The property unit of Straits Trading Company will be developing a cluster of freehold bungalows at the prime Chancery Lane area as the mainboard-listed company is acquiring the original developer, Tertius Development.

The project, called Chancery Five, will have 12 bungalow units and sits on a land plot of 27,600 square feet. The size of the bungalows will range between 4,800 square feet to 6,500 square feet each.

Each of the two-storey bungalows will have five rooms, an entertainment room, an attic, a private basement car park, a swimming pool and a lift.

Eric Teng, chief executive officer of Straits Trading, said the Chancery Five project is in line with its overall strategy of developing properties that are both exceptional and of high quality.

While the company did not disclose the value of the development, property analysts estimate it to be worth about S$58 million.

Based on the project’s estimated worth, Cushman & Wakefield’s regional managing director Donald Han said that the bungalows would be priced at slightly less than S$1,000 per square feet (psf).

This means each unit would be priced at about S$4.8 million, which he said is “a fair price for a bungalow on Chancery Lane”.

Mr Han added that its close proximity to top schools such as the Anglo-Chinese and Singapore Chinese Girl’s schools, as well as to Orchard Road, makes it a hit with families and sub-letters.

Meanwhile, Nicholas Mak, real estate lecturer at Ngee Ann Polytechnic, said that based on similar properties in the vicinity, Chancery Five should fetch about S$500 to S$600 psf.

“With the largest unit at about 6,500 square feet, I have a feeling that they will price it above S$4 million per unit,” said Mr Mak.

“Landed property will always have a place with investors. It has the highest price increase in 2009 compared to other types of properties,” said Mr Han.

Source: Channel News Asia, 2 Mar 2010

Recent measures to cool the property market in China, Hong Kong and Singapore are seen as the right moves to temper speculation and rapidly rising prices.

Still, industry watchers said that prices will have room to move upwards over the next two years.

This is because interest rates in Hong Kong continue to be low, and high-end property prices in Singapore are still below their peak.

Private home prices in Singapore rose by 24 per cent in the second half of last year, causing the government to step in.

Over in Hong Kong, the government also announced measures to avoid an asset bubble – after property prices rose by some 30 per cent last year.

The Chinese government is also doing its part to cool its red-hot property sector by tightening credit.

Analysts said these moves will limit price growth this year, but overall, they still expect prices to move upwards, even if at a slower pace.

Donald Han, managing director, Cushman & Wakefield, said: “With the introduction of these measures, and the fact that the government is keeping a lookout on the market, they may continue to intervene.

“We would expect the market currently to come down to between 8-15 per cent, depending on what market you are in in Asia Pacific. So it would probably come down by a few percentage points in terms of price increases.”

Analysts note that Singapore’s high-end residential market remains below 2008 peaks by some 20 per cent.

Meanwhile – they also say, the measures are only aimed at moderating the price increases.

Karamjit Singh, managing director, Credo Real Estate, said: “The measures that were announced by the Singapore government on February 19 do not address the root cause of the problem yet. The root cause of the problem is a short-term supply crunch at the lower end of the market, but it definitely helps mitigate the risk of bubbles being formed in the future.”

Experts said the factors set to drive prices higher this year are investors searching for higher yields, continuing hot money inflows and continuing low interest rates causing lower borrowing costs for buyers.

Source: Channel News Asia, 2 Mar 2010

The US and Japan are expected to see the biggest rise in distressed property sales in the first quarter, as the fallout from the global property downturn intensifies, the results of a survey showed yesterday.

By contrast, respondents in Brazil, India, Hong Kong and Australia are more optimistic and expect fewer distressed property listings, the Royal Institution of Chartered Surveyors (RICS), which surveyed 430 of its members in 25 countries, said.

RICS, which last polled its members in the final quarter of 2009, defines distressed properties as those with a foreclosure order or are advertised for sale by their mortgagee, and which tend to fetch a lower price than their market value.

It said that the net balance of 85 per cent more respondents in the US polled during the fourth quarter expect distressed property sales to rise in the first three months of 2010, compared with about 68 per cent in Q3.

The turnaround was even more distinct in Japan, where the net balance of respondents predicting an increase in distressed sales this quarter jumped from 12 per cent in the Q3 2009 poll, to 80 per cent in the Q4 poll.

Rounding out the top five markets expected to be worst hit by distressed sales this quarter are Ireland, Scandinavia, and Spain, the survey showed.

It is the major property markets of the world, namely the US and Japan, where agents expect the strongest growth in distressed sales in the first quarter of 2010,’ Oliver Gilmartin, RICS senior economist, said.

RICS also asked its members whether the levels of interest from specialist funds that buy distressed properties was rising, finding that 21 out of 25 countries saw increased interest, with interest in Spain, Ireland, the UK, and the US rising at a faster pace.

‘Significantly, whilst the US is seeing ongoing rises in interest from specialist funds, Japan is not the recipient of the same level of investor appetite for distressed property assets,’ Mr Gilmartin said.

Source: Business Times, 2 Mar 2010

UK mortgage approvals in January have dropped by more than economists forecast to an eight-month low, adding to evidence that the housing market recovery may be losing momentum.

Lenders granted 48,198 loans to buy homes, compared with 58,223 in December, the Bank of England said yesterday. The median of 22 economist forecasts in a Bloomberg News survey was for a result of 50,000. Gross mortgage lending has fallen to its lowest level since 2000.

Bank of England policymaker Kate Barker said last week that the property market may face ‘adjustments’ as banks curb lending, and Hometrack Ltd said yesterday that price gains observed last month don’t have solid foundations. The UK’s longest cold snap in 30 years and an increase in a tax on housing transactions may have also damped activity, economists said.

‘There will be a bit of a slowdown this year,’ Vicky Redwood, an economist at Capital Economics, said in a telephone interview before the figures were released. ‘Credit conditions are still pretty tight and incomes are set to be squeezed.

There are not the fundamentals there to keep the recovery going.’

The pound fell as much as 0.1 per cent against the dollar after the report, and traded at $1.5162 as at 9.33 am in London, down 0.6 per cent on the day. The yield on the benchmark two-year gilt was up 0.5 of a basis point yesterday at 0.977 per cent.

House price data have shown a mixed picture of the property market. Values increased 0.3 per cent on the month in February, Hometrack said yesterday. Nationwide Building Society said last week that prices fell one per cent, the first decline in 10 months.

Net mortgage lending rose in January to £1.5 billion (S$3.16 billion) from £1.2 billion the previous month, the Bank of England said. Overall gross home loans dropped to £10.2 billion, the lowest level in more than nine years.

HSBC Holdings plc said yesterday that it ‘continued to support its customers’ in a ‘challenging period’ by offering £15 billion in new mortgage lending in the past year.

‘Average loan-to-value ratios were less than 55 per cent, and we grew our market share of net new mortgage lending to 11 per cent,’ the bank said in a statement.

Yesterday’s central bank report showed that consumers added to their unsecured debts in January. Net consumer credit rose by £500 million.

Economists predicted a £100 million drop, according to the median of 20 forecasts. Credit-card lending rose by £171 million, while personal loans and overdrafts increased by £330 million.

Source: Business Times, 2 Mar 2010

More buyers chasing fewer properties fuels sharpest increase in 2 years

Luxury home prices in central London jumped 17 per cent in February from a year earlier, the biggest gain in almost two years, as more buyers competed for a dwindling number of properties, Knight Frank LLP said.

The value of houses and apartments costing more than £1 million (S$2.1 million) rose 3.2 per cent from January, the London-based property broker said in a statement yesterday. The annual increase was the largest since the market peaked in March 2008 and compares with an 11.5 per cent advance in January. Prices are still 10 per cent lower than the peak.

‘The continuation of the growth in prices and the recent increase in the speed of such growth has been caused by a dramatic shortage of supply,’ Liam Bailey, head of residential research at Knight Frank, said.

The lack of properties for sale, combined with a surge in overseas buyers drawn by a weaker pound, helped London’s prime real estate perform better than the residential market as a whole. House prices across the country fell last month for the first time in 10 months, Nationwide Building Society said on Feb 26.

Knight Frank registered 10 new potential buyers last month for every additional property it was asked to sell in the centre of the UK capital, twice the average since the broker started tracking the ratio five years ago.

The company now has 30 per cent more new buyers than in any comparable period in the past five years, while it has 22 per cent fewer properties for sale than is normal for this time of the year.

The pound’s 22 per cent decline against the euro in the past three years attracted purchasers from Russia, Italy and Greece, in particular, Mr Bailey said. Foreigners bought 45 per cent of properties sold for more than £2 million in the past year, according to the broker.

Prices for the best properties in the Mayfair, Kensington, Holland Park and Knightsbridge districts are reaching or exceeding levels from when the prime central London market peaked in 2008, Knight Frank said.

The broker recently sold a modernised property in Mayfair for near the record price of £3,700 a square foot achieved in 2007, Richard Cutt, head of Knight Frank’s office in the district, said. He declined to be more specific because of confidentiality agreements.

‘Newly refurbished properties done to the right standard are back to their peak and are in very short supply,’ he said.

The market’s revival is drawing developers back into neighbourhoods such as Chelsea, Belgravia, Kensington and Mayfair after a gap of 18 months, Knight Frank said. Construction starts in the municipality of Kensington & Chelsea rose 43 per cent between July and December.

Consumer confidence rose to a four-month high in February as the UK emerged from the longest recession on record, market researcher GfK NOP said on Feb 26. The British economy grew at a faster pace in the fourth quarter than previously estimated, the Office of National Statistics reported the same day.

Gross domestic product increased 0.3 per cent from the third quarter, compared with a previous calculation of 0.1 per cent, the statistics office said.

The median forecast in a Bloomberg News survey of 27 economists was a 0.2 per cent gain. Prices of luxury properties in central London surged 82 per cent during the last boom, between January 2005 and March 2008, Knight Frank’s data show.

The broker compiles its luxury home index from estimated values of properties in the Mayfair, St John’s Wood, Regent’s Park, Kensington, Notting Hill, Chelsea, Knightsbridge, Belgravia and South Bank neighbourhoods of London.

Source: Business Times, 2 Mar 2010

Australian property prices are rising strongly and show no signs of abating, analysts said yesterday, after weekly sales in one state hit a record A$1.03 billion (S$1.3 billion).

The Real Estate Institute of Victoria said last week saw ‘the largest dollar volume of transactions ever recorded’ amid growing confidence in the economy as people took advantage of low interest rates.

‘We’ve seen more physical sales in a week period, but never have they passed the billion dollar mark,’ research manager Robert Larocca told AFP.

‘So that’s partly a sign of how strong the market is and it’s also a sign that people are spending more than they have in the past.’

Mr Larocca said that the surge in sales was the result of historically low interest rates following the global financial crisis and the growing population in Melbourne, Australia’s second largest city, outstripping available housing.

‘People are confident, they are confident because the economy is going much better than they expected it to,’ he added.

David Airey, president of the Real Estate Institute of Australia (REIA), said that Melbourne was one of the country’s strongest markets, but noted that Australian property prices were in general very strong and rising.

‘The property market in all Australian capital cities has had a rapid recovery from mid-2009 on, and noticeably in Melbourne and Sydney with property prices rising quite significantly over that six month period,’ he said.

‘I think that will be reflected again this quarter with further growth in all capital cities.’

Mr Airey said that Australians felt property was a safe investment, with median house prices rising by 18.5 per cent in Melbourne and around the country by more than 12 per cent in 2009.

Source: Business Times, 2 Mar 2010

Participants say govt should rethink Land Intensification Allowance

THE new tax allowance scheme that replaces the Industrial Building Allowance (IBA) and aims to raise land productivity is not business friendly.

In fact, restricted to too few sectors, the Land Intensification Allowance (LIA) may actually inhibit the growth of industry ecosystems and raise business costs to uncompetitive levels, participants at a post-Budget roundtable said yesterday.

Ascendas chief financial officer Chia Nam Toon said that there is a ‘need to address this very carefully’, lest the nine qualifying sectors – singled out as ones which will move Singapore manufacturing up the value-added chain – are hurt too.

As a business park developer, Ascendas looks into the clustering effect of industries – where core players are supported by small and medium sized enterprises (SMEs) that may not fall in the same sector.

The LIA’s sectoral restriction could be counterproductive if it discourages such clustering, Mr Chia said.

KPMG executive director of tax David Lee agreed that phasing out the IBA seemed contrary to the strategy of nurturing industry ecosystems.

This involves attracting MNCs, he said, and the IBA continues to be a key incentive offered by locations such as Hong Kong, which compete with Singapore for global investments.

Building costs are significant expenses forked out, said Ernst & Young international and corporate tax services partner Choo Eng Chuan, who also called for the move to be re-examined.

Those who spoke up were in favour of not abolishing the IBA entirely and relaxing restrictions on the LIA.

Among numerous other Budget measures debated at the Institute of Certified Public Accountants of Singapore (ICPAS) roundtable, was the hike in foreign worker levies.

Steering away from usual comments about its impact on the construction sector, National Volunteer and Philanthropy Centre corporate development director Chang Che Hsien asked if non-profit and healthcare sectors could be exempted.

National Kidney Foundation financial controller Ingrid The said that up to 80 per cent of nursing homes’ employees are foreign and not easily replaced, and that costs cannot be passed on to needy patients.

Mr Choo added that the levy hike was unlikely to induce productivity gain in an already overstretched healthcare workforce.

SME voices were also represented at the table. Michael Tien, CEO of Atlas Sound & Vision, spoke about the gap in training grants for basic degrees while CEO of Greenpac Susan Chong proposed that the government provide bridging loans for SMEs to embark on patenting.

Yesterday’s session was co-chaired by ICPAS president Ernest Kan and MP Jessica Tan. Ms Tan chairs the Finance and Trade & Industry government parliamentary committee and will speak in Parliament when the Budget debate begins this afternoon.

Source: Business Times, 2 Mar 2010

THANK you for publishing the thought-provoking concerns of Mr Tan Keng Ann last Saturday (‘Review law on en bloc sales’).

There is a growing band of condominium owners who continue to live in fear of being ousted from our precious chosen homes by property speculators or often-misguided secondary proprietors in a lemming-like pursuit of a perceived windfall profit.

With the refreshing sentiment of regarding a house as a home, I hope there will be concrete action to tighten appropriate legislation and curb collective property sales exercises.

Dennis Butler

Source: Straits Times, 2 Mar 2010

MR TAN Keng Ann’s letter last Saturday (‘Review law on en bloc sales’) revealed the unfair predicament suffered by a good number of people amid the frenzy of many collective property sale exercises. Instead of leaving them alone to retire in peace and contentment, young speculators callously go out of their way to make home owners like Mr Tan miserable, all to make a quick buck.

I am not involved in any collective sale, but from what I have heard from friends who are, the situation is dire and shameful. Meetings of condo owners to discuss such sales are invariably boisterous. Some turn ugly with owners hurling verbal abuse at one another, with those who refuse to sell on the receiving end. They are also harassed between meetings.

It is clear that those who put pressure on reluctant owners have much to gain if the sale goes through. Some speculators have bought several units earlier in anticipation of a successful sale. It is purely business and their aim (and that of the would-be developers) is to make money. The feelings of people like Mr Tan do not concern them in the least.

Yes, the law must change if we are serious about curbing speculation. It would protect the interest of owners who cherish their homes. Why take away the rights of owners who are not interested in the money and want to stay put? Besides, many of the condos involved are not by any stretch of the imagination obsolete in design, or in a state of disrepair.

Lee Seck Kay

Source: Straits Times, 2 Mar 2010

But ARA has to first reposition centre for more stable income

There are plans for Suntec Real Estate Investment Trust (Suntec Reit) to purchase the entire Suntec International Convention & Exhibition Centre. But this is unlikely to happen until the latter has been repositioned to produce a more stable income stream.

John Lim, chief executive of ARA Asset Management, which has a unit that manages Suntec Reit, told BT: ‘Eventually, we hope for Suntec Reit to acquire the asset.’

But ‘we have to spend some time and money to reposition the convention centre, and that may take about two to three years’.

ARA is yet to approach the Urban Redevelopment Authority, though its plans are subject to approval. ‘We will have to work with the authorities closely on how to reposition the asset,’ Mr Lim said.

Last year, ARA bought Suntec convention centre for $235 million and placed it under a newly created private real estate fund called the ARA Harmony Fund. Suntec Reit has a 20 per cent stake in this fund.

The convention centre did not go to Suntec Reit entirely because its earnings fluctuate, depending on the size and frequency of events held.

Reits tend to prefer properties with steady income, so they, in turn, can make steady payouts to unit-holders.

According to Ngee Ann Polytechnic real estate lecturer Nicholas Mak, ‘putting up tenants that pay regular rents’ would be one way to inject more stability into the convention centre’s income. But the amount of space that can be converted for other uses could be limited, he said.

Mr Lim raised the possibility of more food and beverage outlets at Suntec convention centre. ‘There are quite a number of activities you can look at,’ he said.

In the meantime, Suntec Reit has been busy with other asset enhancement works. It said in January that it would build a glass facade and covered walkway to link Suntec City Mall to the upcoming Promenade MRT station. It is also creating new retail units.

Suntec Reit units gained one cent on Friday to close at $1.30.

Source: Business Times, 2 Mar 2010