A-Reit’s portfolio hit record occupancy of 99% at end-2007

A-Reit’s portfolio hit record occupancy of 99% at end-2007

 

By UMA SHANKARI

 

ASCENDAS Real Estate Investment Trust (A-Reit) said yesterday its overall portfolio occupancy rate increased to a record 98.7 per cent at end-2007 from 96.1 per cent at end-2006.

 

The occupancy rate for A-Reit’s multi-tenanted buildings rose to 97 per cent at end-2007 from 93.1 per cent at end-2006, the trust said.

 

Based on value, A-Reit’s portfolio comprises 51 per cent multi-tenanted buildings and 49 per cent sale- and-leaseback properties.

 

A-Reit renewed and signed new leases including expansions amounting to a net lettable area of 46,933 sq m for the three months ended Dec 31, 2007. These leases represent 6.8 per cent of the net lettable area of its multi-tenanted buildings and annualised rental income of $11.1 million.

 

Total new leases including expansions for the quarter were 16,961 sq m – 28.7 per cent in business and science parks, 32.8 per cent in hi-tech industrial buildings and 38.6 per cent in two other sectors – light industrial and flatted factories and logistics and distribution centres. A-Reit said HansaPoint@CBP, a partial built-to-suit development project it undertook in November 2006, attained 100 per cent pre-committed occupancy during construction. The development is expected to be completed next month.

 

Looking ahead, demand for industrial space is likely to remain healthy due to multi-national companies setting up facilities in Singapore and the spillover effect from tight office supply in the central business district, A-Reit said.

 

But anticipated high supply of 702,000 sq m of logistics and distribution space in the next two years is expected to dampen rents, it warned.

 

Source: Business Times

Housing starts plunge 14% in December

Housing starts plunge 14% in December

 

Building permits post biggest fall in 12 years as housing slump deepens

 

(WASHINGTON) Builders in the US broke ground in December on fewer houses than forecast, making 2007’s decline in homebuilding the worst in almost three decades.

 

The 14 per cent decrease to an annual rate of 1.006 million, the lowest since 1991, followed a 1.173 million pace the prior month, the Commerce Department said here yesterday. For all of 2007, starts were down 25 per cent, the biggest decline since 1980, to 1.354 million.

 

Building permits, a sign of future construction, declined by the most in 12 years, suggesting the housing slump will deepen as it enters a third year. Rising foreclosures will throw even more houses onto the market, hurting property values and threatening to push the economy into recession, economists said.

 

‘Housing will take a big chunk out of growth in the first half’ of this year, Patrick Newport, an economist at Global Insight Inc in Lexington, Massachusetts, said before the report.

 

‘Builders are cutting back production and discounting heavily but they haven’t really made a significant dent in inventories.’ Starts were projected to fall to a 1.145 million pace from a previously reported 1.187 million rate in November, according to the median forecast of 74 economists polled by Bloomberg News. Estimates ranged from 1.05 million to 1.2 million.

 

Permits fell 8.1 per cent to a 1.068 million annual rate, bringing 2007’s decline to 25 per cent, the biggest since 1974. Permits were forecast to drop to a 1.135 million annual pace, according to the survey median, after 1.162 million. Projections ranged from 1.05 million to 1.17 million.

 

Construction of single-family homes decreased 2.9 per cent to a 794,000 rate, yesterday’s report showed. Work on multi-family homes, such as townhouses and apartment buildings, plunged 40 per cent to an annual rate of 212,000 from the prior month.

 

The decrease in starts was led by a 31 per cent slump in the Midwest and a 26 per cent decline in the Northeast.

 

Federal Reserve policy makers, including chairman Ben S Bernanke, have signalled they may take more aggressive action in response to the increasing risk of slower growth.

 

Central bankers are likely to cut interest rates by half a percentage point when they meet this month, according to futures trading.

 

‘The demand for housing seems to have weakened further, in part reflecting ongoing problems in mortgage markets,’ Mr Bernanke said in a speech here on Jan 10. — Bloomberg.

 

Source: Business Times

Economic grey clouds gather

Economic grey clouds gather

 

THE chill wind blowing out of America is not only about its big banks having to shore up their capital base after dropping billions in failed mortgage investments, but also consumer nervousness which could presage a recession in a pivotal export market for Asia. The decline in housing values, booked and anticipated, is making consumers wary about spending. As private consumption accounts for 70 per cent of the American economy, the across-the-sectors slowdown in retail sales for December, a prime season, is being taken by analysts as evidence of a need by individuals to conserve and by corporates to relook inventories. When America conserves, the world feels the side effects.

 

The big imponderable is that Wall Street banks’ balance-sheet struggles appear far from concluded. First, losses from subprime-backed derivatives have not been fully computed or revealed. Citigroup’s fourth-quarter loss of US$9.8 billion (S$14 billion) reported this week, on US$18 billion of value depreciation on mortgage investments, was eye- catching only because of its iconic status in American capitalism. Its troubles are mirrored in banks of near-comparable stature. Second, finance houses are hurting from consumer and leveraged buyout debt, besides subprime-variety losses. Not many market trackers pay attention when borrowers begin to default on workaday car loans and credit card bills. They should. It is a sign of gathering trouble.

 

It is thought most Asian economies, which have husbanded their resources and diversified export markets, have had their immune system boosted after the currency setbacks of 1997. There is a growing belief Asia has ‘decoupled’ from the West, specifically America, and that it can generate growth within the continent even if the West were to slide. One must hope this is so. The theory will soon be put to the test when the full extent of America’s troubles stands revealed. The head of the Asian Development Bank, Mr Haruhiko Kuroda, thinks the US slowdown and high oil prices would bring down Asia’s growth this year. He told the Financial Times the next forecast due out in March will see growth projected at a little under 8 per cent, against the September 2007 prediction of 8.2 per cent. If the paring down is this small, the decoupling theory may hold. But wait for the evidence. Asia does not have to borrow any more; it lends big, as the purchases of Wall Street assets the past few months show. But consumer confidence and herd sentiment are non-specifics that respond to no ready models and tools of analysis. Right now, the economic mood – in America, and by contagion, elsewhere – is turning dark.

 

Source: Straits Times

Borrowing costs swell as banks clamp down

Borrowing costs swell as banks clamp down

 

NEW YORK – STUNG by billions of dollars in bad debts, banks in the United States are clamping down on loans, making borrowing costlier for the consumers and companies that are the best hope for keeping the US economy out of recession.

 

Economists are increasingly worried that reluctant banks plus skittish borrowers will create a recipe for economic disaster, and even aggressive interest rate cuts by the Federal Reserve may not be enough to prevent a downturn.

 

‘It’s a vicious cycle. As banks tighten lending standards, credit is harder to get, which is worse for the economy, and that makes banks tighten up more,’ said Mr Ray Soifer, the chairman of bank consulting firm Soifer Consulting.

 

‘Fed rate cuts will have some impact, but cutting rates by itself does not improve the availability of credit.’

 

The central bank’s Beige Book survey of economic conditions, released on Wednesday, showed that both business and consumer lending activity slowed from mid-November up till last month, with most regions reporting tighter credit conditions.

 

Banks have reason to be concerned about credit quality as US consumers struggle to stay current on a growing pile of debt.

 

American Express, which traditionally focuses on wealthier consumers less exposed to an economic slowdown, said that delinquencies suddenly ticked up last month.

 

Citigroup – which is raising at least US$14.5 billion (S$20.7 billion) of new capital, with US$6.88 billion of this coming from the Government of Singapore Investment Corporation – said fourth-quarter credit costs for US consumer loans jumped because of rising delinquencies in credit cards, mortgages and car and personal loans.

 

Borrowers with clean credit histories will still find lenders willing to push money their way, but the easy money that kept the economy rolling in recent years has dried up as banks, hobbled by the US sub-prime mortgage mess, scramble to shore up their balance sheets.

 

Deutsche Bank estimates that losses from sub-prime mortgage loans will reach US$300 billion to US$400 billion, of which one-quarter will probably fall on the banking sector.

 

‘We are more optimistic than some observers who have predicted a major credit crunch because of write-offs on sub-prime loans,’ the German bank’s analysts wrote in a note to clients.

 

They added: ‘But we expect the balance sheet repairing process to reduce banks’ inclination to extend new credit, resulting in higher lending rates and tighter lending standards.’

 

There are already subtle signs that consumer credit terms are tightening, and that could be particularly painful for the US economy as consumer spending accounts for more than two-thirds of the country’s economic activity.

 

Credit card issuers are mailing out fewer solicitations, according to Credit Suisse. The credit card industry mailed out 595 million offers in November, 3 per cent lower than in October and 11 per cent below the figure a year ago.

 

Loans from car dealers have not kept pace with the Fed’s interest rate cuts. The average interest rate on new car loans was higher in November than it was in August, even though the Fed lowered benchmark overnight rates by three-quarters of a percentage point over that period.

 

On the corporate side, loan volume for companies with high credit ratings remains robust, in part because businesses are relying less on other funding avenues, such as commercial paper.

 

But junk-rated companies are expected to borrow less this year than they did last year, because banks and investors are much less interested in taking that risk.

 

REUTERS

 

Source: Straits Times

Home prices stay firm even as property stocks retreat

Home prices stay firm even as property stocks retreat

 

Amid weak sentiment in a quiet market, many players are adopting a wait-and-see attitude

 

By Joyce Teo

 

SINGAPORE‘S property stocks have been taking a hammering lately but the property market has so far remained unscathed.

 

After riding the boom to dizzy heights, property counters have now dropped by up to 60 per cent or so from their high points over the past 12 months. Home prices, on the other hand, have not softened noticeably, if at all, although the number of transactions has shrunk significantly.

 

The share price of Wheelock Properties, for instance, closed at $1.87 yesterday, down 48.9 per cent from its one-year high on Nov 4.

 

But caveats lodged with the Urban Redevelopment Authority and anecdotes of more recent transactions showed no evidence of property sellers lowering their prices.

 

‘The stock market must fall convincingly before property prices will be hit,’ said DMG & Partners Securities head of research (retail) Terence Wong, explaining the apparent disconnect between physical properties and stock prices.

 

Stock investors’ worries stem from serious trouble in another housing market – the United States, which is currently embroiled in a sub-prime mortgage crisis. Fears are growing that the US is headed for recession.

 

In Singapore, while property buying sentiment is weakening as liquidity dries up, prices are not likely to head south any time soon, analysts said.

 

They say that is because most potential buyers are believed to be taking a breather for now and watching to see what comes next.

 

If and when these would-be buyers believe the worst of the current financial worries are over, they are set to jump back into the market, they said.

 

Mr Ku Swee Yong, director of Savills Residential, said: ‘Asia is still very strong and so is the Singdollar.’

 

‘The problem is not bad enough that expatriates have to be repatriated. Our finance industry is still growing and the expats are still renting.’

 

But things could get worse in the US and that would hit the general investment mood. ‘Sub-prime is but the tip of the iceberg,’ said Mr Ku.

 

Knight Frank managing director Tan Tiong Cheng said: ‘A prolonged US recession could contain any price increases in the property market this year. But the property market is fundamentally sound and there are buyers on the sidelines.’

 

Prices of upcoming launches are expected to remain firm, analysts say.

 

‘I believe the major developers will hold as their pockets are deep enough,’ said DMG’s Mr Wong.

 

Favourable interest rates will enable them to hold for a longer period, analysts say.

 

While launch prices are not likely to be hit, resale prices could fall, one analyst said.

 

Still, analysts believe many people bought properties at high prices in the past year or so and are unlikely to dump them now. Many of them are believed to have strong holding power.

 

Mr Ku said buyers who made use of the deferred payment scheme before it was scrapped will not be worrying about their buys for several years.

 

But analysts think some speculators who bought high, hoping to make a quick buck from high-end properties in Sentosa Cove, Marina Bay and the Orchard Road area, are now panicking.

 

High-end homes have crossed the $5,000 per sq ft mark – more than double the record price in the last peak in 1996.

 

The days of making quick money from the high-end property market are likely over. ‘The clock is running and there would be some speculators out there who cannot service the loans on their property,’ said one analyst.

 

Even so, speculators do not form a large part of the market, analysts say.

 

With buyers adopting a wait-and- see attitude given the current uncertainty, the market is expected to remain quiet for a while.

 

Source: Straits Times

This grande dame is ready to shine again

This grande dame is ready to shine again

 

We take a peek at newly renovated Tan Chin Tuan Mansion

 

By Radha Basu

  

A COLONIAL-ERA mansion in Cairnhill Road has emerged from a makeover, ready for the next chapter of its history.

 

Four years and $3 million in renovations have turned the Tan Chin Tuan Mansion into a venue for the charitable Tan Chin Tuan Foundation to host events for its partners and beneficiaries.

 

The works have added, atop the old house, a 20-storey condominium, the design for which was conceived by the late banker and philanthropist.

 

The renovations have been completed on time to mark the centenary of the birth of the former OCBC Bank chairman, who died in 2005. The house itself, the family home, fuses colonial architecture and Peranakan influences. The Straits Times was given a preview of the place, now a treasure trove of artefacts linked to Mr Tan’s life.

 

In the chandeliered living-cum-dining room on the ground floor, a 12-seater dining table holds pride of place. It was where he entertained former presidents Benjamin Sheares, Ong Teng Cheong and Wee Kim Wee.

 

The walls in the house are adorned with photographs and memorabilia, including his marriage certificate dated 1926 and a yellowed newspaper clipping announcing his marriage to Helene Wee. More recent artefacts include a hard hat he wore to supervise the construction of the OCBC Centre and his Order of the British Empire medal.

 

Upstairs, his wooden desk sits in an alcove, and on it are a decades-old magnifying glass, an ornate paperweight and a 1926 edition of Webster’s dictionary. His handwritten diaries have also been preserved.

 

The restoration has been a labour of love for the family, said Ms Chew Gek Khim, 46, one of the granddaughters who oversaw the project.

 

Built in the 1920s as the home of entrepreneur and philanthropist Tan Kah Kee, the house was bought by Mr Tan Chin Tuan just before World War II broke out in 1939.

 

When Mr Tan and his family were forced overseas during the Japanese Occupation, the house was taken over by Japanese generals. They gave away all the furniture in the three years they were there from 1942. By the time they left the house, vanquished in the war, all that was left was a wooden chair, now on display.

 

The entire project to a large extent reflects Mr Tan’s ‘philosophy of life’, in that while history always has a place, it cannot hinder progress, explained Ms Chew, who is also deputy chairman of the foundation.

 

Asked for his reaction to the mix of old and new in the look of the place, conservation activist Terence Hong acknowledged that many like him were initially apprehensive about whether the condo would mar the history of the place.

 

He said: ‘In the end, the project turned out beautifully, marrying the old with the new and remaining useful and relevant at the same time.’.

 

Source: Straits Times

Next wave of US housing woes could come from the rich

Next wave of US housing woes could come from the rich

 

At risk are owners who bought too many homes or borrowed too much against them

 

HINSDALE (ILLINOIS) – A HOUSE in the wealthy Chicago suburb of Hinsdale, Illinois, is far beyond the reach of most Americans.

 

Unfortunately, Hinsdale may also now be too expensive even for some of the people who already live there.

 

‘There is a section of the population here that overextended themselves to buy here and then keep up the facade of wealth,’ said Ms Sharon Sodikoff of local real estate agency Prudential Homelife Realty.

 

‘In the next year or so, they will be forced out in dribs and drabs.’

 

With prices of the average home at around US$1.15 million (S$1.64 million), Hinsdale seems a world away from the sub-prime housing crisis, involving modest homes bought by people with spotty credit histories, that may tip the US economy into recession.

 

Even here, however, far from the crisis’ epicentre, high-earners with good credit may be heading for trouble as their adjustable rate mortgages adjust beyond their means, local real estate agents and others say.

 

In a normal housing market, they would be able to sell their property, but now they are stuck.

 

‘The next wave of problems will come from prime borrowers who have bought too many houses or borrowed too much against them,’ noted Mr Michael van Zalingen, the director of home ownership services at the Neighbourhood Housing Services of Chicago. A ‘prime’ borrower is one with a good credit rating.

 

Real estate agents point out that some high-income borrowers have already been forced to sell or leave their homes and more will follow, especially those who used their homes as automated teller machines, withdrawing cash via home equity loans.

 

‘For those who utilised home equity loans for five to 10 years to finance their lifestyle, the chickens are coming home to roost,’ said real estate agent Marki Lemons.

 

There are also signs some lenders are warily eyeing ‘prime’ borrowers.

 

Mr Tom Kelly, a spokesman for Chase Home Lending, a unit of JPMorgan Chase, said the company raised its reserves for possible home-equity loan loss for sub-

 

prime and prime borrowers by US$635 million in the second and third quarters of last year.

 

‘The concern is people who have borrowed a large percentage of the equity in their homes,’ Mr Kelly said.

 

‘Now, the value of their homes is falling and they cannot refinance. Some just stop paying and walk away.’

 

Getting into property during the boom years was easy, with mortgages freely available for no money down.

 

Then came the sub-prime crisis and the credit crunch, slowing the market, and pushing prices down and unsold homes up.

 

In Hinsdale, for instance, the supply of homes on the market rose to more than 17 months in early October from less than six months in January 2006.

 

While it is apparently a buyers’ market, Mr Lawrence Yun, the chief economist at the National Association of Realtors, says high-end borrowers are put off by the high interest rates now applied to so-called jumbo mortgages, those for US$417,000 or more.

 

‘Potential buyers say, ‘No way am I buying at that price’,’ Mr Yun said. ‘If some borrowers can’t get into the market, there are others who can’t sell to get out.’

 

Real estate agents say speculative investors who bought to make a profit are also walking away, as the rents they charge fall behind the mortgage payments as their adjustable-rate mortgages readjust.

 

Unlike sub-prime borrowers, however, wealthy home owners are more likely to try to cut a deal with their lender rather than end up in foreclosure.

 

Alternatively, they can opt for a short sale.

 

Under a short sale agreement, the borrower sells below the mortgage value and the lender writes off the difference. The lender gets less than originally anticipated but is not stuck with a foreclosed property.

 

‘You won’t see many foreclosed homes here because that would involve public embarrassment,’ Prudential Homelife Realty’s Ms Sodikoff said.

 

‘But they will call their realtor and get them to quietly broker a deal to get out of their homes.’

 

REUTERS

 

 

——————————————————————————–

 

NEAR BREAKING POINT

 

‘There is a section of the population here that overextended themselves to buy here and then keep up the facade of wealth. In the next year or so, they will be forced out in dribs and drabs.’

 

MS SHARON SODIKOFF of Prudential Homelife, on residents in the wealthy Chicago suburb of Hinsdale, Illinois

 

TROUBLE AHEAD

 

Real estate agents warn that some high-income borrowers have already been forced to sell or leave their homes and more will follow, especially those who used their homes as ATMs, withdrawing cash via home equity loans.

 

Source: Straits Times

Lie low till next quarter, Credit Suisse tells investors

Lie low till next quarter, Credit Suisse tells investors

 

By Chua Hian Hou

 

THE Singapore stock market will continue its wild swings for the next few months – so keep clear.

 

That was the health warning from Credit Suisse’s head of Asian equity research, Ms Fan Cheuk Wan, who believes the bourse will start to stabilise and head north in the second quarter.

 

She estimates that regional markets will end the year 21 per cent higher than where they are now.

 

She said Asian markets are at an advanced stage of the bull market, where the easy money has been made and where valuations are ‘no longer cheap’.

 

Regional markets have been hammered by non-stop bad news about the sub-prime crisis and United States recession worries over the past few days.

 

This ‘perfect storm’ is the reason why investors fled the market in a panic, resulting in the volatility that has roiled regional bourses, including Singapore’s, said Ms Fan.

 

The good news, though, is that ‘we are now approaching the trough of the market correction’, with at most a ‘single-digit per cent downside for the region’, she said.

 

Ms Fan expects the US subprime crisis and other problems to persist into the second quarter, however, which means ‘no imminent upside’, and so no real incentives for investors to enter the market now.

 

In fact, investors should batten down the hatches and sit tight until the second quarter, which she believes will offer ‘better opportunities’ for bargain-hunting.

 

By then, the full effects of the sub-prime crisis will be clear and the US Federal Reserve will also have outlined its plans for the faltering American economy.

 

Further cuts in US interest rates – inevitable, says Ms Fan – will boost global equity markets, including Singapore’s.

 

Investors will also have a clearer idea if a US recession is imminent, she said.

 

Good picks then, she said, would be ‘market leaders in their respective sectors’ with ‘good fundamentals in their domestic markets’.

 

Ms Fan said companies such as Keppel Corp, DBS Group Holdings and CapitaMall Trust should give investors a ‘good upside potential’.

 

Other picks include firms in ‘environmental protection and alternative energy’, such as Hyflux, or food producers.

 

Ms Fan also warned investors off export-oriented counters, such as semiconductor and technology stocks, especially now.

 

Source: Straits Times

1,098 HDB flats now open for balloting

1,098 HDB flats now open for balloting

 

THE Housing Board yesterday launched a ballot for the sale of 1,098 flats in Bedok, Clementi, Queenstown and Jurong West with demand for public housing staying on the boil.

 

The flats are surplus units from the board’s Selective En bloc Redevelopment Scheme, which relocates residents from ageing blocks to new ones nearby.

 

Such flats are usually highly coveted as they are located in mature estates near transport nodes and amenities.

 

Adding to the demand is the fact that recent hikes in private property prices have pushed more buyers to these government-subsidised flats.

 

Last month, an HDB ballot for 316 surplus flats in the outlying towns of Hougang, Sengkang and Punggol drew an overwhelming 5,147 applications.

 

The Government responded by committing to putting out about 6,000 new flats between last month and June.

 

Its latest sale exercise includes 234 studio apartments for the elderly in Queenstown and Jurong West, at a cost of $54,000 to $89,000 each.

 

There are also 164 three-room flats priced from $180,000 to $266,000, 516 four-room flats going for $282,000 to $400,000 and 184 five-room flats between $400,000 and $520,000.

 

Five unfurnished sample units in Clementi and Queenstown will be open for viewing.

 

While some of the flats are immediately available, others will be ready by 2012.

 

Online applications from potential buyers must be submitted by Feb 6.

 

A computer ballot will determine the queue position of eligible applicants and those shortlisted will be informed in April.

 

Source: Straits Times

Three Allco Reit properties gain $121m in value

Three Allco Reit properties gain $121m in value

 

Their combined value rose 36.8% last year to $1.13b at end-December

 

By UMA SHANKARI

 

ALLCO Commercial Real Estate Investment Trust (Allco Reit) said yesterday that the combined value of three of its property assets has jumped by $120.8 million or 12 per cent since the end of June last year, based on the latest revaluation.

 

The three properties are China Square Central and 55 Market Street in Singapore, and Central Park in Perth. Allco Reit owns the first two properties, and has a 50 per cent stake in the third.

 

This means that the total value of the trust’s stakes in the three properties rose 36.8 per cent or $302.8 million over the full year in 2007. Their combined value at the end of December was $1.13 billion.

 

The Singapore properties were valued by Savills and the Perth property was valued by CB Richard Ellis.

 

‘The most significant increases in this latest round of asset valuations were seen at China Square Central and 55 Market Street in Singapore,’ said Nicholas McGrath, chief executive of Allco Reit. ‘These assets increased in value by 17 per cent and 14 per cent respectively in only six months.’

 

China Square Central, 55 Market Street and Central Park have all achieved significant growth in value since end-June 2007, adding to earlier increases of 15 per cent, 43 per cent and 26 per cent respectively in the first six months of last year.

 

‘The continued improvements to Allco Reit’s underlying asset values are a direct reflection of (the trust’s) asset management strategy, combined with underlying market rental growth across the Singapore and Perth commercial property markets,’ Mr McGrath said.

 

Allco Reit’s share price closed 1.5 cents lower at 80.5 cents yesterday. The trust’s share price has fallen 10.1 per cent since the start of the year.

 

Source: Business Times