 71, a former president of the nonprofit Surfrider Foundation that sued Khosla for blocking access, said in an interview on the beach.

Closing Gate

Khosla bought the property in July 2008 and began sporadically closing the gate that winter, prompting San Mateo County officials to send a letter asking him to apply for a coastal development permit. In 2010, the closures became more frequent until the gate was permanently closed that fall, according to Eric Buescher, an attorney at Cotchett, Pitre & McCarthy LLP, the firm representing the Surfrider Foundation. Khosla reopened the gate on Dec. 18, he said.

“You can’t thwart a billionaire,” Maharaj said in an interview after a stroll along the deserted sandy coastline on Jan. 15, a day when the gate leading to the beach was locked.

The previous owner had charged cars a small fee to use the road to the beach, which is bordered by cliffs and features seals bobbing in the surf. About 45 leased cabins and grassy bluffs line its edge.

Jennifer Lucchesi, executive officer at the State Lands Commission, sent a letter to Khosla’s representatives on Dec. 31 initiating talks mandated by a law enacted last year that directs the agency to consider using its eminent-domain powers if an agreement isn’t reached by Jan. 1, 2016. The agency has about $6.4 million in a land bank fund to buy the property, she said, adding that she hasn’t yet received a response.

‘Permanent Right’

“I do think it’s going to be challenging, but I’m optimistic we can find a resolution that results in the public having a permanent right to access Martins Beach,” Lucchesi said in a phone interview.

If the state decides to use those powers, it could acquire land leading to and along the shoreline, including the sandy beach, through Khosla’s property.

Any agreement reached with his representatives or a decision to use the agency’s eminent-domain powers would have to be approved by Yee, Lieutenant Governor Gavin Newsom and Finance Director Michael Cohen.

Cohen spokesman H.D. Palmer and Newsom spokesman Rhys Williams declined to comment on the eminent-domain option.

Caughlan has been stopping by almost every day to check the status of the gate after a state judge last month ordered Khosla to keep it open. Khosla has filed a motion asking for a new trial.

Painted Over

A billboard that used to welcome visitors to the beach has since been painted over in green. A sign posted on the metal barricade reads “private property, no trespassing.” Caughlan said the gate is open occasionally, and an attendant charges visitors $10 to park nearby.

The battle waged in the courts and the Legislature also involves the California Coastal Commission, which sent Khosla a letter last month advising him that he will face a penalty of as much as $11,250 daily for blocking public access, said Sarah Christie, the agency’s legislative director. The commission would have to hold a public hearing to impose a fee, and Khosla could challenge it in court, she said.

Such disputes are “unfortunately fairly routine,” Christie said. Her agency “has been pretty consistently successful in the counterargument and that’s essentially why you can still get to the beach and enjoy yourself there in California without having to own a multimillion-dollar piece of property on the coast,” she said.

-By Alison Vekshin

Additional Articles Of Interests - Local & Overseas Real Estate