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29th January 2015

Singapore Economy

Sibor rises as MAS eases monetary policy

Source: Straits Times / Top of The News

SOME mortgage repayments will hurt a little more after a benchmark interest rate here rose yesterday, as the central bank made a surprise move to tweak its exchange rate policy.

The three-month Singapore Interbank Offered Rate (Sibor) is used to set many floating-rate home loans here. Banks add their margin to Sibor for these loans.

Sibor rose to 0.65289 per cent yesterday, a 1.3 per cent jump from Tuesday's 0.64429 per cent.

The Monetary Authority of Singapore (MAS) unexpectedly announced yesterday that it would slow the appreciation of the Singapore dollar.

It led to the Singdollar dropping to as low as 1.357 against the United States dollar, its weakest level since August 2010 and a 1.1 per cent increase from Tuesday's close of 1.3426.

MAS directly controls only the exchange rate and not interest rates here, but a weaker Singdollar can lead to capital outflows and cause interest rates to rise.

"Effectively, the move will keep short-end domestic rates elevated," said Credit Suisse economist Michael Wan.

Home owners would feel the pinch, with Morgan Stanley analysts noting that each 25 basis points increase in Sibor would add 3 per cent to a mortgage borrower's monthly payments.

Economists, however, noted that any significant hike in Sibor in future will more likely be affected by the expected increases in US interest rates rather than the MAS move.

Despite the rise in Sibor, Mr Donald Han, managing director of property consultancy Chestertons, said home owners should be able to stomach the increase.

"The days of low interest rates are over, but the effect of the TDSR (total debt servicing ratio) would have weeded out borrowers who have been over-leveraged."

Mr Han added that those who bought homes after the TDSR went into effect would still be able to make repayments if current floating home loan rates of around 1.5 per cent and 1.8 per cent rise to between 2.5 per cent and 3.5 per cent.

The TDSR limits a borrower's overall monthly debt repayments to no more than 60 per cent of his gross monthly income.

Even though a cheaper Singdollar makes investments here more attractive for foreigners, Mr Han does not expect them to return to the property market as cooling measures have not been relaxed.

CIMB research head Kenneth Ng said the bigger problem facing the property market is not a rise in interest rates, but vacancy rates.

"We are in the second year of a four-year cycle of an avalanche of supply, and the vacancy rate has risen from about 5 per cent a year ago to around 8 per cent to 9 per cent now," he said.

-By Mok Fei Fei

Singapore Real Estate

Completed condo prices down 1.2% in Dec: NUS index

Source: Business Times / Real Estate

Prices of completed non-landed private homes in Singapore fell 1.2 per cent in December from November, based on flash estimates from the National University of Singapore (NUS) for its Overall Singapore Residential Price Index (SRPI). R'ST Research director Ong Kah Seng said this was within expectations, given the slow festive year-end coupled with the continued loan curbs under the total debt servicing ratio (TDSR) framework. 

-By Lee Meixian

Resale prices of private homes fall further in December: SRPI

The overall resale prices of private homes fell 1.2 per cent on-month in December, with prices of homes in the central region leading the decline, according to the Singapore Residential Price Index flash estimates.

Source: Channel News Asia / Singapore

SINGAPORE: Resale prices of private homes fell again in December, according to Singapore Residential Price Index (SRPI) estimates released on Wednesday (Jan 28).

The SRPI, compiled by the National University of Singapore's Institute of Real Estate Studies, showed overall prices declined 1.2 per cent in December from the previous month. In November, prices fell 0.4 per cent from a month earlier.

Prices of homes in the central region, excluding small units, led the decline with a 1.7 per cent fall. Prices of homes in the non-central region, excluding small units, fell 0.8 per cent in December from November.

In contrast, prices of small units, which have a floor area of 506sqf or below, rose 0.5 per cent from the previous month.

- CNA/cy

Gloomy outlook for shoebox units as their numbers rise 

Source: Straits Times / Money

THE resale prices of shoebox flats rose 0.5 per cent last month after dipping 2 per cent in November but they were still well down over the course of the year, according to a new report yesterday.

Shoebox units - defined as up to 506 sq ft in size - fell in value by about 4 per cent last year but that was still the smallest decline in the four segments of completed non-landed private homes covered in an index complied by the National University of Singapore.

Flash estimates for the overall Singapore Residential Price Index (SRPI), as the gauge is called, showed that prices of completed non-landed private homes in Singapore fell 1.2 per cent in December over November.

For the full year, prices fell about 5.1 per cent last year islandwide, with homes in the central region taking the biggest hit with a drop of around 5.7 per cent.

Resale prices in the non-central region slipped about 4.8 per cent for the year. Mr Nicholas Mak, SLP International executive director, said the big fall in resale prices in the prime districts was no surprise as they were most affected by cooling measures.

The outlook appears gloomy for small units given the high number of completions due in coming years, while leasing demand seems patchy.

When the concept of shoebox units kicked off in 2009, they were mainly in the central region but by 2011 they were being incorporated into projects islandwide.

The trend became so pronounced that the Urban Redevelopment Authority noted in September 2012 that as many as 50 per cent to 80 per cent of then- new projects outside the central area consisted of shoebox units.

Some of these projects will be completed this year and next year, said analysts.

Mr Mak said that about 6,200 shoebox units will get their Temporary Occupation Permit over these two years, including units at The Promenade@Pelikat and The Hillier, which were both launched in 2012.

Suburban shoebox homes have "untested leasing demand", said Mr Ong Kah Seng, R'ST Research director. "In the suburban areas, these homes will face competition from HDB flats, which offer more space for almost the same rent... Expatriates also do not seem to have moved to the suburban areas from the central region and city fringes."

While these flats were meant for singles or young couples, some families invested in them as they were more affordable, noted Mr Ong. "Coming to completion, they may face some challenges as the units aren't sufficiently large for their living requirements, (while) at the same time, leasing demand is competitive," he said.

Demand among tenants for centrally located shoebox units seems more positive although rents can be comparable with those for a less conveniently located, possibly older two-bedroom apartments, added Mr Ong. Overall, resale prices for private non-landed homes are expected to drop by about 4.5 per cent to 7 per cent this year, said Mr Mak.

-By Rennie Whang

Buying S'pore or HK property? Watch Fed moves 

If it raises rates in H2 as widely expected, property prices in these places may fall by 5%

Source: Business Times / Real Estate

Investors seeking to buy property in Singapore or Hong Kong this year may be better off listening to US Federal Reserve chair Janet Yellen than a real estate agent. The Fed is widely expected to raise interest rates sometime in the second half of 2015 as the US economy improves and inflation remains benign.

Tenants opt for shorter leases as rents slide

More are asking for one-year leases, expecting prices to soften further

Source: Straits Times / Singapore

MORE tenants are opting for shorter leases in hopes of scoring a better deal as rentals continue to slide.

Property agents and analysts said the trend started to pick up last year as the rental market started to soften.

The rental index for private homes fell by 3 per cent for the whole of 2014, while that of public flats dropped by 2.1 per cent.

The vacancy rate for private homes hit 7.8 per cent at the end of last year, the highest in nearly a decade.

With a pipeline of more residential units to be completed in the next two years, the rental scene has become a "tenants' market", said experts.

Horizon Real Estates key executive officer Lena Low said that while nine in 10 rental enquiries she received used to be for two-year leases, half are now asking for one-year leases instead.

"They say prices may go further south. Or maybe they can upgrade to a bigger place for the same price. They are very shrewd," said Ms Low.

ERA Realty, the country's largest real estate agency, said that one-year leases used to form just 36 per cent of private housing rentals in 2013. But this went up to 39 per cent last year.

Similarly for public housing, one-year leases were about 87 per cent of all rental transactions in 2013 but climbed to 90 per cent last year.

"It is currently a tenants' market due to a supply glut, especially in the private residential market," said ERA Realty key executive officer Eugene Lim.

"With a shorter expiry, tenants are free to renegotiate terms as the leases near expiration or look for alternatives should the terms be not as favourable."

But OrangeTee agent Derek Teng said that not everyone wants shorter leases.

Those who secure good locations will want to hang on to their choice units.

"If it's a great location and good price, they will sign a longer lease," said Mr Teng, noting that most of his clients' tenants still opt for two- or three-year leases.

At the same time, the softer rental market is also luring more Singaporeans, said agents.

"When the resale market started to decline (in 2013), some sold off their place before prices crashed further," said DWG agent Felix Mui.

"They want to purchase a new home but opt to rent first and monitor the market as resale prices are falling."

OrangeTee agent Tan Zhi Wei, who markets private units in the central region, said about two in 10 tenants he sees now are locals, up from one in 20 before last year.

"Many are renting to reposition their portfolio. They are trying to capture the time when prices go even lower before buying," said Mr Tan.

A native of France who gave her name only as Ms Loise, 31, is one foreign tenant who is increasingly conscious of falling market prices. She and a friend currently fork out $2,100 monthly for a three- room Housing Board flat in Commonwealth.

But she plans to negotiate for a lower price or move elsewhere when their two-year lease expires in August.

"I would consider a shorter lease, but the main factor is my job, not the rent amount," said the associate with a foreign law firm here. I don't want to be stuck with a two-year lease if I'm no longer working in Singapore."

-By Yeo Sam Jo

MOM steps up checks on construction sites

3-week blitz to cover more than 200 sites to ensure safety first in CNY deadline rush

Source: Straits Times / Singapore

THE Manpower Ministry has started a three-week enforcement blitz to stamp out unsafe workplace practices at more than 200 construction sites.

The initiative comes after investigations into eight deaths in January last year showed contractors were rushing work and disregarding key safety procedures to meet deadlines before the Chinese New Year break.

The operation, which is on top of regular inspections MOM conducts throughout the year, will end by early February, said a press statement.

Inspectors are looking out for lapses in formwork, work-at-heights and lifting operations, among others.

On Jan 23, a Bangladeshi worker died after being struck by a formwork panel, a mould for concrete to be poured into, while assembling it with three colleagues.

The accident happened along Alexandra Terrace at a worksite managed by Shimizu Corporation. The company was engaged by developer Mapletree Business City.

The ministry has instructed the contractor to stop assembly of formwork panels and investigations are ongoing.

Between 2010 and 2013, the number of workers who were killed in the month of January ranged from zero to three.

Contractors disagreed that deadlines are rushed in the run-up to Chinese New Year, saying they have no lack of labour for the festive period among their mainly Indian and Bangladeshi workers.

Chinese nationals also prefer to work. "Leaving Singapore means earning less and spending more," said Mr Richard Teo, a project manager with CHL Contruction.

Instead, they put forward a record number of projects last year coupled with a tight labour market as reasons for any safety lapses.

Last year, an all-time high of $37.7 billion in construction deals was recorded, according to the Building and Construction Authority.

"We have more projects to complete but the same number of workers to do them," said Mr Kenneth Loo, executive director of Straits Construction.

From January to June last year, 17 deaths were recorded, the highest since 2006.

Errant employers will face thorough investigations, harsh penalties and corrective actions such as intensified monitoring, inspections and training requirements, said Mr Chan Yew Kwong, director of MOM's Occupational Safety and Health Inspectorate.

Under the Workplace Safety and Health Act, companies that fail to take reasonably practical measures to ensure the safety and health of their workers can be fined up to $500,000 for a first offence.

-By Aw Cheng Wei

MOM launches construction safety enforcement blitz

The Manpower Ministry said investigations into previous construction worksite deaths showed that contractors had ignored safety guidelines to meet deadlines before Chinese New Year.

Source: Channel News Asia / Singapore

SINGAPORE: The Manpower Ministry (MOM) has launched an enforcement operation to weed out poor Workplace Safety and Health (WSH) practices at construction sites. This comes after investigations into eight construction site-related deaths last January showed contractors had rushed work and disregarded guidelines in order to meet deadlines before the Chinese New Year holidays.

The ministry said in a news release on Wednesday (Jan 28) that the blitz will "ensure contractors maintain their focus on WSH" ahead of the festive period. Operation Sunbird, as it is codenamed, will involve inspections at more than 200 worksites island-wide over a three-week period, ending in early Feb 2015. This is on top of regular inspections MOM conducts throughout the year. Inspections under this operation will cover a range of work areas, including formwork, work-at-heights and lifting operations, among others, according to MOM. 

Errant contractors and employers will face a "thorough investigation and harsh penalties" as well as corrective actions - including "intensified monitoring, inspections and traiing requirements", said MOM's Director of Occupational Safety and Health Inspectorate Mr Chan Yew Kwong. Companies that fail to comply with safety rules can be fined up to S$500,000 for their first offence. 

Last Friday (Jan 23), a worker died in after being crushed by a formwork structure at a Alexandra Terrace construction site. Preliminary findings indicate that four workers were assembling two formwork panels, working in between them, when one of the panels toppled inwards, MOM said. It struck a Bangladeshi national, who died from his injuries in hospital.

Manpower Minister Tan Chuan-Jin called this "unacceptable". "Every worker is entitled to a safe workplace, and every employer and occupier is obliged to provide that. I call on all stakeholders to play their part to prevent accidents and ill health at work. Prevention is key as no amount of investigations or penalties will bring a deceased worker back to life,” he said.

- CNA/dl

Need design ideas for your HDB flat? Check out My Nice Home 

Source: Straits Times / Singapore

FLAT buyers can now get design ideas from the Housing Board's show flats in the My Nice Home Gallery, which was launched at the HDB Hub in Toa Payoh yesterday.

Located on the third floor, the gallery was previously known as the HDB Habitat Forum.

Its two- to five-room flats have now been renovated with modern themed interiors. The three- to five-roomers feature open concept kitchens, which the HDB introduced in 2012 as an option in new flats.

A studio apartment show flat has been added, so the public can see the special features such as grab bars and built-in wardrobes.

There is also an interactive display allowing visitors to design and furnish their own virtual flat, choosing colour schemes and furniture items which they can arrange in digital 3D models.

A special photo booth allows visitors to take a photograph of themselves "inside" the flat they have designed and e-mail it to themselves for reference.

National Development Minister Khaw Boon Wan said yesterday while launching the gallery: "As the standard of HDB interiors climbs, our gallery has to move forward too."

The HDB held a My Nice Home photo contest last month, with entrants encouraged to submit photos of their stylish pads.

Fifteen winners were announced at yesterday's launch, with designs including a two-roomer with a white-brick feature wall and a counter instead of a dining table, and a minimalist four-roomer with white walls and pale wood creating an airy, spacious feel.

The latter, which cost $30,000 to $40,000 to do up, took the top prize.

"We wanted everything to be understated," said aerospace technician Ong Lian Seng, 36, who lives there with his wife and their three-year-old son.

Singapore Institute of Architects president Theodore Chan, one of the contest judges, noted that many entries had a budget of $20,000 to $30,000.

"Good ideas don't have to be expensive," he said.

The My Nice Home Gallery is open to the public from 8am to 5pm, Mondays to Fridays, and 8am to 1pm on Saturdays.

-By Janice Heng

HDB revamps showflat gallery to keep up with the times

The gallery now features five fully furnished HDB showflats – including, for the first time, a studio apartment unit.

Source: Channel News Asia / Singapore

SINGAPORE: The Housing and Development Board (HDB) has revamped its showflat gallery to showcase the latest in flat designs, interior design ideas and renovation tips. 

Located at the HDB Hub, on Level 3 Biz Four, the space is now called "My Nice Home Gallery". It will feature five fully furnished HDB showflats – including, for the first time, a studio apartment unit. The other types of flats on display are the two-, three-, four- and five-room units. 

This is the first time showflats of all five flat types will be on display, HDB said, adding that eco-friendly features and elderly-friendly fittings have also been included in the showflats.

National Development Minister Khaw Boon Wan, who officially opened the revamped gallery on Wednesday (Jan 28), said that with the rising standard of flats’ interiors, HDB’s showflat gallery has to improve as well.

Said Mr Khaw: "I have visited many HDB homes, a clear impression is that Singaporeans are very proud of their homes and rightly so. Another impression is that Singaporeans are passionate in using their flats and homes to express themselves. As the standard of HDB's interiors climbs, our gallery has to move forward too."

The studio apartment unit on display comes fitted with elderly-friendly features like grab bars and pull cords linked to an alarm system. The showflat was added as HDB has seen increasing demand for such features in flats, Mr Khaw said. He added the HDB gallery also has to keep pace with rising standards.

Eco-friendly features like the eco-pedestals in all HDB toilets are also included in the gallery, as well as the open kitchen concept - an option given to home buyers since 2013. 

The revamped gallery also has interactive exhibits for potential homeowners to better plan for or visualise the design of their home. Besides choosing the type of flat and a design theme, homeowners can also get to test out different colour schemes and furniture to see what may or may not work in their new home.

Formerly known as the HDB Habitat Forum, the showflat gallery was set up in 2002 and has seen more than one million visitors. The last revamp was in 2006. The gallery has been popular with both prospective buyers and existing home owners, Mr Khaw said.

At the launch, Mr Khaw also presented prizes to the winners of the My Nice Home Photo Contest, held in December 2014. The contest attracted 155 entries, of which, 15 will be displayed at the new gallery.

According to the HDB, more than 75,000 new flats are scheduled to be completed between 2015 and 2017.


Mr Wang Shun Li, who moved into a Punggol 4-room flat in October, said the revamp has been more up-to-date and current. "There is a physical design that we can look at, so it is always better than just looking at pictures," he added. Mr Wang is also the distinction prize winner of My Nice Home Photo Contest.

One architect added Singaporeans are putting more effort into the design of their home. Singapore Institute of Architects President, Theodore Chan said: "It is all about the lifestyle. If your lifestyle changes, then the design of your flat changes.

"People are getting more sporty now, so you can see that some of the flats, they have incorporated spaces to put their mountain bikes. Some of them are very musically inclined. So I saw one of the flats using spaces to put their musical instruments," Mr Chan said.

"We all know that the price of housing has gone up and the flat is probably one of the biggest investments you make in your life so yes if it is a big investment, why not? You should really take care in how you design your spaces and be really house proud about it."

The gallery is open Mondays to Fridays, from 8am to 5pm, and on Saturdays, from 8am to 1pm.

- CNA/cy/xk

HDB’s revamped showflats include studio apartment, eco features

Source: Today Online / Singapore

SINGAPORE — A new Housing and Development Board (HDB) showflat gallery launched yesterday, its first revamp in 12 years, features for the first time a studio apartment showflat and an interactive design-your-own-flat station.

Housed on the third floor of the HDB Hub in Toa Payoh, My Nice Home Gallery was previously known as the HDB Habitat Forum. The studio apartment showflat allows prospective buyers to view elderly-friendly fittings in such units, including built-in wardrobes and kitchen cabinets, sliding partitions, grab bars and pull cords linked to an alarm system.

The other showflats have also been renovated in collaboration with interior designers and furniture manufacturers. They sport modern features such as eco-pedestals in bathrooms that recycle water for toilet flushing and open-concept kitchens, which the HDB introduced as an option in September 2012.

Prospective buyers can furnish their virtual homes at an interactive station, which allows them to choose from a palette of flat types, colour schemes and furniture items, and contact manufacturers directly for fittings.

National Development Minister Khaw Boon Wan, who attended the launch event yesterday, noted that many Singaporeans would spend time researching and planning the renovation of their HDB flats. “As the standard of HDB’s interior climbs, our gallery has to move forward, too,” he said.

Mr Khaw also presented awards to 15 winners of the inaugural My Nice Home photo contest held last month. Winning entries included a cafe-themed four-room flat with string lights and a chalk board. The gallery is open from 8am to 5pm on weekdays and 8am to 1pm on Saturdays.

-By Kelly Tay

Companies' Brief

CDLHT declares 3.13¢ DPS for Q4, eyes more Japan assets

Source: Business Times / Companies & Markets

CDL Hospitality Trust (CDLHT), which on Wednesday posted a 7.2 per cent rise in distribution per stapled security (DPS) to 3.13 cents for the fourth quarter ended Dec 31, 2014, is eyeing more hotel assets in Japan following the acquisition of its first two hotels there last month.

-By Lynette Khoo

CDL Hospitality Trusts posts stronger income despite hurdles

Boost from new acquisitions, but it faces challenges in S'pore, Maldives markets

Source: Straits Times / Money

CDL Hospitality Trusts endured a challenging fourth quarter as a weak rouble kept Russian tourists away from its Maldives resorts and stiffer competition drove down Singapore hotel rates.

Despite these hurdles, CDLHT still posted stronger distribution and income for the three months ended December last year.

CDLHT said quarterly distribution per stapled security (DPS) rose 7.2 per cent from the same period a year earlier to 3.13 cents.

Gross revenue rose 14.4 per cent to $45.1 million, mainly boosted by a full quarter of hotel revenue from the Jumeirah Dhevanafushi, its new resort in the Maldives.

Excluding Jumeirah Dhevanafushi's contribution, CDLHT's fourth-quarter gross revenue from its remaining properties was $39.7 million, barely above the $39.4 million recorded in the same period a year earlier.

Although there was a $1.3 million rental boost from its Angsana Velavaru hotel in the Maldives, this was offset by lower revenues from its Singapore hotels.

Another negative was the absence of income from Claymore Link Mall amid renovation works and lower contributions from its Australian properties owing to a weaker Australian dollar.

CDLHT noted that although its Singapore hotels achieved a record high fourth-quarter occupancy fate of 90 per cent, average room rates during the period fell 4.7 per cent year-on-year to $205.

"The revenue performance was affected by increased competition from the new hotel room supply into the market and the uncertain global economic environment, inducing a cautious corporate spending environment," the trust manager, M&C Reit Management, said in a statement.

The hospitality market in the Maldives in the fourth quarter was also challenging, it said.

"This slowdown in the Maldives was most acutely felt from the Russian market, being one of its traditionally active source markets during the fourth quarter," the trust manager said.

"The sharp depreciation of the Russian rouble against the US dollar and the overall strength of the US currency against most currencies has generally made the Maldives a more expensive destination."

Still, net property income for the fourth quarter rose 6 per cent to $38.6 million, while income available for distribution rose 7.8 per cent to $34.1 million.

For the full year, CDLHT's gross revenue rose 12.1 per cent to $166.8 million, while net property income climbed 2.3 per cent to $140.5 million.

Full-year income available for distribution rose 0.8 per cent to $119.5 million.

Its DPS for the year is 10.98 cents, up 0.1 per cent from the year before.

Mr Vincent Yeo, the chief executive of M&C Reit Management, said: "We are encouraged by the company's performance given the softer trading conditions in some of our markets."

CDLHT's diversification strategy and its recent acquisition of two hotels in Japan last month is expected to benefit the portfolio income stream further, he said.

-By Yasmine Yahya, Assistant Money Editor

KepCorp's KepLand bid: joint financial adviser appointed

Source: Business Times / Companies & Markets

Keppel Corp, which has offered to buy the remaining shares in Keppel Land that it does not own, said on Wednesday that Credit Suisse (Singapore) has been appointed as the joint financial adviser.

Pioneer artist and architect dies

Source: Straits Times / Singapore

SINGAPORE pioneer artist, architect and former city councillor Ho Kok Hoe died last Saturday, three days after his discharge from hospital for treatment of bladder cancer. He was 93.

Better remembered for the active role he played as president of the 65-year-old Singapore Art Society in the early 1950s and 1960s, Dr Ho left behind three sons and a granddaughter.

Youngest son Kah Keh, 54, a corporate trainer, said: "My father's cancer was treated, but he had multiple medical problems and finally succumbed to lung infection at our Camden Park home."

Dr Ho, he recalled, led an active life and was still playing golf at 87, about 10 years after his retirement as an architect in 2000.

"I will always remember him as a man of passion, and he loved what he did as an artist, architect and art collector," said Kah Keh.

Well-known buildings he designed included the National Art Museum and Gallery in Kuala Lumpur in 1963, the Haw Par Tiger Balm Building in Jurong in the early 1970s and the new complex of St Andrew's School in Potong Pasir in 1997.

He studied architecture in Sydney, Australia, and joined the architecture firm started by his father, Mr Ho Kwong Yew, the first local architect registered under the British colonial government, when he returned from his studies in 1951.

Dr Ho, also went into politics briefly in the 1950s. He took part in the 1957 City Council elections and won the seat for River Valley on a Labour Front ticket.

He was interviewed by the authors of Men In White, the 2009 book of untold stories on the ruling People's Action Party, when he talked about his days as a politician and his relationship with Singapore's founding prime minister Lee Kuan Yew.

Artist Choy Weng Yang, who was with Dr Ho at the Singapore Art Society in the late 1950s, said: "I am shocked to hear of his passing... I remember he had done a lot for Singapore art, especially in the early years."

Dr Ho's body is lying in his Camden Park home. The funeral will take place tomorrow morning.

-By Leong Weng Kam, Senior Writer


Source: Straits Times / Money

GUOCOLAND has more than trebled its second quarter net profit to $42.5 million from $12.9 million previously.

Revenue for the three months to Dec 31 rose by 40 per cent to $355.7 million, mainly due to revenue recognised for the sale of an office tower with gross floor area of 24,928 sq m in Shanghai Guoson Centre.

Earnings per share firmed to 3.61 cents from 0.94 cent previously while net asset value per share grew to $2.48 compared to $2.36 as at June 30. For the quarter, the group received deposits from buyers for Shanghai Guoson Centre's service apartments and another office tower.

Views, Reviews & Forum

Architecture profession facing same problem

Source: Straits Times / Forum Letters

THE architecture profession empathises with the dilemma faced by eateries due to the labour crunch ("Empty tables? Sorry, restaurant is 'full' "; Tuesday).

The Building and Construction Authority projected that the value of construction deals here will reach $29 billion to $36 billion this year, following an exceptionally strong performance last year.

There is record construction demand, yet available manpower is at its lowest, caused by the strict hiring quotas on foreign architectural technicians imposed by the authorities.

The industry is stretched to its limit as the supply of such technicians among locals and permanent residents (PRs) is almost non-existent. It is interesting to note that, unlike the banking and IT sectors, no local or PR jobs have been compromised on account of foreign staff in the architecture profession.

This is because our profession has been experiencing extreme difficulty in recruiting locals as the available numbers are insufficient to meet demand, even before the labour crunch.

While it is possible for other sectors in the construction industry to adopt new technologies to raise productivity, the work of architects cannot be done by a tablet PC or an app.

Architecture is about lovingly crafting and designing buildings and ensuring they comply fully with the myriad of statutory requirements, for the safety and well-being of the public.

To maintain quality amid the labour crunch, many practices have been forced to turn away work. This is a chronic problem and a wasted opportunity to explore architectural innovations and enhancements.

To circumvent this, some firms have set up production offices overseas, resulting in a brain drain and resources being spent overseas instead of locally for the country's benefit.

Unless something is done to review the quota on foreign hires in our profession and other industries where the local workforce is virtually non-existent, delays in delivery, growth retardation and, possibly, closure of businesses will be inevitable.

-By Theodore Chan


Singapore Institute of Architects

Preserve more of what makes Geylang unique

Source: Straits Times / Forum Letters

HAVING read about the rezoning of Geylang ("Rezoning won't change character of Geylang area"; last Friday), I wonder if more could be done to preserve the uniqueness of the place.

I grew up in Geylang, in a part that is not Geylang Serai or the red light district.

Seldom is this area discussed even though it has a rich history. Back in the 1960s and 70s, this area - between Lorong 3 and Lorong 21 - was a hive of activity.

Walking along the five-foot way, one could find all kinds of shops, above which lived families; and in the back alleys, there were hawkers.

Besides the history, the buildings in the area will make you pause and look.

There is a beautifully decorated one in Lorong 19, the post-modern residential units in Lorong 17, and the smart greystone units that dot the area.

Then there is the Geylang English School, which reminds one of a Malay school of old.

Geylang will not be Geylang if its tree-lined, three-storey terraced houses disappear or are transformed.

Already, tall condominiums are invading the area, replacing the older buildings.

I hope the authorities will make a concerted effort to gazette and preserve more of this part of historical Geylang. After all, many of our pioneers laid down their roots in this area.

-By Lai Tuck Chong

Checks in place to assess contractors' financial status 

Source: Straits Times / Forum Letters

DR V. Subramaniam ("Any checks on bidders for construction projects?"; last Thursday) shared his views in response to the article ("Braddell Rd project hits bump as work comes to a halt"; Jan 20).

There were several factual errors in the article. Hexagroup posted a post-tax loss of $4,605 in 2007, not $4.6 million; and the company's post-tax profits in 2006 amounted to $50,116, not $50.1 million.

The Building and Construction Authority administers the Contractors Registration System to serve the public sector's needs for procurement of construction services.

Firms interested in bidding for public sector construction projects must meet the stated requirements, including financial capacity, technical personnel, management standards and track records before they can be registered.

Each registered firm is graded upon these criteria to be eligible for projects of various types and scales.

For contractors that qualify for a higher tendering limit, they must meet the additional requirement of submitting audited accounts yearly, and continue to meet the financial requirements.

The tender evaluation process for construction projects is managed by individual public sector agencies.

When the Land Transport Authority (LTA) called the tender for the widening of Braddell Road in 2012, Hexagroup's submission offered the best value among the tender proposals. The company had a good track record, having completed several road improvement projects for LTA between 2007 and 2012.

At the point of tender submission for the Braddell project, the LTA saw no indication that Hexagroup was suffering any financial difficulties. The LTA's project management team also monitored the project closely after the award of the contract.

The company was able to meet the project schedule and there was no sign of financial distress until works slowed down visibly late last year. Since then, the LTA's project management team has been discussing the various options with Hexagroup so that the road works can continue.

We thank Dr Subramaniam for the opportunity to clarify.

-By Helen Lim (Ms)

Director, Media Relations

Land Transport Authority


Tan Chee Kiat

Director, Procurement Policies Department

Building and Construction Authority

New rules impose extra requirements on big dorms

Source: Straits Times Forum Letters

WE THANK Mr Tham Tuck Meng for supporting the Foreign Employee Dormitories Bill ("Tighten rules: Why stop at large dorms?"; last Friday).

As he has rightly pointed out, all dormitories, regardless of size, should be well regulated. For this reason, there already exists a comprehensive set of rules governing the living conditions of foreign workers.

The areas that are regulated include building and fire safety, minimum living space and hygiene standards. These requirements apply to all forms of foreign worker accommodation.

The various government agencies such as the Building and Construction Authority, the Singapore Civil Defence Force and the National Environment Agency are stepping up enforcement of these rules, and will review them with a view to raising them over time.

However, for larger dormitories, it is necessary to impose additional requirements. Given their larger size and higher density of workers living within close proximity to one another, they pose higher risks that need to be mitigated upstream during the design phase and in the operational phase.

This includes requirements that cover public health and safety, security and public order, and the provision and maintenance of social and commercial facilities and services.

It is for this reason that the Ministry of Manpower introduced the Foreign Employee Dormitories Bill as a progressive measure to mitigate the risks of larger dormitories.

As more large dormitories are developed over the next few years, this Bill ensures that, upstream, better requirements are woven into their design and development.

The effect of the new legislation is not to allow us to take a more relaxed attitude with respect to smaller dorms, but rather to put additional regulatory requirements on the bigger dorms that have a much greater impact on their surrounding neighbourhoods.

-By Alvin Lim

Divisional Director

Workplace Policy & Strategy Division

Ministry Of Manpower

Mortgage revival expected in Spain after ECB easing

Source: Business Times / Real Estate

Bloomberry plans S Korea casino in first overseas foray

Source: Business Times / Real Estate

Qatari-led group set to win bid for London's Canary Wharf

Owner Songbird Estates has dropped its opposition to the US$4b offer

Source: Business Times / Real Estate

Dubai house prices to ease in 2015: JLL

Emirate's robust economy is helping it avoid repeat of crash in 2008-9 despite a slump in oil prices

Source: Business Times / Real Estate

Life of Italian nobility for sale, complete with rules and taxes

Buying the castle is one thing, making changes to it is either impossible or extremely bureaucratic and complicated

Source: Business Times / Real Estate

Sunac likely to take over troubled Kaisa Group

Source: Business Times / Real Estate

Stylish plans for sleepy, industrial Red Hook

Ambitious scheme for 12-acre, 1.2 million-square-foot mixed-use project called Red Hook Innovation District would include offices, shops, performance spaces, promenade

Source: Business Times / Real Estate

Ireland eases mortgage cap plan to help first-time buyers

They will be allowed to borrow as much as 90 per cent of a property valued at up to 220,000 euros

Source: Business Times / Real Estate

New York's World Trade Center tower turns to crowdfunding

Fundrise inviting investors to put US$5,000 into bonds backing skyscraper

Source: Business Times / Real Estate

Starwood Team to Buy Offices From Duke for $1.12 Billion

Source: Bloomberg 

(Bloomberg) -- A joint venture including an affiliate of Barry Sternlicht’s Starwood Capital Group agreed to buy a group of suburban U.S. office properties from Duke Realty Corp. for $1.12 billion.

The deal comprises 62 buildings with 6.9 million square feet (641,000 square meters) of space combined, and 57 acres (23 hectares) of undeveloped land, Indianapolis-based Duke said in a statement today. The Starwood venture includes affiliates of Vanderbilt Partners and Trinity Capital Advisors.

“This transaction is a continuation of our strategy to increase our focus on bulk industrial and medical-office properties and to reduce our investment in suburban office assets,” Denny Oklak, Duke’s chairman and chief executive officer, said in the statement.

Demand for office space outside U.S. cities is increasing as the economy grows. Vacancy rates for suburban offices fell to 16.3 percent in the fourth quarter, and occupancy gains reached 26.9 million square feet, the most since 2006, Maria Sicola, head of Americas research for Cushman & Wakefield Inc., said in a Jan. 20 report.

Duke’s sale includes the company’s wholly owned suburban office properties in Nashville, Tennessee; Raleigh, North Carolina; South Florida and St. Louis, according to the statement.


Norway Regulator Raises Warning Housing Market Is Out of Control

Source: Bloomberg

(Bloomberg) -- A combination of plunging oil prices and falling interest rates risks pushing Norway’s housing market beyond its breaking point, the financial regulator said.

The economy of western Europe’s biggest oil exporter is now struggling to expand amid a slump in crude. The central bank cut rates in December and said there’s a 50-50 chance for another reduction, triggering a mortgage war as banks such as DNB ASA and Nordea Bank AB lowered rates to lure customers.

“Lower interest rates and strong competition in the mortgage lending market could contribute to continued rapid growth in debt and house prices,” Morten Baltzersen, head of Norway’s Financial Supervisory Authority, said in an e-mailed reply to questions this week. That could drive the housing market into a “self-augmenting spiral,” he said.

Norges Bank Governor Oeystein Olsen had kept rates higher than warranted by inflation alone to protect the economy from overheated credit and housing markets. The bank ended a 1,000-day pause in rates in December with a surprise cut to 1.25 percent after oil prices collapsed.

Norway’s housing market, which Nobel laureate Robert Shiller all the way back in 2012 said was in a bubble, has been inflated amid an oil boom that has driven wealth creation and kept unemployment below 4 percent. Norwegians have more debt than ever before, owing their creditors about twice their disposable incomes, a level that Olsen and FSA’s Baltzersen have said is unsustainable.

Real Bubble

House prices rose 8.1 percent in December from a year earlier, according to Real Estate Norway. They have risen 85.4 percent nationwide over the past decade, the group says.

“I’m beginning to be a little bit worried,” Steinar Juel, chief economist at Nordea, said by phone in Oslo. Another rate cut from the bank would be risky and drive house price gains up by 15 percent, he said. “We could also have a situation where we really are in a bubble.”

In an effort to cool the market, Norway has introduced a number of measures including raising capital requirements, the risk weights that lenders assign their mortgages and capping loans at 85 percent of a property’s value.

The Conservative-led government last year allowed more flexibility in loan standards, allowing banks to lend up to 90 percent of a property’s value. The government rejected advice from the FSA for tighter regulations to slow debt growth.

While FSA declined to comment on whether it would present changes to its existing guidelines, Baltzersen said he has monitored the rise of house prices last year.

“Continued rapid growth in debt and house prices isn’t sustainable,” he said.


Germany Studies Tools to Halt Property Bubbles, Dombret Says

Source: Bloomberg

(Bloomberg) -- German financial regulators are studying tools that can be used to fight potential real-estate bubbles as liquidity measures by the European Central Bank increase the risk of escalating asset prices.

Germany’s financial stability committee plans in coming months to recommend that the government create the legal framework for putting such tools to use, Bundesbank board member Andreas Dombret said in the text of a speech in Berlin on Wednesday.

“Even if the risks on the property market seem slight at the moment, we still have to prepare for all eventualities,” he said. “The world has become a bit more dangerous for real-estate investors.”

The ECB said on Jan. 22 that it’ll buy 60 billion euros ($68 billion) of bonds every month through September 2016 in a push to put more cash into circulation and revive euro-area inflation. The measure was announced against opposition led by German officials in the Governing Council.

German home prices rose 5.1 percent in 2014, for the sharpest increase since 1993, according to researcher Bulwiengesa AG. Buyers, including private individuals and investment firms, are crowding into German real estate as a way to earn higher returns amid record-low interest rates in fixed-income markets.

Currency Risk

Consumers and banks should prepare for potential increases in interest rates, Dombret said.

“Mortgage contracts should only be signed if borrowers can still pay them off when interest rates are higher,” he said.

The Swiss National Bank’s recent decision to remove its currency cap shows that property markets can become vulnerable if borrowers take out mortgages in foreign currencies. However, only about 2 billion euros of Germany’s approximately 1 trillion euros in mortgages are in Swiss francs, meaning that there’s no cause for concern, Dombret said.

Dombret repeated the Bundesbank’s assessment that there is no German property bubble, although home prices in cities such as Berlin, Hamburg and Frankfurt were overvalued by more than 20 percent as recently as 2013.

None of the conditions of a bubble are present, he said. Price increases have already started to slow down, credit growth remains moderate and most banks have maintained strict lending standards, according to Dombret.

However, regulators will take a closer look at data that were presented in the Bundesbank’s annual financial stability review in November, suggesting some banks in large cities are offering mortgages covering more than the property’s appraised value, he said.


Homebuilders Boost Buyer Incentives to Increase Sales

Source: Bloomberg

(Bloomberg) -- As the key spring U.S. homeselling season approaches, buyers are finding deals on new houses as builders focus on boosting revenue.

Dwayne Saunders purchased a house in Eastvale, California, in December, paying $450,000 after builder D.R. Horton Inc. cut the price by 4.5 percent, threw in a washer-dryer and covered his closing costs.

This month, the house next door sold for $404,000.

“It was bigger too,” Saunders, an office manager who lives with his family of five, said during an interview in his driveway. “I think D.R. Horton just wanted to finish this phase and move onto the next one.”

U.S. builders are trying to increase earnings by selling more houses, even if it requires freebies to draw customers such as Saunders. That’s creating more of a buyers’ market for new homes after a 46 percent jump in prices in four years -- and denting housing companies’ profit margins at a time when land and labor costs have also jumped.

“The pressure is they need to generate volume,” Robert Curran, a managing director at Fitch Ratings in New York, said in a telephone interview. “They can’t assume these margins will grow further or even sustain. So if they want to generate improved profitability, they need to sell more homes.”

Sales of new houses are strengthening after choppiness last year, with purchases last month reaching the highest pace since 2008, Commerce Department data showed Tuesday. Single-family home starts are expected to increase 26 percent to 804,000 units this year -- the highest pace since 2007 -- as job growth, rising consumer confidence and low mortgage rates spur demand, according to the National Association of Home Builders.

Adjusting Prices

To keep volume up, homebuilders will need to make prices attractive as buyers get more to choose from. Some companies have adjusted by offering discounts and lower-priced homes. Others are stuck with higher-cost land that makes it hard to offer discounts while maintaining profits. The Standard & Poor’s Supercomposite Homebuilding Index lost 3.6 percent this year through yesterday, more than the 1.4 percent drop in the S&P 500.

D.R. Horton, the largest U.S. builder by revenue, said this week that it expects a sales increase this year to offset narrowing profit margins as it shifts a bigger share of production to entry-level houses. The Fort Worth, Texas-based company had 12,400 speculative homes, or houses built before finding a buyer, as of Dec. 31. That positions it to quickly meet expected demand -- or offer incentives to sell the properties.

Horton is “adjusting our pricing accordingly, whether it’s down or up,” to meet sales goals for each community, Chief Financial Officer Bill Wheat said on a conference call with investors. The stock rallied 5.5 percent on Jan. 26.

KB, Lennar

Shares of KB Home and Lennar Corp. didn’t fare as well when the builders said their profitability will be hurt by rising costs and shrinking pricing power. The stocks fell 16 percent and 7.2 percent, respectively, on the days of their earnings reports this month.

MDC Holdings Inc.’s gross margin on home sales fell to 16.3 percent in the fourth quarter from 17.4 percent a year earlier as it increased incentives, Chief Executive Officer Larry Mizel said in a statement today.

“Combined with rising construction and land costs, the increased incentives placed pressure on our homebuilding gross margins,” he said.

Stock Downgrades

The decline in builder profitability is “unlikely to reverse soon,” Stephen Kim, an analyst with Barclays Capital, wrote in a Jan. 16 note in which he lowered his ratings on Horton, Lennar and Meritage Homes Corp. That left him with no buys among the seven builders he covers. Michael Dahl, an analyst with Credit Suisse Group AG, followed later with downgrades of Meritage, PulteGroup Inc., Ryland Group Inc. and Taylor Morrison Home Corp. Citigroup Inc.’s Will Randow yesterday cut Horton and Brookfield Residential Properties Inc. to neutral from buy.

Land costs, especially for prime locations, are going up for homebuilders that have worked their way through lower-priced lots purchased after the housing crash. Most public builders -- with the notable exception of Horton, with its Express Homes line starting at less than $100,000 -- have shifted away from the entry-level buyer segment, because those customers have had difficulty qualifying for loans. Now that’s where the supply shortage is most acute and the growth potential is greatest.

“We topped out on the number of people who need $400,000 homes,” said Alex Barron, an analyst with Housing Research Center LLC in El Paso, Texas. “If you got one of those, you won’t need another one for a long time. And if you’re in the market for a lower-priced home, they aren’t available, or you can’t afford it.”

Existing Homes

Builders have the disadvantage of competing with sellers of existing homes, which are cheaper and closer to jobs than many of the new communities on the suburban outskirts. The median price of a new home was $298,100 in December, up from an October 2010 low of $204,200, according to Commerce Department data. For existing homes, the median rose 23 percent in the period to $209,500, according to the National Association of Realtors.

In Texas, which has been one of the nation’s strongest housing markets, builders are rushing to sell amid concern that falling oil prices will dent demand, said Lawrence Dean, a senior adviser in Houston at market researcher Metrostudy. Public homebuilders during the past month have increased incentives, especially in Houston and Dallas, and are building more homes on a speculative basis, seeking to sell as many homes as they can now in case the market cools, he said.

“They may be overreacting,” Dean said. “It’s possible they’re going to leave money on the table as they try to push sales volume unnecessarily so.”

Buyer Comfort

The ability of builders to increase sales depends heavily on the U.S. economy, and that picture is mixed. While low mortgage rates, falling gas prices and the 2.95 million new jobs added last year will bolster buyer finances, wage growth has been feeble, especially for lower-paid workers. Average hourly earnings rose 1.7 percent in the 12 months ended December, the least in two years, Labor Department figures show.

“As soon as people are more comfortable buying homes, you’ll see margins go up,” said Larry Sorsby, chief financial officer of Red Bank, New Jersey-based Hovnanian Enterprises Inc. “What’s going to make consumers more comfortable is getting better-paying jobs, and that’s what’s going to be the catalyst for homebuilders to take off again.”

In setting prices, builders are becoming more adept at responding to shifts in consumer sentiment, credit availability and production pace, according to David Goldberg, an analyst with UBS Securities LLC in New York.

“The builders package deals not so you’ll get the best deal, but so that you’ll feel really good,” he said in a telephone interview. “For all we know, they marked the base pricing of the house up enough so the net pricing wasn’t changing. Part of it’s just psychological, and the builders are great at that.”

Big Deal

At the Trails, D.R. Horton’s 369-lot community in Eastvale, about 45 miles (72 kilometers) east of Los Angeles, the sales team festooned fences with red, yellow and blue balloons and hung banners for its “Big Deal Event,” offering as much as $35,000 off on homes. Before the discounts, the houses were listed from $428,900 to $490,854.

Saunders and his fiancee, Rotundra Greene, were unpacking boxes in their new garage, offering friendly waves to new neighbors who recently bought homes on their street, Cantata Drive in the Trails. The couple, who plan to marry this year, purchased the new home as a place to blend their families -- and because they felt like they got a good deal.

“Builders are giving out great incentives,” Saunders said. “At the end of the day, they sold all but one house on my block.”

-By  and

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