‘Perfect storm’ of factors could see another recession next year: Prof

NEW YORK – The global economy may fall back into a recession by late next year or in 2011 because of rising government debt, higher oil prices and a lack of job growth, said Professor Nouriel Roubini, the New York University economist who predicted the credit crisis.

A “perfect storm” of fiscal deficits, rising bond yields, “soaring” oil prices, weak profits and a stagnant labour market could “blow the recovering world economy back into a double-dip recession”, he wrote in a research note yesterday.

“It is getting more likely unless a clear exit strategy from the massive monetary and fiscal stimulus is outlined even before it is implemented.”

Prof Roubini, chairman of Roubini Global Economics and a professor at NYU’s Stern School of Business, predicted that the global economy will begin recovering near the end of this year. The United States economy is likely to grow about 1 per cent in the next two years, less than the 3-per-cent “trend,” he said.

Prof Roubini based his short-term outlook on the worsening condition of the US housing and labour markets, which he called “inextricably linked”.

He said a “weak” job market will contribute to another 13- to 18-per-cent drop in house prices, bringing total declines nationally to as much as 45 per cent from their peak.

As a result, Prof Roubini predicted a new round of distress for a financial industry facing economic conditions that were worse than regulators factored into so-called stress tests earlier this year. “The worst-case assumption in US stress tests were that unemployment could average 10.3 per cent next year,” Prof Roubini wrote.

“The reality is clearly going to be worse as the unemployment rate is likely to peak around 11 per cent.”

Emerging markets may fare better than the industrial world because, “paradoxically”, many have better sounder economic foundations than more advanced nations.

“We are now closer than we were six months ago to the end of the worst financial crisis since the Great Depression and the worst global recession in decades,” wrote Prof Roubini. “But the road ahead will be very rough and bumpy.”

Source: Today, 24 July 2009

DESCRIBED as a quality high-end resort for the working class, Palawan Resort was to have opened its doors by the end of last year.

But it will not be opening at all now.

Its developer, NTUC Club, has scrapped plans for the $45 million development on Sentosa after concluding that the project is “no longer viable”.

The 200-room resort was to have been built on a 3-hectare disused carpark and boast state of the art facilities, including a luxurious spa and a mirage pool.

Room rates would have been about $150 with discounts for union members.

But as of last September, the project – announced in 2005 by former NTUC Secretary-General Lim Boon Heng – had faced several delays.

With the Integrated Resort being built at Sentosa, NTUC Club said then it was reviewing the concept and plans for Palawan Resort. Plans had to be shelved due to “rising land premium and construction costs”.

After reviewing initial plans, the conclusion was that the project is “no longer viable”.

It was meant to be “an engagement tool by NTUC Club Investments (NCI) for the labour movement, to allow members to have an additional option for affordable leisure and entertainment,” according to NTUC Club.

NCI and Sentosa Development Corporation (SDC) have a good understanding of the decision and the site will be reviewed for future developments by SDC, NTUC Club also said.

Construction costs for commercial or sports and recreational spaces have risen by up to 15 per cent year on year.

But property analyst Nicholas Mak said the cost of land on Sentosa has remained relatively stable – the development charge rates, which is the tax paid to the government for the development of land at Sentosa – has not changed over the past six months.

Both parties declined to reveal details on the land arrangement but SDC said there were no rental payments made.

The project “never went beyond a Memorandum of Understanding”, said NTUC Club.

NTUC Club is the biggest local resort operator, managing three budget family-themed resorts.

Two are located in Pasir Ris and one on Sentosa.

Source: Today, 24 July 2009

1 PURE INVESTORS
Many investors have been waiting for an opportunity to jump into the property market – but timing is everything, and they have been waiting until the price is right.

Mr Ashok Veerappan, a 56-year-old manufacturing executive, wants to buy a unit at Parc Imperial on Pasir Panjang Road as an investment. One-bedders of about 400 sq ft cost around $550,000.

Some investors are in no hurry to buy. Ms Eunice Lee, 39, a customer service professional, is keen to invest but is holding back as she expects prices to fall further.

Another investor, Mr Chan, in negotiations to buy a condo unit, said banks are paying little interest. ‘Stocks are volatile but real estate is quite stable. I don’t think prices will go down because external investors from countries like Indonesia and China are still there,’ he said.

2 RENTERS
Many of those who are renting their current premises and other first-time buyers are also considering buying property despite the downturn.

Condo renter Sundaresan N., 46, a bank employee, recently visited The Peak @ Balmeg showflat.
A three-bedroom 1,500 sq ft apartment costs about $1.4 million.

‘Rents have gone up so much, so it makes sense to buy, but I will buy only if the price is right – I have no problem waiting and trying to squeeze a lower rent out of my landlord.’ He has been seriously searching for six months.

Mr Eddie Koh, 40, who owns a cleaning company, is renting a condo unit but is thinking of buying his own place to live in. ‘If prices are not very high, then it’s worth it, like now,’ he said in Mandarin.

3 HDB UPGRADERS/LONG-TERM INVESTORS
Some HDB upgraders want to buy property for both residential and investment purposes. Mr H.G. Cheng, a regional sales executive in his 40s, is keen to buy a unit soon and live there. ‘I’ll see in two to three years’ time whether to rent it out or stay on. If the price is high, I’ll sell it, otherwise I will live in it myself.’

He was viewing a showflat at Double Bay Residences in Simei, where units range from $850,000 for a three-bedder to $1 million for a four-bedder.

Mr E.C. Ho, 48, a construction industry worker, said his plan to buy a home is unrelated to the economy. ‘We are half-upgrading and half-investing. My family of three live in an HDB flat and we are considering buying a condo now only because we didn’t have enough money before,’ he said.

4 BROWSERS/SHOWFLAT-HOPPERS
Amid the furious buying, many people are just browsing at the showflats, curious about the recent property launches.

‘We happened to see so many developments all of a sudden, and thought we might as well look for one as a long-term investment and upgrade,’ said Ms Eileen Chua, a childcare centre worker in her late 40s with two teenage children.

Mr K. Leong, a 32-year-old banker who was at The Gale, is keen to buy but added: ‘I’m just trying to see the market pricing. There is a perception that the economy is getting better and that is probably why everyone is buying right now.’

Source: Straits Times, 24 July 2009

Lower prices, pent-up demand driving surge in sales of private homes

THE current recession-defying surge in home sales is being driven by pent-up demand from local buyers with enough savings to swoop on lower-priced units and a determination to invest or upgrade.

These buyers are not acting on impulse but have been saving up for years.

Another key factor is the fear of missing the boat ahead of another property boom, The Straits Times has found after speaking to buyers and market analysts.

Last month, an all-time record of 1,825 private homes were sold, continuing a major upswing that started in February. The June figure exceeded that of August 2007 – the height of the last property boom.

On recent weekends, showflats have been crammed with families, couples and singles. Some want to buy a condo as an investment with prices still quite low; others wish to upgrade from HDB flats.

A few others have been renting condos in the hopes of picking up a bargain later, while another group is just browsing.

‘I think that now is the right time,’ said investor Therence Tay, an engineering firm owner in his 30s who bought a two-bedroom-plus-study unit at Changi condo The Gale on Sunday. He lives with his family in an HDB flat.

On average, such a unit is about 1,120 sq ft with a price tag of about $770,000, based on a price range of $650-$725 per sq ft (psf).

Mr Tay said in Mandarin that he had slogged for over a decade to save enough cash. ‘Interest is very low from bank savings now, so we might as well put our money somewhere more useful,’ he said.

A company chief operating officer, who asked to be known only as Mr Chan, 51, said he is in the middle of negotiations to buy a unit at Bukit Timah Road condo Ferrell Residences, where units are 1,840 sq ft on average and cost at least $3 million.

The Singapore permanent resident is mainly using his cash savings to buy the investment property. He will live there alone; his family lives overseas.

‘I missed the boat in the last boom,’ he said. ‘By the time I decided to buy, prices were already $1,800-$2,000 psf. By then it was out of reach, and I was kicking myself very hard.’

Property consultants say a combination of pent-up demand and lower prices has sparked this strong sales streak, in contrast to the previous boom.

‘The last property boom was fuelled by foreign demand for luxury and high-end homes from investors and speculators, which eventually filtered down to the mid- and mass-market segments,’ said Colliers International property consultant Tay Huey Ying.

Dr Chua Yang Liang of Jones Lang LaSalle said: ‘Some upgraders were excluded from the market during the last property boom due to high prices and there appears to be a correction now.’

Ms Chua Chor Hoon, a property consultant at DTZ Debenham Tie Leung, noted that the price gap between HDB flats and condos has narrowed.

For instance, an executive HDB flat in a prime location like Bishan costs up to $650,000, while some suburban condos with facilities are about the same price.

HDB upgrader Abdullah Muhamad, 50, a supervisor, who has a wife and four children, said that he wanted to buy a condo for his family while prices were still affordable.

He had saved for 20 years before buying a two-room condo unit on Sunday at Oasis@Elias in Pasir Ris, which had 190 visitors that day. Units there are going for $670 psf on average. Mr Abdullah’s unit cost him about $640,000.

‘We liked the facilities here, and were worried that property prices will increase further,’ Mr Abdullah said. Executive HDB flats in Pasir Ris have sold for over $500,000 in the past three months.

Also waiting for a good buy is Dr Phoon Kok Fai, 56, a professor at the Singapore Management University who is currently renting a condo.

He did not buy a unit in the last boom as he had other financial considerations on his plate then. But this year, Dr Phoon has set his sights on a Ferrell Residences unit, which he plans to move into with his wife.

‘This condo is within my reach and I have the security of a good location with reasonable value. I also sense that real estate prices have bottomed out,’ he said.

Many others have enough cash and are interested, but are in no rush. ‘In the last few weeks, buying sentiment has been very strong, but there is no panic,’ said Mr Eugene Lim of property firm ERA Singapore.

‘We can afford to wait,’ said prospective investor Raymond Ting, 40, who works in building maintenance and lives in a condo with his wife and 10-year-old son.

‘I expect prices to drop because there are so many new developments being released. What goes up will come down.’

Source: Straits Times, 24 July 2009

One is next to Ang Mo Kio Hub and the other beside Tanah Merah MRT Station

TWO 99-year-leasehold condominium projects next to MRT stations are slated to be previewed next week – Far East Organization’s Centro Residences next to Ang Mo Kio Hub and TID’s Optima@Tanah Merah.

Prices at the 34-storey Centro Residences are tipped to start from $1,150 per square foot (psf). Far East bought the site at a state tender in September 2007 for $601 psf per plot ratio. That was a record price for suburban condo land.

Analysts reckon Far East’s breakeven cost for the project could be close to $1,000 psf.

They suggest that Far East is releasing the project, which is along Ang Mo Kio Avenue 8, to ride on the current home buying momentum but it may release only about 100 or so units initially and sell the rest as construction proceeds to extract higher prices progressively. The condo has a total of 329 units.

Far East is starting its preview on Wednesday evening and will release two and three-bedroom units.

A typical two-bedder of about 800 square feet could cost about $900,000, while a typical three-bedroom apartment of 950 sq ft may be priced on average at about $1.15 million.

As for Optima, beside the Tanah Merah MRT Station, market watchers suggest it could be priced at about $750-$800 psf on average.

They based this estimate on current average pricing for Waterfront Key in Bedok ($735 psf) and Dakota Residences($900 psf) and adjusted for locational differences.

The 297-unit Optima will be a 14-storey project comprising one-bedroom studio apartments as well as two, three and four-bedroom apartments plus 18 penthouses.

Developer TID is a joint venture between Mitsui Fudosan of Japan and Hong Leong Group Singapore.

Another Hong Leong unit, Tripartite Developers, previewed The Gale along Upper Changi Road two weeks ago. The 329-unit freehold project, priced at $650 to $725 psf, is over 80 per cent sold.
With the release of Centro and Optima, the pipeline of suburban condos on 99-year-leasehold sites bought at state tenders will shrink further.

This will increase impetus on developers to trigger the release of sites on the government’s reserve list, analysts say.

Already, the government has announced the release of two sites from this list this week – at Chestnut Avenue and Dakota Crescent.

Source : Business Times – 24 Jul 2009

SINGAPORE : Property developer TID will hold a preview of its newest condominium project – Optima@Tanah Merah – before the end of this month.

Located next to the Tanah Merah MRT Interchange along New Upper Changi Road, commuters will be able to get to the city centre by train in less than 20 minutes and to Changi International Airport in about 6 minutes.

The 99-year leasehold development has 297 units that feature one-bedroom studio apartments, 2- to 4-bedroom units plus 18 penthouses which come with open balconies and terraces.

TID is a joint venture between Japan’s largest listed developer, Mitsui Fudosan, and Hong Leong Group Singapore.

Its portfolio includes projects such as the St Regis Hotel and Residences, Parc Emily, Oceanfront on Sentosa, as well as The Gale, which was launched recently.

Hong Leong said interest in Optima is already building up, with over 1,000 enquiries received over the past two months.

The project is expected to receive its Temporary Occupation Permit (TOP) by 2014.

SINGAPORE: The upcoming suburban mall Nex located at Serangoon Central has leased 60 per cent of its lettable space.

Its developer Gold Ridge said retailers like Isetan, Courts and Challenger are among its key tenants.

Gold Ridge added that Isetan has secured a 53,000-square foot space, spanning three floors. This will be Isetan’s first new department store in Singapore since 1995.

Another first, the developer said supermarket chains Cold Storage and Fairprice Xtra will be housed together under the same roof.

The six-storey mall will also have a wide variety of F&B and entertainment options.

To be developed at a cost of S$1.3 billion, Nex will be ready by the end of next year.

Complaints about property agents run the gamut from service quality to commission disputes.

Each week, the Singapore Accredited Estate Agencies (SAEA) deals with 15 to 25 such enquires and feedback from the public, comparable to the 1,000 to 1,200 that reach the Consumer Association of Singapore every year.

Based on the four most frequent complaints received, the SAEA offers tips on how you can deal with what appears to be the property agent from hell.

CASE 1
The owner of a five-room Housing and Development Board (HDB) flat engages an agent to help sell the unit. A prospective buyer calls the agent for a viewing and makes an offer, but says he does not wish to appoint an agent for the purchase. However, the agent insists that the buyer sign a commission agreement with his agency.

SAEA says: HDB owners and buyers do not need to engage a property agent in a resale transaction. Thus, the agent cannot insist that the buyer use his services; neither can he refrain from selling to a buyer who refuses his services. If a buyer does not wish to engage the agent, he may write directly to the seller and meet the seller personally to make the offer. At the meeting, the prospective buyer may verify that the person he is meeting is the seller by requesting for a copy of his property tax statement and identity card.

CASE 2
A man who bought his flat at the peak of the last property boom is sitting on big paper losses. If he sells the flat, the proceeds (after paying off the mortgage balance and returning the requisite amounts to his Central Provident Fund account) may not leave him with any cash. So to help the seller pocket some cash, the agent strikes a deal with the buyer to declare to the authorities that the flat was sold for a lower price. The buyer then pays the difference between the actual and declared price to the seller in cash.

SAEA says: It is illegal to make a false declaration of resale price in an HDB transaction. If the resale flat is likely to result in negative equity, sellers should explore alternatives such as renting out the flat or the Lease Buyback scheme. Alternatively, sellers can simply wait for a better time to sell.

CASE 3
An agent persuades a seller to sign an agreement allowing the agent sole rights to sell the property. He tells the seller that the agreement can be terminated at any time, but does not say that if the seller finds a buyer himself during the validity of the agreement, the agent would still be entitled to commission. A month after signing the agreement, the seller decides to terminate the agreement, only to be told it is irrevocable.

SAEA says: It is important for the agent to inform the seller of his rights and obligations in granting an “Exclusive Authorisation To Sell”. Once it is signed, it cannot be revoked for the period of validity. Sellers should read the agreement carefully before signing it.

CASE 4
When a tenant is writing a cheque for the tenancy deposit and one month’s advance rent, an agent tells the tenant to make out the cheque in the agent’s name instead of in the owner’s name.

SAEA says: Tenants should not make out cheques for tenancy deposits and the likes to the agent – unless the agent can prove that he or she was appointed to be Power of Attorney by the landlord. Landlords can protect themselves from rental scams by buying rent protection insurance.

Source: Today, 23 July 2009

Dakota Crescent condo site gets $130m offer; Chestnut Avenue plot put up for tender today

Bukit Timah, Cairnhill Circle projects to cash in on market optimism

TWO new residential projects will soon be launched by property developer Keppel Land (KepLand) in an indication of the rebound in market sentiment.

The firm has yet to launch any residential projects this year, unlike other developers which have launched projects week after week in recent months to capitalise on the new-found optimism.

KepLand said yesterday it will be launching luxury projects Madison Residences in Bukit Timah and The Promont at Cairnhill Circle in the next two months.

This comes only four months after it made the decision to defer the construction of Madison Residences in March, citing weak market conditions.

The Promont is due for completion this year, said the firm.

Group chief executive Kevin Wong said yesterday at its financial results briefing that as markets in the region improve, ‘we will accelerate our project launches in Singapore, China and Vietnam to achieve faster returns’.

The firm posted a 10.4 per cent increase in net profit to $58.2 million for the three months ended June 30, compared to the same quarter last year.

Revenue came in at $250 million for the second quarter, up 34.4 per cent from a year ago due to progressive sales from launched projects in Singapore such as Park Infinia at Wee Nam and The Tresor at Duchess Road.

Keppel Land’s growing footprint overseas also helped to boost turnover, as sales from projects in China and Indonesia were registered.

Overseas earnings accounted for 30 per cent of net profit, compared to 18 per cent for the same quarter last year, said KepLand.

The firm is determined to expand its presence in China, recently announcing its proposal to delist Evergro, a China-focused property group, to merge both entities.

It had offered 29 cents per share – a 16 per cent premium over Evergro’s last traded share price of 25 cents on the Friday before the announcement.

Shareholders can also opt for one new Keppel Land share for every seven Evergro shares they own. This plan will allow KepLand to ‘tap on combined operational expertise, industry knowledge and extensive networks’ for expansion in China, said Mr Wong.

KepLand had raised some $708 million in a fully subscribed, nine-for-10 rights issue at $1.09 a share in June.

This has improved the firm’s borrowing position, and it is now looking for land to buy, said its finance chief Lim Kei Hin.

For the first half of this year, net profit was down 15.8 per cent at $95.1 million from the same period last year because of poorer first-quarter sales arising from lower revenue recognition for projects in Singapore and overseas.

Overall, turnover was down 13.8 per cent at $395.6 million compared to the first half of last year.
Earnings per share for the half-year ended June 30 was 8.2 cents, down from 11.1 cents previously.

Net asset value per share stood at $2.29 as at June 30, compared to $3.39 as of Dec 31, 2008.
Keppel Land shares closed five cents up at $2.54 yesterday.

Source: Straits Times, 23 July 2009