Possible shocks from spillover of euro zone crisis and excessive capital flow

DAEJEON (SOUTH KOREA): Asia may be experiencing a sharp and quick rebound from the global financial crisis, but it has received a word of warning from the International Monetary Fund (IMF).

The region, said IMF chief Dominique Strauss-Kahn yesterday, should brace itself for possible further shocks, including being hit by a potential spillover from the euro zone crisis.

Or exuberant investors could pour so much capital into Asia that parts of the region could overheat, bringing about dangerous credit and asset bubbles.

The warning comes just after last week’s growth forecast by IMF for all of Asia – a buoyant 7.5 per cent this year, well above the average 4.6 per cent worldwide. But the IMF managing director also sought to soften the blow, stressing that a global double-dip recession was unlikely as recovery remains on track.

‘Asia’s time has come, no one can doubt that Asia’s economic performance will continue to grow in importance,’ he said yesterday at the opening of a high- level economic forum in the central South Korean city of Daejeon.

‘But downside risks – including the recent turmoil in Europe – mean that Asian policymakers need to remain attuned to negative shocks.’

The region also faces a real threat in the sharp rebound in capital flows that is likely to emerge as investors avoid Europe, the United States and Japan, where growth has been sluggish, for a burgeoning Asia. ‘Such huge inflow of capital can create instability,’ he warned.

To manage such a problem, Asian nations could consider measures such as currency revaluation and even temporary capital controls, he suggested.

Jointly organised by the IMF and South Korea, the two-day forum on Asia brings together senior policymakers and economists including Singapore’s Finance Minister Tharman Shanmugaratnam and his Thai counterpart Korn Chatikavanij. Both men are due to take part in a round-table discussion today.

Yesterday, South Korea’s Finance Minister Yoon Jeung Hyun echoed Mr Strauss-Kahn’s concern, noting that developing countries were not doing enough to withstand external shocks from the high volatility of capital flows.

According to media reports, Seoul and the IMF are looking at a possible global financial safety net that would give nations quick access to funds, helping them stave off crises and also discouraging emerging market nations from hoarding foreign reserves. Details are expected to be unveiled in November when South Korea hosts the G-20 summit.

The warnings for Asia come amid emerging signs that the global economic recovery may be losing steam. China’s economic growth appears to be slowing down, while the US has reported a stream of disappointing economic data.

Last week, an IMF report also warned that Europe’s credit woes could hit bank funding and corporate financing elsewhere, especially Asian economies that are more dependent on foreign currency financing.

As if that was not enough, the European Central Bank and the Bank of England also sounded an alarm bell on a looming credit crunch.

Institutions worldwide, including banks and cash-strapped governments, will have to repay or roll over trillions of dollars they owe under short-term loans in the next two years. As they compete for the bond market’s favour, it could squeeze the credit available for business and consumers, dampening economic growth.

Together, these risks pose a longer- term challenge for export-driven Asia, as Mr Strauss-Kahn and other speakers noted.

‘It is a trigger for change,’ he said.

Asia, he pointed out, needed to nurture a ‘second engine of growth’ by boosting domestic investment and consumption.

It is a strategy that some nations in the region are already pursuing, as they try to strengthen their social safety nets to boost private consumption, and introduce more flexible exchange rates.

China, for instance, recently raised the minimum wages of workers in the hope of revving up domestic consumption, a move hailed by Mr Victor Fung, honorary chairman of Hong Kong’s International Chamber of Commerce.

He said: ‘They are putting money into the hands of those who can actually spend.’

Source: Straits Times, 13 Jul 2010

Makeover to give 20-year-old mall a cinema, mix of F&B outlets and upmarket brands

THE 20-year-old Katong Mall in East Coast Road will undergo a $60 million facelift.

When it reopens in the third quarter of next year, the mall will have about 150 shops including a cinema, retail outlets as well as a myriad of food and beverage outlets, pubs and bars.

The current five-storey building will have an additional floor built at the top to house a Golden Village cineplex.

There will also be an additional basement level to ease the building’s parking squeeze. The extra level will boost the maximum capacity of its carpark to 310 spaces, from the current 179.

The mall will also have a Peranakan-themed concept to fit the neighbourhood, which has historically been a Peranakan enclave in Singapore. The management said it will also consider bringing in tenants that tie in with the theme, such as Peranakan restaurants.

The new look for Katong Mall is the developer’s overall plan to jazz up the building to appeal to the affluent working professionals living in the area.

Previously, the tenants in the mall were mainly educational and child enrichment services such as tuition and dance classes.

‘We hope to better the experience for our retail customers as we redevelop the site into a more vibrant hub with an exciting and desirable tenant mix,’ said Mr Loh Chin Hua, managing director of Alpha Investment Partners, which holds a majority stake in Katong Mall.

The mall, which will be renamed, was bought over earlier this year from Tuan Sing Holdings for $247.55 million.

The new owners are a consortium of investors brought together by Mr Pua Seck Guan, chief executive officer of Perennial Real Estate.

The mall had previously faced controversy when 23 of its former tenants banded together to lodge a protest with the Strata Titles Board against the collective sale of the shopping complex in late 2007. The matter was eventually resolved early last year when the objection was withdrawn by the tenants.

All previous tenants have now moved out and the new management said there are no immediate plans to bring any of them back.

‘We have to consider the positioning of the new mall as a lifestyle and F&B hub,’ said Mr Pua. ‘However, we will still consider the old tenants if they fit in with this concept,’ he added.

In the past, the mall was largely patronised by young students on their way to various enrichment programmes and after-school activities.

Now, the management wants to attract professionals in the vicinity who have spending power.

Mr Pua said the new mall will aim for more upmarket brands to draw in those who live nearby, who mostly live in private houses and condominiums.

The mall has already signed up three anchor tenants – Golden Village (GV), Cold Storage and BreadTalk Group – which will occupy about 32 per cent of the available space between them.

GV’s eight screening halls will have two of its more upmarket Gold Class halls – the first such halls in the eastern part of the island.

Cold Storage’s supermarket will also be of a more upscale concept, known as Market Place, which is also the first in the east. Other Market Place outlets are found in the city, such as in shopping complexes Paragon and Tanglin Mall.

The revamped mall is also a first for several other reasons.

It is Mr Pua’s first local venture in property since stepping down as chief executive of CapitaLand Retail in November 2008, after about eight years with the company.

It will also mark BreadTalk’s first venture into retail property investment as it holds about an 8 per cent stake in the mall.

BreadTalk chairman George Quek said: ‘After 10 years of opening our food and beverage outlets in malls, I’ve seen and learnt how they work. This area also suits us as we do not have many of our brands here.’

The BreadTalk Group operates the BreadTalk bakeries, Food Republic food courts, and the Din Tai Fung and RamenPlay restaurants.

To Katong residents, this new shopping mall is a welcome addition to the neighbourhood.

‘I’m really looking forward to having a movie theatre in the area because it will be so much more convenient when I want to catch a late-night movie,’ said Ms Jacqueline Tan, 23, who lives in East Coast Avenue.

‘More parking space would be great along that stretch of road which is notorious for its limited spaces,’ she added.

——————————————-
New name, new look
Previously
Katong Mall used to house mainly educational and child enrichment services, such as tuition and dance centres.

After revamp
The mall will be renamed and turned into a lifestyle and food and beverage hub with a Peranakan-themed concept.

There will be 150 shops including a Golden Village cinema, Market Place supermarket, other retail and F&B outlets.

Source: Straits Times, 10 Jul 2010

The HDB Build-to-Order (BTO) project in Punggol, Waterway Terraces, is proving a big draw for home buyers.

With hours to go before applications close, some 5,422 home buyers have indicated their interest to own one of the five-room units available.

That’s close to 18 times the number of such units on offer.

Demand was also high for the four-room units.

Close to 6,900 applications have been received so far – more than 11 times the 588 available units.

Three-room flats were also popular with home buyers.

Some 970 applications were received for the 178 units available.

The project is Singapore’s first public waterfront housing, consisting of 1,072 premium flats with eco-friendly designs and features such as rain gardens and solar power.

The development will be ready in the first quarter of 2015.

Two other BTO projects were launched in Sengkang – Rivervale Arc and Fernvale Foliage – at the same time.

These, however, were less well-received.

Some 3,120 applications were received for the 1,624 two-, three-, four- and five-room flats available.

Source: Channel News Asia, 13 Jul 2010

Mainboard-listed healthcare trust Parkway Life REIT (PLife REIT) has acquired five new nursing home properties in Japan for some S$46.8 million.

The properties will be bought from Yugen Kaisha, which is a subsidiary of Kenedix, a real estate asset manager in Japan.

PLife REIT had previously acquired 15 nursing home properties from Kenedix.

It said it is buying the properties because they are well-equipped, in good physical condition and strategically situated in dense residential districts.

PLife REIT added that each of the properties has a long term lease agreement with the operators, with a weighted average lease term to expiry of 17.45 years

It also said the stability of the overall portfolio will be further enhanced with backup operator agreements to be secured for the properties.

Furthermore, PLife REIT said Yugen Kaisha will provide a rental income guarantee in respect of the properties for a period of seven years capped at 5 percent of the purchase price.

Such a move will offer protection to PLife REIT and provides certainty for PLife REIT’s future distributions to its unitholders.

The acquisition is expected to be fully funded via a five-year committed unsecured revolving credit facility of up to S$48.5 million.

PLife REIT is expected to enter into an interest rate swap to hedge the interest rate for five years.

Source: Channel News Asia, 13 Jul 2010

Malaysia’s southern economic region Iskandar expects strong investment flow from neighbouring Singapore, despite an expected economic slowdown in the second half of the year.

In an interview with Channel NewsAsia, the CEO of Iskandar Investment, Arlida Ariff, said she hopes to ride on improved bilateral ties to woo Singapore investments.

Spanning over 2,200 square kilometres, the Iskandar economic region located in southern Johor is three times the size of Singapore.

Since its inception at the end of 2006, Iskandar has attracted more than 60 billion ringgit worth of investment from both local and foreign investors, surpassing its own target of 47 billion.

Singapore is currently the third largest investor in Iskandar, with 3.03 billion ringgit worth of investments committed so far.

They are mainly in electrical and electronics, manufacturing and education.

But according to the CEO of the economic region, Iskandar offers plenty of synergistic opportunities especially in leisure tourism.

CEO Arlida Ariff said: “This is an area Singaporeans as visitors have taken advantage of. But for businessmen (and) investors, this is certainly an area we see potential and opportunities… those are the areas we would like to invite interest from Singapore.”

To boost tourism, Iskandar is opening up two more hotels, a marina, retail malls, an indoor family theme park including Asia’s first Legoland in 2012.

It also plans to add another 5.5 million square feet of commercial and residential space later this year.

CEO Arlida Ariff said: “Very frankly, most long-haul visitors look for location that justifies a stay of 4-5 nights.

“I think, singly, Johor and Singapore do not provide the long-stay conditions. We don’t have enough attractions to justify a long stay.

“(But) working together in collaboration, we can develop packages. It’s a win-win situation, we actually create a bigger market.”

Malaysia expects its tourist arrivals to exceed 18 million this year while Singapore is forecasting 12 million.

Combined, analysts say, both countries stand to reap more from an increased number of tourists who stay longer and spend more.

Source: Channel News Asia, 13 Jul 2010

People’s Mansion at Lorong 31 Geylang has been sold en bloc to Tomlinson Investment for S$42.68 million.

That translates to about S$421 per square foot per plot ratio.

Urban Front Real Estate closed the tender for the site on July 2 after receiving three bids and one expression of interest.

The next highest bid was S$42.1 million.

The collective sale is subject to approval from the Strata Titles Board.

The site, which now houses a 32-unit development, has a land area of about 37,000 square feet and is designated for residential use with a plot ratio of 2.8.

Urban Front says the site can be redeveloped into a project with 115 apartments of 900 square feet on average with basement carparks.

Source: Channel News Asia, 13 Jul 2010