US mortgage refinance applications plunge: MBA

US mortgage refinance applications plunge: MBA

 

Applications for US home mortgages dropped for the fourth week in the last five as soaring rates on standard, fixed-rate mortgages choked off refinancing opportunities, an industry group said on Wednesday.

 

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity fell 8.7 per cent to 508.4 in the week ended June 13.

 

The MBA’s seasonally adjusted index of refinancing applications tumbled last week by 15 per cent to 1,378.6 – its lowest since July 2006. The gauge of loan requests for home purchases declined 4.3 per cent to 360.2.

 

Fixed 30-year mortgage rates averaged 6.57 per cent in the week, up 33 basis points from the prior week and the highest since July 2007.

 

Yields on fixed-income securities that drive mortgage rates have surged this month as a chorus of central bankers, led by Federal Reserve Chairman Ben Bernanke, shed light on the potential for faster inflation in the months ahead. Benchmark 10-year Treasury note yields have climbed almost a full percentage point over the past three months.

 

The increase in mortgage rates is removing one of the few supports to the US housing market that has been in decline since 2006. Costlier interest rates have hurt the outlook for US homebuilders that have been trying to dig themselves out from burgeoning inventories of unsold homes, the National Association of Home Builders said on Monday.

 

The only sub-indexes to increase were those that measured applications for government programmes run by the Federal Housing Administration and the Veterans Administration. The volume of loans guaranteed by the FHA has soared this year as borrowers locked out of refinancings by lenders who have tightened credit standards scramble to escape high-cost loans. — REUTERS

 

Source: Business Times

China’s May property outlook index falls

China‘s May property outlook index falls

 

BEIJING – China’s property outlook index, which covers price and investment trends in the sector, fell to 103.34 points in May from 104.07 in April, the National Bureau of Statistics said on Wednesday.

 

The index has been falling since it peaked at 106.59 in November.

 

The index distils trends in investment, prices, and supply and demand in the real estate market into a composite figure representing the sector’s overall health.

 

A reading above 100 indicates positive or improving conditions, while one below 100 indicates negative or worsening ones. — REUTERS

 

Source: Business Times

Most expensive flat in Asia sold in HK

Most expensive flat in Asia sold in HK

 

HONG KONG – A luxury flat in Hong Kong has sold for HK$225 million (US$28.8 million), the most expensive apartment per square foot ever sold in Asia, a report said on Wednesday.

 

The 80th floor penthouse with a private swimming pool and spectacular view of Hong Kong’s Victoria Harbour sold for HK$41,000 per square foot, a report in the Sing Tao Daily said, citing an unnamed real estate source.

 

The 5,497-square-foot (511-square-metre) flat, with its own roof-top terrace, is located in a new complex called The Arch, in Hong Kong’s Kowloon area.

 

The Arch is close to a yet-to-be-completed office tower, the International Commerce Centre.

 

The new tower is attracting multinational firms away from the central business district, where rocketing property prices have scared away even the world’s richest firms.

 

The flat’s price beat the record of HK$39,800 per square foot set last November for a larger apartment on Hong Kong island, according to the report.

 

Hong Kong‘s property market has boomed in recent years, following a major crash during the Asian financial crisis in the later 1990s. — AFP

 

Source: Business Times

Keppel Land buys new Shenyang site for integrated township development

Keppel Land buys new Shenyang site for integrated township development

 

SINGAPORE: Keppel Land has bought a 10 hectare site in Shenyang’s Shenbei New District for about S$31 million.

 

This parcel is located next to another site which Keppel bought in August 2007.

 

The combined area of some 34 hectares will house an integrated township development, with a mix of mid- and high-rise apartment blocks.

 

The new township is surrounded by residential, commercial, high technology industrial developments and educational institutions.

 

The development, which is scheduled for completion in 2013, will have about 5,600 homes, with a total gross floor area of over 675,000 square metres.

 

The first phase of the development, targeted at upper and middle income home buyers is due to be launched in 2009.

 

Shenyang is the capital city of Liaoning Province. It is seen as an important industrial and transportation centre in northeast China. – CNA/vm

 

Source: Channel NewsAsia

Keppel Land buys new site in Shenyang

Keppel Land buys new site in Shenyang

 

Keppel Land has acquired a new site in the Chinese city of Shenyang for integrated township development.

 

It paid 30.7 million dollars for the 10-hectare site, which lies adjacent to another site it acquired last August.

 

The combined site area will measure about 34 hectares and will house an integrated township development with a mix of mid and high rise apartment blocks.

 

The blocks will house two and three bedroom units.

 

When completed in 2013, the township development will yield about 5,600 homes.

 

The homes are targeted at upper-middle income home buyers, with sales launch for the first phase expected to be carried out in 2009.

 

Keppel Land said the transaction is not expected to have any material impact on the consolidated earnings and net tangible assets per share for the current financial year.

 

Source: 938Live

FAMILY: WE LOST $290,000 OVER BACK LANE

FAMILY: WE LOST $290,000 OVER BACK LANE

 

When trying to sell house, owners surprised to find out Government acquired their land

 

THEY were offered close to $2 million for their two-storey shophouse and the back lane behind it.

 

By Celine Lim

 

 

18 June 2008

 

THEY were offered close to $2 million for their two-storey shophouse and the back lane behind it.

 

But while trying to retrieve an online copy of the title deed to the back lane, the Goh family found out that the tiny strip of land had been acquired by the Government in an island-wide exercise in April last year.

 

As a result, the buyer, a property developer, slashed $290,000 off the purchase price.

 

The family said they did not receive any letter informing them that the back lane had been acquired.

 

Neither did they get any compensation.

 

Ms Goh G K, 52,said: ‘If it wasn’t for the offer for our house and lane, we won’t have known the Government had taken back the lane.’

 

The Land Transport Authority (LTA) said the lane was acquired under the Street Works Act and no compensation is due for such acquisitions.

 

It said it had notified the owners by posting a copy of the declaration together with a plan at the site of the Gohs’ back lane on 27 Mar 2007.

 

But the Gohs felt the LTA should have informed them personally by sending a letter.

 

Ms Goh, her five siblings and their mother are joint owners of the property.

 

‘We didn’t want to sell the house or the lane initially due to the sentimental value as all of us grew up there,’ said Ms Goh, who’s in sales.

 

‘In the past, the door to the back lane was always open. It was our ‘backyard’, where our mum used to make bak changs (rice dumplings) and extended family gatherings were held.

 

‘But our mum said, ‘Better sell the property and distribute the proceeds’.

 

‘She had heard about family tussles over property in the news and didn’t want us to end up squabbling after she passed away.’

 

Ms Goh said her parents had bought the house and back lane for about $20,000 in 1950.

 

The 261 sq ft lane is located right behind their two-storey Rangoon Road shophouse and the unit next door. The family owns part of the back lane, stretching from behind their unit to the next door unit.

 

In March 1999, the family paid about $2,000 in legal fees, stamp duties and for a plan of the land area from the chief surveyor to renew the title deeds so as to include the names of all the siblings.

 

Before that, the title deeds had only the names of the mother and the eldest Goh sibling.

 

The family has a physical copy of the title deed to the back lane.

 

When they wanted to sell the property last October, they tried to get a copy online from the Singapore Land Authority’s (SLA) website to show the buyer.

 

They were unable to do so and realised something was amiss.

 

They called the SLA, which told them the lane had been acquired by the LTA.

 

Ms Goh said that when they called the LTA, an officer said the LTA was only required to post a notice in the government gazette as well as put up a letter of declaration at the site of the back lane to say it would be vested in the State.

 

The officer added that if no one raised any objections within a month, the LTA would take it as consent to proceed with the vesting of the lane.

 

The answer did not sit well with the Goh family.

 

‘Why didn’t the LTA inform us directly by sending us a letter? How much is the postage? Only 22 cents,’ said Ms Goh.

 

‘After all, they knew that our family had the title deed to the backlane.’

 

She said the LTA sent them a copy of the government gazette listing the back lanes that were vested during the exercise.

 

The Gohs’ back lane was on the list and the words ‘deed title’ written next to it.

 

This showed that the LTA knew her family held the title deed to the lane and should have contacted them, said Ms Goh.

 

The Gohs also insisted they did not see any letter of declaration near their back lane.

 

SEEK COMPENSATION

 

Ms Goh said: ‘We moved out about 10 years ago when everyone got married and started their own families.

 

‘But one of my brothers keeps items for his business in the house so he drops by almost every day.

 

She claimed: ‘He parks his car along the back lane and enters through the back door, but he did not see any notice pasted there.’

 

Ms Goh said the family has tried in vain to seek compensation from the LTA.

 

She said an LTA officer told them that there was ‘no commercial value to back lanes’.

 

But the Gohs pointed to a news article about a back lane off Jalan Bunga Raya in the Balestier area that was auctioned off on 10 Jan.

 

The article noted: ‘Knight Frank has indicated a price of about $750,000 to $800,000 for the back lane, which works out to $80 to $86 per square foot of potential gross floor area.’

 

A check by The New Paper found the Jalan Bunga Raya back lane eventually fetched $1.55m, or $465 per square foot.

 

In the Gohs’ case, the property developer was planning to put up a five-storey building on the site of their house and back lane.

 

The property agent told the family the developer had priced the back lane at more than $1,000 per square foot, the same as for the house.

 

Ms Goh said after they found out the back lane had been acquired by the Government, the property developer extended their option to sell in the hope that the family could work something out with the LTA.

 

The 1,660 sq ft house was finally sold for about $1.5m.

 

They didn’t want to reveal the exact amount.

 

She said the proceeds went to their mother who is in charge of disbursing the money.

 

LTA: Family won’t get compensation

 

A SPOKESMAN for LTA said the back lane was one of 206 lots vested island-wide from December 2006 to July last year under the Street Works Act.

 

A SPOKESMAN for LTA said the back lane was one of 206 lots vested island-wide from December 2006 to July last year under the Street Works Act.

 

Of the State-acquired lots, the spokesman said: ‘No compensation is payable for vesting of back lanes.’

 

The 261 sq ft lot owned by the Gohs had been set aside in 1937 as a back lane. This meant that before the Gohs bought the lane in 1950, it had become part of the Government’s ‘street reserves’.

 

The reserved land can be acquired by the State as and when it is needed for road improvement or construction, according to the LTA website.

 

The spokesman said the relevant authorities will not approve the building of any structure, like building extensions, on land that has been set aside but yet to be vested.

 

So, even if the Gohs still owned the back lane and had sold it to the property developer, the latter would not be able to build over it.

 

If a structure was built illegally, no compensation will be given for removing the structures if the land is vested. The spokesman said the back lanes were vested ‘in the interest of the public’.

 

Acquiring the back lanes ‘facilitates a more orderly and systematic maintenance. .. of these back lanes… by various public agencies’.

 

In a letter to the Gohs, the LTA said the working team had ‘exercised due diligence in the process of vesting’. The Gohs’ back lane was ‘not treated differently from the other cases’.

 

As per the Street Works Act, the LTA had posted a copy of the declaration together with a plan at the site of the Gohs’ back lane on 27 Mar 2007, said the spokesman. A month later, in the absence of any objections, the back lane was vested in the Government on 26 Apr 2007.

 

 

Source: The New Paper

CCT DIRECTOR BUYS STAKE IN TRUST

CCT DIRECTOR BUYS STAKE IN TRUST

 

A DIRECTOR of CapitaCommercial Trust (CCT) has made a series of share purchases in the firm.

 

Mr Kee Teck Koon, who is a member of CapitaCommercial Trust Management’s executive committee and CapitaLand’s chief investment officer, bought 150,000 shares over two days last week.

 

Last Thursday, he bought 20,000 shares at $2.04 apiece, a further 20,000 units at $2.03 each, 40,000 units at $2.02 apiece and 20,000 units at $2.01 each.

 

These open market purchases totalled 100,000 shares, at an average price of $2.024.

 

A day later, he bought 50,000 shares on the open market at $2.02 apiece.

 

This series of purchases gives him a direct stake of 150,000 shares, or 0.11 per cent of issued share capital. He does not have a deemed stake in the company.

 

Mr Kee’s purchases come after a steep correction in the stock prices of real estate investment trusts (Reits).

 

CCT shares closed at $2.04 last Friday, down 8.9 per cent for the week. They continued their decline on Monday and finished unchanged at $2.02 yesterday.

 

‘While markets will continue to be shaken by the twin fears of inflation and higher interest rates, we are starting to see value in some of the Reits,’ said UOB Kay Hian in a report last Friday.

 

Analyst Jonathan Koh said CCT was well positioned to benefit from positive rental revisions, as 29.4 per cent of leases for office space will be up for renewal this year and next.

 

The local brokerage kept its ‘buy’ call on CCT but trimmed its target price from $2.87 to $2.63.

 

Source: Straits Times

Rising construction costs put squeeze on builders

Rising construction costs put squeeze on builders

 

Some manage to factor into contracts the higher risks of price fluctuations

 

By ARTHUR SIM

 

(SINGAPORE) Construction costs have risen across the board by at least about 13 per cent in Singapore in the six months to end-March. And for the residential/ condominium segment, costs have risen even faster, by as much as 16 per cent, according to a report by construction cost consultancy Rider Levett Bucknall (RLB).

 

The rise comes in the light of a 23 per cent increase in the Building and Construction Authority’s tender price index in Q4 2007 on a year-on-year basis, making Singapore among the most expensive in the world.

 

At the top end in Q1 2008, the construction cost for a luxury condominium, a five-star hotel and a 55-storey office now comes to as much as $4,000-$5,500, $5,650-$7,680 and $4,960-$5,660 psm per gross floor area (GFA) respectively, according to RLB.

 

Says RLB managing partner Winston Hauw: ‘High demand and competition for limited resources, the lack of tendering capacity among contractors, sub-contractors and suppliers, and volatile commodity prices have contributed significantly to building price escalation.’

 

RLB also found that the prices of crude oil, copper and aluminium have increased by 22-26 per cent between January and April.

 

According to RLB’s 2007 data, Singapore ranks after Macau and Hong Kong on its tender price relativity matrix. Against this index with Hong Kong at 100, Singapore is 97 while Macau is 102. London is 144, New York is 140 and Sydney is 105.

 

RLB also has its own tender price index. At end Q4 2007, the index rose 26.3 per cent year on year and it expects this to rise a further 15-18 per cent in 2008. Property prices have eased but RLB believes this will have a limited impact on local construction demand in the short term due to the large existing project commitments on hand from both the public and private sectors.

 

These ‘commitments’ , together with rising costs, are adding strain to the industry.

 

United Engineers Ltd (UEL), which has operations across Asia, agrees with the growing market sentiment that Singapore could actually be the most expensive in the world in building costs. But a UEL spokesman added: ‘But it is likely to be a temporary phenomenon.’

 

To mitigate against rising costs, some construction companies have priced in the risk of price fluctuations at higher levels. A spokesman for a construction company said that in general, this could amount to 10-20 per cent of the construction package. Saying that this has increased by at least 10 per cent over the last three years, he added, ‘In fact, three years ago you might still have had to mark down to increase competitiveness. ‘

 

Straits Construction Co director Wong Chee Herng, however, says that these risk factors are still very ‘material specific’. And although such contractual clauses are becoming more common, Mr Wong said these are not always adopted.

 

Singapore Institute of Surveyors and Valuers president Lim Lan Yuan believes the pricing-in of risks may have increased by as much as 10-15 per cent since 2007 simply because ‘prices are so uncertain’.

 

The filter-down effect of rising costs is that more projects could be delayed. While private sector developers have stayed largely silent about the impact, it was recently reported that the completion of the Singapore Sports Hub could be pushed back to 2012. While it was only reported that the delays were due to the ‘contract’s financial and legal details’, it is probably safe to assume that construction costs were a factor too.

 

A spokesman for City Developments Ltd told BT: ‘There is a significant increase in demand for construction work over the past two years. However, we are fortunate to have a team of regular contractors who continue to build our projects over this difficult period.’

 

A spokesman for Kajima in Singapore says that delays are also not simply due to construction costs per se but also due to the ‘inability to pay’ for certain materials or services. Citing the cost of steel re-bars as an example, which have doubled in price since 2007, he says: ‘It’s an additional cost we have had to bear. Basically, if (a construction company) can’t shoulder this, it will have to default.’

 

Reiterating the plight of construction companies, Singapore Contractors Association (Scal) executive director Simon Lee says: ‘It is not true that Singapore construction companies are pricing in high-risk factors for all contracts. They only price in high-risk factors in the demanding and unreasonable contracts.’

 

He added: ‘Some contracts are very unforgiving and expect construction companies to take on all unforeseen risks and absorb all cost increases.’

 

But Mr Lee believes that construction costs are still competitive here because ‘labour cost is still kept at a reasonable level’.

 

He also says that while costs and shortages of materials can affect the progress of projects here, ‘on a case-by-case basis, the construction company and the developer will discuss the best way to resolve these issues. The parties always prefer not to nullify contracts if such issues can be amicably settled’.

 

Source: Business Times

 

 

URA plot facing Bedok Reservoir up for sale

URA plot facing Bedok Reservoir up for sale

 

Fairly good response seen with modest bids ranging from $200-$300 ppr

 

By KALPANA RASHIWALA

 

A 99-YEAR leasehold condo plot at Tampines Ave 1/10 fronting Bedok Reservoir, launched yesterday by the Urban Redevelopment Authority, is likely to draw modest bids ranging from $200 to $300 per sq ft of potential gross floor area, given tepid developer sales, property consultants say.

 

Cushman & Wakefield managing director Donald Han reckoned that ‘given Singaporeans’ affinity for living near water, the site should see fairly good response from developers’. ‘I would expect this site to fetch a fair number of bids, maybe about five,’ he added.

 

On the other side of Bedok Reservoir, in a more choice spot, Frasers Centrepoint and Far East Organization are understood to have sold about 140 units at their Waterfront Waves condo. The average price is about $800 psf for reservoir-facing units and around $750 psf for pool-facing units.

 

‘The Waterfront Waves project has better views all round whereas the URA site is kind of tucked in a corner,’ Mr Han said.

 

Assuming a new condo on the latest plot can sell for about $750 psf on average, the land bids will come in at about $280-$300 psf. ‘For developers to bid higher than this range, they must be confident of selling the project at above $750 psf or have a sense of controlling costs in a market where construction costs are spiralling upwards,’ he added.

 

CB Richard Ellis director (research) Leonard Tay projected an even lower land price of around $200-$230 psf per plot ratio. He reckoned a new 99-year leasehold project on the site may fetch an average price of around $700 psf, citing resale prices for nearby completed condos, and factoring in higher construction costs.

 

‘Current prices of units in The Tropica, Aquarius By The Park and The Clearwater are within $550 psf and $670 psf, while those at Baywater, a recently completed condominium, are around $600-$680 psf,’ Mr Tay added.

 

Cushman’s Mr Han reckoned the latest plot, which has a land area of 341,650 sq ft and a 2.1 plot ratio – the ratio of maximum potential gross floor area to land area – can accommodate a new condo with about 650 units averaging 1,100 sq ft.

 

URA’s latest plot is next to The Tropica, developed by a Hong Leong Holdings unit and completed around 2000.

 

The tender for the plot closes on Aug 12. It is the penultimate plot to be launched under the first-half 2008 confirmed list of Ministry of National Development’ s Government Land Sales programme.

 

The 11th and final plot on the current confirmed list is a ‘white’ site at Ophir/Rochor roads. Slated for release by the end of this month, the 2.7 hectare plot will be sold with minimum office and hotel components stipulated. MND’s H1 2008 GLS programme also includes 26 reserve list plots. Twenty-four of these have been available for application by developers – but not one has been triggered for sale.

 

The two remaining reserve plots – residential sites in Sengkang West Avenue and Sembawang Road – will be made available for application by month-end. All eyes in the property market are now on the GLS programme for H2 2008, which will be announced by the end of this month.

 

Source: Business Times

Are stocks and properties an inflation hedge?

Are stocks and properties an inflation hedge?

 

THE Manpower Ministry’s labour market report for the first quarter reveals that employees in manufacturing, transport and administrative jobs saw their real wages shrink, compared with the same period last year. Their pay increases did not quite match the 6.6 per cent inflation rate. On average, real earnings grew 3.6 per cent compared to the same three-month period last year. However, with annual inflation forecast at 6 per cent this year, a labour economist says it is a matter of time before real earnings dip for workers in other sectors.

 

This, of course, is not good news for working adults who, in addition to having to meet their current financial obligations, also have to save and plan for their children’s education as well as their own retirement. With neither pay rises nor bank deposit rates adequate to cover inflation, and with the financial and property markets still fraught with uncertainties, there would appear to be few safe investment options.

 

In normal circumstances, most people would want to maximise returns. However, in the current climate, many may want to change their risk preferences. Instead of maximising returns, the preferred objective may be to minimise risk.

 

Even so, it is worth remembering that over the long term, equities and properties are the best hedge against inflation. Between 1975 and 2007, the Consumer Price Index (CPI) in Singapore rose 187 per cent. The Straits Times Index (as calculated by Thomson Financial Datastream) climbed 1,159 per cent, while the Urban Redevelopment Authority’s property price index increased 1,334 per cent. Over the same 32-year period, Singapore’s gross domestic product expanded 914 per cent.

 

However, the key phrase to note here is ‘over the long term’.

 

Of course, in the case of equities and properties, which are prone to big swings in prices, the returns one gets will depend a lot on one’s entry level. Investors entering at the wrong point in the cycle would be in for a rough ride. Out of the 28 rolling five-year holding periods in the last 32 years, the STI’s returns lagged the CPI in eight of those periods. Property prices rose less than general prices in 10 periods. But if the holding period is increased to 10 years, stocks failed to keep up with inflation in only three out of the 23 rolling ten-year periods between 1975 and 2007. For property, it was four. But for holding periods of 15 years and above, both properties and equities comfortably beat inflation for all the holding periods. Moreover, returns on properties exceeded those on equities.

 

So for any investor who takes the long view – that is, 15 years or more – current market conditions should not be a deterrent to meeting long-term financial goals.

 

Source: Business Times