Real News‎ > ‎2015‎ > ‎January 2015‎ > ‎

30th January 2015

Singapore Economy

S'pore No. 2 on Safe Cities Index

Source: Straits Times / Asia

SINGAPORE is the world's second safest city, after Tokyo and ahead of Osaka, according to a report by the Economist Intelligence Unit that looks at urban security.

The Safe Cities Index, with a focus on 50 cities worldwide, looked at more than 40 qualitative and quantitative indicators spread across four categories: digital security, health security, infrastructure safety and personal safety.

The findings show that safety is closely linked to wealth and economic development, with cities in developed markets tending to fall in the top half of the list, while those in developing markets appear in the bottom half.

In Asia, rich cities occupy the top three positions, while poorer neighbours Ho Chi Minh City and Jakarta fill two of the bottom three positions.

However, ample resources are no guarantee of urban safety, with only one of four high-income Middle Eastern cities surveyed - Abu Dhabi - making it to the top half of the index at 25.

Singapore does well in personal safety, coming in tops in a category that other Asian cities also do well in, with Osaka (2), Tokyo (3), Hong Kong (5) and Taipei (6) in the top 10. This category looks at how secure individuals are from theft and violence.

The Republic also ranks high on digital security, which looks at resources spent on ensuring that citizens can use the Internet and other digital technologies without fear of privacy violations or identity theft. It is second behind Tokyo and ahead of New York (3), Hong Kong (4) and Osaka (5).

But it does poorly in health security, ranking outside the top 10 at No. 12, in a category dominated by high- and upper-middle income cities.

While it is joint first for its quality of health services, it does badly for the number of hospital beds and doctors per 1,000 people. It is seventh in the infrastructure safety category.

MAS move timely to tackle threat of 'hot money'

Economists flag possibility of excessive capital inflows and low inflation here

Source: Straits Times / Money

A MOVE by the Monetary Authority of Singapore (MAS) yesterday to ease its monetary policy came as a considerable surprise.

However, the unscheduled intervention is actually well- timed as it puts Singapore in a better position to deal with the threat of speculative "hot money" inflows from abroad and low inflation at home, economists said.

The regulator said it would tweak its exchange rate policy to slow the appreciation of the Singdollar - the first time since 2001 that the MAS has adjusted monetary policy outside biannual regular meetings in April and October.

Yesterday's was also the first off-cycle move in recent memory outside of a crisis, economists noted, and could signal a downshift in the central bank's growth expectations for Singapore.

HSBC economist Joseph Incalcaterra said MAS had "significantly altered" its inflation forecasts before without changing its monetary stance. Yesterday's move thus implies that the MAS has "strong concerns about growth and disinflation", he said.

But economists do not believe this should be taken as a portent of gloom. "Oil is a massive stimulus for the world economy and the benefits will accrue to us later in the year, in exports," said Barclays economist Leong Wai Ho.

Rather, MAS' intervention is timely given the very sharp, prolonged drop in global oil prices.

This factor coming ahead of MAS' next scheduled meeting in April had rendered the bank's inflation forecasts too high, said Mr Leong, and the "main motivation" behind yesterday's announcement was to revise inflation forecasts downward. The concurrent adjustment to the policy setting was "tiny", he added.

The MAS said yesterday that it now expects inflation to come in between -0.5 per cent and 0.5 per cent this year, down from earlier estimates of 0.5 to 1.5 per cent.

"If they had waited until April to adjust inflation forecasts, it would be clearer to many observers that their inflation forecasts would be out of sync," said Mr Leong, adding that this in turn might have precipitated more bets in the market for a larger easing, and more intervention.

ING economist Tim Condon said the Singdollar's slower pace of appreciation will enable MAS to hit its revised inflation target.

"The policy target is inflation, and the Singdollar is the instrument," he said.

Bank of Singapore's senior currency strategist Sim Moh Siong noted that as a small, open economy, Singapore is rightly concerned about slower global growth that is not strong enough to push inflation higher.

Other emerging market economies that are also facing low inflation - "lowflation" - will likely pursue similar strategies of slowing down their currencies' appreciation or devaluing them, he said.

Within Asia, he noted, inflation is slowing not just in Singapore but also in South Korea and China.

United Overseas Bank economist Francis Tan also flagged hot money as a possible reason for MAS' decision to act - the possibility of "huge and excessive" capital inflows that may result in another round of asset price inflation here, which he believes the MAS wants to pre-empt.

The consensus is that the US Federal Reserve will start interest rate normalisation this year, and "since Singapore adopts the exchange rate monetary policy, it is effectively importing the monetary policy stance of the US," Mr Tan wrote in a note yesterday.

The Singdollar could then stand out more strongly against other regional currencies - so, had the MAS not acted to slow the Singdollar's rise, Singapore would likely have seen another round of hot money flowing in, he said.

The move comes as several central banks around the world are taking similar steps to deal with low inflation, including interest rate cuts in India, monetary loosening in China and South Korea, the removal of a currency peg in Switzerland and major quantitative easing in the euro zone.

It has got some economists talking of a currency war. At a recent media briefing in Singapore, HSBC chief economist Stephen King said: "How do you get growth going when the world is this weak and each country is trying to do the same thing, which is to devalue their currency?

"The devaluation simply shifts the deflationary risk from one part of the world to another."

But ING's Mr Condon said the ongoing currency war is one that Asia will likely benefit from, as it comes amid a strong US dollar.

This allows central banks in the region to "enjoy the quiet life" as it means low inflows of hot money and more competitive exports.

"Since the US dollar began appreciating against major currencies in July last year, the Singdollar has depreciated 8 per cent against the US dollar, third-most in Asia after the ringgit and yen. I think the MAS has been enjoying the quiet life. The policy change means it will continue to do so."

-By Yasmine Yahya & Marissa Lee

Singapore Real Estate

Sengkang plot not for commercial columbarium: Khaw

Source: Straits Times / Top of The News

NO COMMERCIALLY-driven columbarium will be built on land set aside for a Chinese temple, National Development Minister Khaw Boon Wan told Parliament yesterday.

He explained that the project in Sengkang was awarded to funeral services firm Eternal Pure Land (EPL) because Housing Board officers assumed that the company was acting for a religious group.

"For 20-odd years, we would never have thought that a for-profit company would participate in a non-profit-making venture like building a Chinese temple," said Mr Khaw, adding that a review of the tender process was ongoing. "The key point is... we do not want a commercial columbarium, and we won't have one.

"But having reached such a situation, I will find a way to try to unwind this."

While a commercial columbarium was ruled out for the site, an incidental columbarium offered as a service by a temple was acceptable, he said.

Mr Khaw added that the Ministry of National Development is in talks with EPL, whose parent company, Life Corporation, had raised $20 million to fund the project.

Soon after the company's plans for the columbarium were shot down yesterday, it asked the Australian Securities Exchange, on which it is listed, to stop trading in its shares for 48 hours.

The controversy ignited last month after a Straits Times article highlighted that a new columbarium was going to be built next to the Build-to-Order project Fernvale Lea, catching future residents by surprise. At first, the authorities said the columbarium could go ahead as it met guidelines.

Yesterday, MPs Lee Bee Wah (Nee Soon GRC) and Fatimah Lateef (Marine Parade GRC) questioned if it was fair for a purely for-profit company to challenge religious organisations for scarce land.

Mr Baey Yam Keng (Tampines GRC) and the Workers' Party's Ms Lee Li Lian (Punggol East) asked if enough checks were done before a site reserved for a place of worship was awarded to a commercial firm.

Mr Khaw explained that private companies have always been able to bid for such sites. However, these firms were either set up by or in joint ventures with religious organisations. EPL was the first to break the mould.

"The officers assessing the tender just assumed (EPL) must be affiliated to some religious organisation, and because it made the highest bid, (the tender) was awarded to it."

He said the government had been looking to tighten tender rules even before the controversy broke. Some religious organisations had complained about losing bids to groups with smaller congregations or to those with deeper pockets.

"It is not easy to assess needs, especially when different kinds of religious organisations are involved, but we will find a way. We will seek religious wisdom. We will meditate on it."

-By Lester Ho

Relief over no-go for Fernvale commercial columbarium

But some future residents worry place for the dead may be built later

Source: Straits Times / Top of The News

FUTURE residents of Fernvale Lea were mostly relieved after being told that the building of a commercially run columbarium close to their new homes will not be happening now.

But some were still uncomfortable with the idea that the eventual Chinese temple in the estate might still include a resting place for the dead, if its trustees decide to include niches for ashes.

Since last December, more than 1,000 people have signed an online petition to "say no to a columbarium next to our future home". The Build-to-Order project will be ready for people to move into this year.

Some even went as far as to demand a refund from the Housing Board during a dialogue earlier this month with Dr Lam Pin Min, MP for Sengkang West.

Yesterday, it was made clear in Parliament that the site was never meant to be used for a for-profit columbarium, and that the Government is in talks with winning bidder Eternal Pure Land to ensure that the land is used for a Chinese temple.

"With this development, residents' fears should be allayed and there will not be a need to return the flats to HDB," Dr Lam told The Straits Times, adding that many residents had expressed their relief to him.

Ms Josephine Soh, a 29-year-old human resource executive, said: "I was pretty worried about noise pollution that might come from funeral processions. At least a temple just has periodic noise from festivals or big dinner events - usually occasions to celebrate and not something to do with someone passing away."

Sales manager Tan Wei Leong, whose Fernvale Lea flat faces the Chinese temple site, said: "If there really has to be a columbarium, then at least it should not be a commercial one, which will have a lot more niches.

"I hope that the current tender will be void and a religious group will win the bid."

Minister for National Development Khaw Boon Wan said yesterday that the eventual temple there has the choice of whether to run columbarium services for its devotees. "We cannot make the assumption that (there will be such services)," he said.

But even if there is a columbarium, it is not an uncommon practice. Other temples, such as Puat Jit Buddhist Temple and Nanyang Thong Hong Siang Tng Temple - both in Anchorvale - and some churches already include columbariums.

But that still upsets Mrs Gladys Goh, a 33-year-old order management specialist. She said that she had asked HDB several weeks ago about the possibility of getting a different unit in Sengkang or other estates.

"I wouldn't mind living elsewhere, as long as it is not where, every day, I would walk past a place which includes a columbarium," she said.

Dr Lam, while receiving many thanks on his Facebook page after posting about yesterday's development, was also criticised for seemingly "defending" Eternal Pure Land's plans earlier this month.

He had assured residents that the columbarium would be out of the public's view and will take up, at most, only a fifth of the Chinese temple it will be housed at.

He highlighted the modern look of the temple, which he said will be the first in Singapore to have an automated columbarium. There will be other features to reduce noise and parking issues, he said.

Religious groups yesterday highlighted that sites reserved for places of worship are not meant for commercial entities.

Said Mrs Parvathi Annanth, the chief executive and legal counsel of Sree Maha Mariamman Temple in Yishun: "Land released to commercial entities with no religious affiliation is an invasion of our rights."

The president of the Singapore Buddhist Federation, Venerable Seck Kwang Phing, said land is scarce here and commercial entities should go for sites zoned for those purposes.

Singapore Management University law professor Eugene Tan also suggested that bids for worship sites by joint ventures involving a religious organisation and a commercial firms should be subjected to extra scrutiny.

This is "to ensure that profit- making companies do not use religious groups as a front to make money from a site designated for religious purposes".

-By Cheryl Faith Wee

Rents rise in trendy districts

The rising popularity of hipster cafes, ice cream parlours and quirky retail shops has pushed up shop rental rates in neighbourhoods like Haji Lane and Tiong Bahru, say analysts.

Source: Channel News Asia / Business

SINGAPORE: Hipster cafes, ice cream parlours and quirky retail shops have found their way into the Republic's heartlands.

According to analysts, their rising popularity over the years has pushed up - and in some cases even doubled - shop rental rates in neighbourhoods like Haji Lane and Tiong Bahru. Looking ahead, they said this trend of rising rents could replicate itself in new up-and-coming "hip" districts.

The old world charm and hip appeal of Tiong Bahru have drawn many businesses to set up there. Independent bookstore Books Actually and cafe Forty Hands nearby were among the first to open in the area, around 2010 to 2011.

More restaurants and cafes have since joined them, displacing old-timers there. According to consultancy JLL, average rents have also doubled from S$4 to S$5 per square foot (psf) per month in 2010, to over S$8 now.

Said Ms Lee Siew Ling, director of retail at JLL: “When one starts to discover an area, especially with social media - Facebook, blogs and so on - it actually expedites the popularity which leads to the increase in rentals.

"It has to reach a point where it will stabilise because if it hits a certain threshold, it will no longer attract the types of hipster, indie cafes to the area, it just won't be attractive to them anymore.”

Typically, businesses are attracted to such locations because of the relatively lower rents and greater flexibility in terms of operating hours and business concepts.

Analysts said these so-called hip places are popular because they offer something different, something that speaks of the soul, history and culture of the place. They added that some up-and-coming districts include Simon Road in Kovan and Tyrwhitt Road in Jalan Besar.

Numbers by Colliers International show that gross median retail rents of non-mall space at more established areas like Tiong Bahru were about S$8.64 psf per month in the fourth quarter of 2014, and about S$6.50 psf in Haji Lane at Kampong Glam.

This is compared to S$3.53 in newer areas like Jalan Besar and Lavender - which could see more upside in rents in the years ahead.


Some operators, however, are heading for public housing estates instead.

Said Ms Chia Siew Chuin, director of research and advisory at Colliers International: “These are the more innovative trendy hangout places. We have seen them in Toa Payoh, we have also seen them in Bedok. Even in coffee shops. You can actually see a new or third wave of cafes and stalls setting up in the normal typical coffee shops, so operators are actually getting more innovative when they source for space.”

Said Mr Desmond Sim, head of research for Southeast Asia at CBRE: "We have also seen some shops - bicycle shops, bakeries, F&B shops - opening up at Midview Industrial Park in Sin Ming. Basically, they are driven by low rents and they want to start something, especially for small and medium enterprises.”

Analysts said landlords are likely to continue to ask for higher rents come lease renewal time, as long as there is demand for the shop space.

That said, rents at these trendy districts are still way below those in more traditional commercial areas. For instance, Colliers International said monthly rentals at prime retail space in the central business district is around S$29 psf, S$33.80 psf at suburban malls and S$36.20 psf at Orchard Road. 

- CNA/dl

Mosquitoes mushroom at building sites

Source: Straits Times / Business

SHOULD construction firms be required to appoint a dengue officer to ensure their large sites are not breeding mosquitoes?

Is it possible, or even desirable, to segregate foreign construction workers by work locations, instead of allowing dorms to hold workers from different parts of the island, to try and contain the spread of any dengue infection?

These were suggestions thrown up at a dialogue on dengue held by the Ministry of the Environment and Water Resources yesterday.

The session, attended by academics, members of the public and others, was meant to provide an overview of the dengue situation in Singapore.

But a significant portion of the 1½-hour session centred on construction sites, after the ministry highlighted statistics related to them.

About 1,150 notices to attend court, 132 stop work orders and 72 court prosecutions were enforced against construction firms and sites last year, said the National Environment Agency (NEA).

Last year, NEA detected mosquito breeding in 7.5 per cent of 11,700 inspections at construction sites. Minister for the Environment and Water Resources Vivian Balakrishnan said: "7.5 per cent is a lot for a dense, compact city. It's still too high and we've got to get it down to below 5 per cent."

He did not think it was possible to segregate construction workers. "They also have days off. You cannot confine them to one side or one sector of the island."

The ministry also sought views on using Wolbachia bacteria-infected male Aedes aegypti mosquitoes to reduce the mosquito population.

When the infected mosquitoes mate with female mosquitoes, the latter produce eggs that do not hatch.

National University of Singapore Assistant Professor L. Roman Carrasco, one of the participants, said his preliminary research showed the mosquito population here could be "dramatically reduced" in three to five years using the infected mosquitoes, at a cost of about $5 million to $10 million each year.

The NEA spent $80 million in the 2013/2014 financial year on dengue issues, which included research, public education and elimination of mosquito breeding.

Dr Balakrishnan said it was unlikely Singapore could eliminate the dengue-carrying mosquito. "The real solution from the human health perspective is a vaccine," he said, while stressing that everyone had to play their part to prevent mosquito breeding.

-By Feng Zengkun

CapitaRetail China Trust ready for asset growth; Q4 DPU up 12.7%

Source: Business Times / Companies & Markets

Capitaretail China Trust (CRCT) is now "geared for growth" where acquisitions are concerned, after reporting a 12.7 per cent year-on-year rise in distribution per unit (DPU) to 2.48 Singapore cents in the fourth quarter on the back of an overall strong portfolio income. Tony Tan, chief executive officer of the Reit manager, said on Thursday that there are already some potential targets on the table, as owners become increasingly willing to sell their assets.

-By Lynette Khoo

Higher Optus Centre valuation boosts AA Reit's Q3 DPU

Source: Business Times / Companies & Markets

AIMS AMP Capital Industrial Reit (AA Reit) on Thursday posted a distribution per unit (DPU) of 2.83 Singapore cents for its third quarter ended December 2014. This was an increase of 2.2 per cent from the 2.77 cents it paid out a year ago.

-By Lee Meixian

Tuan Sing's Q4 profit dips 4% to S$24.3m

Source: Business Times / Companies & Markets

Tuan Sing's net profit for the fourth quarter ended Dec 31, 2014 dipped 4 per cent from a year ago to S$24.34 million, as other operating expenses and finance costs offset a surge in revenue. Revenue for the quarter rose 72 per cent year on year to S$112.1 million, attributable to higher revenue from the property segment and maiden contribution from Grand Hotel Group (GHG) between Dec 2 and Dec 31, 2014, after the group completed its acquisition of the remaining 50 per cent stake in GHG.

-By Lynette Khoo

Frasers Hospitality beats forecasts in maiden results

Source: Business Times / Companies & Markets

FRASERS Hospitality Trust announced a distribution income of S$35.7 million for the period July 14 (its listing date) to Dec 31, 2014, and an illustrative distribution per unit of 2.97 cents, both of which are 5.3 per cent above forecast.

Both figures include the foreign-sourced income from Japan, which will be remitted after completion of statutory audit and tax filing, Frasers said. This revenue is expected to be received once a year in May or June and will be included for distribution for the financial period ending Sept 30.

The forecast distribution income and distribution per unit also excluded income top-up from InterContinental Singapore and Fraser Suites Singapore for comparative purposes.

The trust comprises Frasers Hospitality Real Estate Investment Trust and Frasers Hospitality Business Trust, and is the first global hotel and serviced residence trust that was listed in Singapore. Its portfolio consists of 12 assets across Asia, Australia and the United Kingdom.

Gross revenue over the same period was S$50.2 million, on par with forecast as gross revenue from InterContinental Singapore, as well as its Japanese, Australian and UK properties registered strong performances.

Gains, however, were offset by weaker performances from Fraser Suites Singapore, which is in line with the weakening trend in Singapore's rental market, and The Westin Kuala Lumpur, due to softening corporate and leisure market in Kuala Lumpur, following Malaysia Airlines' (MAS) aviation incidents.

Frasers' net property income for the period was S$41.8 million, 2.3 per cent above expectations.

Eu Chin Fen, CEO of Frasers Hospitality Asset Management, Frasers' Reit manager, said that the trust will commence its asset enhancement plans for InterContinental Singapore in April this year and expect to complete all renovation works around early 2016.

Singapore's hospitality industry is facing headwinds with the increasing supply of hotel rooms, and the city is expected to have 60,000 hotel rooms by the end of this year, Frasers said. "While hotel rates could face certain pressure, tourist arrivals to Singapore is expected to grow between five to seven per cent, and may help to support occupancy levels," it added.

While Malaysia's tourism arrivals and hospitality industry are affected by the MAS incidents, Frasers said that the Malaysian government has launched a new MyFest 2015 campaign, which is expected to target 29.4 million tourist arrivals and 89 billion ringgit in tourist receipts. The trust also expects its Japanese, Australian and UK properties to benefit from higher tourist arrivals.

No distribution was declared for the period. The first distribution will be paid on or before June 29 this year. On Thursday, Frasers' counter closed up 0.56 per cent at S$0.90.

-By Chan Yi Wen

CDL Hospitality Trusts

Source: Business Times / Companies & Markets

In FY2015, we expect a recovery in CDL Hospitality Trusts' earnings due to an improvement in overall/Chinese tourist arrivals into Singapore and contribution from the recently acquired Japanese hotels. However, Q1 2015 may see some softness, due to a combination of cautiousness on the part of corporates ahead of the Chinese New Year and the lack of the airshow this year.

Starhill Global Reit

Source: Business Times / Companies & Markets

Starhill Global Reit (SGReit) reported its Q4 2014 results which met our expectations. The brightest development during Q4 2014 came from the 17 per cent positive rental reversions accomplished for leases committed at Wisma Atria (retail). We continue to like SGReit for its healthy financial position (gearing of 28.6 per cent as at Dec 31, 2014) and attractive valuations and distribution yields vis-à-vis its peers. The stock is trading at FY2015F price-to-book and yield of 0.88 times and 6.3 per cent, respectively.

Thakral subsidiary to acquire property investment unit

It is acquiring the remaining 49% stake in Thakral Capital Australia from four vendors

Source: Business Times / Companies & Markets

Mainboard-listed Thakral Corporation and its wholly-owned subsidiary, Thakral Capital Holdings (TCH), on Thursday entered into a share sale agreement to acquire 49 per cent of Thakral Capital Australia (TCAP)'s share capital from four vendors. TCAP is Thakral's real estate investment subsidiary. Currently, TCH owns 51 per cent of TCAP's share capital.

-By Chan Yi Wen

Far East Orchard

Source: Straits Times / Money

FAR East Orchard (FEOrchard) is selling its share in two parcels of land at Bassein Road to its joint venture partner and controlling shareholder Far East Organization.

FEOrchard teamed up with Far East Organization in 2010 to acquire Pastoral View and the next door plot for a total of $122 million.

The properties were valued at $127 million last October.

As the mainboard-listed firm took a 30 per cent stake in both projects with Far East Organization owning the remaining 70 per cent, the sale works out to $38.1 million for FEOrchard.

Hiap Hoe

Source: Straits Times / Money

HIAP Hoe has proposed to spin off its Australian property business held under Meteorite (Australia) on the Catalist board.

Its portfolio of investment properties in Australia are in Melbourne and Perth.

Hiap Hoe noted that the restructuring for the spin-off is in its preliminary stages.

Views, Reviews & Forum

Safety features in place at condo

Source: Straits Times / Forum Letters

OFTEN, on a controversial issue, there is more to it than meets the eye. Unfortunately, when emotions get in the way of facts, opinions tend to take on an uncalled-for character, such as when Mr Rajasegaran Ramasamy deemed the attitude of the management corporation of One North Residences "callous" ("Board's ruling on safety grille in condo laudable"; Monday).

Children's safety has been one of the developer's and management's top priorities ever since the project obtained its temporary occupation permit.

From the onset, the developer provided for the following (endorsed by the management corporation and the annual general meeting as the norm for One North):

A lockable grille design inside the sliding balcony doors, should the subsidiary proprietor wish to install one for increased safety of children.

In the case reported in the article ("Family wins case to install grille in condo balcony for child's safety"; last Saturday), the subsidiary proprietor insisted on his own grille design to effectively enclose the entire balcony.

A 35cm-deep, 52cm-wide sunken concrete box area around the entire balcony adjacent to the glass balustrade, intended for plants to block anyone from getting close to the balustrade and also to enhance the aesthetics for every balcony.

Some owners, including the subsidiary proprietor mentioned above, chose to cover the sunken planter box with wooden planks, to have a larger balcony.

Of course, this considerably compromised the intended safety feature as it would be easier to climb over the balustrade.

Yet, the subsidiary proprietor refused to consider the simple safety option of merely removing the portion of the planks abutting the edge of the balcony.

-By Loh Kim Fong (Ms)

Management Corporation of

One North Residences

'Never thought a for-profit firm would vie for non-profit venture'

Source: Straits Times / Top of The News

NATIONAL Development Minister Khaw Boon Wan was pressed on the Sengkang columbarium controversy by six other MPs in Parliament yesterday. Here are some highlights:


Both Mr Seng Han Thong (Ang Mo Kio GRC) and Mr Zaqy Mohamad (Chua Chu Kang GRC) highlighted residents' concerns that potentially sensitive information, such as the presence of a columbarium, should not be hidden in the fine print of the Housing Board's sales brochures.

Mr Zaqy: One of the sticking points from many of the residents or potential buyers of these flats was that the columbarium was (mentioned in) the fine print. So, moving forward, from a URA (Urban Redevelopment Authority) perspective or sales perspective, how does HDB plan to change this practice?

Mr Khaw: HDB's BTO (Build- to-Order) brochures are very clear. In this instance, for example, that there will be a site reserved for a Chinese temple was clearly marked. There was no ambiguity about that.

But I can understand some of the residents' unhappiness because of this indication that there would be a commercial columbarium cropping up in their neighbourhood. So, I think those concerns are legitimate and reasonable.

We all make a strong distinction between a commercial columbarium and an incidental columbarium service which is provided by temples and some churches.


Ms Lee Bee Wah (Nee Soon GRC) asked if the tender process for religious sites would bar commercial companies from bidding.

Mr Khaw: A review is ongoing and has, in fact, been going on for several months. We have been doing many rounds of consultations, and the consultations will continue to see how best to tighten some of these tender rules to achieve what our planning objectives are...

We have gotten (quite a lot) of feedback from some of our temples and churches. They found that when they take part in tenders, they often lose out to some bidders, whose congregations are much smaller and who already own an existing place of worship. So, they ask: Should we not build in a criteria assessment that tries to ascertain needs, rather than whoever happens to have the deepest pockets? But, as you know, it is not easy to assess needs, especially when different kinds of religious organisations are involved, but we will find a way.


Mr Seng asked what the Government can learn from this incident.

Mr Khaw: I think one takeaway for me from this episode is that times have changed, and some of our tender procedures have not caught up with time.

For example, for 20-odd years, we would never have thought that a for-profit company would participate in a non-profit-making venture like building a Chinese temple.

But, of course, in this instance... the motivations are very different.

But having reached such a situation, I will find a way to try to unwind this. The key point is, for that Sengkang site, we want the Chinese temple, and we will deliver that. We do not want a commercial columbarium, and we won't have one.


Mr Khaw was also questioned by Mr Baey Yam Keng (Tampines GRC) on why the HDB did not perform its due diligence in assessing the Sengkang tender.

Mr Baey: When the agency assessed the bid and the tender, didn't information about the parentage of the bidder, and the fact that it was incorporated only recently in Singapore, arouse some suspicion or checks?

Mr Khaw: Certainly, out of this incident, we learnt some lessons which Mr Seng asked about just now. But, as I said, for a quarter of a century, we never had a for- profit company taking part in such temple tenders.

Therefore, it never crossed the minds of the officials evaluating the tender. But never mind, having ascertained the situation now, it is not too late to unwind the situation.

Global Economy & Global Real Estate

Forest City: Healthy foreign investment or blight on Iskandar?

Go-ahead for project once again raises spectre of real estate glut in south Johor

Source: Business Times / Government & Economy

THE winds of change will soon blow over the quaint laid-back villages with their wooden jetties dotted with fish cages. The area, located in the southwest of Johor Bahru, is where mostly fishermen families have lived for over 30 years.

From this, the mega development Forest City will rise. To be built over nearly 2,000 hectares - four-fifths of that on reclaimed land - straddling decades, the iconic project is led by one of China's biggest developers, Country Garden Holdings, with the backing of the Sultan of Johor.

Understandably, the native residents will be upset over the bursts of activity in their sleepy town and potential loss of livelihood, as construction hurt water quality and marine life.

According to insiders, the grandiose project will be "very high end" with spacious luxurious villas, complete with Versace and Armani furnishings and dazzling water features (think Dubai's Palm Islands).

"Every island will stand out as a key destination. If Country Garden can market the project as a fantastic place to invest and go to, then won't it be fantastic for Iskandar?" said a top executive of a firm with projects in the Iskandar area.

But not everyone shares that view; such mammoth projects rolling out in quick succession has turned investors wary of Iskandar, Malaysia's bustling southern growth corridor, now noticeably beset with big over-crowding concerns.

Two weeks ago, the tense wait ended for this lofty project, with a gross development value of RM600 billion (S$223.4 billion) involving four man-made islands from 58 hectares to over 1,000 hectares - twice the size of Sentosa island; the developer received the green light to go ahead from the Malaysian authorities following a detailed environmental study on the project that is located close to Singapore's Second Link.

Last June, the developer stopped work that had begun six months earlier - by then, 40 per cent of the reclamation work under the first phase was already done - after Singapore expressed concerns over the project's transboundary impact and sought more details from Malaysia.

To date, Singapore has yet to receive any official response on the detailed environmental study from Malaysia.

This is not the only project that has stirred concerns between the neighbouring countries, whose ties have greatly warmed in recent years.

At the Causeway, a waterfront and "marine lifestyle" development is set to substantially alter Johor Bahru's skyline. Led by Hong Kong-listed Guangzhou R&F Properties; this Tanjung Puteri project sits on 47 hectares, two-thirds of which involve two plots of reclaimed land on either side of the Causeway.

The brakes were also slammed on this project last June after two months of work had begun pending a detailed environmental study and more recently, early this year, it received the nod to proceed.

While Tanjung Puteri is dwarfed by the Forest City project, it is a startling 290 metres from the Malaysia-Singapore international border, as disclosed in the project's environmental impact assessment report.

These mega projects have also sparked worries in the real estate market, which may weaken the allure of Iskandar and its sound business proposition as a hinterland to Singapore.

The massive overbuilding by gung-ho Chinese developers, coupled with the property curbs in Malaysia, have raised some red flags for Iskandar real estate.

Property prices are sliding, with Johor's house price index falling 2.8 per cent in the third quarter of last year, the first decline since 2012's first quarter, says an analyst, who expects prices to stay weak over the medium term.

That's getting hard to stomach, particularly for local property developers such as UEM Sunrise, one of Malaysia's largest property firms and land owners in Iskandar, which has deferred its high-rise launches in Nusajaya - one of five flagship zones in Iskandar - and slashed internal sales projections on the back of the anticipated supply glut.

Not all are naysayers. From the foreign direct investment lens, some say it augurs well for the state and by extension Malaysia that China investments are rising at a healthy clip.

But they warn that these big developments need to be part of a well-crafted and coordinated big-picture policy; anything less could prove too much of a risk for Iskandar, whose success in recent years after a slow start from its 2006 inception was touted as a handsome showcase of Malaysia's transformation efforts.

This is more so as real estate has become Iskandar's centrepiece, pulling in some 40 per cent of total investment dollars poured into the economic zone, which is deemed still in the early stage of a rapid build-up with footfall still far from the desired critical mass.

-By Anita Gabriel

UK home prices rise at slowest annual pace in 14 months

Source: Business Times / Real Estate

Incentives galore for new US homebuyers

US builders are trying to increase earnings by selling more houses, even if it requires freebies to draw customers

Source: Business Times / Real Estate

Push for greater govt role in home finance

Rent-to-own schemes take a new name amid shortage of rental housing in US.

Source: Business Times / Real Estate

America's home-improvement industry gets a major boost

Record renovation spending expected this year as many homeowners decide to remodel their homes rather than move

Source: Business Times / Real Estate

Kaisa woes: junk-rated China developers face crisis

Source: Business Times / Real Estate

Luxury Montage Resort Sells for $360 Million to Strategic

Source: Bloomberg 

(Bloomberg) -- Strategic Hotels & Resorts Inc., whose properties include the Ritz-Carlton Half Moon Bay in California, added to its holdings in the state with the $360 million purchase of the Montage Laguna Beach luxury resort.

The purchase of the 250-room property was funded by issuing 7.35 million shares of common stock valued at $100 million, assuming a $150 million mortgage backed by the hotel and using existing cash, Chicago-based Strategic said Thursday in a statement. The seller is an affiliate of Ohana Real Estate Investors, started by EBay Inc. founder Pierre Omidyar.

Strategic, which last June acquired Blackstone Group LP’s stake in the luxury Hotel del Coronado near San Diego, has been adding luxury resorts to its portfolio with the expectation that a rebound in corporate travel will accelerate, Chairman and President Raymond “Rip” Gellein said in November.

The Montage Laguna Beach purchase fits Strategic’s strategy of acquiring “world-class luxury hotels located in North America,” Gellein said in the statement. “The Southern California market generally, and the coastal Orange County market specifically, have been among the highest-rated markets in the country and are poised to continue their strong growth.”

Montage Hotels & Resorts will continue to manage the resort, which sits atop a 50-foot (15-meter) bluff overlooking the Pacific Ocean and has 16,000 square feet (1,500 square meters) of indoor meeting space and a 20,000-square-foot spa. Omidyar is an investor in Montage.

Luxury resorts, shunned after the real estate crash because they’re expensive to run and suffer during recessions, are back in demand as investors seek to capitalize on the economic rebound, record corporate-travel spending and little construction, David Loeb, an analyst at Milwaukee-based Robert W. Baird & Co., said last month.

The Montage Laguna Beach is expected this year to achieve an average daily rate of almost $600 and total revenue per available room, an industry measure of occupancy and rates, of more than $1,000, Strategic said.


Renters Gain as Kids in U.S. Move Out of Parents’ Houses

Source: Bloomberg

(Bloomberg) -- Parents who’ve been waiting for their grown children to move out may finally be in luck.

The number of renter-occupied residences grew by 2 million last year, according to a report Thursday from the U.S. Census Bureau in Washington. Vacancy rates for rentals fell to 7 percent in the fourth quarter, the lowest since 1993, the data show.

A resurgent job market is enabling more members of the millennial generation to leave the nest. Along with its benefit to parents, the trend is good for apartment and single-family home landlords, who may be able to raise rents as demand increases faster than the supply of properties for lease.

There’s a “pent-up demand for housing that’s built up as young people waited longer to enter the housing market,” Jed Kolko, chief economist for San Francisco-based real estate researcher Trulia Inc., said in an interview. “All of the reported household formation is new renter households.”

The number of owner-occupied households fell by 354,000 from a year earlier as the U.S. homeownership rate dropped to its lowest level since 1994, according to Census data. The ownership rate for people under age 35 fell to 35.3 percent, down 1.5 percentage points from a year earlier and the lowest level in Census data going back to 1982.

Largest Increase

The increase in total households -- 1.66 million -- is the largest since 2005, according to Kolko, who said that quarterly data on housing vacancies and ownership rates is less reliable than Census reports that take longer to release.

The vacancy rate for owner-occupied properties declined 0.2 percentage points to 1.9 percent.

Demand for apartments will grow as “1 million households still could begin to unbundle,” AvalonBay Communities Inc. Chief Executive Officer Timothy Naughton said on a conference call Thursday. His Arlington, Virginia-based company is the biggest publicly traded apartment landlord after Equity Residential.

“We expect fundamentals in the apartment space to remain very strong,” he said.

U.S. renters paid $441 billion for apartments and houses in 2014, a $20.6 billion increase, as fewer Americans owned their homes and landlords with tight inventories charged more, according to data provider Zillow Inc.

Moving Out

Margaret Mooney, 27, this month moved out of her parents’ house to a three-bedroom Washington apartment she shares with a roommate. They’re looking for another tenant. Her share of the rent is $1,375, not including $85 for a parking space and about $100 for utilities.

“I finished my graduate degree and got a promotion,” said Mooney, a director at Collingwood Group LLC, a housing-finance consulting firm. In October, she received a master of business administration degree from Mount St. Mary’s University in Emmitsburg, Maryland. “I got a pretty significant wage increase, so I was able to move out.”

Doing so let Mooney shave an hour from her round-trip commute each day. Having moved out, she’s learning to cook, and her parents are adjusting to life as empty-nesters.

“I was surprised how sad they were,” she said. “They were giving me a hard time about living with them for the last two years.”

-By  and

General Growth Emphasizes Urban Growth With NYC Purchase

Source: Bloomberg

(Bloomberg) -- General Growth Properties Inc. is emphasizing its expansion in street retail in top U.S. shopping districts with its biggest urban deal, the purchase of half the Crown Building on Manhattan’s Fifth Avenue.

The real estate investment trust plans to expand the retail portion of the Crown Building, which also has office space, by 25,000 to 125,000 square feet (2,300 to 11,600 square meters), Chief Executive Officer Sandeep Mathrani said on Thursday. General Growth will spend $888 million to buy its share of the property, the company said in a statement on Wednesday.

“The Crown Building is widely recognized as one of the most valuable and sought-after corners, not only in New York City, but the world,” Mathrani said on the company’s earnings conference call. “Our growth strategy here is simple: re-lease some of the existing retail space at today’s rents, which significantly exceed in-place rents, and convert non-retail space to retail to maximize value.”

General Growth is purchasing more urban properties as rents climb amid rising tenant demand for space in prominent shopping districts in major U.S. cities. The company last year bought stakes in four street-retail properties -- three in New York and one in Miami -- for about $600 million, including a 50 percent stake in Manhattan’s 530 Fifth Ave. for $150 million. The company also owns or has interests in urban shopping properties on Chicago’s Michigan Avenue and in San Francisco.

Mathrani said last July that urban storefronts “offer very compelling opportunities to create shareholder value” in situations where the company can raise rents that are below market, increase occupancy or convert non-retail space to retail.

Bigger Share

General Growth’s goal is to boost the share of its net operating income from its street-retail operations to 20 percent from 5 percent, according to Nathan Isbee, a Stifel Nicolaus & Co. analyst. Buying street-front properties is one way for General Growth to grow externally, given that it doesn’t develop outlet centers, as some of its competitors do.

“Flagship stores are important to retailers because they build brand awareness and are a way to showcase their entire assortment of merchandise,” Isbee wrote in a Jan. 4 report. General Growth “views street retail as an extension of the mall portfolio, given the overlap of tenants.”

General Growth is buying the Crown Building, which has 70,000 square feet of retail space, for about $1.78 billion through a joint venture. After improvements, the property is expected to “generate a 6 percent unlevered stabilized return,” Mathrani said on Thursday.

Boosting Returns

Initial yields on street-retail purchases are often low and need to be countered with income growth to produce acceptable rates of return, Cowen & Co. analysts led by Michael Gorman said in a Jan. 20 report.

Chicago-based General Growth, the largest U.S. mall owner after Simon Property Group Inc., isn’t the only REIT expanding into street retail.

Acadia Realty Trust said in December that it paid $144.3 million for an 88.4 percent stake in 840 N. Michigan Ave., a four-story, 87,000-square-foot building on Chicago’s Magnificent Mile. The property is fully occupied by Hennes & Mauritz AB’s H&M clothing store and Verizon Communications Inc. Vornado Realty Trust this year spun off its shopping-center properties into a separate REIT, while holding onto its street-retail real estate, including properties on Manhattan’s Fifth Avenue.

General Growth “is hardly early to the street-retail story, and it could be difficult to establish any kind of platform value in a traditionally fragmented space,” the Cowen analysts said.

The proposed Crown Building deal would be General Growth’s biggest purchase of a street-retail building, according to data in the Cowen report. The landlord’s largest purchase last year was half of Manhattan’s 685 Fifth Ave. for $260.7 million, according to a General Growth regulatory filing on Wednesday.


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