Curtin Uni to open S’pore campus

Curtin Uni to open S’pore campus


THE abrupt exit of the University of New South Wales (UNSW) last June is not stopping other Australian universities from venturing here.


By Karen Wong



27 March 2008


THE abrupt exit of the University of New South Wales (UNSW) last June is not stopping other Australian universities from venturing here.


The New Paper understands that Perth‘s Curtin University of Technology will be setting up a campus here.


And it has already snagged a site for it – the former ITE Balestier campus and the former Singapore Civil Defence Force Kim Keat camp.


Sources told The New Paper that Navitas Ltd, an Australian-listed education service provider, has tied up with Curtin to manage its campus here.


The New Paper understands that earlier this month, Navitas was awarded the site at 90 and 92 Jalan Rajah.


The Singapore Land Authority, which manages and leases state land, said the site, which has an area of about 21,600 sq m, consists of two four-storey blocks, two two-storey blocks and two single-storey blocks of classrooms, lecture halls and labs.


It also has a fitness block and a number of standalone storerooms.


The tenure of the lease is up to 2017.


Going by the size of the site, it appears that Curtin is poised to have a major presence here.


It will be the university’s second Asian campus. The first, established in Sarawak in partnership with the state government, was completed in 2002.


It is a full campus, offering diploma and degree programmes in subjects ranging from commerce to engineering. It also offers four post-graduate programmes, including a Master of Business Administration and Doctor of Philosophy (Engineering).


Besides its Perth base, Curtin also has a campus in Sydney.


The New Paper understands that the university will have a full campus here, offering a wide range of subjects and programmes.


The university is well known to Singaporeans for its business school and accountancy programme.


Subjects available at Curtin’s main campus include journalism, health sciences, information systems, engineering, pharmacy and psychology.


It is not clear at this stage when the campus here will be ready, but it could be as soon as late this year.


The New Paper also understands that Navitas, which offers a range of educational services for students, including university programmes and language training, will help run the campus while Curtin will manage the academic programmes.


Navitas, formerly known as IBT Education, has a market capitalisation of over A$650million ($820m).


It also offers student recruitment services for universities and other institutions in Australia, Canada, China, the United Kingdom and the United States.


A senior Navitas official is expected to chair a press conference later today, with more details about the venture.


The setting-up of Curtin’s campus here is another feather in a cap for Singapore in its efforts to become an education hub.


So far, under the Global Schoolhouse initiative, Singapore has attracted more than 15 internationally-renowned institutions, including the University of Chicago Graduate School of Business, SP Jain Centre of Management, Insead and New York University‘s Tisch School of the Arts.


When contacted yesterday for details about Curtin’s campus here, the Economic Development Board said it would not be able to comment until after the official announcement.


Source: Business Times

Not quite the Great Depression yet, say analysts

Not quite the Great Depression yet, say analysts


Some signs point to a coming turn in the crisis, despite ‘hysterical’ debate


(LONDON) Maybe, just maybe, the financial world is not about to implode.


Such is the level of disaster mongering surrounding the latest phase of the eight-month-old credit crisis that you could be forgiven for thinking that we will all soon be hoarding food and reverting to a barter economy.


Some commentary has invoked a systemic collapse akin to 1929’s stock market crash and the Great Depression that followed.


Let’s put that in context. US historians estimate that in the first 10 months of 1930 some 744 US banks failed, rising to a total of 9,000 by the end of the 1930s. Savers lost the equivalent in today’s money of US$140 billion in deposits by 1933. US unemployment rose to 25 per cent from 4 per cent in 1929 and prices and incomes fell by 20-50 per cent over the same period.


The debate, as German government spokesman Thomas Steg noted this week, has become ‘hysterical’. This crisis is serious, for sure. But there is a good chance it is not 1929, even if the US Federal Reserve has adopted Depression-era tactics to address it.


‘To justify a repeat of last week, you really have to start believing this is going to be 1929 again,’ said Jim O’Neill, chief global economist at Goldman Sachs. ‘With the Fed moving so quickly, I think that is unlikely.’


But with investors already positioning for a ‘worst case’ scenario, there is a chance of a large pendulum swing.


Last week, a survey by Merrill Lynch showed that a majority of 193 fund managers were overweight cash in March, signalling extreme caution. No coincidence then that three-month US Treasury bill yields are at their lowest since the 1950s, at less than one per cent. Or that safe-haven gold had topped US$1,000 an ounce before a violent reversal late last week that may itself signal a turn.


‘People are one-way; they’ve got the cash; they believe equities are cheap,’ said Merrill consultant David Bowers. ‘They just need a catalyst to know when it is safe to go back into the markets.’


Whatever the catalyst for a turn, it will first need to offer evidence that the problem is not getting any worse.


The credit crisis, rooted in the US real estate bust, is now essentially one of bank liquidity and solvency. The problem is lack of confidence. Visibility is near zero as markets fail to provide adequate pricing for mortgage assets and securities.


The only burst of clarity tends to happen at the end of each quarter when accounting rules force banks to report asset values on their books. And as they write down assets where market prices are impossible to find, the banks struggle to raise cash to meet capital adequacy rules. This is despite the fact that many of these assets are in suspended animation rather than worthless – many will still pay out over the life of the loans.


The coincident hoarding and searching for cash in the final weeks of each quarter leaves the weakest exposed and it’s no surprise that stricken UK lender Northern Rock and US investment house Bear Stearns were forced to go cap in hand to their central banks in mid-September and mid-March.


With only volatile derivative prices or bespoke pricing models to go by, conservative accounting has led to huge writedowns, dents to bank capital ratios and a rationing of lending that we now know as the credit crunch.


So what could be the circuit breaker? First, bankers and investors need to be able to see some timescale for the crisis. Otherwise they will continue to hunker down in the safe havens of cash and gold and perpetuate the cycle.


One important development this month – drowned out by panic surrounding the Bear Stearns rescue – was that credit rating firm Standard & Poors said that the end was in sight for writedowns of the sub-prime mortgage assets that sparked the crisis.


Putting total writedowns at some US$285 billion, it said that the banking sector had already written off the majority of its distressed assets and more than US$150 billion was already declared. S&P also emphasised that some sub-prime mortgage writedowns are larger than any reasonable estimate of actual losses. This raises the prospect that when the mortgage market normalises, banks may be able to add ‘writebacks’ onto quarterly results\. \– Reuters


Source: Business Times

Rising tide of foreigners snapping up S’pore property

Rising tide of foreigners snapping up S’pore property


S’poreans buying more private homes but their share is still falling as foreigners outpace them




(SINGAPORE) Take a walk down some of the poshest parts of Singapore and your eyes will confirm precisely what the numbers say. With its immigration-friendly policies and its growing attraction for wealthy individuals across the world, Singapore is seeing more foreigners than ever before parking their funds in private property here – especially in the Core Central Region (CCR).


Singaporeans, too, are buying more private property but, in relative terms, their share is dwindling because of the foreign influx.


Result: From a 77 per cent share in the purchases of private apartments and condo units here in 2000, Singaporeans have seen their slice drop to 63 per cent in 2007, according to a study by Jones Lang LaSalle. This is their lowest share since 1995, which is as far back as the caveats captured by Urban Redevelopment Authority’s Realis system go.


Conversely, foreigners (including permanent residents) accounted for 29 per cent of non-landed private homes purchased here last year – nearly double their 16 per cent share seven years earlier and also their highest ever.


Companies account for the remaining purchases.


Market watchers expect the trend to continue in the mid- to long-term. ‘We need the external talent to support Singapore‘s economic growth in the long term, as the citizen population has not been replacing itself sufficiently,’ says JLL‘s head of research (SE Asia) Chua Yang Liang.


JLL‘s study shows the trend of declining ratio of Singaporeans among non-landed private home buyers was most apparent in CCR – which has been a hotbed of purchases by foreign investors.


Here, Singaporeans accounted for 47 per cent or less than half the caveats lodged for the purchase of non-landed private homes last year, while foreigners (including PRs) had a 41 per cent share, nearly double their 21 per cent share back in 2000, according to Jones Lang LaSalle’s analysis.


Foreigners who are not PRs have shot up the buying charts. They picked up 26 per cent of non-landed homes that changed hands in CCR last year, compared to their 11 per cent share seven years earlier. CCR includes the prime districts 9,10 and 11, Downtown Core location and Sentosa Cove.


DTZ executive director Ong Choon Fah likens the luxury residential sector in CCR to Central London, with a high proportion of foreign ownership. ‘We’ll have to accept that Singapore will be open to international competition, with funds and high net-worth individuals coming in. People who cannot afford to live in these areas will have to find alternative locations,’ Mrs Ong says.


JLL‘s study showed that even in the Outside Central Region (which covers suburban locations and is a realm dominated by typical Singaporean home upgraders), the share of foreign buyers (including PRs) went up to 22 per cent last year from 13 per cent in 2000.


In the Rest of Central Region, which covers the mid-tier market, foreigners’ (including PRs’) share increased from 18 per cent in 2000 to 29 per cent in 2007. The percentage of non-landed homes bought by Singaporeans in the area fell from 74 per cent in 2000 to 61 per cent last year.


Jones Lang LaSalle analysis covered caveats lodged for the purchase of non-landed private homes in both primary and secondary markets (including subsales).


Overall, the absolute number of such properties purchased by all categories of buyers has increased over seven years. The total caveats lodged for purchases of apartments/condos more than tripled, from 9,347 in 2000 to 30,576 last year. Even though Singaporeans bought more than they did in 2000, their share fell as purchases by foreigners saw higher percentage gains.


Islandwide, the number of private apartments/con- dos bought by Singaporeans jumped 165 per cent from 7,225 units in 2000 to 19,154 units last year.


Over the same period, the number of private apartments/condos bought by foreigners (counting PRs as well) leapt 496 per cent from 1,491 units in 2000 to 8,884 units in 2007.


The increase was due partly to the influx of foreign talent into Singapore. ‘As birth rate of the citizen population is below replacement level, in-migration has been necessary to sustain economic growth. As at end-2007, Singapore‘s total population stood at 4.588 million, with well over a million foreigners. This is a 33 per cent increase from the 750,000 foreigners as at-end 2000,’ JLL says.


Source: Business Times

This mall offers a platform for artists

This mall offers a platform for artists




IN these days when malls tend to focus on offering the biggest and best international brands, here’s one that has decided to focus on arts and entertainment – and provide a platform for local artists. Iluma, in the ‘arts and heritage’ district at Bugis, is branding itself an ‘Urban Entertainment Centre’ by dedicating about 60 per cent of its space to arts and entertainment.


‘Our plan is to incorporate arts and cultural activities into Iluma’s overall space for a distinct retail experience unique in Singapore,’ says Han Minli, a director of Jack Investment, a private local property development and investment company that focuses on niche, creative and targeted real estate projects and developments.


Various spaces in the six-storey mall have been designated for dual commercial, performing and exhibition use – among them a flexible 800 sq m ‘black box’ or open space on the rooftop for performances that can cater to some 400 people.


There is also an 814 sq m indoor events plaza and a 1,247 sq m outdoor civic plaza. ‘It’s about providing an alternative, independent platform with greater commercial exposure for the artists,’ says Ms Han. The company’s support will include concessionary venue rentals or even full venue sponsorship.


Iluma’s biggest entertainment component will be an eight-hall cinema with 1,400 seats, called Filmgarde. Located on the fifth floor, it aims to bring back the ‘glamour’ of movie-going, with gala premieres planned.


The retail element of the mall will be spread out between floors one to three, and the focus will be on niche quality local and foreign brands, says Ms Han.


Iluma had its trade launch last night, at Red Dot Museum. ‘We’d be open to promoting local designers,’ says Ms Han.


The fourth storey will have multiple themed restaurants.


Shoppers can expect a designer architectural ambience in the mall, with a light-and-media facade, as Iluma has been designed by award-winning architectural company Woha.


Ms Han says that Jack Investment wants to add a twist to the conventional retail environment, and challenge boundaries as to what a shopping mall should be like. ‘We hope to make every trip to iluma a playful and inspiring experience for all our shoppers and visitors alike,’ she notes.


Jack Investment also owns Leisure Park Kallang, West Coast Recreation Centre, Woodlands Point and 600@Toa Payoh.


The $160 million Illuma mall is expected to open by the year-end.


Source: Business Times

Last year’s boom in investment sales likely to continue in ’08

Last year’s boom in investment sales likely to continue in ’08




IT was an eventful 2007 for the Singapore property investment sales market, which hit a record $55.29 billion in volume of transactions. This was 81 per cent higher than the previous record of $30.59 billion in 2006. The robust momentum in the investment market was largely driven by active acquisition of development sites by developers in both the private and public sectors. The office sector was also very active.


The investment market was exceptionally active last year for the following reasons:


·  A reversal of the ‘perfect storm’ – a combination of factors that allowed Singapore‘s property market to hit the sweet spot.


·  Strong economic growth of 7.7 per cent in 2007.


·  Office and residential market property booms.


·  Strong interest from foreign real estate investors, both corporate and individuals.


·  Emergence of Singapore as a service centre hub for Asia, for example private banking, back offices, medical centre and education.


·  Feel-good factors such as the Formula One and integrated resorts.


The private sector investment sales market took the lead in 2007, accounting for 79 per cent of total investment sales or $43.63 billion. Public sector sales contributed the remaining 21 per cent or $11.66 billion.


Altogether, 39 government sites were bought by developers during the year, made up of three ‘white’ sites, 12 residential sites, eight commercial sites, six hotel sites and 10 industrial sites.


In addition, five residential sites at Sentosa Cove were sold for a total of $1.11 billion in 2007.


Significant public land sales in 2007 included a prime ‘white’ site at Marina View (Land Parcel A), which was awarded to Macquarie Global Property Advisors (MGPA) for $2.02 billion, and a commercial site at Beach Road, which was sold to a consortium comprising City Developments, the Istithmar Group and the Elad Group for $1.69 billion.


By sector, the residential sector took the lead in investment sales in 2007. Total residential investment sales amounted to $34.43 billion in 2007, representing 62 per cent of total investment sales and an increase of 118 per cent year on year.


A total of 116 collective sales were transacted in 2007, generating investment sales of $13.64 billion, exceeding the $8.2 billion from a total of 79 collective sales concluded in 2006 and is the highest ever.


Interestingly, many, including a number of overseas institutions and individuals, were observed to have purchased bulk apartments in residential projects before or after each project was officially launched for sale.


There was the purchase of 16 units at The Orchard Residences by a Thai investor for $135 million and a fund linked to MGPA acquired 162 units at The Cascadia for a total of $280.36 million. Also, a joint venture between US-based Wachovia Group and City Developments acquired 44 units at Cliveden at Grange for $432.43 million.


Investment activity in the office sector remained strong throughout the year, with increasing foreign investor participation, supported by strong market fundamentals.


Total office investment sales generated $14.19 billion worth of sales or 26 per cent of the year’s total investment sales. This was nearly triple the $4.79 billion recorded in 2006. On the back of an upbeat office market, prime office properties continued to be highly sought after by Reits and foreign funds as they expanded their investment reach in Singapore.


About $4.86 billion worth of private en bloc office buildings and strata-titled office properties was acquired by these investors which in turn gave them a 54 per cent share of the $8.97 billion in total private major office transactions in 2007. The most significant transaction was the acquisition of Temasek Tower by MGPA at $1.04 billion.


Other notable office sales included the sale of Chevron House to a US fund for $730 million and the sale of 78 Shenton Way to Commerz Grundbesitz Investmentgesellschaft (CGI), a German fund, for $650.78 million. The deal was CGI‘s first foray into the Singapore property market.


Another German fund, SEB Asset Management, displayed strong interest in office properties by acquiring the SIA Building, 12 floors at Springleaf Tower and 10 floors in 79 Anson Road for a total of $965.91 million in 2007.


In addition, New Star Asset Management, a UK fund, acquired Parakou Building for $128 million and One Phillip Street for $99.02 million.


Reit-related office sales in 2007 included Keypoint at Beach Road which was acquired by Allco Commercial Reit for $370 million, inclusive of income support of up to $10.5 million for two years to be provided by the vendor. Both Keppel Land and Cheung Kong Holdings divested their one-third stakes in One Raffles Quay to K-Reit and Suntec Reit respectively, for $941.5 million each.


Looking ahead, strong office demand and potential for further rental escalation will lead to more buying of quality office properties in 2008. The sustained influx of foreign investors should continue to lead to brisk activity in the office investment market and provide strong support to prices.


Despite some volatility resulting from the global credit crunch and the slowing down of the US economy, investment sentiment will remain positive albeit a little cautious in 2008, due to the healthy economic forecast for Singapore.


Mounting inflationary pressure, the divergence of the weakening US dollar, the high level of liquidity in the investment market and the perception of promising returns have combined to make Singapore real estate an attractive investment alternative.


Investment activity in the office sector is likely to continue to outperform other property sectors given the limited supply coming on stream in the short term.


Foreign funds and Reit-related parties will also continue to lend support to the investment market, showing keen interest particularly in offices, retail and industrial assets.


The writer is executive director, investment properties, at CB Richard Ellis


Source: Business Times

Luxury home prices to fall 32% by 2010: Nomura

Luxury home prices to fall 32% by 2010: Nomura


It says sector has risen too fast relative to rental expectations




TAKING a bearish stance on Singapore‘s residential sector, Nomura Research expects luxury home prices to slide a staggering 32.3 per cent from their 2007 peak between now and 2010.


Average prices in the luxury segment will fall 16.9 per cent in 2008, 10.3 per cent in 2009 and 9.3 per cent in 2010 as rental growth slows and yields are reappraised, Nomura says in a report.


Luxury residential prices have risen too fast relative to rental expectations, the report says.


‘Sentiment in the market has deteriorated rapidly – asset prices look to have fallen by about 5 per cent over the first two months of the year, with falls of up to 15 per cent in some non-prime locations,’ Nomura analysts Tony Darwell and Daniel Raats say.


‘We see asset prices being driven lower by marginal speculative sellers amid low transaction volumes and higher unsold pre-sale inventories.’


These factors will add up to a major correction – but not a crash – with a 2010 average price of $1,847 per square foot, marginally higher than $1,811 psf in the 1996 peak and 22.4 per cent above the 2001 peak of $1,508 psf. The mass market will not be immune from falling prices amid rising new supply, Nomura believes. ‘Mass residential prices appear on a firmer footing, supported by rental growth and prevailing yields,’ its analysts say.


‘However, the advent of new supply and the resultant increase in rental availability in prime locations is likely to see demand that was once displaced to ‘non-core mass market’ locations returning to prime districts, hurting non-core rents and ultimately mass market prices.’


As a result, mass residential prices will remain flat in 2008, climbing just 0.5 per cent, Nomura believes. And as new supply is completed in the prime districts, it expects prices to fall 10.3 per cent in 2009 and 10.1 per cent in 2010 – a total fall of some 19.4 per cent from the 2008 peak.


In view of this, the firm is maintaining its bearish stance on Singapore residential property and says the market will move swiftly from a ‘state of denial’ to the realities on the ground.


Residential rents are likely to remain firm in the short term, given the low vacancy rate, Nomura reckons. But rising new supply is likely to cap rental gains from the second half of this year. Nomura forecasts that the vacancy rate will rise from 5.7 per cent at end-2007 to 8.2 per cent at end-2010.


Average rents are expected to peak in 2008, rising five per cent year-on-year to $3.64 psf per month, after rises of 14.1 per cent year-on-year in 2006 and 41.2 per cent year-on-year in 2007, Nomura says. But with supply on the rise, rents will ease 10.3 per cent year-on-year in 2009 and 15.7 per cent year-on-year in 2010.


Source: Business Times

Church puts up Telok Kurau site for tender sale

Church puts up Telok Kurau site for tender sale


Marketing agent CBRE pegs guide price at $40m


THE Presbyterian Church in Singapore has put up for sale a large 9,445 square metre (101,662 square foot) site in the Telok Kurau area.


The church said in a statement yesterday that the sale by tender is part of its strategy to unlock the value of selected properties to support the financial needs of the church, as well as its missions and school ministries.


CB Richard Ellis has been appointed marketing agent for the site which is at 116 Lorong J, Telok Kurau and 119 Lorong K, Telok Kurau. The legal owner is the Trustees of the Presbyterian Church in Singapore Registered.


The Urban Redevelopment Authority has granted an Outline Permission for the construction of a five-storey condominium development with a plot ratio of 1.4.


The development site is located a short drive away from Parkway Parade, East Coast Park and education institutions such as Tao Nan School (Primary) and Victoria Junior College.


Developers have the option to purchase the site with a leasehold tenure of 105 years or 999 years commencing Jan 26, 1939.


CBRE pegged the guide price at $40 million or about $607 per square foot per plot ratio.


Development charge is estimated at $46.44 million for a condominium development.


Under the Master Plan 2003, the site is zoned civic and community institution. Other potential uses are strata landed housing development or civic, community and cultural development. These uses incur a lower development charge.


Potential uses will, however, be subject to evaluation by the competent authority.


But for a condominium development, the developer can build about 118 units assuming an average size of 1,200 square feet each. The tender exercise closes at 3 pm on April 30, 2008.


Source: Business Times

Pramerica makes $800m top bid for Serangoon site

Pramerica makes $800m top bid for Serangoon site


Breakeven cost for full retail development under $2,000 psf: CEO




(SINGAPORE) Entities linked to fund manager Pramerica Real Estate Investors (Asia) placed the top bid of $800.9 million or $850 per square foot of potential gross floor area for a plum ‘white’ site above Serangoon MRT Station.


Pramerica Asia chief executive Victoria Sharpe told BT that the group is planning a full-retail development on the site, and that its breakeven cost would be ‘slightly below $2,000 per square foot (psf)’ of net lettable area.


Based on this estimate, analysts reckon that Pramerica Asia’s total investment in the development would be around $1.3 billion.


Suburban malls in Singapore are currently valued at about $1,800-2,000 psf.


The tender for the site at Serangoon Central, conducted by the Land Transport Authority, attracted six bids.


Pramerica Asia’s bid was 10 per cent higher than the next highest offer of $727 million or $772 psf per plot ratio (ppr), by a unit of Australia‘s Lend Lease Group.


‘We’re an experienced retail player in Singapore and we’re very pleased with the outcome today. This is a site in a premier location, integrated with the MRT stations,’ Ms Sharpe said.


The 269,180 sq ft plot is above both the existing Serangoon North East Line station and the Serangoon Circle Line station which will open next year.


The plot is expected to be developed into a sizeable mall with a net lettable area of about 650,000 sq ft. This would be similar to Parkway Parade and IMM.


‘The proposed mall’s location at a strategic intersection of the present North East Line and the future Circle Line, as well as its size, will allow the centre to not only tap into the existing traffic from Serangoon, Ang Mo Kio, Hougang and Sengkang but will probably be a major magnet for shoppers living beyond these immediate housing estates,’ CB Richard Ellis executive director Li Hiaw Ho said.


Suburban malls in Singapore are currently valued at about $1,800-2,000 psf.


‘Assuming an average overall gross monthly retail rental of about $12-13 psf that is achievable for a retail centre in this location, the developers could look forward to a net income yield of about 5.5 per cent on a stabilised basis,’ he added.


Ms Sharpe said that the asset is likely to be held by several funds managed by Pramerica Asia including its pan-Asian funds – like the Asia Property Investment Fund and possibly its Asian Retail Mall Fund (ARMF) series.


Gold Ridge Pte Ltd, the entity that Pramerica used to bid at yesterday’s tender, is owned by ASPF II (Mauritius) Ltd and Yunnan Gold (Mauritius) Ltd.


ARMF I owns four malls in SingaporeTiong Bahru Plaza, White Sands in Pasir Ris, Century Square in Tampines and Hougang Mall – while ARMF II owns Liang Court and is also developing the Tampines 1 mall.


The other parties which bid for the Serangoon Central site were a unit of Frasers Centrepoint, which bid about $750 psf ppr; a joint venture involving the trustee for CapitaMall Trust, NTUC Income Insurance Co-op and NTUC FairPrice Co-op ($702 psf ppr); a tie-up between City Developments, Hong Leong Holdings and TID ($426 psf ppr); and Peak Properties ($228 psf ppr).


The plot had been expected to draw top bids of about $600-700 psf ppr. The ‘white’ site can be developed into any combination of the following uses: commercial, hotel, residential, and sports and recreational. But the ‘highest and best use’ for the property is retail, property consultants say.


Separately, the Urban Redevelopment Authority yesterday made available for application two 99-year leasehold reserve list sites – a hotel plot at the corner of Clemenceau Avenue and Havelock Road, and a private condo site at Upper Changi Road North/Flora Drive, next to Edelweiss Park Condo.


Mr Li estimates that the hotel site could be worth around $700-750 psf ppr, based on the $805 psf ppr and $762 psf ppr prices that two 99-year hotel sites at Upper Pickering Street and New Market Street/Merchant Road respectively fetched last October. ‘The hotel sector is bursting at the seams but it can be hard getting funding because of the credit squeeze,’ he said. Knight Frank director Nicholas Mak’s estimate of the site’s value is slightly lower, at $600-650 psf ppr. The Upper Changi condo plot is expected to fetch about $180-250 psf ppr, property consultants said.


Source: Business Times

Foreigner factor in property here to stay

Foreigner factor in property here to stay


Rising rents, influx of foreign talent set to spur demand for homes, say analysts




THE attraction to foreigners of buying a non-landed home in Singapore isn’t expected to wane in the mid- to longer-term, say property experts.


Jones Lang LaSalle’s head of research (SE Asia) Chua Yang Liang expects the ratio of foreign buying to be maintained in the short term – because of sub-prime uncertainty – but to increase moderately in the medium to longer term.


‘A key factor is that residential rents have moved up quite a fair bit, and the low interest rate environment will encourage more foreigners and PRs (living here) to consider taking up home ownership,’ he added. This, of course, is assuming that they can get loans.


Another factor that will contribute to the trend is the government’s policy of encouraging more immigration into Singapore to power the Republic’s economic growth, say market watchers.


Knight Frank executive director (residential) Peter Ow notes that non-PR foreign investors were last year a major buying force especially in the Core Central Region (CCR), drawn by the story of Singapore’s transformation into a global city and its ambitions to be a hub in many fields – including financial, healthcare, education, R&D.


‘The implication is that Singapore‘s property prices, especially in CCR, will be more affected by events in the rest of the world such as the sub-prime crisis which is now unfolding.


‘But that’s not necessarily a bad thing. If the situation worsens overseas and international investors view Singapore as a safe haven, that could draw more foreign funds to the local property market, especially in the CCR,’ Mr Ow reckons.


‘Increasingly, we may see more foreigners who will be able to afford properties in CCR. That also explains why some high-end residential developers are feeling pretty confident that prices will not slide in the luxury tier, as demand is being supported by foreign investors looking for a place to park their monies,’ Mr Ow said.


A 12 percentage-point slide in Singaporean buyers’ share of private apartments/condo purchases in the Outside Central Region – which covers mass-market suburban locations, the staple of Singaporean upgraders – between 2000 and 2007 revealed in JLL‘s study may have implications on that perpetual Singaporean dream – of upgrading to a private condo.


‘The authorities may have to ramp up supply of the high-end of public housing, like the Design, Build and Sell Scheme (DBSS), and executive condos (ECs) to cater to local home buyers,’ Mr Ow suggests.


ECs are condominium housing that have resale and other restrictions in the first 10 years, while DBSS are public housing flats designed, built and sold by private sector developers.


DTZ executive director Ong Choon Fah also says these housing types will help meet the aspirations of Singaporeans who feel priced out of private housing. ‘There’s a right product for everybody. We must understand that in a global economy, there is open competition. We must embrace meritocracy. Anybody can buy the product if they can pay. To survive, Singapore must keep attracting the best.’


Source: Business Times

‘False floors’ just make credit fallout more painful

‘False floors’ just make credit fallout more painful





PICTURE a rubber ball falling from a high rooftop. It rebounds quite sharply upon first impact with the ground and then bounces several times more before finally coming to rest. Should the ball strike some ‘false floor’ on the way down, there may be a few more bounces involved.


This roughly analogises what is happening in financial markets now in the wake of the sub-prime mortgage crisis and at the moment we are in the second bounce, following the first one late last year.


Some commentators are asking whether this is a good time to be getting back into markets, after the panic and mayhem of last week. But it is no more likely that we have reached the bottom than for our imaginary rubber ball to suddenly defy gravity and come to rest in mid-air. There are more steep falls to come (with smaller bounce-backs each time) before we hit bottom.


If this seems unduly gloomy, consider how the edifice from which the ball is falling came to be so high. The foundations were jacked up by massive infusions of central bank cash into the global banking system at the time of the stock market crash in 1987 (the worst to hit Wall Street since 1929); the Long Term Capital Management hedge fund collapse a year later, and the IT bubble burst in 2001 (not to mention during the emerging market crises of 1987).


Each time, a crash was averted half-way through, rather as though all the financial liquidity pumped out by central banks was a rising tide on which our metaphorical ball could ride.


This time, however, the rising tide is not there because distressed banks have abandoned their role as pumps to get central bank-infused liquidity flowing through the system again. There is nothing left to reverse the fall of the ball.


This is why we have the extraordinary prospect before us of a taxpayer bailout of the global banking system, with the US Federal Reserve and other US agencies orchestrating it. The European Central Bank has not yet shown willingness to join such a colossal rescue plan but reliable sources say that European banks have yet to disclose the full extent of their sub-prime mortgage crisis. So the ECB may have to join the rescue operation before long, force majeure.


Japan too is pushing the idea of a public bailout of the banking system, because that is precisely what Tokyo did after the collapse of the bubble economy brought Japanese banks to their knees. Perhaps Tokyo is secretly hoping that the US and Europe will follow suit, so that governments in the West will end up as deeply mired in debt as Japan’s following its great bailout. That way, they will no longer be able to assert their fiscal superiority over Japan.


A public bailout of banks – though it would be hugely onerous on public balance sheets and present and future generations of taxpayers – is the only way to prevent the fall of the ball. And it looks more like a wrecker’s iron ball now than a rubber one.


Unless banks get access to new capital, there is little hope of them indulging in lending on the kind of scale that will be required to get economic activity going again after the sub-prime crisis is played out. Even then, they may be reluctant to lend aggressively, given their obligation to repay public debt.


Even supposing that cash is moving around the system again once banks’ balance sheets are repaired, there is still the question of what level asset values (stocks and real estate) would settle at once the current crisis has run its course. Property prices, residential in particular, have been inflated to levels that could be sustained only during an era of abundant money creation and the high levels of economic activity that this generates. They will need to correct to more normal levels, and this implies more distress to come.


Declining corporate profits and falling asset prices also imply further corrections in equity values. Commodity prices are likely to decline further too without the spur of white-hot economic activity, and once the situation of too much money chasing too few investment opportunities – which has been the case up till now – comes to an end.


This time, unlike after the crash of 1987 or 2001, it will not be the ‘cult of the equity’ that suffers but the cult of easy money and inflated asset values.


To return to the original analogy, the falling ball has indeed bounced from a false floor on its way down. That floor is represented by expectations of quick market corrections that were generated by huge central bank monetary interventions, under the generic name of the ‘Greenspan put’ (named after former Federal Reserve chairman Alan Greenspan’s proclivity for injecting cash rather than purging financial excesses).


Street level is still a long way down and the ball has a long way to fall.


Source: Business Times