Bankruptcies sneak back despite good times

Bankruptcies sneak back despite good times


Situation could worsen if economy slows and people start losing their jobs




(SINGAPORE) Despite full employment and robust economic growth, the number of people facing financial ruin has begun to rise.


After falling from a high in 2004, the number of bankruptcy petitions and orders has begun to flatten and the delinquency rate for credit card holders has started to go up.


Lawyers and those involved in bankruptcy counselling say new bankrupts tend to be younger and are mainly men. Also showing up are parents who acted as guarantors for their children.


While the upward trend is far from alarming as it springs from a very low base, the situation could turn bleaker if the economy slows down and some people lose their jobs.


‘As far as I am aware, 99.9 per cent of the people made bankrupt are holding jobs; they complain that their salary is too low to pay (the debt) and that they have a family to feed,’ said Aaron Chan, Advent Law director.


The economy expanded 7.5 per cent last year and the unemployment rate was 2.1 per cent – a 10-year low. The National Trades Union Congress (NTUC) said retrenchments hit a 14-year-low, while unionised firms paid out the fattest bonuses in 18 years.


Yet people seem to be living beyond their means.


‘When the country is doing well, there’s a feel-good factor and people just want to spend,’ said Mr Chan, who has been a banking litigation lawyer for some 15 years.


He said the weekly list which comes out for bankruptcy hearings includes professionals such as lawyers and doctors.


But these professionals usually pay up at this stage as they would not be allowed to practise if they were made bankrupt, Mr Chan said.


Creditors can petition for a person to be made bankrupt once the debt exceeds $10,000.


Leong Sze Hian, president of the Society of Financial Service Professionals, volunteers at the Official Assignee’s office. He said the number of bankrupts could be even higher as creditors are holding back.


In January this year, there were 292 petitions for bankruptcy and 215 bankruptcy orders were passed. In 2007, the average monthly bankruptcy petitions stood at 268 and the orders at 230, according to the Insolvency & Public Trustee’s Office.


In the works is a debt repayment scheme to help debtors avoid bankruptcy.


Since he began counselling debtors two years ago, Mr Leong said he noticed that a number of new bankrupts seem younger, and are overwhelmingly men.


Bankrupts include those who have problems paying rent for their HDB shops as well as those who cannot pay the bank loans for their HDB homes.


In addition, quite a few are parents who acted as guarantors for the unsecured credit taken out by their children, Mr Leong said.


There was also one case of a man who did not own a car but was bankrupted for his certificate of entitlement (COE) bid.


He had bid $8,000 for the COE but found his application for a car loan rejected by a bank, said Mr Leong. With fees and charges, his debt snowballed to over $10,000, he said.


Credit Bureau (Singapore) Pte Ltd data shows that the number of delinquent credit card holders began rising steadily from July last year.


In December, there were 14,379 delinquent credit card holders representing a delinquency rate of 1.42 per cent against 11,346 or 1.16 per cent in July.


Said Credit Bureau general manager Mark Rowley: ‘I agree that we are seeing some early signs that delinquency is trending upwards although arguably off a low base. The numbers over the next few months will be interesting.’


Credit Bureau’s data also shows that a majority of those having payment problems are between 21 and 44 years old, and men make up almost 70 per cent.


Some 80 per cent have credit cards with at least two banks. In most cases, the delinquent owes less than $5,000.


Source: Business Times

HDB’s 2nd BTO project takes off

HDB’s 2nd BTO project takes off




THE Housing and Development Board launched its second build-to-order (BTO) project yesterday.


Jade Spring @ Yishun (Phase 2) will have 576 flats for sale. With 494 flats launched last month, HDB has made available a total of 1,070 flats so far.


It says five more BTO projects will be launched by June and they will make available 3,430 flats, taking the total number to 4,500 for the first half of 2008.


At the end of the first day of the Jade Spring @ Yishun (Phase 2) launch yesterday, HDB had received 247 applications.


Cushman & Wakefield managing director Donald Han said that demand for BTO flats is expected to remain firm despite volatile economic conditions worldwide. ‘HDB buyers are different from those in the private market,’ he said.


And because there are few launches at the low end of the private residential market, he reckons that that sector is not likely to be affected by new BTO projects.


Mr Han said that while the top price for a four-room flat at Jade Spring is around $250,000, a low-end mass market private home costs at least $500,000. ‘At these prices, the HDB market still has room to grow,’ he said.


Jade Spring will comprise mostly four-room flats, costing $189,000-$253,000 for unit sizes of 92-97 square metres.


Three-room flats will cost $124,000-$141,000 for unit sizes of 67 sq m. Two-room flats will cost $77,000-$97,000 for unit sizes of 47 sq m.


The monthly household income ceilings for purchasing the flats are $2,000 for a two-room unit, $3,000 for three-room and $8,000 for four-room.


ERA Realty Network assistant vice-president Eugene Lim said that the flats should appeal to first-timers and those with lower budgets, as little or no cash is needed to buy them.


He estimates that the median cash-over-valuation (COV) for a four-room Yishun resale flat is about $18,000. Current resale prices of four-room flats of about 20 years old at Yishun Avenue 11 are around $230,000-$260,000.


Mr Lim said that the HDB resale market is still active despite the global economic bad news. ‘Any flat that has a COV of $50,000 and below sells relatively quickly, usually within a month or less.’


Source: Business Times

Jurong West landed plot not awarded

Jurong West landed plot not awarded


THE government yesterday said that it’s not awarding a landed housing parcel in Jurong West – because the bids were too low.


When the tender for the 151,759 square foot site closed this month, there were just two bids. And the higher of the two was a low $11.8 million – or just $77.80 per square foot – in what was taken as a sign of an uncertain property market. That bid, from Boon Keng Development, was significantly below the $200-$250 psf of land area that analysts reckoned the site could fetch.


The other bid came from Sunway Concrete Products, a unit of Malaysia-listed Sunway Holdings. It offered $10.3 million, or $68.10 psf of land area.


Property analysts said then that there was a chance the government would not award the site, as has happened before when the highest bid was too low.


In January, for example, the government decided not to sell a short-term office site at Aljunied because the sole bid was too low. The move followed a string of lower-than-expected offers for state land.


‘The decision is expected on the Jurong site, as the top bid was well below the market rate,’ Cushman & Wakefield managing director Donald Han said yesterday. ‘It would not have been justifiable to award the site, as it would have been a shockwave in terms of market value in that area.’


It is estimated that 50 to 60 landed homes can be built on the 99-year leasehold site in Westwood Avenue.


Source: Business Times

Mapletree Logistics buys two warehouses for $56m

Mapletree Logistics buys two warehouses for $56m


MAPLETREE Logistics Trust (MapletreeLog) is acquiring two warehouses in Singapore for a total consideration of $56 million.


MapletreeLog, through its trustee, HSBC Institutional Trust Services (Singapore) Ltd, has signed two put and call option agreements to acquire the two warehouses from Cougar Holdings Pte Ltd, a wholly owned subsidiary of Menlo Worldwide LLC, the global logistics unit of New York- listed Con-way Inc.


The two properties, located at Boon Lay Way and Benoi Road, cost $48 million and $8 million, respectively. The properties will be leased back to Menlo’s Cougar Express Logistics for an initial term of 10 years with an option to renew the lease for further consecutive periods of five years each.


The acquisitions will be accretive to MapletreeLog’s distribution per unit (DPU). The proforma financial effect of the acquisitions on the DPU for the financial year ended Dec 31, 2007 is an additional 0.13 Singapore cent per unit.


Said Chua Tiow Chye, chief executive officer of Mapletree Logistics Trust Management (MLTM), the manager of MapletreeLog: ‘The properties are well located in established industrial areas and are within close proximity to Jurong Port and the larger Jurong Industrial Estate. . . These accretive assets will add to the trust’s stable core of long-term leases which generate stable returns to our unitholders.’


Menlo and its subsidiaries are also MapletreeLog’s tenants in two of its existing properties and the acquisitions will further strengthen the partnership, Mr Chua added.


The acquisitions are expected to be completed by Q2 2008. MLTM said it is confident that at their completion, MapletreeLog will have sufficient debt capacity to fund the acquisitions wholly by debt. It will explore alternative means of funding should the need arise.


Source: Business Times

Rooftop greening cools Pasir Ris Park

Rooftop greening cools Pasir Ris Park


THE new 2.9-hectare Pasir Ris Park extension, toured by the media yesterday, features plants growing on the roofs of its open interpretive centre and toilet block.


Rooftop vegetation reduces surface and ambient air temperatures by as much as 31 deg C and 4.2 deg C respectively, reducing energy demand for cooling purposes, as highlighted in the 2002 Handbook on Skyrise Greening in Singapore, published by the National Parks Board (NParks) and also available on the NParks website.


While the energy cost savings from greening of accessible roofs are insufficient to offset the accompanying increase in maintenance costs, the handbook found, extensive turfing of inaccessible roofs brings life cycle cost savings of 8.5 per cent. Within 10 years, a green inaccessible roof would save enough in energy costs to cover the initial cost of greening.


Hence, current research focuses on the types of plants that are suitable for inaccessible roofs, said NParks staff.


Source: Business Times

MGPA’s Marina View project to cost $5b

MGPA’s Marina View project to cost $5b


Devt to have over 2.6m sq ft in two towers of more than 40 storeys each




MACQUARIE Global Property Advisors (MGPA) will spend about $2 billion building a commercial complex on two development sites at Marina View that it clinched last year.


With the sites having cost close to $3 billion, the total investment will be around $5 billion.


MGPA bid for the two sites at separate public tenders just three months apart. It paid $1,409 per square foot per plot ratio (ppr) for the first parcel in September 2007 and $952.90 psf ppr for the second in November that year.


The second parcel does come with a requirement to provide a hotel component.


Speaking at the building agreement signing ceremony yesterday, MGPA CEO (Asia Investments) Simon Treacy said that there could be more bargains in the offing here.


‘The next six to nine months will have even better pricing available,’ he said.


Mr Treacy did not give details of future acquisitions here but was bullish on the office sector, where he believes rents can rise between 10 and 25 per cent this year.


MGPA’s Marina View development is expected to have a total gross floor area (GFA) of more than 2.6 million sq ft in two 40-storey-plus towers with a 20-metre-high podium.


According to the conditions of the tender, at least 70 per cent of the GFA of the first site must be developed as office space. The second site must have at least 60 per cent office space.


Also speaking at yesterday’s ceremony was MGPA CEO (Asia Developments) Michael Wilkinson, who revealed that there will be a 250-room luxury hotel. He also said that the retail podium is likely to have a significant number of F&B outlets to support the offices.


While a residential component is allowed, Mr Wilkinson said that this is not likely at the moment. However, he said that the design has not been finalised and MGPA is having ‘extensive discussions’ with the authorities to settle this.


MGPA has invested about $4.5 billion in Singapore over the last 15 months. Other major acquisitions include Temasek Tower, which it bought for $1.04 billion in March 2007.


Source: Business Times

Risk of global financial contagion: IMF

Risk of global financial contagion: IMF


Global financial system could be facing losses of close to US$800b


(WASHINGTON) A mounting global credit crisis could result in financial ‘contagion’ that could wipe US$800 billion of value from the books of US and global financial institutions, a senior International Monetary Fund (IMF) official said on Monday.


Anoop Singh, IMF director for the Western Hemisphere Department, including the US and Latin America, cited a high likelihood of a US recession and said he sees losses from the US sub-prime mortgage market crisis resulting in widening losses for European banks.


‘This is clearly a period of exceptional uncertainty,’ Mr Singh told a conference in Brazil. A copy of his speech was made available here.


‘The distribution of risks for the US outlook is wide and skewed clearly toward the downside, and the probability of additional shocks leading to a US recession is quite high,’ he said.


‘All in all, current estimates suggest that the global financial system could be facing losses of close to US$800 billion spread across banks, insurance companies, hedge funds and pension funds, although some analysts are projecting much higher losses,’ he said.


Mr Singh said the US housing crisis was starting to spread beyond the sub- prime mortgage market to other real estate areas.


He said the US housing crisis was the ‘ground zero’ for the current financial market turmoil, with an asset price bubble in the process of deflating, adding that it will likely be ‘a protracted process’.


‘We know from past experiences that output effects from housing price bursts last about twice as long as those from, say, a bursting equity price bubble,’ he said.


There is growing concern that housing prices abroad might ‘deflate abruptly’, with potential financial implications, Mr Singh said.


‘At this point, we expect banks’ sub-prime-related losses to mount further to around US$230 billion worldwide, with about half of that amount residing in the US banking system and the remainder mostly in Europe,’ he said.


An additional US$100 billion in losses may arise from bank holdings of other financial assets, including commercial mortgages and credit card debts, he said.


‘However, losses could mount much further as an economic downturn brings with it a widening deterioration of credit across a broad range of household and corporate credit,’ Mr Singh said.


He spoke a day after the US Federal Reserve announced emergency measures to stem the fast-spreading credit market seizure, pouring funds into cash- starved Wall Street firms.


The Fed cut the discount rate it charges on direct loans to banks to 3.25 per cent from 3.5 per cent and set up a new programme to provide cash to a wider range of big financial firms previously unable to borrow directly from the central bank.


Turning to Latin America, Mr Singh said the region was ‘holding up pretty well’ amid the market turmoil, with no substantial exposure to US sub-prime-related credit products. – Reuters


Source: Business Times

It all depends on age for Gillman Heights

It all depends on age for Gillman Heights


Wednesday • March 19, 2008


Teo Xuanwei



THE new laws regulating en bloc sales that kicked in last October may mean controversial collective sale tangles are unlikely to arise again.


But for Gillman Heights, where the sale process started before the rules were tweaked, the 22 minority owners’ attempt to overturn the privatised ex-HUDC estate’s sale now hinges on how the High Court rules the property’s age should be calculated.


The last day of the appeal yesterday saw the lawyers representing the different parties locking horns — mainly over how old the sprawling estate in Alexandra Road is.


Senior counsel (SC) Andre Yeap, who is acting for the sales committee, argued that the estate’s age be pegged to its date of completion in 1984. He said that although a Certificate of Strata Completion (CSC) was issued to Gillman Heights in 2002, it does not mean that “time runs afresh”.


SC Michael Hwang, who is acting for the minority owners, noted that where a CSC or temporary occupation permit was available — like in the Gillman Heights case — the property’s age must rest upon it. He added that a check with the Building and Construction Authority had showed that the 607-unit property’s status was classified as “new erections” as of Oct 23, 2002. All the structures in the estate were issued with CSCs, he emphasized, and not just for the additions to the common areas.


To ignore such certification would cause “huge uncertainty in the market”, he told the court. The approximately $20,000 each owner coughed up when the development underwent conversion into a private property was an investment, he added.


Another bone of contention was the conduct of the sales committee. Mr Hwang said regulations stipulate that the committee’s mandate to sell a property expires after one year from the day the first owner signs on the collective sales agreement.


It is “commonsensical” that the committee does not have “absolute power” to sell at any price at any time, he added.


While they were on different sides of the tussle, the minority owners seeking to scupper the deal and their opposite numbers, sat side-by-side in the packed gallery, without any signs of tension between them.


The only way to tell their allegiance: The minority owners wore T-shirts bearing the words “I love Gillman Heights“, like they had done in the previous days of hearing.


Justice Choo Han Teck will deliver his judgment at a later date.


Source: TodayOnline

Macquarie still optimistic over real estate

Macquarie still optimistic over real estate


Wednesday • March 19, 2008


Esther Fung



Even as some market observers are saying that the Singapore property market is weakening, Macquarie Global Property Advisers (MGPA) is still optimistic and sees value in the office, retail and residential sectors.


“There are still some good bargains around, and in the next 6 to 9 months, there might be better pricing value,” said MGPA’s chief executive (Asia investments) Simon Treacy at the signing of the building agreement for the second land parcel at Marina View. The private equity real estate firm won the tender for both Marina View sites last year.


“When completed in 2012, MGPA’s Marina View development will yield about 200,000 sq m of office facilities,” said Ms Grace Fu, Minister of State for National Development. “It will add to the critical mass of prime office space in our CBD and offer more location choices for business and financial services which want to grow their operations.” MGPA said that the development (picture) will include about 250 five-star hotel rooms, and is now in talks with some hotels for a tie-up.


“It will be the first office complex in Marina Bay to be integrated with a luxury hotel,” said Ms Fu. Investors find Singapore attractive, with foreign direct investments to Singapore increasing to $14 billion last year from $6.7 billion in 2006, she added.


“There’s still a lot of latent demand for office space, and there’s limited supply in the next couple of years,” said Mr Treacy, adding that Singapore would follow Hong Kong‘s pace where new office building space is taken up very quickly.


He expects office rents in Singapore to rise 10 to 25 per cent this year.


“This reflects strong regional growth in Asia and solid demand for international grade office space. So we’re comfortable and we still see growth in the medium term in Singapore,” said Mr Treacy.


Source: TodayOnline

HDB launches 576-unit Yishun project

HDB launches 576-unit Yishun project


By Jessica Cheam


THE Housing Board yesterday launched 576 build-to-order (BTO) flats in Yishun for sale and also named the sites of upcoming sales projects – a first for the board.


Five more BTO launches – two each in Punggol and Sengkang and one in Woodlands – will be held from now until June. Flats under the scheme are built only when a certain demand is reached.


The HDB also announced yesterday that the application period for all BTO and balloting sales exercises has been cut from three weeks to two with immediate effect.


This is because the ‘vast majority of applications are submitted within two weeks of a launch’, it said.


HDB’s new launch – Jade Spring @ Yishun Phase 2 – is the second BTO sale this year.


It offers 36 two-room units, priced from $77,000 to $97,000, and 72 three-roomers that will cost between $124,000 and $141,000.


There are also 468 four-room flats, which will go from $189,000 to $253,000.


By 5pm yesterday, the HDB’s website had recorded 247 applications. Names can be lodged until March 31.


The project is at the junction of Yishun Ring Road and Yishun Avenue 11, and is near Yishun town centre, the MRT station and the upcoming Khoo Teck Puat Hospital.


It is also not far from Lower Seletar Reservoir, which the national water agency PUB has singled out for transformation under its Active, Beautiful, Clean Waters programme.


Last year, the HDB also announced plans to rejuvenate Yishun with a host of new housing, commercial and recreational developments.


Plans include a revamp of the bus interchange, which will be integrated with a shopping complex and new homes.


An exhibition of Jade Spring @ Yishun Phase 2 can be viewed at HDB Hub’s Habitat Forum in Toa Payoh.


The latest launch and the five scheduled over the next three months are in line with HDB’s previous announcement to launch 4,500 BTO flats in the first half of this year to meet the recent high demand for public homes.


Source: Straits Times