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Archive for July 31st, 2008

Solved – the Rental spike mystery

Posted by luxuryasiahome on July 31, 2008

It was caused not by a jump in demand, but by a contraction in supply

LAST week, I suggested that the private housing oversupply may have been understated.

This is because units that have been bought by investors can still be considered as part of the housing supply until they are resold or are tenanted. If the rental income cannot cover the mortgage payments and if the owners are highly geared, then they will have to sell the units sooner or later. If a greater proportion of owners are in the same predicament, the competition to sell will result in lower prices.

But surely, finding a tenant cannot be a problem.

After all, was it not so long ago that we heard complaints of unreasonable hikes in rentals. Between the third quarter of 2006 and the second quarter this year, the official rental price index went up by a hefty 69 per cent. This is almost 10 per cent each quarter.

What were the factors responsible for this? Many attributed it to higher demand. It could not have been anything else. But was this really the cause?

Amid the euphoria and excitement of the construction of the two integrated resorts and the anticipation of the tremendous spillover effects, the market misread the cause.

Many attributed it to the surge in foreign talent arriving on our shores. For sure, more expatriates were coming but were their arrivals in such large numbers so as to cause rents to escalate to such dizzy heights?

Even the new plans to prepare Singapore to accommodate up to 6.5 million people were loosely bandied around as proof that Government officials shared the same view. Investors bought the story and snapped up apartments at prices which presupposed a continuation of that strong upward trend.

However, official figures showed the number of rental contracts actually contracted by 17.6 per cent in 2006 and remained flat last year.

On the other hand, the average cost of rentals rose by 15 per cent in 2006 and43 per cent last year. So, where are the missing expatriate households?

Certainly, the high rents did cause some to leave Singapore, others – especially Permanent Residents – to purchase, and for those without a generous budget, to rent HDB flats.

But there should have been at least a substantial – if not dramatic – nett increase in rental contracts. After all, they were supposed to have come in droves.

The mystery is solved if we realise that the spike was caused, not by a steep jump in demand as many had assumed, but by a sharp contraction in supply. The result may be the same but the implications are different.

The surge in en bloc sales had led to groups of tenants leaving their homes. The competition for homes simply drove rentals sky high.

There are no official figures but I estimate that the supply of rental accommodation to have shrunk by at least a quarter to a third of the existing stock.

Today, the rental market has stabilised. Those seeking homes would have found them by now – either by buying, downgrading or leaving Singapore.

What are the market implications?

First, there are now no hordes of expatriates scrambling for accommodation. This means demand will lag behind supply. Rents will decline. Lower rents translate into lower yields.

Second, for less prime units, it will come to a point when the low rents make no sense. It will be better to sell.

Recently, a consultant’s report extolled the benefits of owning a home on Sentosa Cove and a $19,500 monthly lease was reported in a the news as having been achieved.

Checks revealed that the 560-square-metre unit was sold in July last year for $8.59 million. It was probably a penthouse. This translates to a gross yield of 2.7 per cent. Does this even cover the interest on the mortgage?

Lest we forget, we have not factored in property tax of 10 per cent or maintenance charges of about $12,000 a year for a penthouse. What about the additional security cost for Sentosa homes? Or the cost of furnishings?

Eventually, the nett yield may dwindle to below 1.8 per cent – certainly a high risk to take for such a low return.

Is this situation typical of the other”investor” units completing over the next12 months? I hope I am wrong, but I fear this may be so.

The writer is the head of research at property consultancy Chesterton International.

Source : Today – 31 Jul 2008

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Three parts to Dawson’s new face

Posted by luxuryasiahome on July 31, 2008

THE public first got wind of the ambitious vision last August, when Prime Minister Lee Hsien Loong spoke of giving the 56-year-old Dawson Estate a new face.

Now, the surgeons who will design its new face have been appointed, and flats could go on sale by next year.

Construction is expected to start six months after the sale and the new generation of flats would be ready by around 2014, said Ms Grace Fu, Senior Minister of State for National Development and Education, yesterday.

She added that since the conceptual designs from the three architects invited to give shape to the ideas had been well-received by the public, all three – SCDA Architects, WOHA Architects and Surbana International Consultants – would be appointed as consultants for the Dawson project.

The rejuvenation of Dawson Estate is part of an initiative to transform public housing into vibrant homes for Singapore. Apart from Dawson, Yishun and Punggol have also been earmarked for major facelifts.
Dawson Estate – formed by the merger of Princess and Duchess estates – was first developed in the 1950s by the Singapore Improvement Trust.

Last September, the Housing Development Board (HDB) commissioned the three architects to come up with design ideas for Dawson Estate and showcased these concepts in an exhibition called “Remaking Our Heartland”.

The majority of the 11,000 Singaporeans who visited the exhibition gave the designs a thumbs up.
As a result, the HDB decided to appoint all the three architects to regenerate Dawson Estate.

SCDA and WOHA will work on the next stage of the estate’s detailed design as the sites they would be working on are now vacant.

SCDA and WOHA told Today that they are already talking to landscapers, quantity surveyors, structural and mechanical engineers.

The HDB will appoint Surbana at a later date when the site that the firm would be working on is ready for development in 2011.

Under SCDA’s concept, residents can look forward to flats with tall ceilings in the living room. These lofts are built next to smaller flats which can function as “granny units” should the owners of the bigger flat decide to buy over the smaller unit.

Other features include a central staircase with solar panels which face the West and cascading landscaped terraces. Around 800 units will come under the SCDA’s design.

WOHA’s design is based on a concept of a “kampung in the sky” by creating a 10-storey column as the heart of each village, overlooking a village square.

“This village square has community gardens, study areas, barbecue areas and gathering spaces which will allow people to get to know the other 60 to 70 households in their village,” said Mr Richard Hassell, WOHA’s founding director.

Surbana plans to stretch a park six storeys upwards with ramps covered with greenery.

It will meander in a figure-of-eight shape around the twelve 48-storey blocks. The site includes the old Queenstown town centre.

But with construction costs going up, will all these features and amenities be included?

Mr Chan Soo Khian, SCDA’s founding principal and design director, said the firm would stick to its design and “it is up to HDB” how it wants to price these units.

Mr Chan, however, said there is a possibility that not all features – such as solar panels – will be included since they “are an economic issue”.

WOHA’s Mr Hassell said it would be working very closely with the HDB to achieve Dawson’s expected standard “at a reasonable market price”.

The HDB is inviting all Singaporeans with fond memories of Dawson Estate to contribute old photos, postcards, cinema tickets and souvenirs commemorating the estate at its “Transforming Our Dawson” exhibition, which is being held at the HDB Hub until Aug 10.

Meanwhile, another first step in remaking Singapore’s heartland was taken, when 94.1 per cent of voters in a Yishun precinct said “yes” to the new Home Improvement Programme. The nine blocks are the first to come under this scheme.

Source : Today – 31 Jul 2008

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Lawyer jailed for fraud barred from practising

Posted by luxuryasiahome on July 31, 2008

A LAWYER convicted of fraud has now been barred from practising.

Mr Tan Sok Ling, 41, was the first lawyer to be struck off the rolls this year.

He did not appear before the Court of Three Judges yesterday to contest the application by the Law Society to dismiss him from the profession.

Last November, Mr Tan, a lawyer since 1993, was sentenced to jail for 11 months for forgery and giving false information.

In March 2006, he had inflated the stamp duty payable for a Thomson Park house that his client bought by $5,400.

And in July 2003, Mr Tan lied to a police officer that he lived in Bukit Timah when he actually lived in Tanah Merah in order to secure a spot in a prestigious all-girls school in Bukit Timah for his daughter.

He is believed to be out of jail as a notice to attend court for yesterday’s hearing was personally served on him at his home on July 26.

Before his conviction, he had also been suspended from practising by the Law Society for a year in March last year for not keeping proper accounts as the sole proprietor of the now-defunct Tan S.L. Partners.

Following his conviction, the Law Society began proceedings to remove him from the Bar as his offences involved fraud and dishonesty – flaws which the legal profession does not accept.

The hearing yesterday took all of 10 minutes.

Another lawyer Low Yong Sen also faced the Court of Three Judges yesterday for allegedly overcharging a married couple for expenses incurred in a property deal.

He had allegedly charged his clients three times more than what was deemed by a disciplinary committee as fair when he billed his client $4,300 in expenses.

Mr Low, who represented himself, told the three judges that he was mainly a family lawyer who rarely did conveyancing deals.

The property transactions he handled mainly involved HDB flats and this was his case which involved a private property, he said.

Mr Low, a lawyer for 15 years, said he had engaged a legal secretary to help him with the work and had billed his clients that much based on that secretary’s claims.

He did not stand to benefit by overcharging the couple, Mr Low told the court.

His case was adjourned to a later date as the judges asked for a point of law in his case to be clarified.

Last year, two lawyers were disbarred – fugitive David Rasif, who has fled the country after allegedly pocketing more than $11 million of his clients’ money, and Mr Edwin Tay, who did not keep any books of acounts of his clients for the entire year of 2004 for the law firm he then owned.

Source : Straits Times – 31 Jul 2008

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94% support for new upgrading scheme in Yishun

Posted by luxuryasiahome on July 31, 2008

YISHUN residents have given the thumbs-up to the Housing Board’s first Home Improvement Programme, which aims to spruce up the town’s existing facilities and add new ones.

Over nine in 10 voted in favour of upgrading when polling closed on Monday night, said Senior Minister of State for National Development Grace Fu.

Referring to the 94 per cent support, she said: ‘This shows a really strong endorsement.’ She was speaking at the HDB’s annual awards yesterday.

Township planner Surbana International Consultants swept the design awards in all categories – new housing, upgrading and parks – for the second year.

Two projects – Edgedale Green in Punggol and Central Horizon in Toa Payoh – won for new housing, while its work at Clementi Meadows won for the main upgrading programme. The firm won the park prize for Montreal Green in Sembawang.

Quality awards for building were also given to Poh Lian Construction and Straits Construction. Three contractors – Kienta Engineering Construction, Chiu Teng Construction and Teambuild Construction – won for quality in upgrading projects.

Six firms were lauded for good service, including Sun Microsystems, which runs the backup and recovery of HDB business data, and V-Workz International, supplier of e-brochure and virtual showflat systems.

For construction safety, Straits Construction, Sim Lian Construction and Teambuild Construction took top honours.

Source : Straits Times – 31 Jul 2008

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Keppel Land upbeat despite 16% fall in net gain

Posted by luxuryasiahome on July 31, 2008

Take-up of mid-priced projects at recent launches ‘encouraging’

THE property story has been one of gloom for months but Keppel Land (KepLand) sees a silver lining in the dark clouds.

It said market sentiment appears to be more positive now compared to the first quarter, ‘judging from the encouraging take-up in recent launches of mid-priced projects’.

But it added that market sentiment remained cautious due to ’slower economic growth and a challenging external environment’.

KepLand, which has projects in China, Vietnam and India, said that while regional property markets have been affected by higher mortgage rates and credit-tightening, housing demand will continue to grow.

Despite a lift in spirits, the firm had to report a 16.4 per cent slump in net profits for the three months to June 30 in the wake of the cooling market in Singapore and in the region.

Earnings came in at $52.7 million, down from $63 million in the same period a year ago, after property sales were almost halved.

Revenue plunged 48.2 per cent from $359.2 million to $185.9 million, partly on lower contributions from residential projects after they had been completed.

Singapore remains a stalwart for the firm, contributing over 70 per cent in net profits for the quarter.

The firm is expected to launch its prime residential projects, including Marina Bay Suites and Phase Two of Reflections at Keppel Bay, when sentiment improves.

KepLand also expects to benefit from the buoyant office market. It forecasts positive rental revisions that will be supported by strong demand for prime space over the next few years.

Earnings per share was 7.3 cents, down from 8.8 cents for the same period last year. Net asset value per share was $3.13 as at June 30, down from $3.18 at Dec 31.

Net profit for the six months was down 10 per cent at $112.96 million while revenue fell 29.9 per cent to $459 million. No dividend has been declared for the half-year ended June 30.

KepLand shares closed unchanged at $5 ahead of the earnings announcement yesterday. They have fallen by more than 30 per cent this year.

Source : Straits Times – 31 Jul 2008

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1,800 flats to go on sale at Dawson estate next year

Posted by luxuryasiahome on July 31, 2008

Two 40-storey towers to be constructed under build-to-order system by 2014

A NEW generation of Housing Board flats is set to go on sale in about a year’s time at now-sleepy Dawson estate.

The 50-year-old Queenstown estate is set to be transformed with the construction of two striking 40-storey towers, designed by award-winning architects, SCDA Architects and WOHA Architects.

The towers, to boast about 1,800 flats, are being built under the HDB’s build-to-order (BTO) system – now the board’s main means of providing new housing stock.

HDB rarely builds new flats within a mature estate due to the lack of space. The new towers in Dawson will be nestled among gardens designed by landscape architects – a first for an HDB estate.

News that the flats will be on sale in a year’s time was unveiled by Ms Grace Fu, Senior Minister of State for National Development, at the HDB awards dinner yesterday.

She later told reporters that she expects very strong demand for the new flats.

Sales will start in the third quarter of next year. Construction could start six months after that and be completed in 2014, Ms Fu said.

At Dawson – Singapore’s first Housing Board estate – the SCDA-designed tower block is on a 2.2ha site and could feature about 800 flats. The other block, on a 2.7ha site, will have about 1,000 units.

The towers will have special features such as lofts, flexible flat designs, and sky villages or common high-rise space shared by every 10 floors.

But potential buyers can still influence the final design. Feedback is invited at an exhibition on Dawson estate before the consultants finalise their designs. The show at the HDB Hub in Toa Payoh runs from today until Aug 10.

Home-hunter Lauren Shen, 27, a graphic designer, said: ‘The flats are exciting because they can be customised. I have applied for a flat in Punggol. If I don’t get it, I will wait for these new ones.

‘But it will depend on the prices. My chances may be limited because I think they will be very popular.’

A third new-generation development will be added later at Dawson by Surbana International Consultants. It will be launched when the site for it is cleared by 2011.

To tie the three developments together, HDB has asked award-winning local landscape architects Cicada to draw up a landscape plan.

The plans will rejuvenate Dawson estate, which has about 3,000 flats. Dawson eventually could boast about 10,000 new homes, most of which are expected to be public flats.

HDB is keen to preserve Dawson’s heritage and is seeking contributions of old photos, postcards, books and other items for use in a display.

Source : Straits Times – 31 Jul 2008

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End of the road for 174 Seletar colonial homes

Posted by luxuryasiahome on July 31, 2008

As aerospace park takes shape, many ‘black-and-white’ homes must go

The first phase of the $60 million Seletar Aerospace Park (SAP) project is nearing completion and Phase 2 is about to take off, so the agencies spearheading the redevelopment of the complex have been briefing residents and other tenants about the next step forward.

Agency officials, led by Edwin Ho, JTC Corp’s assistant director for industrial parks, met tenants of the colonial ‘black-and-white’ residences last night to inform them that 174 of the 378 buildings could be demolished.

A significant number of the remaining units will be converted to offices and commercial outlets, including F&B and lifestyle clusters around The Oval/Parklane area.

But about 100 will be retained as residences.

All affected tenants will have to move out by this December, while those remaining will have to sign up to new tenancies.

Mr Ho assured everyone that all aspects of the development of SAP were being done with the input of ‘all stakeholders’ including residents, commercial tenants, aviation business operators, the Nature Society and other interest groups.

Other works in the upcoming Phase 2 of the massive project will be road widening and refurbishment of buildings which will be retained.

Phase 2 works will begin next January and stretch until 2013.

Phase 1 has essentially focused on the groundbreaking works for new tenants Rolls-Royce and Pratt & Whitney, and upgrading facilities for existing giants like ST Aerospace and Jet Aviation.

Besides the demolition of old buildings and refurbishment of others, key elements of Phase 2 will also include demolition of the old water reclamation plant located in the complex and the upgrading of the airport and the lengthening of the runway by some 300 metres.

The runway lengthening will be done for 14 hours a day for 18 months, starting this November, with works done at night.

Also starting next January will be works on construction of a new flyover from the Tampines Expressway, which will be the main entrance to the complex. There will also be some road diversions within the area.

A joint project of the EDB, CAAS and JTC Corp, the SAP will host an integrated aerospace industry cluster incorporating maintenance, repair and overhaul, design and manufacturing of aircraft systems and components, business and general aviation, and an aviation campus to train pilots, other industry professionals and technical personnel.

When completed in 2018, the SAP is envisaged to elevate Singapore’s status as an aviation hub, contribute $3.3 billion a year or one per cent of GDP and create jobs for 10,000 people.

Source : Business Times – 31 Jul 2008

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Frasers to support top KL serviced residences

Posted by luxuryasiahome on July 31, 2008

FRASERS Hospitality, the hospitality arm of property group Frasers Centrepoint. said yesterday that it will provide technical and advisory services for a ‘gold-standard’ serviced residence project in Kuala Lumpur.

The project, Fraser Place Kuala Lumpur, is in the Malaysian capital’s ‘Golden Triangle’, where most international banks, oil-and-gas companies and multinationals are based.

It is also within walking distance of the Petronas Twin Towers and the retail mall Pavilion KL.

Fraser Place Kuala Lumpur is owned by Malaysian-listed YNH Property.

The project is part of a mixed development comprising an office tower and a second tower with 217 studios, one-bedroom, two-bedroom and penthouse serviced residences.

Frasers said in a statement yesterday that when Fraser Place Kuala Lumpur opens in the third quarter of 2009, it will set a new standard for Malaysia’s extended-stay segment.

Every apartment has a separate bedroom, a fully-equipped kitchen with cooking implements, cutlery and a dishwasher, and a washer-dryer for clothes.

Guests can also make use of an all-day dining outlet, meeting and function rooms, fitness centre, and playground and playroom for children.

Frasers Hospitality chief executive officer Choe Peng Sum says the project will be ideal for expatriates working in Malaysia on medium- term projects, as it provides comfort, all-day-dining and even facilities for accompanying spouses and families.

Source : Business Times – 31 Jul 2008

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SCDA, WOHA and Surbana named consultants for Dawson Estate flats

Posted by luxuryasiahome on July 31, 2008

FLAT-BUYERS eyeing Dawson Estate in Queenstown will be spoilt for choice, as upcoming public housing will feature designer looks courtesy of not one, not two, but three local award-winning architectural firms.

The Housing & Development Board (HDB) said yesterday that it will appoint SCDA Architects, WOHA Architects and Surbana International Consultants as design consultants for the district’s public housing projects.

Dawson Estate comes under a ‘Remaking Our Heartland’ exercise that aims to transform public housing into vibrant homes for Singaporeans.

To showcase the regeneration of an old estate, HDB invited the three architectural firms last year to design public housing precincts in Dawson Estate based on new ideas and concepts.

Favourable response from the public led HDB to appoint all three as design consultants.

SCDA and WOHA received their letters of appointment at a HDB awards dinner yesterday evening. The two sites which both firms worked on are vacant and ready for development.

HDB plans to launch the first batch of flats on these two sites for sale under the Built-to-Order system in the third quarter of next year.

Construction could start in the first quarter of 2010 and be completed in 2014.

HDB will appoint Surbana later, when the site it worked on is cleared and ready for redevelopment in 2011.

‘The participation of these firms will not only give HDB flat buyers greater variety and choice, it will also bring a livelier, more attractive buzz to Dawson,’ said Senior Minister of State for National Development and Education Grace Fu.

HDB has also appointed a local landscape architectural firm, Cicada Pte Ltd, to draw up a landscape masterplan. The plan will create a distinct identity for Dawson Estate and bring together the three different precincts.

To retain Dawson Estate’s heritage, HDB is inviting the public to contribute items from the district’s past. Selected heritage items will be woven into the new development.

Ms Fu said yesterday that the ‘Remaking Our Heartland’ programme has made much progress. Nevertheless, she added: ‘There will be challenges along the way, such as grappling with inflation and competing for resources amidst the global construction boom, while keeping HDB flats affordable.’

Source : Business Times – 31 Jul 2008

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