DEVELOPERS took a hit on the share market yesterday following the announcement of new measures aimed at cooling the real estate boom.

It was far from a bloodbath – shares dipped around 4 to 5 per cent although Allgreen Properties dived 7 per cent – but experts are uncertain where the market is headed.

Analysts expect downward pressure on shares to continue in the short term.

Although similar cooling measures have been introduced over recent months, yesterday’s steps are more broad-based and possibly of greater magnitude, said CIMB analyst Donald Chua.

Mr Brandon Lee, an analyst at DMG & Partners, added that much will depend on how the real estate market dynamics play out and how sales fare and markets perform.

Companies like CapitaLand and Keppel Land are expected to be less susceptible to the effects of the measures given their diversified business models and geographic exposure, Kim Eng analyst Wilson Liew noted in a report yesterday.

Real estate investment trusts or Reits with exposure to retail and commercial assets are also expected to fare better.

Market observers note that the new steps can heighten uncertainty about the market’s stability.

Although the measures come across as a ‘mild warning from the Government’, a report from Daiwa Capital Markets stated, if price increases persist, things could be different.

If prices continue to rise by over 5 per cent per quarter, Daiwa expects more ‘severe’ measures could come our way.

On the shares front, Allgreen closed at $1.06 while City Developments, Singapore’s biggest property developer after CapitaLand, slumped 50 cents or 4.18 per cent to $11.46. Wing Tai was down 4.6 per cent to $1.65, while the Ho Bee Group was off 3.77 per cent to $1.53.

Losses were smaller elsewhere. CapitaLand shares dropped just half a per cent to $3.98, Keppel Land kept losses to 2 per cent at $3.85 and UOL lost only 1.26 per cent to $3.93. Luxury property developer SC Global fell 1.25 per cent to $1.58.

Source: Straits Times, 31 Aug 2010

(SINGAPORE) Property stocks slid yesterday after the government announced new measures to cool Singapore’s residential property market, even though analysts said the impact on developers is likely to be minimal.

Allgreen Properties was the biggest loser among property plays listed on the main board. The Singapore-based developer, controlled by Malaysian billionaire Robert Kuok, plunged 7 per cent to $1.06.

City Developments, Singapore’s second-largest developer by market value, sank 4.2 per cent to $11.46. UOL Group fell 1.3 per cent to $3.93 and CapitaLand, South-east Asia’s biggest developer, dipped 0.5 per cent to $3.98.

Analysts said the government’s measures are largely aimed at speculators, and that property stocks with high residential exposure are likely to be hit – although the impact may be minimal, with mid-to- high-end property developers largely unaffected. Most have maintained their ratings for the sector.

Daiwa Research put it this way: ‘We believe these cooling measures appear light. All in, this package looks to us like a mild warning from the government to be careful.’

Daiwa kept its ‘neutral’ call on property developers here.

A saving grace for many developers is that they have sold down the bulk of their inventory and, as a result, are unlikely to be adversely affected by the policies, said CIMB Research. It reiterated its ‘under-weight’ call on the property sector.

The major impact will be in the public housing and the private mass market segments, said UOB Kay Hian. ‘We see better value in the high-end segment that is less susceptible to government measures.’

It said its top picks are A-Reit, K-Reit and CDL Hospitality Trust, which have exposure to the industrial, office and hospitality space respectively and are not the targets of the government curbs.

Mid-to-high-end properties are unlikely to be affected, though their transaction volumes could be soft in the near term, said Credit Suisse.

Although the government’s moves are aimed primarily at speculators in mass market properties, such as HDB units, developers are likely to suffer a knee-jerk reaction, it said. In particular, residential property proxies like City Dev, Allgreen and Wing Tai Holdings are likely to be affected.

And while developers are expected to weather the tightening measures fairly well, downside risks lurk.

Daiwa said the government could implement tougher measures if the market remains buoyant, with price increases of over 5 per cent per quarter.

The record pipeline of residential units being planned and constructed, and global economic uncertainty could drag down property prices and rents, said Barclays Capital.

The ‘measures continue to signal that the authorities are adopting an incremental approach to deflating house price expectations’, it said.

‘Coupled with the record pipeline of residential units that are planned or under construction, as well as rising global economic uncertainties, we maintain that the risks for property prices and rents over the next four years are to the downside.’

Source: Business Times, 31 Aug 2010

HK Land making exit offer to MCL shareholders at $2.45 apiece, a 25.6% premium to Tuesday’s price

(SINGAPORE) An established property developer with a memorable corporate history is headed for an exit from the Singapore Exchange.

Hongkong Land is proposing to voluntarily delist its 77.4 per cent-owned subsidiary MCL Land from the bourse and is proposing to buy all the shares in MCL it does not own at $2.45 apiece. The price represents a 25.6 per cent premium to the $1.95 at which MCL was last traded on Tuesday.

MCL’s first-half 2010 results released last month reflected net asset value per share of US$1.80 (S$2.52) as at June 30 this year.

On the Singapore Exchange, MCL’s 52-week trading high was $2.26, on April 22 this year.

Hongkong Land says the delisting will give it greater operational flexibility in managing its residential property development activities in the region. ‘Hongkong Land currently has no intention to propose any major changes to the businesses of the company; redeploy the fixed assets of the company; or discontinue the employment of the employees of the company and its subsidiaries,’ according to a joint statement by the two companies yesterday.

The statement also cited MCL’s small free float, low trading liquidity and the compliance costs of maintaining a listing as the rationale for the proposed delisting.

‘The exit offer presents stockholders with an opportunity to realise their entire stockholding for cash at an attractive premium,’ it added.

Another point is that MCL has not raised funds through the Singapore bourse for at least 10 years and is unlikely to require access to the capital markets to finance its operations in the foreseeable future.

Standard Chartered Bank and N M Rothschild & Sons (Singapore) will make the exit offer for and on behalf of HKL (MCL) Pte Ltd, an indirect wholly-owned subsidiary of Hongkong Land that currently holds the 77.4 per cent stake in MCL.

Malaysia’s Employees Provident Fund Board – which owns about 4.7 per cent of MCL – has given an irrevocable undertaking to HKL (MCL) to vote in favour of the delisting proposal and accept the exit offer.

The delisting and exit offer will be conditional on approval by MCL shareholders of the delisting resolution at an extraordinary general meeting by a majority of at least 75 per cent of the total number of issued stock units held by stockholders present and voting. Another condition is that the delisting resolution must not be voted against by 10 per cent or more of the total number of stock units held by stockholders present and voting. All stockholders are entitled to vote on the delisting resolution.

The exit offer will not be conditional upon a minimum number of acceptances being received by HKL (MCL)

If HKL (MCL) receives acceptances for the exit offer for at least 90 per cent of the MCL shares it does not already own, it intends to exercise its right under the Companies Act to compulsorily acquire at the exit offer price all the remaining shares from shareholders who have not accepted the offer.

Full acceptance of the exit offer will result in a payment by Hongkong Land of about $205 million (US$151 million).

As at Aug 25, MCL had a market capitalisation of about $721 million (US$530 million).

MCL Land – formerly known as Malayan Credit Ltd – was set up in 1963 by Malaysia’s Teo family. In June 1992, Cycle & Carriage (now Jardine Cycle & Carriage) teamed up with Ong Beng Seng’s Hotel Properties Ltd (HPL) in a hostile takeover of the property company from the Teo family. HPL later sold its stake in Malayan Credit.

Arguably the most memorable transaction that Malayan Credit did was in late 1993, when it sold the plum Ardmore Park site to Marco Polo Developments (now Wheelock Properties Singapore) for $375 million; Marco Polo then proceeded to redevelop the freehold site into a plush condo, creaming a whopping $1 billion profit in the process.

In January 2006, MCL ceased to be a subsidiary of Jardine Cycle & Carriage following a restructuring of its parentage within the Jardine group and become a subsidiary of Hongkong Land.

MCL is an established residential property developer in Singapore. Its projects over the years include The Warren at Choa Chu Kang, Esta at Amber Gardens, Waterfall Gardens at Farrer Road, Hillcrest Villas at Dunearn Road and most recently The Estuary in Yishun, overlooking the Lower Seletar Reservoir. It launched the 608-unit condo in February this year and the project was fully sold by end-April.

For first-half 2010, MCL posted US$162.9 million in group net profit, a big jump from US$38.1 million in H1 2009. In addition to profit arising from the completion of Waterfall Gardens, the bottom line received a fillip from the reversal of a US$51 million writedown on The Estuary development following the project’s sellout.

Source: Business Times, 27 Aug 2010

Net income rises to $164.6m as economic recovery boosts demand for homes, office space

CITY Developments Limited (CDL), Singapore’s second-largest property company, posted an 18 per cent increase in second-quarter net profit as economic recovery boosted demand for its homes and office space.

Net income for the three months ended June 30 rose to $164.6 million from $140 million a year earlier.

Earnings per share rose to 17.4 cents from 14.7 cents.

The group’s revenue climbed 20 per cent to $941.7 million from $787.1 million in Q2 2009.

Analysts said that the results were largely in line with expectations.

Including the Q1 net profit, net profit for the first six months of 2010 came to $304 million – up 36 per cent from $223.1 million in H1 2009.

‘This is equivalent to 47 per cent of consensus estimates of $642 million and 49 per cent of our estimate of $623 million for the 2010 financial year,’ wrote Citigroup analyst Wendy Koh in a note.

Revenue for the first half of 2010 rose 20 per cent to $1.7 billion from $1.4 billion a year ago as CDL sold a total of 773 units with a sales value of $950 million in H1 2010.

Year-to-date, the company has sold 934 units with sales value of $1.2 billion.

In comparison, in H1 2009, the group sold 537 units worth $665 million.

The group’s property development segment was the lead performer, contributing more than 50 per cent to profit before tax for both Q2 and H1 in 2010.

The rental properties segment continued to be the second largest contributor for H1 2010 due to the gains recognised on the disposal of North Bridge Commercial Complex and The Office Chamber in Q1 and Q2 2010 respectively.

However, for Q2, the recovery of the hospitality market (particularly in Asia) pushed CDL’s hotel operations into becoming the second in line in terms of profit contribution.

CDL has two new launches planned for Q3. The first is the 642-unit NV Residences at Pasir Ris.

The second project is the redevelopment of the existing Copthorne Orchid Hotel site along Dunearn Road, which the group is managing the marketing on behalf of its hotel arm Millennium & Copthorne Hotels (M&C), in which it has a 54 per cent interest.

The upcoming project on the site will have 150 units.

CDL shares gained 8 cents to close at $12 yesterday.

Source: Business Times, 13 Aug 2010

The bottom line improved despite a 19% fall in revenue to $202.8m

KEPPEL Land plans to launch the first phase of a residential project next to Lakeside MRT station by the end of the year.

The development will have around 630 units, comprising one- to four- bedders. It will be on a 99- year leasehold site which the group won recently in a state tender.

Keppel Land said this yesterday as it released results for the second quarter ended June 30.

Net profit was $70.1 million, up 20 per cent year- on-year, driven by stronger performances across the property trading, property investment and fund management divisions.

The bottom line improved despite a 19 per cent fall in revenue to $202.8 million. Q2 earnings per share dipped 2 per cent to 4.9 cents.

For the first half, Keppel Land’s net profit was $134.7 million, increasing 42 per cent from a year ago.

Revenue dropped 9 per cent to $361.6 million. H1 earnings per share rose 15 per cent to 9.4 cents.

Keppel Land has been launching projects in the last few months and will continue to do so.

In Singapore, it held a second preview of Marina Bay Suites in Q2 and sold about 40 units. It also sold 77 units at Reflections at Keppel Bay in H1.

According to caveats lodged with the Urban Redevelopment Authority in June, five units at Marina Bay Suites changed hands at $2,261-2,680 psf.

In China, Keppel Land sold around 1,200 units in H1, mainly from townships in second-tier cities such as The Botanica in Chengdu.

Although the Chinese government has imposed measures to cool the property market, ‘we are still seeing resilience of demand for residential properties especially in middle-income homes in the second tier cities and suburban areas of first tier cities’, said Keppel Land CEO Kevin Wong at a briefing yesterday.

Apart from launching units at the Lakeside project, Keppel Land will also release the remaining 90 units at Marina Bay Suites and 384 units at Reflections at Keppel Bay.

The group is not too worried about the recent slowdown in new private home sales.

‘We don’t have that many units left, and ours are in locations of choice,’ said its chief financial officer Lim Kei Hin.

For high-end property, there is also room for prices to rise further as they have not reached pre-crisis levels, he added.

In China, Keppel Land will launch the 1,680-unit Seasons Park at Tianjin Eco-City. It also plans to roll out 260 units from 8 Park Avenue in Shanghai.

In the meantime, Keppel Land will be keeping an eye out for residential, commercial and mixed-use sites, said its CEO Mr Wong.

‘We will continue to look for opportunities to build up our land bank in Singapore, whether it is through government land sales or private transactions.’

Keppel Land gained 10 cents yesterday to close at $4.21.

Source: Business Times, 21 Jul 2010

This marks the 5th departure of a senior exec at the group in last 2 years

PROPERTY giant CapitaLand yesterday announced the resignation of Patricia Chia as CEO of its Singapore residential business ‘to spend more time with her family’.

Her job will be taken over by Wong Heang Fine, who will concurrently continue in his present role of developing CapitaLand’s business in the Gulf Cooperation Council (GCC) region.

Ms Chia’s resignation marks at least the fifth departure of a senior executive from the group in the past two years.

The departure train began to take off in September 2008, with the shocking announcement of the resignation of Pua Seck Guan, who was CEO of CapitaLand Retail and chief executive of CapitaMall Trust Management Ltd. The day after his resignation was announced, CapitaMall Trust lost over $300 million of its market capitalisation. Mr Pua now heads international operations at Indian real estate giant DLF and is based in Singapore; he has also set up his own property fund management outfit, Perennial Real Estate.

Then in December 2008, CapitaLand announced that its chief corporate officer Tham Kui Seng, was leaving, ‘to pursue personal interest’.

In June last year, the company announced that its chief investment officer Kee Teck Koon, was retiring. However, Mr Kee was recently named chairman of CapitaMalls Malaysia Reit Management Sdn Bhd, the manager of the soon-to-be-listed CapitaMalls Malaysia Trust.

In April this year, it was announced that CapitaLand Financial CEO Lui Chong Chee, would exit the company on June 1 to pursue his personal interests. Mr Lui, however, remains as chairman of CapitaLand’s Australian unit Australand.

Messrs Kee and Tham were members of CapitaLand Group president and CEO Liew Mun Leong’s ‘inner kitchen cabinet’ as he terms his inner circle. Market watchers note that another member in that league to have parted ways earlier was Hiew Yoon Khong. He was CEO of CapitaLand Commercial and CapitaLand Financial when he left the group in 2003. He is now CEO of Mapletree Investments, a fully owned real estate subsidiary of Temasek Holdings.

In its statement yesterday announcing Ms Chia’s departure, Mr Liew said: ‘Patricia has worked with me in various capacities over the years. She joined Pidemco Land in 1996 and, given her excellent execution skills, she has played a key role in establishing CapitaLand Residential Singapore as a leading developer in Singapore today. She has now requested to step down to spend more time with her family and I have acceded to her request.’

CapitaLand was formed in 2000 out of a merger between Pidemco Land and DBS Land.

Ms Chia is 55.

Her successor, Mr Wong, 52, holds degrees in mechanical engineering, and engineering production and management.

‘Heang Fine, with his track record in the areas of engineering and construction globally, will bring a new perspective to the Singapore residential business as we enter the next phase of growth,’ Mr Liew said.

Mr Wong joined the CapitaLand Group in 2006. He had previously been president and CEO of SembCorp Engineers and Constructors and prior to that, held the same post at Cathay Organisation Holdings.

Source: Business Times, 6 Jul 2010

THERE are worries that CapitaLand’s huge exposure to the China property market will be its Achilles heel if the mainland economy suffers a hard landing.

Shanghai stocks tumbled 6.7 per cent last week, due to jitters over the Agricultural Bank of China’s coming initial public offering.

There are also concerns that a drop in China’s purchasing managers’ index last month might flag slowing growth in the country’s manufacturing sector.

But so far, CapitaLand seems to be riding high in China.

Swiss bank UBS, for example, noted in a report last week that the property giant ‘remains well positioned to deliver net asset value growth’, as the challenging China market is likely to favour well-capitalised and diversified groups with the ability to execute on large-scale opportunities.

The investment bank also believes that CapitaLand may benefit from any appreciation in the yuan, as ‘around 40 per cent of its revalued net asset value is exposed to China’.

Besides trading in CapitaLand shares, there are other means to gain exposure to the counter.

Macquarie Bank issues covered warrants on CapitaLand, which offers traders options to buy into the shares over a period of time.

The bank also has a call warrant where traders can exchange two warrants and pay an exercise price of $3.50 to get one CapitaLand share. It matures on Sept 1.

Bearish investors have the option to ‘short’ CapitaLand by trading Macquarie put warrants on the counter. One put derivative gives traders the option to sell CapitaLand at $3.50 by using two put warrants. It expires on Dec 2.

Source: Straits Times, 5 Jul 2010

Market players believe more home hunters and investors are going up-market.

To tap opportunities in this segment, developer Far East Organization has launched a series of luxurious apartments under a brand called Inessence.

Industry figures show that some 240 ultra high-end homes were sold in the first half of this year, and observers said there is more upside ahead.

Living it up at Boulevard Vue will come with a big price tag.

An apartment here costs about S$3,700 per square foot, and that is just the starting price.

About one-third of the project has been snapped up, with the penthouse sold for about S$34 million recently.

Boulevard Vue is among four bespoke residences under the Inessence brand.

Its developer Far East Organization said the properties are all located in the Orchard Road area.

So far, about six-in-10 of the available units are taken up by foreigners.

Chia Boon Kuah, executive director, Far East Organization, said: “With the increase in interest in Singapore, especially from the Chinese, from Malaysians, from Indonesians, and we expect also the Indians to be arriving and buying such luxury properties…with these people, with the new money and the new customers coming to Singapore, we believe these products will be taken up.”

According to recent studies by Cap Gemini and Merrill Lynch, global wealth increased by about 19 per cent to US$39 trillion to close in on the pre-crisis peaks of 2007. The Asia Pacific led the growth in wealth, outpacing Europe for the first time.

Observers said foreigners are also attracted to properties in Singapore because they are relatively cheaper.

The peak price for luxury homes was about S$4,500 per square foot in 2008.

Donald Han, managing director, Cushman & Wakefield, said: “If you look at the ultra high end pricing wise, it is hovering about 18 to 20 per cent off from peak of the residential market, which is defined as the first quarter of 2008.

“There is a lot for the ultra high-end market to pick up, and values are deemed quite compelling to some of our neighbouring cities like Hong Kong, Shanghai or even Beijing, which is all pretty toppish – at market peaks in that sense.”

In the first half of this year, some 240 luxury apartments were sold in Singapore, at a total value of S$1.4 billion.

And Far East Organization believes there is room for growth, as sales are still below the peaks in 2007 when 1,000 units were sold that year, at a total value of S$6.4 billion.

Source: Channel News Asia, 30 Jun 2010

FRASER and Neave (F&N) property arm Frasers Centrepoint has bought a residential site in Sydney, Australia, for A$82.5 million (S$97.8 million).

There are plans to turn the 13.7-hectare plot into a community comprising almost 800 homes, a childcare centre, sports facilities and other amenities.

The site is located in the suburbs on the border of Ryde and Putney, 12km north-west of Sydney’s central business district.

Frasers Centrepoint CEO Lim Ee Seng described the deal as ‘strategic’. It boosts the company’s land bank in Australasia to 9 million sq ft from around 8 million sq ft.

The project will also ‘strengthen the Frasers brand as we continue to make further inroads into Australasia’, he said. The company is planning and developing more than 5,800 homes in Australia and New Zealand.

The Sydney site is part of an 18-ha plot owned by Sydney’s Royal Rehabilitation Centre, which provides rehab services for people suffering temporary or permanent disability. Royal Rehab decided to sell part of the land to Frasers Centrepoint to fund a new rehabilitation, disability and research centre.

The New South Wales government has approved the concept plan for the site. The project will include houses, town houses and apartments. Roads, traffic calming devices and other infrastructure will also be built.

Frasers Centrepoint will set aside 2.3 ha of open space for community use. It will also join hands with Royal Rehab in a multi-million dollar project to develop publicly available community facilities such as a childcare centre, a meeting room and sports and recreation amenities.

Frasers Centrepoint’s Australasian unit will start preparing submissions to the authorities for infrastructure plans and the first stage of residential construction. Work on the public parks will start this year.

F&N shares lost six cents to close at $5.20 yesterday. In a note on Wednesday, CIMB analyst Donald Chua kept his ‘outperform’ call on the counter, citing successful overseas property sales as one of several possible price catalysts.

Source: Business Times, 26 Jun 2010

THE global financial crisis made CapitaLand rethink its strategy for funding expansion, the property group’s chief investment officer Wen Khai Meng said yesterday.

CapitaLand learned that it cannot count on just the capital markets for finance after those markets froze during the crisis, Mr Wen said.

So the developer is now looking at alternative forms of funds – especially private equity – for its growth needs, he said.

Speaking during a panel discussion at the Real Estate Investment World Asia conference on the lessons that real estate developers picked up from the crisis, he also said that it brought home the need to diversify – geographically and among its various business units.

CapitaLand will continue to maintain a good balance among its various income streams – income from property trading, which involves building and selling homes, as well as recurring income from its investment assets and fund management activities, he said.

Other developers echoed the view that the crisis made them re-evaluate their financing needs.

‘The lesson we took out of that (the crisis) is to make sure we have sufficient liquidity and sufficient reserves,’ said Thio Gim Hock, chief executive of Overseas Union Enterprise (OUE). When the crisis hit, OUE often had to go back to the table to negotiate bank loans as it delayed property launches and construction work. Banks were eventually willing to offer fresh loans after considering the new time frame – but at much higher interest rates.

And so like CapitaLand, OUE is looking to diversify its sources of funding. Mr Thio said that the company is now looking beyond bank loans, to instruments such as convertible bonds. OUE this month scrapped plans to issue up to $200 million dollars of convertible bonds, citing market conditions.

The local hotel and property group is also looking to diversify its income base. Mr Thio said that it would like to get as much as 60 per cent of its income from investment assets eventually.

Most representatives on the panel also admitted that they missed opportunities during the financial crisis. ‘We were hoping to pick up some bargains, but before we knew it, it (the crisis) was all over,’ said Mr Wen.

Mr Thio said he identified some good opportunities during the crunch but could not secure finance to take advantage of them.

Donald Choi, managing director of Hong Kong’s Nan Fung Development, who was also a panellist, similarly said that his company should have been more aggressive, as the window of opportunity was very short.

Source: Business Times, 23 Jun 2010