NEW rules aimed at creating more clarity over collective sales kick in today.

A key change centres on when an attempt to sell an estate en bloc fails to garner enough backing from owners.

To discourage repeated attempts when there is insufficient interest, a two-year restriction period will be imposed after a failed collective sale attempt.

During this period, the first retry to convene an extraordinary general meeting to reappoint a sale committee will require the agreement of 50per cent by share value, or of the total number, of owners.

This is up from the current level of 20per cent by share value or 25per cent of the total number of owners.

For the second and subsequent retries, approval from 80per cent is needed.

To speed up the sale process, the Strata Titles Board (STB) will focus on its role as a mediator, instead of also trying to make rulings in disputed cases.

Some recent attempted collective sales, such as Horizon Towers, have become bogged down in disputes that have dragged on for two years or more.

The new rules and other amendments to the Land Titles (Strata) Act were passed by Parliament on May 18.

Source: Straits Times, 15 Jul 2010

Officers seize papers linked to deal on 20 luxury units, including ‘world’s priciest flat’

HONG KONG: Hong Kong police yesterday raided the headquarters of a major property developer embroiled in a controversy over the collapsed sale of what was billed as the world’s priciest flat.

Officers from the financial hub’s Commercial Crime Bureau swooped on Henderson Land Development’s office in Hong Kong’s financial district and took documents believed to be connected to the failed sale.

‘As a result of the execution of the search warrants, we have seized a quantity of documents, which will be investigated and looked into further,’ said Police Commissioner Tang King Shing.

‘Today, we also invited a number of people back to the commercial crime bureau to assist in our investigations. At this moment, the police have arrested no persons concerning this case,’ he added.

Henderson Land said it was cooperating with the authorities.

‘Our company has provided relevant documents and appointed staff to help in the investigation,’ the developer said in an e-mail statement in Chinese.

Inspectors also searched a law firm allegedly connected to the failed sale of luxury flats at the exclusive 39 Conduit Road towers in the city’s Mid-Levels residential area, local radio RTHK reported.

‘At this stage, it’s really hard to tell what’s going to come out from the investigation,’ said Professor Eddie Hui of the building and real estate department of Hong Kong Polytechnic University.

‘Even if the police took some documents from their office, it still does not mean they have committed any wrongdoing. We have to be careful in drawing any premature conclusions.’

Analysts said they expected the Hong Kong developer’s shares, which have lagged behind its peers, to come under pressure in the days ahead.

Last month, the Hong Kong government said it was looking into the cancelled sale of 20 multimillion-dollar flats developed by Henderson in Hong Kong, while legislators have been questioning the developer’s practices over the past few weeks.

The cancellations included a duplex unit that had fetched a global record price of HK$71,280 (S$12,695) per square foot last October. In the end, only four units were sold in that development, Henderson Land said.

Critics have demanded a probe, asking why the cancellations came to light only eight months after the announcement of the sales, which helped hike prices of the city’s luxury residential flats and stoked concerns about a property bubble in the former British colony.

Questions have also been raised about the relatively small deposit that Henderson kept after the failed sales, and why all the buyers appeared to have used the same law firm to process the transactions.

Henderson Land responded with advertisements in major newspapers saying the purchases were genuine and that the company was not connected with the buyers. It has said it will cooperate with the probe.

REUTERS, AGENCE FRANCE-PRESSE, BLOOMBERGS

Source: Straits Times, 15 Jul 2010

(LOS ANGELES) The Spanish colonial-style Hollywood home where iconic sex siren Marilyn Monroe died in 1962 is going up for sale for US$3.6 million, the real estate agency said on Tuesday.

The one-storey property, built in 1929, which spreads lavishly over 23,000 square feet of land, is ‘the crown jewel’ of the luxurious neighbourhood of Brentwood, according to the agency’s website.

Cinematic diva Monroe lived in the house for only six months before her sleeping pill overdose death, having bought the house for US$90,000.

The current owner did not permit press access to the property but allowed AFP access to take photos from behind tall gates on the secluded cul de sac.

Monroe memorabilia is highly coveted, with even a burial spot near the star’s last resting place being sold on the online auction website eBay in 2009 for US$4.6 million. — AFP

Source: Business Times, 15 Jul 2010

Real estate at 6-year peak, private equity, commodities, hedge funds also gain

(LONDON) Real estate investment by European pension funds last year reached a six-year peak amid renewed market confidence in alternative assets, research by global investment manager Invesco showed on Tuesday.

Private equity, hedge funds, and commodities also saw year-on-year gains as pension funds moved into investments not directly tied to mainstream financial markets, the report said.

Alternative investments made up 11.7 per cent of pension portfolio holdings last year, from 8.7 per cent a year earlier.

‘The economic crisis dented confidence in alternatives, but European institutional investors seem to have embraced the sector once again,’ said Simon Redman, head of product management at Invesco Real Estate.

‘Institutional investors are reasserting their belief in the low correlation of alternatives to the mainstream asset classes.’

Real estate formed the bulk of alternative asset allocation, with 6.6 per cent of investors’ total assets in this category, compared with 4.7 per cent in 2008, Invesco said.

The findings of Invesco’s European Institutional Asset Management Survey, whose main focus is on European pension funds, point to a more positive sentiment compared with 2008.

Portfolio holdings in hedge funds overtook holdings in private equity, rising from 1.6 per cent in 2008 to 2.3 per cent last year, the report said.

Last Friday, Oakley Alternative Investment Management said that hedge funds are likely to prosper in currently volatile markets, while portfolios betting on mergers should profit from a lack of competition.

UK pension funds held the largest ratio of hedge funds compared with European counterparts at 3.6 per cent, followed by the Nordic countries at 3.2 per cent, and France with 3.0 per cent, Invesco said. Large- and medium-sized investors now both have at least a 3 per cent allocation to hedge funds, up from less than 2 per cent last year. Smaller investors have retained 2008′s 1.8 per cent allocation, the report said. — Reuters

Source: Business Times, 15 Jul 2010

Govt may fine-tune property policy as economy softens in the coming months

(BEIJING) Investors who bet that China will declare an early end to its property tightening campaign are doing so at their own peril.

While the government is likely to fine-tune property policy as the economy softens in the coming months, it is not about to reverse tightening measures that it believes are critical to safeguarding China’s long-run growth prospects.

Property prices have only just started to dip. Falls should turn much steeper, with investment in the sector also taking a clear hit, before the government takes its foot off the brake.

‘It is, of course, aware that declining prices and investment are the likely result,’ said Xing Ziqiang, an economist with China International Capital Corp in Beijing.

‘But so long the economy is doing all right, slowing gradually with no severe unemployment problem, the government should be able to tolerate this.’

That will disappoint those who thought they had already spied a U-turn in Chinese policy.

Earlier this week, Chinese property shares soared after a report that the government would relax a ban on mortgages for third homes.

This seemingly small change would have been explosive in its symbolism, implying that the government was flinching at the first signs of weakness in the property market.

With unusual alacrity, the banking regulator and the housing ministry published statements to deny the rumour.

‘We don’t see a loosening of policy in the near term because even though some cities have seen considerable price corrections, others haven’t,’ James Xia, vice-chairman of Chinese developer Evergrande Real Estate, said this week.

Nationwide, Chinese housing prices edged down 0.1 per cent last month from May, their first monthly fall since February 2009 – and the first real fruit of the tightening steps, which have included higher down payments and reduced lending to developers.

Notwithstanding the wishes of some investors, if China were to stand down now from its property tightening campaign, it could prove deeply disruptive to the economy’s development.

Just last week, Kenneth Rogoff, a former chief economist at the International Monetary Fund, warned that the country’s housing market was a bubble.

Fleshing out this view, Yi Xianrong, an economist at the Chinese Academy of Social Sciences, a government think tank, made the jaw-dropping claim that there are about 65.4 million empty apartments and houses in China’s cities and towns, many of them bought up by people wagering on a constantly rising market.

Although Mr Yi’s estimate, based on electricity meter readings, was met with scepticism, it still served to underscore how the government has a way to go to put the country’s housing market on a more sustainable footing.

‘We believe many analysts are underestimating China’s determination in curbing property prices,’ Ting Lu, an economist with Bank of America-Merrill Lynch, said in a note.

A little more than two years before the end of China’s decade-long political cycle, the current crop of leaders would shudder at the prospect of a bubble inflating in the property sector and bursting just before they leave office, Mr Lu said.

Politics aside, the economic importance of getting it right is abundantly clear. The property sector makes up about 10 per cent of national output and a quarter of capital spending.

The government knows it has to walk a fine line. Its zealousness in curbing a previous property construction boom bore fruit just as the global financial crisis reached a crescendo in late 2008, driving the Chinese economy to a near halt.

‘China will not issue more tightening measures,’ said Yang Guohua, a property analyst with Oriental Securities. ‘The overall tightening policy will still be implemented, but there may be some fine-tuning in the second half.’

Much will come down to how bank branches and local governments interpret rules.

After the banking regulator reiterated the ban on third-home mortgages, one commercial lender in Beijing told Reuters that such loans were absolutely forbidden. But a state bank in the booming port town of Ningbo said that a third-home mortgage could be arranged, provided the borrower’s credit record was clean.

Still, investment in the property sector, running at 38 per cent over a year earlier, is sure to slow.

As that happens, the central government will spend more on public housing to pick up the slack and cushion the economy, said Sun Xuegong, a researcher in the National Development and Reform Commission, a powerful central planning agency. — Reuters

Source: Business Times, 15 Jul 2010

(SINGAPORE) Amendments to the law governing collective sales – which include tighter rules for repeated attempts at such deals – will take effect from today.

The Ministry of Law gave more details yesterday on how the Land Titles (Strata) (Amendment) Act will apply. For instance, under the new Act, there will be a waiting time of just one hour for the quorum of 30 per cent of share value to be reached at extraordinary general meetings (EGMs). This will apply to all EGMs held on or after the commencement date of the new Act, including those for which notice has been served. Also, the new Act stipulates that once a sales committee (SC) is formed, it will have one year to obtain the first signature for the collective sale agreement (CSA) or face automatic termination.

For existing SCs which have not collected any valid signatures, the one-year period begins on the commencement date of the new Act, regardless of how long they have been in office. For SCs set up after the new Act takes effect, the one-year period begins on the day the SCs are elected at EGMs.

Another key revision to the Act introduces a two-year restriction period after a potential collective sale falls through. Within this period, the first repeated attempt to convene an EGM will require consent from 50 per cent of share value or number of owners. For the second and subsequent repeated attempts, 80 per cent will be needed.

This two-year restriction period will apply to all failed attempts which occur on or after the commencement date of the new Act.

Source: Business Times, 15 Jul 2010

Tender for former has indicative price of around $48m; $28-29m for latter

(SINGAPORE) A freehold residential project at Balestier and 14 freehold strata shop units at Holland Village are up for sale.

The tender for Melrose Court, at 10 Lorong Limau off Kim Keat Road, has opened, with an indicative price of around $48 million for the four-storey 32-unit development.

Melrose Court is on a site with a gross plot ratio of 2.8. Colliers International, which is handling the collective sale, said that it can be redeveloped into a 22-storey project of 88 apartments, each measuring 830 sq ft. The development charge will be around $2.38 million.

The new project would have a total gross floor area of 73,271 sq ft, including an additional 10 per cent of space allowed for balconies. The total land price would work out to around $688 per sq ft per plot ratio.

More than 80 per cent of Melrose Court’s owners have agreed to the collective sale. Based on the asking price of $48 million, each of them stands to receive $1.23-2.46 million if the deal goes through.

Colliers believes that the site will attract mid-size developers as the development cost is relatively small. Collective sales involving projects on the fringe of the city have a high chance of success because of a more ‘manageable gap’ between asking and offer prices, said the agency’s investment sales executive director Ho Eng Joo.

Also, the collective sale market is slowly recovering, he said. Projects sold en bloc recently include Meng Garden Apartments, People’s Mansion and the Colourscan building.

Colliers is also managing the tender for 14 freehold strata units on the second floor of Holland Road Shopping Centre. The indicative price for the adjoining shops is $28-29 million, which works out to $5,051-5,231 psf based on the total gross floor area of 5,543 sq ft.

The owner, an investment company, is selling the shops in line with a portfolio reorganisation. A home decor retailer currently leases all 14 units at a monthly rent of between $10 and $11 psf, under a tenancy agreement that expires in 2013.

The large tenant was able to secure rent slightly below the market rate. According to Colliers’ agency and business services deputy managing director Grace Ng, rents in the shopping centre are higher for smaller units and can range from $20-40 psf.

It is rare for a large retail space in a popular spot to be up for sale, Ms Ng said. In 2008, a unit on the second floor of the mall was sold for $4,955 psf.

According to her, properties in Holland Road Shopping Centre ‘are likely to experience capital and rental appreciation’ with Holland Village MRT station scheduled to open next door in 2011.

Source: Business Times, 15 Jul 2010

Shortage of mortgage financing also expected to curtail demand

(EDINBURGH) UK house prices probably will fall the rest of the year as government spending cuts hurt consumer confidence and homeowners try to repay debt, according to economists and property brokers.

‘Things aren’t looking too great for the next few months,’ said Fionnuala Earley, senior economist at Royal Bank of Scotland Group plc, which predicts that house prices will fall one per cent for the whole year.

‘We’re seeing increases in supply, consumer confidence weakening, and we are going to see real squeezes on disposable spending.’

The government’s plan to reduce the UK deficit by slashing public sector jobs and raising taxes may wipe out gains in property values from the first half of the year, said Lucian Cook, research director at Savills plc in London. A shortage of mortgage financing will also curtail demand for homes, he said.

UK house values rose 3 per cent in the first half, according to Nationwide Building Society, the UK’s largest customer-owned lender. Lloyds Banking Group plc’s Halifax mortgage unit, Britain’s biggest provider of home loans, estimates that they fell 1.6 per cent.

‘Prices have outstripped expectations,’ said Philip Shaw, chief economist at Investec Securities in London. ‘There doesn’t appear to be much momentum in starting this half of the year.’

Values slumped 23 per cent from the peak of the boom in September 2007 to the trough in April of last year after losses on US sub-prime mortgages led global credit markets to seize up, according to Halifax. They are currently at the level they were five years ago.

Now, mortgages are more expensive and harder to obtain for borrowers who can’t afford a down payment of at least 25 per cent.

When the market was at its peak, banks were providing loans as large as five times a borrower’s salary. That helped lift the average house price to a record 6.2 times earnings, compared with the long-term average of 3.7 times, according to Capital Economics Ltd. That ratio has since fallen to 5.2.

At the height of the UK’s previous housing boom that ended in 1989, the ratio was only 4.7. Values slumped 13 per cent during the next four years. They didn’t return to pre-crash levels until January 1998, almost nine years later, even before adjusting for inflation.

‘Prices are still overpriced relative to incomes,’ said Paul Diggle, a housing economist at London-based Capital Economics. ‘We think they will decline 5 per cent this year as a whole and our forecast is for falls in the next couple of years.’

Foreclosure rates have risen more slowly than projections by the Council of Mortgage Lenders, as the Bank of England kept its benchmark interest rate at a record low of 0.5 per cent since March 2009. That has allowed homeowners to keep paying off their mortgages and helped limit repossessions.

Britons have been paying down debt on concern about job losses and government spending cuts. Consumer debt fell in May for a third straight month to its lowest level in six months, according to the Bank of England. Unsecured borrowing is at its lowest level since September 2007.

Claimants for jobless benefits in the UK almost doubled since March 2008 to 1.48 million people in May, which was the lowest amount in 14 months. They may climb 12 per cent more by the end of 2010 to 1.66 million people, according to the average of 38 forecasts compiled by the UK Treasury. That’s still 260,000 fewer than the same forecasters were predicting in November.

Even so, Mr Shaw said last month that the housing market recovery in the first half may falter because mortgage approvals remain at 45 per cent of their long-term average.

There were 25 per cent fewer house sales in the first five months of 2010 than in the previous five, according to Savills, the UK’s largest publicly traded real estate broker.

‘Undoubtedly, prices will fall in the second half,’ said Savills’s Mr Cook. ‘There is more stock coming to the market than people looking to buy.’

At best, Savills expects prices to end the year unchanged from 2009. – Bloomberg

Source: Business Times, 15 Jul 2010

THE number of collective sales is tipped to rise in the coming months as developers replenish land banks – but it is too early to talk of another boom.

Two key factors – large-scale government land sales on the boil and a prime segment stuck in the doldrums – will keep a cap on the sort of ‘en bloc’ mania seen in 2007.

But property experts say the market for such sales has certainly improved this year, especially among smaller developers, and that is energising more owners keen to sell.

Credo Real Estate says there have been 16 collective sales worth $786million completed this year, compared with one last year and eight in 2008.

Consultants expect more launches over the coming months as many estates which initiated the long sales process around last year or early this year will be ready to go to market.

Last week, Villa D’Este in Dalvey Road was launched for sale at a guide price of $115million, or about $2,343 per sq ft per plot ratio (psf ppr).

And Melrose Court, off Balestier Road, was put up for sale yesterday with a guide price of $48million, or about $688 psf ppr, inclusive of a $2.38million development charge.

Consultants said they have been fielding a steady stream of inquiries from potential collective sellers over the past six to nine months.

As in the past, such inquiries pick up whenever news of a successful collective sale hits the headlines.

‘More launches and sales will come but a lot also depends on owners’ expectations. It’s whether they think they can get a similar replacement property with the en bloc premium,’ said Colliers International’s executive director of investment sales, Mr Ho Eng Joo.

Experts noted that there is a price mismatch in the prime sector, with owners’ expectations higher than what the major developers, who are still cautious, are willing to pay.

As for buyers, they are keen to buy freehold land in collective sales because it is not available from the Government, they said.

The Government’s land sales programme comprises large 99-year leasehold sites targeted at the mass market. Unlike a collective sale, a government land purchase is straightforward and fast.

Experts say small- and mid-sized private developers still need to replenish their land banks and they cannot afford the big government sites coming up for sale.

Indeed, the collective sale deals completed this year were all done by boutique developers. Apart from the recently concluded $137million sale of Meng Garden Apartments off Killiney Road, the other deals were all priced below $100million.

The recent successful collective sales are in mostly attractive city-fringe areas such as Balestier, or areas where no government sites will be offered for sale, said Mr Ho.

Credo Real Estate managing director Karamjit Singh expects to see more medium-sized sites of around $100million sold in the collective-sale market this year rather than large sites.

‘Between now and December, there may be another 20 or so successful deals but these are likely to be small sites meant for small-sized units of several hundred square feet,’ said Mr Jeffrey Goh, head of investment sales at HSR International.

‘Smaller sites priced below $100million have a higher chance of success than prime ones priced above that amount.’

The flats on these sites are usually quite old, with owners who are thus more realistic about price, he said. That makes it easier to obtain the 80per cent approval for the sale to proceed.

New mass market launches may be going for benchmark prices but sellers in collective-sale deals can find better value in the resale market for replacing their homes, said Mr Singh. Also, a lower- priced site would attract a bigger pool of buyers than a higher-priced one, said Mr Ho. ‘The risks are manageable.’

Source: Straits Times, 15 Jul 2010

EXPORTS shot ahead last month with shipments to Europe rocketing up 75 per cent over the same period last month, despite the debt crisis in the region rocking global markets.

All of Singapore’s top 10 destinations took in more exports in June, giving the sector an overall increase of 29 per cent for the month – eclipsing economists’ tips of a 23 per cent rise.

A boost in pharmaceutical shipments helped to magnify figures compared to a low base last year, said Barclays Capital economist Leong Wai Ho.

Exports to Europe also rose because they are ‘headed largely for the core European markets of Germany, the Netherlands and France, which have been less affected by problems in southern Europe’, he added.

Aside from Europe, exports to China grew 39 per cent last month from the year before, following a 64 per cent rise in May, while exports to Japan jumped 50 per cent, according to IE Singapore figures yesterday.

Electronics exports continued to expand, rising 44 per cent last month, while non-electronics products, which include pharmaceuticals, grew 21 per cent over the same month last year.

‘China’s trading partners are expected to benefit from the strong performance of Chinese imports. Imports of our major Asian trading partners, for example, Indonesia and Malaysia, also grew…This has had a positive impact on Singapore’s exports,’ said IE Singapore yesterday.

‘Global semiconductor sales are expected to grow at a much faster pace than in 2009,’ it added.

The June numbers have rounded out the second quarter, which had overall export growth of 28per cent over the same three months last year.

Such robust numbers have led to a rethink on Singapore’s growth prospects.

The Government, citing the stronger-than-expected trade expansion in the second quarter, buoyant demand from Asia and a continued boom in the semiconductor industry, has revised its forecast for non-oil domestic exports growth this year to 17 to 19 per cent, up from a 15 to 17 per cent prediction.

Total trade growth this year has also been revised upwards from between 14 and 16 per cent to 17 to 19 per cent.

But economists warn that export momentum appears to have reached a peak and is due for a slowdown in the second half of the year.

Month-on-month seasonally adjusted figures have decreased marginally for the second straight month, while the pace of growth in electronics has also slowed.

Non-oil domestic exports last month fell 0.1 per cent from May, following a 0.2 per cent fall in May from April.

Electronics shipments last month grew 1.7 per cent from May, compared to a 13.7 per cent jump from April to May.

‘Easing momentum was also seen in other trade components, such as non-oil re-exports and non-oil retained imports of intermediate goods,’ said Citigroup economist Kit Wei Zheng.

HSBC economist Frederic Neumann said that since Singapore is coming from a very high export level, a ‘cool-down does not in itself imply a hard landing’.

Some economists also expect lingering debt problems in Europe to gather pace over the rest of the year.

The Ministry of Trade and Industry said that fiscal austerity measures in some European economies and the weakening of the euro could further weaken domestic demand in Europe.
———————————————-

BENEFITS FROM CHINA

‘China’s trading partners are expected to benefit from the strong performance of Chinese imports. Imports of our major Asian trading partners…also grew. This has had a positive impact on Singapore’s exports.’

IE Singapore

Source: Straits Times, 15 Jul 2010