CapitaLand says Q1 profit down 59%

CapitaLand says Q1 profit down 59%


SINGAPORE: Singapore property developer CapitaLand said on Wednesday net profit in the first quarter fell 59 percent year-on-year to S$247.5 million (US$181.9 million).


The decline came mainly from an absence of exceptional gains, said CapitaLand, the largest developer in Southeast Asia.


Last year’s first quarter profit of S$608.1 million included an exceptional gain of S$426.8 million from the sale of an office tower in the central business district, it said.


Revenue in the March quarter was S$631.3 million compared with S$637.0 million a year ago.


CapitaLand said it remained in a strong position to expand further in the region, despite widespread worries about the global economy stemming from a crisis which originated in the US sub-prime or higher-risk mortgage sector.


“The continuing global credit crunch would have, as expected, caused uncertainty in the general economic and business environment in Asia,” said Richard Hu, chairman of CapitaLand.


“However, the group has strengthened its financial footing and is well-positioned to capitalise on any opportunities that may arise,” he said.


Chief executive Liew Mun Leong said the company would continue to concentrate in Asia.


“We will continue our geographic growth and Asia focus as we believe that Asian economies will grow faster than the global average for the foreseeable future,” he said.


CapitaLand sees “vast opportunities” in Vietnam, where it is building 6,000 residential units over the next three years, said Liew.


CapitaLand is 40 percent owned by Singapore’s investment firm Temasek Holdings.


Source: Channel NewsAsia

JTC releases North Buona Vista Drive site for sale

JTC releases North Buona Vista Drive site for sale


SINGAPORE: JTC Corporation releases its North Buona Vista Drive (LX 1-1) site for sale under the government’s reserve list .


The 99-year lease site is located at the junction of North Buona Vista Road and Commonwealth Avenue West.


Under the Reserve List system of the Government Land Sale programme, the site would only be put up for tender after the minimum bid price received from a developer is found acceptable by the government. Interested developers will then have up to 8 weeks to submit their tender bids. – CNA /ls


Source: Channel NewsAsia

Singapore housing upswing to continue to 2010: Lehman

Singapore housing upswing to continue to 2010: Lehman 



Lehman Brothers says the upcycle in Singapore’s housing market is likely to last until 20-10.


The investment bank said it expects that there will be a deficit of up to 4.300 homes by 20-10, due to below-average public housing completion.


This will push homebuyers to the private housing market.


The bank added that the current low transaction volume for private homes has more to do with sentiment than fundamentals.


Lehman said the concern of the market should be the potential housing undersupply and not oversupply.


The bank forecasts a net supply of 11,000 private homes next year and 16,000 in 20-10.


This is higher than the yearly historical average since 1988 of a net supply of 7,000 homes.


But Lehman said the overall housing supply is still likely to miss population needs.


Source: 938 Live

CCT defers office plans for carpark



CCT defers office plans for carpark


CAPITACOMMERCIAL Trust (CCT) is deferring its planned redevelopment of Market Street carpark into a $1 billion to $1.5 billion premium office building due to volatile market conditions.


The plan was announced early this year amid concerns that the carpark crunch in Raffles Place is worsening. Now, a decision will be made not earlier than mid-2009, said the trust’s manager yesterday.


‘Taking into consideration the significant size of this project, rising construction costs and the present volatility in financial markets, the manager is carefully evaluating the financial viability of the funding structure for the redevelopment, ‘ said its chief executive, Ms Lynette Leong.


In early January, CCT was granted provisional planning permission for the redevelopment – conditional upon the trust paying a development premium for changing the use of the 58,964 sq ft site from a carpark to an office tower.


This is to be assessed by the chief valuer. A second condition is that there will be no extension of the site’s existing leasehold land tenure.


Ms Leong said the deferment would give CCT time to plan and develop a sustainable architectural plan for the building.


She said a decision to redevelop will take into account the amount of development premium payable.


Source: Straits Times

Three S’pore residential plots up for sale in quiet market

Three S’pore residential plots up for sale in quiet market


One exec condo site and two 99-year leasehold suburban sites open for bids


By Joyce Teo


BUYING interest in private homes may be relatively low now, but the Singapore Government is offering developers three new residential sites to consider buying.


Two are 99-year leasehold suburban sites, and the other is an executive condominium site.


The first – in Woodleigh Close – is seen as an attractive site by property consultants, as it is a short walk from the Potong Pasir MRT station and the yet-to-be-opened Woodleigh MRT station.


Developers can build 260 to 290 apartments on the 1.08ha site, which has a maximum gross floor area of 30,167 sq m.


Property consultants expect the site to attract bids of $300 to $370 per sq ft (psf) of gross floor area. The apartments may then sell for between $800 psf and $880 psf, they said.


CBRE Research executive director Li Hiaw Ho said the site is close to the city and amenities in the Potong Pasir HDB estate and Upper Serangoon Road.


‘It is likely to be a popular location, as two freehold projects in the vicinity – Blossoms @ Woodleigh and Parc Mondrian – launched last year were fully sold,’ said Mr Li.


Recent caveats lodged for the 240-unit Blossoms @ Woodleigh have hovered between $770 psf and $922 psf.


The 100-unit Parc Mondrian sold for between $650 psf and $720 psf last April.


The tender for the Woodleigh Close site will close on June 24. The site is on the confirmed list, where sites are put up for sale on specific dates.


But the second site in Upper Thomson Road, close to Bishan Park and Lower Peirce Reservoir Park, is on the reserve list.


This means that it will be put up for sale only if a developer commits to a minimum bid acceptable to the authorities.


The site is not near any MRT station, but it is in an established private estate.


A developer could build 380 to 420 apartments on the 2.08ha Upper Thomson Road site, which can have a gross floor area of 43,758 sq m.


To attract buyers, developers may want to consider developing a condo with eco-friendly features, which is in line with the surrounding serene environment, said Mr Nicholas Mak, Knight Frank’s director of research and consultancy.


If triggered, this site could attract bids of $200 psf to $240 psf of gross floor area, and the apartments could sell for $650 psf to $700 psf, he said.


The third site, in Sengkang, is a 17,000 sq m executive condo site on the reserve list.


This 99-year leasehold site is the third executive condo site the HDB has made available for sale in the first half of this year.


The other two are in Jurong West and Yishun Avenue 11.








‘It is likely to be a popular location as two freehold projects in the vicinity…launched last year were fully sold.’

MR LI HIAW HO, CBRE Research executive director, who adds that the Woodleigh Close site is close to the city






To woo buyers, developers may want to consider a condo with eco-friendly features on the Upper Thomson Road site, said Mr Nicholas Mak, Knight Frank’s director of research and consultancy.


Source: Straits Times

US home vacancies rise to record 19 million on foreclosures

US home vacancies rise to record 19 million on foreclosures


BOSTON – A RECORD 18.6 million homes in the United States stood empty in the first quarter, as lenders took possession of a growing number of properties in foreclosures.


The figure is 5.7 per cent higher than a year ago, when 17.6 million properties were vacant, the US Census Bureau said in a report on Monday.


The vacancy rate – the share of homes empty and for sale – rose to 2.9 per cent, the highest since the bureau started keeping count in 1956. About 2.3 million empty homes were for sale, compared with 2.2 million a year earlier, the report said.


New foreclosures have risen to an all-time high, led by defaults in adjustable-rate loans to people with poor or limited credit histories, according to the Mortgage Bankers Association.


Home price declines and tougher lending standards are making it difficult for owners who fall behind on their mortgage payments to sell or refinance into better loans.


Falling values are also encouraging buyers to delay purchases in the hope of getting a better deal.


The median US home sale price may drop 5.8 per cent this year, the most on record, followed by another 4.7 per cent decline next year, Fannie Mae, the world’s largest mortgage buyer, said on April 7.


‘We think it is unlikely that prices will begin to stabilise until vacancy rates start declining,’ Mr Jan Hatzius, the chief US economist at Goldman Sachs, said in a report on Monday for clients.


Source: Straits Times

Rat problem – Town Council should be more responsible

Rat problem – Town Council should be more responsible


WE LIVE on the 10th storey of Blk 416 Hougang Ave 10. On April 23 at about 9am, when my wife opened the door of our flat, we were shocked to see a rat rush in from the common area outside and proceed to our balcony. My wife immediately closed the balcony doors to ensure that the rat could not escape. I then called the Aljunied Town Council to report the incident.


The first reaction of the Town Council was disappointing: since the rat was in my house, I should pay private pest busters to get rid of it. Only when I threatened to chase the rat back right back outdoors, did they understand how ludicrous that stance was, and agreed to send a pest buster (‘just this once’) to trap the rat.


The pest busters arrived at around noon. While they prepared traps in the balcony, the rat pushed aside the gully trap in the balcony and ran down into it. My wife’s quick thinking in trapping the rat in the first place had thus gone to waste – the rat had escaped the professionals. The pest busters then taped the gully cover with masking tape and set some rat glue and poison around the balcony. That night, we noticed that the gully cover had been pushed opened. No rat, however, was in sight. I covered the trap and secured it again.


To no avail. On the morning of April 24, I noticed the gully cover was again opened, but I still could not see the rat anywhere. Nothing else was amiss, so we assumed that the rat had fled the premises. Just to be sure, I covered the gully cover in the balcony and, this time, placed a heavy object over it.


On April 25, my wife noticed our floor mat in the kitchen had moved from its original position towards the drainage hole. When repositioning the mat, she noticed that the edges of the mat showed signs of having been bitten. I called the Town Council again. My wife showed them the drainage hole. Yet the pest buster was still not able to capture the rat. Instead they set up more traps around the house.


I have now noticed a nest on the outside ledge of the block below my bedroom window, which the rat seems to have taken over. We also notice rats moving freely along the ledge. We have informed the Town Council but it is not doing anything about this. They seem to think it is enough to wait for the rat to come into my kitchen and consume the rat poison; which the rat has clearly learnt to avoid. It seems to me that the Town Council still think that it is not their problem once the rat enters my home.


Since the rat appeared, both my young sons have come down with unexplained rashes. While we have disinfected the house, as long as the rat remains uncaught, my sons and the many other children in the block are at risk. Surely expending some serious effort into nipping the problem in the bud is better than trying to control a rat infestation in multiple HDB apartments?


I hope the Town Council will act before my neighbours suffer as well as a result of the council’s inaction.


Shahjehan s/o Ibrahim Kutty


Source: Straits Times

Income, not interest, led to property boom

Income, not interest, led to property boom


(SINGAPORE) The recent climb enjoyed by equity and property prices was driven more by strong economic growth than by low interest rates, according to a study by the Monetary Authority of Singapore (MAS).


Empirical research by MAS shows that economic activity exerts a larger influence on asset prices in Singapore than borrowing costs.


‘Asset price inflation reflects an underlying increase in income growth augmented in part by favourable sentiment towards domestic assets,’ says the study, featured in the MAS macroeconomic review report released yesterday.


The MAS report also says: ‘This linkage has been misunderstood by some analysts, who expressed concern that the increase in domestic liquidity, in and of itself, has fuelled the run-up in asset prices.’


Private housing prices increased by 31.2 per cent for 2007 as a whole, and some market analysts had felt that the central bank should raise interest rates to rein in property inflation.


This was because while overseas investors were driving property prices up, the inflow of foreign funds continued to add to domestic liquidity and kept borrowing costs low.


But as the MAS report mentions, ‘the factors behind the increase in liquidity are much more complex in view of Singapore’s monetary policy framework’.


Domestic interest rates have dropped since September last year as US interest rates fell and the Singapore dollar grew stronger.


The benchmark three- month domestic interbank rate fell by 144 basis points from August 2007 to 1.31 per cent at the end of March 2008.


As interbank rates fell, banks also started offering cheaper and more innovative mortgage packages.


Source: Business Times

Year of uneven growth, price worries ahead

Year of uneven growth, price worries ahead


MAS says financial services, IT sector vulnerable but core activities insulated from US




(SINGAPORE) Global headwinds have gathered speed in recent months, but domestic and regional support should prevent the Singapore economy from sliding into a sharp downturn in 2008, says the Monetary Authority of Singapore (MAS).


While it still expects Singapore’s GDP growth to come in at around 4-6 per cent this year, ‘barring a sharp downturn in the US economy’, the central bank says the economic outlook in 2008 will vary significantly from industry to industry, with certain sectors more vulnerable to the US downturn.


And in the event of a protracted US recession, along with a widespread decline in global and regional economic activity, Singapore’s growth will be more severely hit, as even the more resilient activities will not go unscathed, MAS warns in its latest Macroeconomic Review. In any case, even in the baseline scenario, Singapore’s growth momentum is expected to ease from its double-digit sequential pace in Q1 over the next few quarters.


Advance estimates based only on January and February data have the Singapore economy growing almost 17 per cent in Q1 over the preceding Q4 2007. In year-on-year terms, the flash Q1 GDP growth was a robust 7.2 per cent.


The slowdown this year, after four years of above-7 per cent growth, will bring the economy closer to its potential output path, with the output gap narrowing markedly by 2009, MAS says. The economy has racked up a positive output gap, having expanded above its 4-6 per cent medium-term trend potential over the last four years.


MAS remains broadly optimistic about Singapore’s growth outlook, as a good 30 per cent of the economy – core activities such as construction, marine transport and pharmaceuticals – are relatively insulated from the US.


Another big core of activities, accounting for some 37 per cent of GDP, enjoy strong domestic and regional support. But even these sectors – transport hub services, tourism-related activities, business services – would be affected if the US downturn deals Asia a tough hand.


But the most vulnerable to a US and global downturn are ‘sentiment-sensitive’ financial services such as the wealth advisory, equities, brokerage and treasury markets, as well as the IT-related cluster. They account for about one-third of the economy.


And while the growth outlook is a little murky, inflation remains the bigger concern, with further upside risks to global oil and food prices. MAS expects inflation in Singapore to stay high in 2008 ‘due to a confluence of external and domestic factors’.


Consumer price inflation could average above 6 per cent in the first half of 2008, and ease to about 4 per cent in the second half, partly as the GST hike effect wears off, it estimates.


‘On a sequential basis, inflation should moderate over the rest of the year and come closer to its historical average rate of increase of 0.3 per cent,’ it adds. MAS expects the 2008 inflation rate in the upper half of the 4.5-5.5 per cent forecast range, with underlying inflation – minus private accommodation and private road transport – coming in at 3.5-4.5 per cent.


The central bank also reiterates that its latest monetary policy decision to re-centre the policy band will help to ease inflation pressures and provide support to the economy as it slows to a more sustainable growth pace.


The half-yearly Macroeconomic Review also cites empirical evidence of first signs of a ‘weak synchronicity’ in economic activity between the US and Asia – as opposed to a full decoupling.


Latest trade data, it says, suggest there is some short-term substitution as regional exporters seek out opportunities in the growing China and Middle East markets to partially offset the drag in US demand.


One economist who was a little surprised by the MAS’ latest assessments is HSBC Bank’s Robert Prior-Wandesforde – he reckons the central bank is a bit hopeful about the inflation forecast for the year. He thought the 4.5-5.5 per cent inflation forecast range should have been revised up, and that the economy would quite easily hit the top end of the 4-6 per cent GDP growth forecast.


Source: Business Times

Market Street Car Park set to stay – at least for now

Market Street Car Park set to stay – at least for now


CCT defers decision on redeveloping site into office building




(SINGAPORE) CapitaCommercial Trust (CCT) has decided to defer its decision on the redevelopment of Market Street Car Park (MSCP) into an office building that could cost up to $1.5 billion.


Asked if the huge supply of new office space after 2010 was a determining factor, Lynette Leong, CEO of CCT manager CapitaCommercial Trust Management Ltd (CCTML), said: ‘No, the main reasons are the significant size of the redevelopment, rising construction costs, present volatility in financial markets and the unknown development premium amount, which have caused us to defer the decision on the planned redevelopment, such that it will not be made any earlier than mid-2009.’


Ms Leong also added that CCTML is ‘carefully evaluating the financial viability of and the funding structure for the redevelopment’.


‘We are not concerned about the new office supply after 2010 given that statistics show that office demand for good-quality office space is still strong and that the lease pre-commitments for the new supply have also reached a high level. For example, about 52 per cent of the office space at Marina Bay Financial Centre has been pre-committed three years ahead of its completion,’ added Ms Leong.


Apart from obtaining the necessary approvals, including the approval of CCT’s unitholders, if required, Ms Leong said that the decision to redevelop the site will always be subject to the financial viability of the project, which includes the amount of development premium payable based on the payment of 100 per cent of the enhancement in land value (instead of the standard 70 per cent).


She said: ‘We do not have any indication of the amount of development premium payable right now. However, it is expected to be a major component of the total redevelopment cost of MSCP.’


When the project was first announced in January, CCT said that the total project cost, depending on the development premium, could range from $1 billion to $1.5 billion.


On rising construction costs, Ms Leong said that this has increased by 10-15 per cent since the beginning of the year and that CCTML had also sought quotations from the construction companies.


Ms Leong said it would continue to take the necessary steps to obtain the planning permission (PP) from the Urban Redevelopment Authority, and assist its retail tenants in relocation. It would also ‘continue operating the car park to serve our season and hourly car park users’, she added.


While the potential loss of 704 car parking lots at MSCP was a prickly issue with many of its current uses, CCTML said that the provision of car parking lots was not an issue in getting PP.


Cushman & Wakefield managing director Donald Han said the deferment was ‘excellent news’, not least because occupancy costs, which factor the cost of car parking, would have increased.


He also reckons that the deferment could be linked to MSCP historically being designed to serve the CBD until new lots are provided. However, new restrictions limiting the number of lots in new buildings will have an impact on the number of available lots.


Knight Frank director (research and consultancy) Nicholas Mak believes deferring the project could be a strategic move to see if construction costs and rates for development charges could fall in the future.


But he believes the project will not be deferred for too long. ‘Reit’s have to constantly look for a growth story or it won’t seem interesting to investors.’.


Source: Business Times