Two owners in the Mountbatten area are jointly putting up their adjacent bungalows for sale for some S$30 million.

Property consultant Cushman & Wakefield said the freehold units at 6 and 8 Margate Road have a combined land area of 24,000 square feet.

The property is zoned for high rise residential development of up to 24 storeys. It has a plot ratio of 2.1, allowing a maximum gross floor area of 50,404 square feet.

According to Cushman & Wakefield, the combined plot of land can allow the new developer to construct between 55 and 60 units with average sizes of 850 square feet.

It added that small concept apartments have been making headlines last year and sold well due to the affordability factor.

The property is expected to fetch in excess of S$30 million.

Source: Channel News Asia, 17 Mar 2010

It can withstand removal of govt and Fed stimulus plans: economists

The US housing market is poised to withstand the removal of government and Federal Reserve stimulus programmes and rebound later in the year, contributing to annual economic growth for the first time since 2006, economists say.

Increases in jobs, credit and affordable homes will help offset the end of the Fed’s purchases of mortgage-backed securities this month and the expiration of a federal homebuyer tax credit in April.

Sales will rise about 6 per cent this year, and housing will account for 0.25 percentage point of the 3.6 per cent growth, according to forecasts by Dean Maki, chief US economist for Barclays Capital in New York.

‘I would bet even odds that we’re at a bottom and that we’re going to see improvement in the coming months,’ said Karl Case, co-creator of the S&P/Case-Shiller Home Price Index and a professor of economics at Wellesley College in Wellesley, Massachusetts.

An improving market would allay concerns at the Fed that sales will relapse after the tax credit expires. It would also give it a freer rein to ultimately raise the interest rate for overnight loans among banks from near zero.

Homebuilders’ shares reflect the optimism. The 12-member Standard & Poor’s Supercomposite Homebuilding Index hit a five-month high on March 9 on speculation that the expanding economy will boost sales.

But recent housing data have been mixed. Sales of existing homes fell 7.2 per cent in January, while housing starts rose 2.8 per cent, according to statistics from the National Association of Realtors in Chicago and the Commerce Department in Washington.

Employment is key to the outlook, according to Patrick Newport, an economist with IHS Global Insight in Lexington, Massachusetts. ‘When people get jobs, that’s when they move or decide to buy a bigger house,’ he said.

As many as 300,000 new jobs may be added this month, the most in four years, thanks to an improvement in the weather, government hiring of temporary workers for the census and a growing economy, said David Greenlaw, chief fixed-income economist at Morgan Stanley in New York.

Credit conditions may also be improving. A net 13.2 per cent of banks surveyed by the Fed in January reported that they tightened standards on prime mortgage loans in the fourth quarter, the smallest percentage since the central bank began tallying such data three years ago.

‘This is an important step in the right direction,’ Peter Hooper, chief economist at Deutsche Bank Securities in New York, and his colleagues wrote in a report to clients last month.

The housing market’s first hurdle comes at the end of this month, when the Fed completes its programme to purchase US$1.25 trillion of mortgage-backed securities and about US$175 billion of housing-agency debt.

The move probably won’t have much impact, said Mahesh Swaminathan, a mortgage strategist at Credit Suisse Holdings in New York. Private demand will replace the central bank, keeping down the spread at which mortgage-backed securities trade to 10-year Treasury notes, he said.

He sees mortgage rates remaining ‘about where they are now’.

Once the Fed completes its purchases, the next obstacle for the market is the expiration of the tax credit for first-time home buyers.

The original credit helped boost existing-home sales by 4.9 per cent to 5.16 million last year, the first increase since 2005, according to the Realtors’ association. The credit, which was slated to end on Nov 30, was expanded and extended through April.

The final challenge for the housing market this year is the supply of available properties and the prospect that it may rise.

Foreclosures may increase to 2.2 million this year from a record 1.7 million last year, according to a forecast by Mark Zandi, chief economist for Moody’s Economy.com in West Chester, Pennsylvania.

Source: Business Times, 17 Mar 2010

CONSTRUCTION player Lian Beng Group has won a $78 million contract from Far East Group to build Centro Residences, with completion expected by January 2013.

The deal – the second in two weeks for Lian Beng – is for a 34-storey residential tower, multi-storey carpark, clubhouse, swimming pool, playground and ancillary facilities at Far East’s condominium development opposite Ang Mo Kio MRT Station. Work is expected to start this month.

Just last week, Lian Beng said it would be building a condominium at Dakota Crescent for $144 million. Taken together, the two contracts will add $222 million to the group’s order book, lifting it to $820 million.

‘As a group, we have been fairly successful in leveraging our internal resources to provide more value-added activities for our customers,’ said managing director Ong Pang Aik. ‘We are delighted to be able to work with Far East Group on another of its distinctive projects.’

Lian Beng enjoys good control over some key cost components – through ownership of its equipment fleet and ready-mix concrete facilities, in-house civil engineering expertise and an accredited training centre in Bangladesh.

As Singapore’s construction sector continues to see the return of previously deferred public and private projects, Lian Beng believes its experience of handling major projects should place it in a good position.

The group holds A1 accreditation from the Building and Construction Authority (BCA), which allows it to tender for general building contracts of unlimited value.

Lian Beng shares closed unchanged at 29.5 cents yesterday.

Source: Business Times, 17 Mar 2010

Tender to lease out historic property which has been vacant for 6 years

After being left vacant for about six years, the former Alkaff Mansion on Telok Blangah Hill may spring to life again.

Singapore Land Authority (SLA) has launched a tender to lease out the property, which has conservation status, for the following uses – food & beverage/ restaurant, art gallery, wellness/spa facilities and museum. The guide rent is $28,100 per month and SLA will issue an initial tenancy term of three years, renewable for a further two terms of three years each.

The two-storey property is said to have been left vacant since former tenant Hotel Properties Ltd returned it to Singapore Tourism Board (STB) in 2004, when its 15-year lease expired.

The property has a land area of 96,699 sq ft and a gross floor area of 13,142 sq ft. An outdoor refreshment area (up to 969 sq ft) may be allowed subject to evaluation.

In its heyday, Alkaff Mansion was the venue for grand weddings and even a Ricky Martin concert in 1999. An Indonesian buffet used to be served on the first level, ala carte on the second level and a bar on the verandah. However, the eatery’s fortunes are said to have dwindled since 2001 when the economy tanked. Just months after the 2003 Sars outbreak, restaurant operations at Alkaff Mansion quietly ceased operations.

This time round, market watchers are more optimistic.

For one thing, the location has become more attractive. DTZ executive director (consulting) Ong Choon Fah says: ‘Previously, the location was isolated, out of the way. But now with the development of the HarbourFront area including Vivocity, as well as the integrated resort at Sentosa, Alkaff Mansion’s location is part of a bigger precinct with more buzz.’

A concept-driven F&B outlet and an events/ corporate meetings venue would be ideal for the property, suggests Mrs Ong.

Ronald Tan, a veteran leisure industry consultant, suggests a high-end food and thematic entertainment venue, particularly offering Middle Eastern or North Indian cuisine. ‘There’s a dearth of upmarket halal restaurants right now in Singapore,’ he notes. He feels that a revamped Alkaff Mansion could cater to high-end visitors. In the past, he says, the property was not air-conditioned and there was no covered walkway leading to the car park.

STB returned the property to the state in March last year. Since Alkaff Mansion was listed on SLA’s State Property and Information Online (SPIO) portal six months ago, it has received more than 50 enquiries, according to SLA.

The tender closes at 11 am on April 6. Bids will be evaluated on tender price, concept and proposed uses, among other factors.

Real estate lecturer Nicholas Mak suggests that SLA could share the risks with the successful bidder. ‘Instead of selecting the bidder that offers the highest rent, SLA should choose the operator with the best concept or product. In the first one to three years, SLA can offer a discounted rent. After the business has established a brand name in the market and has loyal customers, SLA could share the rewards by pegging the rent as a percentage of the operator’s income.’

The property was built in the 1920s by Yemeni businessman Syed Abdul Rahman Alkaff as a family retreat named Mount Washington. It was the venue of opulent parties, which the family hosted for top local and international businessmen, celebrities and dignitaries, according to earlier media reports. The house was abandoned by the family by the 1960s.

Source: Business Times, 17 Mar 2010

INDUSTRIAL landlord Ascendas Real Estate Investment Trust (A-Reit) has enhanced its capital structure through a series of capital management initiatives.

As a result, the trust has effectively extended its weighted average debt maturity to 4.5 years – from 2.4 years – and secured funds for acquisitions, it said yesterday.

The trust has extended a $300 million loan that was due this month by seven years to March 2017. It also decided to pay off 165 million euros (S$317 million) of debt due in May 2012 now ‘in view of the significant amount of refinancing expected in the Singapore real estate sector in 2012′.

After the euro debt has been paid off, 23 properties valued at $1.2 billion will no longer be mortgaged. A-Reit has 91 properties in Singapore worth about $4.8 billion in all.

The trust also said a $300 million exchangeable collateralised securities issue – which it announced on Monday – has been successful. The issue attracted strong participation from over 70 institutional investors and was 4.5 times subscribed.

The securities, due in 2017, come with a put option in 2015. They were priced at a coupon and yield to maturity of 1.6 per cent and an exchange price of $2.45 – which is a 25 per cent premium to A-Reit’s closing price on March 15.

A-Reit will use the proceeds from the issue to refinance existing borrowings and finance the acquisition and development of properties.

With all of the initiatives, the trust has increased its weighted average debt maturity and managed to gain funds for future acquisitions.

‘Other than the $150 million medium-term notes and the $138 million committed revolving credit facility due in 2011, A-Reit does not have any major debt refinancing till 2014 and is therefore well positioned to capitalise on growth opportunities moving forward,’ the trust said in a filing to the Singapore Exchange.

A-Reit lost two cents to close at $1.94 yesterday.

Source: Business Times, 17 Mar 2010

Projects in Sengkang and Sembawang may see big demand

THE Housing and Development Board (HDB) is offering 828 flats in Sengkang and Sembawang through two new build-to-order (BTO) projects.

These are the first BTO projects to be launched after the government adjusted some public housing policies early this month.

HDB is gauging interest in the 522-unit Fernvale Ridge in Sengkang, and the 306-unit Sembawang RiverLodge. Fernvale Ridge, bounded by Sengkang West Way and Fernvale Link, will be near the Fernvale, Layar and Thanggam LRT stations. There will be 180 three-room flats, 216 four-room flats and 126 five-room flats.

The selling price for a five-roomer will range from $281,000 to $352,000. According to HDB, the price of a comparable five-room resale flat in the vicinity is $415,000 to $461,000.

The other BTO project, Sembawang RiverLodge, is at Sembawang Drive. The nearest MRT station is at Sembawang, where Sun Plaza is also located.

Of the 306 units available, 86 will be three-roomers and 220 will be four-roomers.

HDB added that the project is designed to house another 126 two-room flats, but it will set these aside ‘to meet the housing needs of lower income families at a later date’.

A four-room flat at Sembawang RiverLodge will cost $212,000 to $268,000. The price of a comparable resale four-roomer nearby is $275,000 to $350,000.

PropNex CEO Mohamed Ismail expects both BTO projects to be popular and they could each be oversubscribed by at least eight times. One reason is because the sites will have three, four, or five-room flats – not studio apartments – which are suitable for young couples starting a family, he said.

Sembawang RiverLodge could stand out, he said. This is because residents will get ‘a taste of waterfront living’ with Sungei Sembawang nearby and the estate will have amenities such as a supermarket.

Applications for the new flats will close on March 29. With these two projects, HDB would have offered 3,653 new BTO flats in the first three months of the year. It plans to release 1,200 BTO flats in Punggol next month.

First-timer households comprising a Singapore citizen and permanent resident applying for flats will have to pay a $10,000 premium on top of HDB’s selling price. The $10,000 will go back to them if the PR family member becomes a citizen, or if the couple has a child who is a citizen.

Source: Business Times, 17 Mar 2010

99-year plot may yield 600 units; consultants describe bids as sensible

SIM Lian Land has emerged as the top bidder for a closely contested land parcel in Tampines.

The developer led the field that included familiar names such as CapitaLand, Far East Organization, Frasers Centrepoint and MCL Land in a state land tender as demand for residential land continues to hold strong.

Sim Lian bid $302 million for the 99-year leasehold site at the junction of Tampines Avenue 1 and Avenue 10, which works out to $421 per square foot per plot ratio (psf ppr).

Analysts had previously said that the site could go for anything between $300 and $460 psf ppr.

The next highest bid of $289 million – just 4.3 per cent under Sim Lian’s – was put in jointly by Far East Organization and Frasers Centrepoint. Their bid works out to $403 psf ppr.

The site has a maximum gross floor area of 717,500 sq ft and can yield about 600 housing units. It is the biggest of the eight residential sites up for sale in the first half of this year.

‘The tender for the condominium site at Tampines Avenue 1 is another demonstration of developers’ interest in the mass-market segment,’ said CB Richard Ellis executive director for residential Joseph Tan. ‘Of the eight bids submitted, the first six bids were very close to each other.’

One developer BT spoke to expressed relief that all the bids were ’sensible’, and the ‘let’s get it at all costs’ attitude from developers is beginning to wear off after the government said that it would release more land sites in the second half of the year.

Based on the top bid of $421 psf ppr, the new project will break even at around $700 psf, said CBRE’s Mr Tan.

Caveats lodged for transactions in new projects in the Bedok Reservoir area (such as Waterfront Key and Waterfront Waves) ranged from $700 psf to $850 psf in the last 4-5 months. When the new project is ready for launch in 6-8 months, it could be priced within the same range or even higher, he added.

Donald Han, managing director of Cushman & Wakefield, said that homes on the site could go for about $800 psf. He factored in construction cost of $300-$320 psf.

‘Sim Lian is also a contractor so that means they have a better control over the construction cost,’ said Mr Han.

Source: Business Times, 17 Mar 2010

THE former Alkaff Mansion, a majestic conserved building perched on top of Telok Blangah Hill Park, has been put up for lease by tender.

Once a popular wedding venue, the property has been vacant since late 2003 but is now being made available for various uses, including a food and beverage outlet, an art gallery, a wellness or spa facility, or a museum.

The Singapore Land Authority (SLA), which launched the tender yesterday, said it has received inquiries from individuals and businesses keen to use the property. Its guide rent is $28,100 a month.

Yemeni businessman Syed Abdul Rahman Alkaff built the property as a family retreat in the 1920s.

It made the news in 1990 when it was turned into a dining and entertainment hub after a $5 million makeover. It was given conservation status in 2005.

A new lease of life awaits following earlier suggestions, including turning it into a one-stop bridal service destination, a hotel or a club for companies to hold meetings.

Dr Kevin Tan, president of the Singapore Heritage Society, had reportedly said the building could be turned into a heritage centre for the Telok Blangah area, especially as it was the traditional stronghold of the former Temenggong of Singapore and his family.

The property has views of Sentosa island and the sea but it lacks a critical mass of buildings or space to attract customers of different tastes, said Ngee Ann Polytechnic real estate lecturer Nicholas Mak.

It is a ‘destination place’ and cannot rely on casual walk-in customers.

‘Furthermore, any business on this site needs a significant amount of marketing to create and maintain awareness among the customers,’ he said. ‘It is expensive for a single business to shoulder the entire marketing bill for a restaurant on this site.’

Mr Mak believes these factors will mean the tender’s take-up rate could be low. ‘Since the previous operator had failed to operate it successfully as a restaurant, it could deter other similar operators from bidding,’ he said.

Businessman Ong Beng Seng’s Hotel Properties leased the property for 15 years from 1990 from Singapore Tourism Board, which returned it to the SLA last year.

Times were good in the 1990s, but business was hit in 2001 when the economy dipped and then the Sars outbreak came in 2003, forcing it to close that year.

The building has a land area of 8,984 sq m and an approximate gross floor area of 1,220 sq m.

The SLA, which will host a site show-around next Wednesday, said the tender is for a tenancy with an initial term of three years and renewable for another two terms of three years each. The tender closes on April 6.

Other key state buildings awaiting a similar rebirth include the Queenstown Remand Prison and Old Kallang Airport.

Source: Straits Times, 17 Mar 2010

It became much cheaper for industries to rent a space in Singapore last year than in cities such as Tokyo, Hong Kong or Sydney.

In Cushman & Wakefield’s global ranking of industrial space occupancy cost, Singapore fell sharply to 18th from fifth place in the previous year. Industrial rents on the island had slipped more than in several other cities as demand for space from the trade and manufacturing sectors weakened from the downturn.

According to the property consultancy, the annual industrial occupancy cost here was 88.48 euros per square metre (S$169 psm) last year. Rents were down about 16 per cent year-on-year.

The drop ‘places Singapore in a more favourable position to attract new demands with its greater cost competitiveness and availability of quality space,’ said Cushman & Wakefield Singapore’s managing director Donald Han. Many other regions in the world also suffered drops in industrial rents. Cushman & Wakefield noted that globally, rents fell by an average of 5.5 per cent in 2009.

Nonetheless, industrial rents in London’s Heathrow stayed relatively constant and the area kept its position on top of the list with the most expensive industrial space. The occupancy cost there was 200.28 euro psm per year.

In second place was Tokyo, with an annual cost of 151.73 euro psm. Hong Kong rose six spots to third on the table, with an annual cost of 145.89 euro psm.

Apart from Tokyo and Hong Kong, the only other Asia-Pacific city to make it to the top ten was Sydney, where the annual occupancy cost was 92.83 euro psm.

As global economic conditions stabilise, Cushman & Wakefield expects to see industrial rents increase towards the end of this year, ‘the extent of which will be driven by the speed in recovery of global export activity’.

But Singapore may not see rents rise until the second half at the earliest, the consultancy said.

Colliers International industrial director Tan Boon Leong shared similar views – he believes industrial rents here may increase sometime in the second half.

He has seen rental activity pick up in the last few months, but that mainly involved companies moving to other premises, he said. The emergence of new demand for space would give an indication of rents firming up, he added.

Source: Business Times, 17 Mar 2010

Latest home-loan skirmish also sees banks speeding up their approvals

A skirmish of sorts has broken out on the home loans front with banks pushing down their interest rates a notch or two over the past week or so. The first volley was fired by DBS Bank and the others have responded.

This is welcome news for home owners and investors who are looking to re-price or refinance their home loans. The rates also provide a positive backdrop to the upturn in the property market. But advisers are telling clients to be prudent and watch their debt servicing ratios.

To date, it appears that Maybank is offering the most attractive loan rates in terms of variable rate loans – and not just for the first ‘honeymoon’ year. Maybank’s package, which is based on an internal board rate, starts from 1.18 per cent for the first year and edges up to 2.28 per cent in the third year.

For those who prefer a more transparent benchmark rate – typically Sibor (Singapore interbank offered rate) or SOR (Singapore swap offer rate) – the spread over the benchmarks has plunged to 0.5 per cent. DBS uses Sibor and OCBC uses SOR.

As always, there is no free lunch. Lower rates usually come with shorter lock-in periods. Borrowers who want certainty in the rate they pay over a longer period should be prepared to pay more and be locked in for two to three years.

The big question is the direction of interest rates. The widespread expectation among home owners is that rates will head up at some point in the next year or two. Rates are currently close to their all-time lows over 10 years. Between March 2000 and 2009, the lowest points for Sibor and SOR were 0.56 and 0.54 per cent, respectively, in 2003. Today Sibor and SOR are not much higher at 0.66 and 0.42 per cent, respectively.

Alvin Liew, economist at Standard Chartered Bank, says the 3 month Sibor rate could stay below one per cent over the next two years, in line with the bank’s expectations for USD Libor.

‘Moderate loan demand and ample SGD liquidity will also help to keep rates low. While we believe there is a possibility that the Fed would increase further the discount rate spread over the Federal Funds Target Rate (FFTR), this should be viewed as a continuation of financial market normalisation, and not signalling any change in the FFTR until late 2011.’

OCBC’s head of treasury research and strategy Selena Ling says any upward rate movement is likely to be ‘quite gradual’. ‘The liquidity story is still intact, and none of the central banks are really talking about aggressive tightening.’

Sibor reflects the interest rate that a bank charges another for the excess SGD it does not need. It is influenced by US interest rates and domestic loan demand, says Mr Liew.

SOR, on the other hand, includes bank funding costs. It is typically slightly higher than Sibor; but the last few months have seen SOR fall below Sibor. While most banks peg their benchmark rates to 3 or 12 month rates, Citi is even giving customers a choice of one month Sibor.

Mortgage adviser Patrick Tan of Morgan Mortgage International is advising home owners not to leap too quickly into a long fixed rate contract as the differential in servicing costs between a floating and fixed package can be substantial. ‘Even if the variable Sibor or SOR rate does move up, it will not move up too much or too quickly unless we see an inflationary scenario in our economy.’

Fixed rate packages start at about 1.25 per cent for Stanchart, but only for one year. The second year moves to a Sibor-plus rate. OCBC and Citi’s two-year fixed rate are currently at 1.88 per cent per annum, with a two-year lock-in.

DBS says its fixed rate packages remain ‘very popular’ with about 60 per cent of customers opting for them. Says a spokesman: ‘The response is not surprising as they were designed specifically to give home owners both the certainty in repayments over three years, and the flexibility to make partial repayments. The flexibility is usually not found in fixed rate packages.’

Dennis Khoo, Stanchart’s general manager (retail banking products) says: ‘We continue to see a balanced demand for both fixed and floating rate (packages).’

Citi said it continues to offer an interest offset feature where deposits in the offset account earn an interest which can be offset by up to 70 per cent against the loan rate. Says Vibha Coburn, Citi business director for secured finance: ‘Our packages are tailored to our customers’ needs… and we advise customers to take a long term perspective when planning their home loans, rather than go for the lowest price points.

Meanwhile, banks have also speeded up loan approvals. DBS says more than 50 per cent of loan clients get their loans approved with an offer letter within the same day.

Stanchart says it offers ‘approval in principle’ within 15 minutes at showflats, which it says is a first. A spokesman says: ‘This way customers know how much they can afford to borrow without over-leveraging.’ In-principle approval is based on basic information such as monthly ncome and other financial commitments. Final approval is subject to necessary documentation.

Providend’s head of financial planning Eddy Cheong is advising clients to follow the prudent path. ‘For a start, do your budgeting and know your limits. Don’t assume interest rates will stay this low. Make sure you can still afford the loan if interest rates go up to 3 to 4 per cent.’ The annual debt repayment over annual salary ratio should ideally be less than 35 per cent. Anything above 45 per cent is seen as excessive, he says.

Source: Business Times, 17 Mar 2010