$17m widening of CTE to begin on Monday

$17m widening of CTE to begin on Monday


1st phase to last till end-2009, but delays to traffic will be minimal


By Maria Almenoar


WORK will begin on Monday to widen the Central Expressway (CTE), but officials say the construction will cause minimal delays on Singapore’s busiest thoroughfare.


The Land Transport Authority (LTA) will add a fourth lane on both sides of a 1.5km stretch between Ang Mo Kio Avenue 1 and Ang Mo Kio Avenue 3.


The work, which will cost $16.9 million, is scheduled to last till the end of next year. The LTA said for most of that time, the expressway’s six lanes will remain open.


However, it will close after 11pm on some nights for repaving and to remove an overhead pedestrian crossing.


This is the first phase of a plan to ease congestion on the CTE, which is plagued by traffic jams during morning and evening peak periods.


The Ministry of Transport hopes the work, together with the opening of the Circle Line, Kallang-Paya Lebar Expressway and North-South Expressway, will ease congestion on the north-south stretch.


The LTA also plans to expand another 5.5km section of the CTE from the Pan-Island Expressway to Yio Chu Kang Road by 2011.


As part of the project, a new sheltered overhead bridge – replacing the old uncovered bridge – will be built to connect Housing Board blocks with the Serangoon Gardens private estate.


To keep the racket down, the LTA will use noise reduction blankets on its hoardings and put noise guards on machinery.


The authority will also use, for the first time, a more costly method of installing pipes running under the roads.


Unlike the usual ‘cut-and- cover’ method, where motorists have to be redirected to their lanes, the pipes are laid underground without the need to tear up lanes.



Source: Straits Times

Evergro to raise $170m through rights issue

Evergro to raise $170m through rights issue

The company also intends to carry out a capital reduction exercise







EVERGRO Properties, a subsidiary of Keppel Land, plans to raise about $170 million through a renounceable rights issue.



Evergro also intends to carry out a capital reduction exercise to write off accumulated losses of $36.5 million.


The fund-raising involves the offer of 761.8 million new shares on the basis of three rights shares for every two existing shares held.


Evergro, formerly known as Dragon Land, will announce finalised details of the rights issue ‘in due course’, and determine the issue price closer to the launch date.


It expects the issue price ‘to be at a discount of up to 15 per cent to the then-prevailing market price’. Shares of Evergro closed unchanged yesterday at 23.5 cents.


The China-focused property developer expects to receive net proceeds of about $169 million, of which 71 per cent will go towards land acquisition.


Evergro has a landbank of about four million square metres, and is looking to purchase around 10 per cent more land. In particular, the company will focus on land acquisition in Jiangsu for more residential and mixed-use projects.


Further residential developments around a golf course in Tianjin will take up another 11.8 per cent of net proceeds.


The remaining 17.2 per cent will be set aside for working capital needs. According to Evergro’s CEO Goh Toh Sim, the availability of land acquisition opportunities will determine how long proceeds from the rights issue will last.


Jittery stock market conditions have not deterred Evergro from conducting a rights issue. Mr Goh noted that there is strong genuine demand for mid-to-high end homes in China. Also, the stable property market presented a good buying opportunity.


‘For land acquisitions, you will not want to do it when the market overheats,’ he said.


Keppel Land, which holds a 71.37 per cent interest in Evergro, has made an irrevocable undertaking to subscribe for its full entitlement and make excess applications. Hence, all rights shares will be fully taken up.


Evergro also announced plans to reduce its issued share capital by $36.5 million, to write off accumulated losses of the same amount in their entirety.


‘This is to better reflect the financial position and share capital of the company as well as cancel or reduce any issued share capital which has been lost or is unrepresented by available assets,’ said the press release. The exercise will not involve share cancellation.



Source: Business Times

Bank loans grow at slowest pace in a year

Bank loans grow at slowest pace in a year


(SINGAPORE) Singapore bank loans grew at its weakest pace in a year in April as lending to businesses slowed, providing new signs that sluggish global demand could drag on the economy.



Bank loans in April rose 0.6 per cent to $251.1 billion in April from $249.5 billion in March, the central bank said yesterday, the slowest monthly growth since April 2007 when loans grew 0.2 per cent.


Loans to businesses fell across most industries from manufacturing to financial institutions, although the weakness was offset by the construction industry where loans grew 3.2 per cent.


Most analysts expect loan growth in Singapore to slow this year as a looming US recession slows Asia’s economies.


‘Business activity is definitely slowing down. It could be an initial sign of slower growth,’ said Kit Wei Zheng, a Citigroup economist.


From a year ago, total loans rose nearly 25 per cent from $201.8 billion, mostly boosted by construction where lending grew 1.5 times. The industry has boomed in the past year, supported by the construction of two casinos worth around US$7.7 billion.


Analysts estimate that loan growth at the South- east Asian country’s three banks, DBS Group, Oversea-Chinese Banking Corp and United Overseas Bank is expected to slow to 12-13 per cent this year after expanding 20 per cent in 2007.


However, economists said a recovery in the three-month Singapore Interbank Offered Rate, a benchmark for mortgage loans, would ease the squeeze on banks’ profit margins. The rate fell to 1.1875 in April, its lowest level in more than four years.


Loans to manufacturers fell 1.2 per cent in April to $11.1 billion from March, while lending to financial institutions declined by 3.6 per cent.


Housing and bridging loans to consumers rose 0.5 per cent to $74.6 billion despite a slowing property market, although Citigroup’s Mr Kit said the increase was probably not a result of new transactions but buyers paying off purchases closed previously under a deferred payment scheme. — Reuters


Source: Business Times

Asia-Pac growth forecast slashed to 3.7%

Asia-Pac growth forecast slashed to 3.7%




(SINGAPORE) The Pacific Economic Cooperation Council (PECC) has cut its forecast of Asia-Pacific’s 2008 growth by more than one percentage point to 3.7 per cent.



In November last year, the think-tank was looking at 4.9 per cent growth in 2008 for the region. But ‘increased pessimism’ about the health of the US economy – which it now sees growing only one per cent this year, down from an earlier forecast of 2.9 per cent – and expectations that exports will be a drag on most of the region’s economies, weigh on the outlook.


Still, the impact of the US slowdown is ‘not forecast to be as severe on the region’s growth as on previous occasions’, PECC says in the first-quarter update of its state-of-the-region economic outlook. Much of East Asia’s growth is now driven by internal, rather than external, demand, it says.


But inflation is now a greater concern than it was six months ago – PECC has also hiked its consumer price inflation forecast to 3.6 per cent for 2008, from an earlier estimate of 2.7 per cent.


This forecast actually masks much sharper price hikes in certain Asian economies, PECC notes.


Overall, the risks to the forecasts are greater than they have been since the 1997 Asian financial crisis, it says, reiterating a point it made in November.


With rising inflation and ‘an uncertain end to the US credit crunch’, policymakers around the region will have less policy space to reflate their economies, says Yuen Pau Woo, president of the Asia Pacific Foundation of Canada, based in Vancouver, and co-ordinator of the state-of-the-region report.


Amid the bearish outlook, PECC does expect the region to bounce back in 2009 with growth forecast at 4.4 per cent. And again, the US economy – which is expected to recover and grow 2.5 per cent – will be key.


That said, PECC points out that the predicted recovery in the US economy is ‘by no means assured’.


And the surge in commodity prices in the first quarter of 2008 has led to protectionist trade stances across the region that have further reduced global supply in some cases, leading to even further hikes in prices.


Source: Business Times

Home prices in Iran going through the roof

Home prices in Iran going through the roof


TEHERAN – AS IRAN’S economy is buffeted by inflation, the country’s homeowners are fast becoming richer in a real estate bubble that is driving affordable housing beyond the reach of ordinary citizens.

A luxury 1,400 sq m penthouse sold recently for US$21 million (S$29 million) at US$15,000 per sq m in swanky northern Teheran – yet the average monthly salary of Iranians stands at US$300 to US$460.


While the housing market of Iran’s arch-foe America is facing trouble, prices in Teheran’s affluent suburbs have gone up by at least 10 million rials (S$1,500) per sq m over three months.


Property prices there compete with upmarket neighbourhoods in Paris at a range of 60 million to 100 million rials per sq m.


‘You have to spend at least a million dollars to buy an apartment in northern Teheran where the average property is 200 sq m,’ says real estate agent Ali Meshkini.


With a stagnant stock market and a hesitant industry, property remains a privileged means to absorb liquidity, which has been flowing into the economy through windfall oil earnings.


Facilities such as swimming pools, saunas, jacuzzis and health clubs have become standard features in newly built upmarket homes to attract wealthier buyers.


An opulent residential tower in northern Teheran even comes with a heliport while another has a lift that takes cars up to the apartments.


The housing boom is not confined to the hot uptown market.


Average neighbourhoods in the capital, as well as in Iran’s other large cities, have been affected.


Prices have doubled within a few months in the satellite town of Parand and Hashtgerd, 50km from Teheran, while in Isfahan, Mashhad and Tabriz, property values have doubled in a year.


‘Property has become the only profitable investment,’ says Mr Meshkini.


‘Prices have risen by over 100 per cent within a year and they will continue to go up. No other sector makes such profits.’


Several entrepreneurs echo the same view, including the owner of a popular fast-food place in Teheran who complained he had made only ‘6 per cent net profit in the busy months of January and February, when sales were surprisingly high’.




Source: Straits Times

Consumer confidence plunges to 28-year low

Consumer confidence plunges to 28-year low


WASHINGTON – CONFIDENCE among United States consumers fell this month to the lowest level in 28 years, pointing to slower spending as petrol prices reach record levels and job losses mount.

The Reuters/University of Michigan final index of consumer sentiment decreased to 59.8, the weakest reading since June 1980, from 62.6 last month. The measure averaged 85.6 last year.


Separately, US consumer spending slowed last month as income gains weakened, a sign that the biggest part of the economy could be faltering.


The 0.2 per cent rise in spending followed a 0.4 per cent increase in March, the Commerce Department said yesterday. Incomes grew 0.2 per cent, bolstered in part by the government’s tax rebates, and the Federal Reserve’s preferred measure of inflation moderated.


‘Consumers are spending cautiously,’ said Mr Michael Moran, the chief economist at Daiwa Securities America in New York. ‘The economy is in a grey area between a recession and slow growth. We had a weak performance in wages.’


The report contained good news on inflation for Fed policymakers. The central bankers’ preferred gauge of prices, which excludes food and fuel, rose 0.1 per cent after a 0.2 per cent gain in the previous month. It was up 2.1 per cent from April last year.




Source: Straits Times

Raffles Hotel won’t be sold after all

Raffles Hotel won’t be sold after all 

Consortium that inked in-principle deal declines to say why sale fell through


A PLAN to sell the historic Raffles Hotel again has fallen through.

The Business Times (BT) yesterday reported that a consortium led by former Credit Suisse banker Mark Pawley, which had inked an in-principle deal to buy the hotel earlier this month, was ‘very disappointed’ with the outcome.


Its spokesman confirmed that the deal was off.


‘This would have involved an assured distinct identity for Raffles Hotel as a flagship for Singapore in the international hospitality industry and a rejuvenation of the hotel,’ the paper quoted her as saying.


Citing confidentiality clauses, she declined to give reasons why the deal soured.


But she denied that there was any issue with the source of the funding, which is believed to be a family trust linked to a European family.


If the deal had gone through, the 121-year-old historic hotel and its adjoining shopping arcade would have changed hands for the second time in three years.


The agreed price was reportedly about $650 million – more than triple the $200 million paid by its American and Middle Eastern owners in 2005.


This was seen as a reflection of the strong boost in demand for hotel space in Singapore in recent years, with the country’s fast-growing visitor arrivals.


Mr Pawley is the chief executive of Singapore-based Oxley Capital Group, a private investment house focusing on real estate and private equity.


While he was head of the Asian real estate, gaming and lodging business at Credit Suisse Investment Banking in Asia, he was involved with the $1.7 billion sale of the entire Raffles Holdings’ hotel portfolio – including Raffles Hotel in Singapore – to United States-based private equity firm Colony Capital in 2005.


Colony later merged that portfolio with Fairmont Hotels & Resorts’ assets to create Fairmont Raffles Hotels International (FRHI). Colony reportedly holds about a 40 per cent stake in FRHI, while Saudi Prince Alwaleed bin Talal’s Kingdom Hotels International owns the rest.


On May 8, FRHI announced that it had reached an in-principle agreement to sell off Raffles Hotel. But as with its past real estate transactions, any hotels sold would continue to be part of the company’s hotel collection.


FRHI’s hotel management arm, Raffles Hotels & Resorts, also secured a long-term management contract to manage the hotel, reportedly for 40 years.


Market watchers told BT that most existing hotel groups would think twice about buying a hotel with a long-term management contract from the seller. They speculated that this clause might have scuppered the deal.


Source: Straits Times