The world’s largest hotel company Wyndham Group is starting operations in Singapore by managing two new hotels at Balestier Road.

Wyndham will partner a joint venture (JV) between local property developer Hiap Hoe and Superbowl Holdings.

This is also the JV’s foray into the hospitality sector.

The busy Balestier Road area is fast becoming home to more hotels.

The latest two will be managed by the Wyndham Group.

There will be about 10 hotels in the area eventually, but Wyndham said there will still be demand for its mid-scale hotels.

They will cater mainly to medical tourists, due to their proximity to nearby hospitals.

Thomas Monahan, EVP, International Development, Wyndham Group, said: “Singapore is a critical market place in Asia. It is a showcase market place. It is where every hotel company wants to be, and there is certainly a shortage of room inventory in the three- and four-star market place for international brands.

“Our brands are a perfect fit for the market place, and they will help us grow in the Asia Pacific. If you look at the room inventory, most of it exists in the upscale (segment) and so these two properties will be positioned in the midscale, three- and four-star, where there is a lack of inventory in that market place.”

Wyndham is planning to use Singapore as a base to build up its Asian presence.

The two new hotels will operate under the Ramada and Days Inn brands, and will each have about 400 rooms.

They will be separated by a public park, which is being developed as part of a government condition attached to the land development.

Besides the hotels, there will also be an adjacent office block and an integrated hub for dining and entertainment.

This is the first time that Hiap Hoe and Super Bowl are going into the hospitality business.

It is part of the duo’s strategy to seek more steady growth.

Teo Ho Beng, managing director, Hiap Hoe Group, said: “The hotel will give us a very good recurring income, whereas for property development, you will be more dependent on the property cycle.

“Our location is near to the medical facilities that are coming up in this area, and we will be able to cater to some of this outpatient requirement that comes here for consultation.”

The total cost of the development is about S$300 million.

Both hotels are expected to be open in 2014.

Source: Channel News Asia, 27 Jan 2010

The Housing & Development Board (HDB) is considering imposing a quota on Permanent Residents buying resale HDB flats. This could be done in the same way that racial quotas are imposed to prevent ethnic enclaves.

The issue came up in a dialogue session on public housing with Minister Mentor Lee Kuan Yew where questions on affordability and aspirations were brought up.

Public housing has come a long way from where it started 50 years ago. Still, issues remain. These include how foreigners are perceived to affect pricing of flats.

Mr Lee said over the next five years, the intake of foreigners will slow down but that means Singaporeans will have to increase their productivity.

Going further, dialogue moderator Professor Tommy Koh asked if more could be done to integrate those already here, in much the same way that the Ethnic Integration Policy was introduced in 1989 in public housing estates to get races mingling.

Mr Lee said: “Could the same approach be adopted towards integrating new Singaporeans? We are not allowing new Singaporeans whether from China, India, Malaysia, or whatever, to congregate in the same tower blocks, which they are already beginning to do.

“They buy second hand flats and they congregate. So we have a record of how many new citizens living where and we keep their numbers dispersed. It’s a very valuable tool of communal harmony.”

HDB later clarified that a quota policy on PRs for resale flats was being considered.

One other issue that came up during the dialogue is that of affordability, which has come up repeatedly. One suggestion was to have HDB provide more rental housing units.

Mr Lee said: ‘I completely disagree with that policy. It will lead us into all kinds of problems. You are getting a dependency group – dependent on the government on constant subsidies, whereas our philosophy is ‘I give you this asset, I will increase the value of the asset as the economy grows but it is yours and you look after it.’ And we do not have run down public housing like other countries which are rental.”

Mr Lee was also asked for his take on a recent media report that at least three opposition parties were eyeing National Development Minister Mah Bow Tan’s ward with the aim of making public housing affordability an election issue.

He explained: “What is affordabilty? From the point of view of the buyer? And the government that is subsidising you? The government has to price it at a level that is fair to the revenue it is collecting and fair to the individual, not only the present buyer but past and future buyers. If Mr Mah is unable to defend himself, he deserves to lose.

“No country in the world has given its citizens and families an asset as valuable as what we have given every family here. And if you say that policy is at fault, you must be daft.”

Mr Lee was speaking before some 500 delegates from 20 countries at a housing conference.

Source: Channel News Asia, 27 Jan 2010

Singapore’s National Development Minister Mah Bow Tan said public housing in the 21st century must evolve to meet changing needs.

But the core mission of the HDB remains unchanged – that of providing Singaporeans with affordable quality homes and building cohesive communities.

Speaking at the International Housing Conference in Singapore, Mr Mah noted the HDB will face increasing challenges due to shifting demographics. These include an aging population which may require further innovations in housing policies or building design.

These include an aging population, which may require further innovations in housing policies or building design.

In addition, with more new Singapore citizens, greater integration efforts will be required.

Mr Mah said rapid globalisation and affluence may also prompt other lifestyle changes and with it, increased expectations of what public housing can provide.

Singapore is also facing the steadily ageing profile of HDB flats and towns. So there will be an urgent need to upgrade, redevelop and rejuvenate older estates.

Mr Mah said HDB must meet these challenges and continue achieving environmental, economic and social sustainability. This will contribute to Singapore’s overall quest to provide a green and healthy living environment, through careful long-term planning.

In the past half century, HDB achieved much for Singapore and garnered significant international recognition, including the UN Public Service Award.

And he urged HDB to continue its relentless pursuit of sustainable public housing for the next 50 years and beyond.

Source: Channel News Asia, 27 Jan 2010

SHANGRI-LA Asia Limited (SA) and Kerry Properties Limited (KPL) have entered into a joint venture through their respective wholly owned subsidiaries for potential real estate development projects in China.

Kerry Properties (China) Investment Co Ltd (KPCI) will own a 55 per cent stake of the joint-venture company, and Shangri-La China Limited (SACL) will own the remaining 45 per cent.

The total amount of the registered capital of the joint-venture company will be 170 million yuan (S$35 million), contributed by KPCI and SACL in proportion to their respective shareholdings.

The maximum total investment amount will be 340 million yuan. Based on this, the maximum contributions of the KPL Group and the SA Group are expected to be 187 million yuan and 153 million yuan, respectively.

‘KPL and SA are currently in the process of identifying potential new real estate development projects involving hotel, commercial and/or residential elements in the People’s Republic of China,’ a joint statement said yesterday.

Source: Business Times, 27 Jan 2010

It will affect demand for building materials, says hedge fund manager

Raw materials producers that sell to China may be hurt by slowing demand because the nation’s real estate market is poised for a ’stumble’, according to hedge fund manager James Chanos.

A Chinese credit-driven property bubble with ‘far-reaching impact’ may be overheating, threatening demand for industrial materials used in buildings, Mr Chanos said.

‘One needs to look at building materials globally; increasingly they’re priced on the margin for the China bid,’ Mr Chanos, the founder of Kynikos Associates Ltd, said on Monday at a conference in London. ‘If the China bid turns into a China offer, there’s going to be an air pocket in the prices of many of these industrial commodities that are used in constructing homes and office buildings.’

China’s growth rate in the fourth quarter accelerated at the fastest pace since 2007, as the nation’s US$586 billion stimulus spending and record lending stoked car and property sales. That has raised concerns the government may increase interest rates or take other measures to curb inflation and limit asset bubbles.

Mr Chanos was one of the first investors to foresee the 2001 collapse of Houston-based energy company Enron Corp. His hedge fund is known for shorting stocks, or wagering on shares of companies he expects to fall. In a short sale, investors borrow shares with the intention of buying the stock back at a lower price and returning it to the lender.

‘This is not a call for an impending crash,’ Mr Chanos said. ‘What we are saying is that there are classic pockets of overheating and overindulgence.’

China’s property market data may be masking the degree that speculation is driving prices in some of the larger cities, Ardo Hansson, the World Bank’s chief economist for China, said on Monday in an interview. Government data this month showed Chinese real-estate prices climbed the most in 18 months in December, highlighting a struggle to rein in speculation while sustaining an economic rebound.

Steel prices in China, the world’s biggest producer of the metal, dropped the most in four months last week as inventories piled up and concerns grew that the government may curb lending.

Meanwhile, investor Mark Mobius said he still doesn’t believe China is experiencing a property market bubble.

‘If a property bubble means too high prices, you can see much higher prices in Australia or Hong Kong,’ Mr Mobius, who oversees US$34 billion of developing-nation assets at Templeton Asset Management Ltd, told investors on Monday in Bangkok.

Source: Business Times, 27 Jan 2010

Reit to use proceeds to part finance its acquisition of malls

FRASERS Centrepoint Trust (FCT), a shopping centre real estate investment trust (Reit), yesterday launched a private placement of 137 million new units to part finance its acquisition of Northpoint 2 and Yew Tee Point malls.

The issue price range is $1.29 to $1.33 per new unit, which will generate gross proceeds of $176.7 million to $182.2 million. The actual issue price will be determined after a book-building process.

Of these sums, $173.3 million to $177.8 million will be used to pay for the two malls, which are costing FCT about $295 million in total, inclusive of transaction costs. The rest will be funded by debt.

The issue price range of $1.29 to $1.33 per new unit reflects a discount of 3.7 per cent to 6.6 per cent to the adjusted volume-weighted average price of $1.3805 per unit for trades done on the full market day on Jan 25. Trading in FCT units was halted yesterday.

The manager of FCT has appointed DBS Bank as the sole financial adviser and Citigroup Global Markets Singapore and DBS Bank as the joint lead managers and underwriters of the private placement.

Existing unitholders will receive an advance distribution per unit of about 0.71 cent for the period from Jan 1, 2010 to the day immediately before the date of issue of the new units under the private placement.

The books closure date for the advance distribution will be Feb 3 at 5pm.

FCT has in place a range of loan facilities which it may use to part finance the purchase of Northpoint 2 and Yew Tee Point.

These include a total of $185 million in unutilised bridge loan facilities as well as a total of $1.165 billion that remains untapped under two separate multi-currency medium-term note programmes.

The trust – which currently owns Causeway Point in Woodlands, Northpoint in Yishun and Anchor Point in the Queensway/ Alexandra Road area – will see its gearing increase from about 30.4 per cent as at Jan 1, 2010 to 33.2 per cent after the acquisition of the two malls.

The value of the trust’s deposited property is expected to increase by 25.2 per cent from about $1.167 billion as at Jan 1 to $1.462 billion.

Source: Business Times, 27 Jan 2010

The government is committed to keeping public housing affordable for Singaporeans, said Prime Minister Lee Hsien Loong yesterday.

He was speaking at a gala dinner for the International Housing Conference, organised by the Housing and Development Board (HDB) to mark its 50th anniversary this year.

The message came on the back of recent HDB data, showing resale flat prices reaching a new high in Q4 2009. Cash premiums for resale flats also jumped.

Mr Lee noted that HDB prices its new flats so that the vast majority of Singaporeans would be able to purchase them. The agency will also build enough flats to meet demand from a growing population.

‘However, the government has less control over housing prices in the resale market,’ he said. These prices are reached on a willing buyer, willing seller basis, and are affected by other factors in the economy, including those in the private property market.

As a result, resale flat prices will fluctuate, Mr Lee said. ‘But over the long term, the value of HDB flats depends on the strength of the Singapore economy. Provided Singapore continues to do well, our flats will maintain their value, and Singaporeans can enjoy an appreciating asset.’

Demand for resale flats was strong for most of 2009. HDB said last Friday that its resale price index hit 150.8 points in Q4, up 8.2 per cent from the previous year.

The median cash premium for all resale transactions doubled to $24,000 in Q4 from Q3. It has since dipped to $22,000 for the first half of this month. With a robust housing market, HDB will be launching 12,000 new build-to-order flats this year.

Today, more than eight in 10 Singaporeans live in HDB flats and nine out of 10 HDB households own their flats. The situation is markedly different from that in 1959, when less than 10 per cent of the population of 1.6 million owned a home.

There are now more than 900,000 flats across the island and HDB will be building the one millionth this year.

Mr Lee believes that HDB still has a role to play. While private housing has become more readily available, it caters mostly to higher-income groups – HDB still needs to provide good-quality public housing to most Singaporeans.

But he also recognised that Singaporeans’ aspirations have risen sharply, and a flat acts not just as a shelter, but also as a key investment asset. Home seekers now have many considerations in choosing a flat.

‘HDB is committed to providing Singaporeans with high quality public housing, even though I hope Singaporeans can understand that it cannot accommodate every preference and meet every expectation,’ he said.

Some 800 guests, including delegates and speakers attending the conference, former national development ministers and former HDB executives were at the dinner.

Source: Business Times, 27 Jan 2010

Says he was not a key player in en bloc deal sales committee

The newest instalment of the Horizon Towers saga has taken a fresh turn, with one of the parties being sued now applying for the lawsuits against him and another to be struck out.

Tan Kah Gee, a member of the original sales committee being sued by a group of minority owners, yesterday applied to the High Court for the suit to be struck out – saying the action was ’scandalous, frivolous (and) vexatious’.

He also filed his defence against the claims made against him, saying he was not a key player in the sales committee which brokered the en bloc sale of the development.

Mr Tan – and former sales committee chairman Arjun Samtani – are being sued by three sets of minority owners, who are looking to reclaim close to $1 million in legal and administrative costs which they say they incurred during the lengthy fight to keep their homes.

The minorities say they were made to defend their homes against an en bloc process actuated by a lack of good faith on the part of the sales committee, and had to spend much for their effort.

The collective sale of Horizon Towers was an affair which spanned more than two years and involved two Strata Titles Board (STB) hearings and two High Court hearings before finally being decided in the Court of Appeal.

The Court of Appeal ruled against the sale of the development in April last year, saying the sales committee failed to get the best price possible for Horizon Towers. It awarded costs for the second High Court hearing, the second STB hearing and the Court of Appeal hearing to the minority owners who had objected to the sale.

But the minority owners are now suing Mr Tan and Mr Samtani to claim sums which they said they had spent in excess of what the Court of Appeal has awarded them. The three sets of owners are seeking between $117,000 and $370,000 in costs – making for a total of more than $800,000.

But Mr Tan – through his lawyers Senior Counsel Tan Cheng Han and Ian Lim of TSMP Law Corporation – has moved to strike out their claim. He says the entire remedy sought by the minorities was already dealt with by the Court of Appeal last April, when it decided on how it would award costs to the various parties. He said their claim ‘does not form a legitimate item of damage in a separate cause of action’, neither does it ‘flow from a different and additional wrong’ from the Court of Appeal judgment.

Mr Tan also responded to allegations made by the minorities that he was one of the ‘key players in the process leading up to the commencement, facilitation, management and finalisation of the collective sale process’.

In his defence, he claimed he was ‘not a key player’ and cited various correspondence and minutes of sales committee meetings which he said showed that he did not play a major role in the various aspects of the collective sale.

He also responded to the minorities’ claim that he and Mr Samtani ‘pushed for a quick sale of the property for their personal benefit’ because both had bought additional units in Horizon Towers, at the start of the collective sale process, and were keen to profit from that.

Mr Tan’s defence was that he bought a second unit because the location and price were very attractive, and that he had acted in good faith at all times. He said he disclosed his purchase of a second unit to the rest of the sales committee, as well as to one of the minority owners now suing him. He claims he also disclosed the purchase to the sales committee’s legal advisers and was told that he did not have to disclose the purchase of this unit.

The minorities had also claimed, in their suit, that the sales committee had failed to follow up on alternative offers for Horizon Towers, including a higher offer from a Vineyard Holdings. They cited the Court of Appeal judgment, which ruled that the sales committee had failed ‘to proactively follow up on the Vineyard offer and other expressions of interest’.

Mr Tan said Vineyard’s and other expressions of interest ‘never substantively materialised’ and that the sales committee had ‘questioned the credibility of the expression of interest from Vineyard and their level of seriousness given that Vineyard was a Hong Kong company that was not well known and its lawyers were not from a Singaporean firm, but from a small Malaysian law firm’.

He claims he suggested waiting for a higher offer, but that the majority of the sales committee did not agree. He said the sales committee genuinely felt they would not get a better offer than the one by Hotel Properties Ltd (HPL), and that they had been advised by their lawyers to accept the offer.

The minorities will have 14 days to respond to Mr Tan’s defence – and 14 days to respond to Mr Samtani’s defence, which was filed last Wednesday. The court will also convene a date for the hearing of Mr Tan’s striking-out summons.

The minority owners are represented by Kannan Ramesh of Tan Kok Quan Partnership. Mr Samtani is represented by N Sreenivasan from Straits Law Practice.

Source: Business Times, 27 Jan 2010

LAST week, the blockbuster Avatar was pulled from China’s cinemas after topping the box office for three weeks. It was getting too popular.

The movie had struck a chord with viewers all too familiar with residents being forced out of their homes by unscrupulous developers in cahoots with corrupt officials. Skyrocketing housing prices in China have led to much unhappiness.

But yanking a film is the easy part. To manage the inflated real estate prices in China is far trickier. The government must deal with the nub of the problem: the incestuous relationship between property developers and officials who exploit the government’s monopoly over land supply.

In some cases, the relationship is as sleazy as the affairs that a beautiful Qingdao real estate tycoon had with three top officials – Qingdao mayor Du Shicheng, former finance minister Jin Renqing and state-owned oil giant Sinopec’s former chairman Chen Tonghai – to clinch lucrative land deals at below-market prices. Hauled in by investigators last year, the mistress ratted on the three officials.

But most times, the collusion between developers and officials is not so easy to stamp out as it is embedded in the land reserve system. Local governments have the power to determine how much land can be acquired forcibly from residents or how much reserve land can be released and sold to private developers in a competitive bidding system.

Chinese developers tend to hold the land they buy until it rises in value before they build. But as Beijing itself has acknowledged over the past two years, many developers are actually hoarding land to limit supply of housing, thus driving up prices of existing property and creating panic among home-buyers.

According to Beijing-based Soho China’s chairman Pan Shiyi, about one-third of developers reap most of their profits from holding onto land until it rises in value before selling the land for a profit or building properties that they can then sell for a much higher price.

Until this year, the authorities also closed one eye to developers who had long flouted the rule of paying a 20 per cent fee on the transaction price of land left idle for more than one year.

Beijing knows only too well that housing woes – cited by the Chinese as one of their top ’sources of pressure’ this year in a recent nationwide poll – present a key threat to social stability. It is finally getting tough on this longstanding problem of land hoarding.

This year, with some 10,000ha of land approved by the government for real estate development still unused, Beijing said it will enforce the 20 per cent rule. Land plots left idle for more than two years will also be reclaimed by the government, it declared earlier this month.

Local analysts have called this a big step in reining in China’s runaway housing prices, which shot up in December by 7.8 per cent across the country – its most frenetic pace in 18 months.

But this affects only the private developers. For officials in local governments – the other partner in the collusion that keeps property prices high – the incentive to collude with developers is not affected.

After all, they rely heavily on revenues derived from real estate. Local governments reap about 40 per cent of their total revenue from the sale of land and property development taxes, some local economists estimate.

For example, for Hangzhou’s local governments, income from land sales may even be twice their tax revenues last year, reported 21st Century Business Herald.

Beijing has tried to control how local officials sell land with a new rule requiring them to apply annually to the central government for land allocation with a proposal on land use. Once approved, the local officials distribute the land for different purposes, such as housing, commercial and industrial uses.

But there are loopholes. Local officials can claim that the land is meant for, say, a business park or public sports centre, but auction the land off for a package deal with a lucrative residential component.

As prominent Chinese economist Zhou Tianyong pointed out, the only way to cut the costs of building affordable homes for ordinary Chinese is to ‘cut out the root of the problem’ – the government’s lucrative land monopoly.

One way is to liberalise the land supply market, he said. Allow individuals or groups of land owners to sell the land themselves rather than surrendering it to local officials. This may close the loophole for unscrupulous officials to forcibly evict residents.

But this would mean an overhaul of China’s property rights laws, which could take years.

And the coffers of local governments, already burdened with a big bill for last year’s stimulus measures to spur an economic recovery, would also be hit if land sales cease to be a major source of income.

So Beijing would also have to look at ways to help local governments further diversify their funding, using more instruments like bonds. But can the masses of Chinese saddled by housing woes wait this long for a solution?

Not that long, if Avatar’s popularity and its depiction of an uprising that booted out the powers-that-be is any indication. The Chinese government knows that it has to act – fast.

Source: Straits Times, 27 Jan 2010

WHILE the Government will keep the prices of new Housing Board flats in check, it has less control over prices in the resale market.

This state of affairs was highlighted by Prime Minister Lee Hsien Loong last night when he commented for the first time on what has been one of the hottest topics of discussion.

Speaking at a gala dinner to mark the HDB’s 50th anniversary, Mr Lee stressed the Government was committed to keeping HDB flats affordable and that its new flats are priced within the means of the vast majority of Singaporeans.

On top of that, it would also build enough new flats to cater to demand as the population grows. In fact, to cap its 50th year, the HDB will build its one millionth flat this year.

However, the Government does not have control over the prices of resale flats, he said.

His explanation: ‘These resale prices are set by individual households who transact flats on a willing buyer, willing seller basis, and are affected by movements and sentiments in the wider economy, including the private property market.

‘Hence, resale prices of HDB flats will fluctuate from year to year.’

Despite these short-term fluctuations, Mr Lee said these flats would still hold their value in the long run.

‘Over the long term, the value of HDB flats depends on the strength of the Singapore economy. Provided Singapore continues to do well, our flats will maintain their value, and Singaporeans can enjoy an appreciating asset,’ he said.

The affordability of resale HDB flats has been in the spotlight, following a slew of reports showing a surge in prices.

Latest HDB data show resale prices rising 3.9 per cent in the final three months of last year to hit a fresh record, bringing the full-year increase to 8.2 per cent.

Similarly, the median Cash-over-Valuation (COV) paid for HDB flats in that period was $24,000 – double the $12,000 median in the third quarter last year. COV refers to the cash a buyer pays over and above a flat’s valuation.

Price discussions aside, Mr Lee, in his address, looked back at the 50-year history of the HDB, starting from 1960 when it was formed to tackle Singapore’s housing crisis to the present day when it is the provider of quality housing to most Singaporeans.

As he reflected on its successes, he threw up an interesting poser: Given that the entire population is housed, and the HDB has fulfilled its original mission, does it still have a role to play?

His reply: ‘I have no doubt the answer is ‘yes’.’

He explained that the HDB would remain relevant because it performs a crucial dual role: a housing and a social role.

‘It is both a matter of capability – who can build, plan and manage these estates – and also a matter of social policy.

‘Nobody else but the Government can build houses not just to achieve a housing objective, but to achieve a social goal – racial integration, community bonding, establishing and upgrading and maintaining a high quality living environment for the whole community,’ he said.

But the environment the HDB is working in now has changed, as with the expectations of the people, he said.

‘Singaporeans’ aspirations have risen sharply. Finding a roof over our heads is no longer the pressing requirement. The HDB flat is not just a shelter, but also a key investment asset,’ he noted.

So, when people look for a flat now, many more considerations are involved, he said: ‘They want the right flat, in the right locality, at the right time and at the right price. Such high expectations are understandable, since buying a flat is a major commitment for a young couple setting up a home together.’

He stressed the HDB is committed to providing Singaporeans with high quality public housing, although it cannot accommodate every preference and meet every expectation.

The gala dinner also launched the International Housing Conference, which will run till Friday. Some 500 local and foreign delegates, as well as housing experts, are here to discuss such housing issues as urban planning and environmental sustainability.

Source: Straits Times, 27 Jan 2010