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Archive for August 2nd, 2008

Balcony size: The bigger, the better

Posted by luxuryasiahome on August 2, 2008

If recent condominium project launches are anything to go by, expansive balconies are hot among homebuyers

ALL it took was one look at the big balcony spanning the living room and the master bedroom, and the deal was sealed for Mrs Jean Hong.

The 47-year-old company director bought a three-bedroom unit for close to $1,500 per square foot in the Parc Centennial condominium in Kampong Java Road three months ago and is still gushing about the large balcony to her friends.

BED AND BALCONY (left): Among the features of the 51-unit Parc Centennial condo is a balcony that spans from the bedroom to the living room (not shown). Located in Kampong Java Road, the project is expected to be completed in 2011. — PHOTOS: EL DEVELOPMENT, CITY DEVELOPMENTS LIMITED

She is planning to rent it out and feels expatriates will appreciate the balcony space.

‘There is enough space to put some chairs and a small table in the balcony, so that the tenant is able to have a drink or read there without cluttering the place unnecessarily,’ she said.

Parc Centennial is among a number of new condos that are bucking the trend of developments from the 1990s, which had balconies that were tiny corners with just standing space or irregular-shaped ones that nobody used.

In contrast, some of the new private housing projects today have large balconies that even extend to the master bedroom or outside the lift.

SOAK UP THE SCENERY: Cliveden at Grange Road, which offers three-, four- and five-bedroom units, comes with panoramic views of Orchard Road which can be enjoyed from the expensive balconies.

Projects with generous balconies include completed ones like Residences@Evelyn in Evelyn Road as well as those nearing completion such as Parc Centennial, JIA at 65 Wilkie Road, Lucida in Suffolk Road, Parc Mackenzie in Mackenzie Road and Cliveden at Grange in Grange Road.

Developers say that buyers prefer units with large balconies because the open space lets in natural light and ventilation and can be used as an alfresco dining area or just an outdoor area to relax in.

EL Development, the developer behind Parc Centennial, designed its units with large balconies because of the expansive views offered at the site: There are no tall buildings nearby so residents have good views of the surrounding greenery.

The balcony also serves to screen off the afternoon sun for the west-facing units.

GREEN VIEWS: Located off Bukit Timah Road, the Shelford Suites condominium project has 77 units, all of which look out to lush greenery. Its targeted completion date is 2011.

Similarly for developer City Developments Limited (CDL), the decision to incorporate balconies into the projects depends on their location.

‘Typically, buyers would like a balcony where there are good views of the surroundings, such as the lush greenery which residents of Shelford Suites or Cliveden at Grange can enjoy, or if there are waterfront views that can be appreciated, which is the case with One Shenton and The Oceanfront@Sentosa Cove,’ said Mr Chia Ngiang Hong, group general manager of CDL.

Larger balconies are also good for homeowners to keep in touch with their surroundings, says developer SDB. Its first local project here, JIA, is only seven storeys high so owners get to enjoy the greenery nearby from their balconies.

The developer also designed the balconies with enough depth to put a coffee table.

‘Enjoying the outdoors from the balcony means being able to have a relaxing cup of tea comfortably seated,’ said Ms Leon Kim Yoke, senior manager of SDB Properties.

The developer has also included ‘fold and slide’ screens at the balconies to provide privacy when required. They double as safety features.

Their two-bedroom units even have the lift opening directly into the balcony.

‘Large balconies are targeted at those who enjoy the outdoors and do not want to be confined to indoor spaces only. Anyone downsizing from a landed property to an apartment would particularly appreciate such features,’ Ms Kim Yoke added.

Mrs Hong, who lives in Serangoon Gardens, agrees.

‘In my house, I can take a walk around my garden or koi pond, but in a condo, you have only your bedrooms and living room to turn to, so having a balcony helps.

‘Even some HDB flats are getting their own balconies too nowadays. With large balconies, I am able to get higher rents for my unit,’ she said.

About 70 to 80 per cent of expatriates opt for large balconies, according to Mr John Koh, 60, associate director of Huttons real estate group.

‘Singaporeans are quite kiasu. Some think it is a waste of space and don’t want to pay for it,’ he said.

Senior executive Kelvin Ho, who bought a flat in Parc Mackenzie, begged to differ.

‘I don’t understand why people don’t want balconies. I like the open air, space, lights, breeze and view. I think it is usable space,’ he said.

It is opportune that buyers like him have secured units that come with large balconies as they may become a thing of the past with the recent announcement by the Urban Redevelopment Authority.

From Oct 7, features such as bay windows, balconcies and planter boxes are no longer exempt from the gross floor area (GFA) calculations.

This means that developers may scale down balcony sizes since they will be charged for the area, unlike now.

‘I think it’s scary if the sizes of balconies shrink in future as Singapore is going to be one large concrete jungle,’ said Mrs Hong.

‘Personally, I do not mind paying for the space if the design is nice and it is functional.’

Source : Straits Times – 2 Aug 2008

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CapitaLand Q2 profit falls 43.5% to $515.2m

Posted by luxuryasiahome on August 2, 2008

Group hopes to list Malaysia retail Reit on Bursa Malaysia by end-2008

Capitaland group president and CEO Liew Mun Leong has urged analysts and journalists ‘not to be overinfected with what’s happening in the US’. He made this call yesterday at the property group’s briefing on its results – which saw second-quarter net profit falling 43.5 per cent year-on-year to $515.2 million.

‘Despite the cautious market sentiment, we have a positive outlook as our business units are competitively positioned and geographically diversified,’ said Mr Liew.

CapitaLand’s Q2 net profit drop was due mainly to lower fair value gains from the revaluation of investment properties, lower portfolio gains and developments profits, and the absence of writeback of previous provisions. ‘Lower revaluation gains were partly a result of the moderation in price increase for the Singapore property market and partly because the group divested some of its investment properties in 2007,’ the group said.

First-half net profit also declined 49.8 per cent year-on-year to $762.7 million. Mr Liew pointed out that 2007 was an exceptional year.

The group posted return on equity of 15 per cent in H1 2008, down from 38 per cent in the corresponding year-ago period but slightly ahead of the 14.5 per cent achieved for full-year 2006.

Excluding revaluation gains, CapitaLand’s H1 2008 net profit would have been $345.3 million, down 19.7 per cent from H1 2007, which Mr Liew termed a ‘commendable result’.

Overseas contribution to earnings before interest and tax rose 10.4 per cent year-on-year to $695.8 million in H1 2008. The increase came mostly from China, chiefly due to fair value gain of $297 million (at earnings before interest and tax or Ebit level) for Raffles City Shanghai, which is being sold to the Raffles City China Fund. However, this was partly offset by a lower contribution from Australia. CapitaLand booked a $24.1 million provision for its share of foreseeable losses on Australand’s residential development projects.

The group’s finance cost rose 43.7 per cent to $270.5 million in H1 2008. Gross debt rose to $11.6 billion as at June 30, 2008, from $8.6 billion a year earlier. Net debt to equity ratio increased from 0.43 as at end-June 2007 to 0.68 as at end-June 2008.

Serviced residences giant The Ascott Group, which CapitaLand took private earlier this year, posted an 87.3 per cent year-on-year drop in Ebit in Q2 2008 to $17.9 million, while H1 2008 Ebit fell 66.3 per cent to $57.4 million. The Q2 2007 figure had included a gain from the sale of Master Golf and Country Club. The deconsolidation of Ascott Residence Trust, which was listed last year, also contributed to the lower H1 2008 Ebit. However, Ascott’s Q2 revenue rose 12.5 per cent to $120.5 million, due largely to the group’s serviced residence operations in Europe and China. The group sold $138 million of its serviced residences portfolio in H1 2008 and hinted that it was studying further divestments.

CapitaLand China Holdings’s revenue fell 63.9 per cent in Q2 2008 and 49 per cent in H1 2008 because of the re-scheduling of launches of a few projects (in Foshan, Chengdu and Ningbo) from H1 2008 to H2 2008. However, the China business posted posted respective year-on-year Ebit gains of 120.4 per cent and 113.3 per cent in Q2 and H1 respectively due largely to the fair value gain from the revaluation of Raffles City Shanghai and better operating performance of commercial properties.

The group’s assets under management stood at $21.1 billion as at June 30, 2008, up from $17.7 billion as at Dec 31, 2007.

The group had $3.4 billion cash as at June 30, 2008 – down 21.4 per cent from a year earlier – and that is in addition to the $12 billion balance investible amount in its private equity funds as at the same date – giving it a sizeable warchest for potential acquisitions.

CapitaLand hopes to list its Malaysia retail Reit on Bursa Malaysia by end-2008. CapitaLand chief investment officer Kee Teck Koon said: ‘We’re looking at an asset size of about RM$2 billion (S$841 million) (based on the three malls we have purchased for this Reit – Gurney Plaza, Mines Shopping Fair and Sungei Wang Plaza). This will make it the largest Reit in Malaysia in terms of asset size.’

Group revenue fell 12.3 per cent in Q2 to $820.1 million. For the first-half, revenue slipped 7.7 per cent to $1.45 billion.

CapitaLand’s net asset value per share stood at $3.68 as at June 30, 2008, up from $3.54 as at Dec 31, 2007. The counter closed 23 cents lower yesterday at $5.47. No interim dividend was declared, as was the case in the previous corresponding period.

Source : Business Times – 2 Aug 2008

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Developers must take own initiatives to go green: Leng Joo

Posted by luxuryasiahome on August 2, 2008

CDL MD says it’s not sustainable to have long-term govt subsidies

Depending on the government for more subsidies to encourage developers to go green is not sustainable, said City Developments managing director Kwek Leng Joo.

‘I don’t think it’s sustainable to look to the government for grants and subsidies on a long-term basis,’ said Mr Kwek, who was speaking to reporters on the sidelines of the memorandum of understanding signed between the company and NUS School of Design and Environment’s Master of Science, Environmental Management (MEM) programme to work on green solutions for the building sector.

‘We have to make our own plans and it’s not a one-way street,’ he said, adding that while the returns may not be ‘direct and apparent’ now, green buildings will become more attractive to buyers who can lower their utility bills through green features such as photovoltaic cells when their prices fall over time.

City Developments currently audits the green practices of its contractors and those who score better stand a higher chance to bid for tenders for subsequent projects.

But Mr Kwek added that smaller developers are less likely to be able to influence construction and architectural firms to go green because they have little influence over the supply chain.

‘Perhaps if you are a very small developer. . . then you will not be in the position to influence, to help direct the other players in the whole value chain,’ said Mr Kwek. ‘But we can take up that role and we’ve been doing it.’

During the event, Tommy Koh, who chairs the MEM advisory committee, said he had proposed to the government in 1992 about the potential of solar energy, but the idea was shot down because it was not seen to be commercially viable.

‘How wrong they are,’ said Prof Koh, adding that Singapore is just at the beginning of its ‘green journey’.

‘We’ve not done a bad job in balancing the need to provide adequate housing for 4.6 million people and having room for garden, parks and nature,’ he said.

‘But we’ve also done some bad things. We’ve largely destroyed our mangrove forest. We need to reclaim land because we need additional space but in the process, we’ve destroyed most of our coral reefs,’ he added.

Source : Business Times – 2 Aug 2008

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No rush to the high-end??

Posted by luxuryasiahome on August 2, 2008

Mass market take-up rate still good despite slowdown in luxury sector

There are still signs of life in the mass housing market, despite signs that the luxury sector is flattening out, according to the head of Singapore’s biggest developer.

“The outlook for Singapore residential prices will probably be very flat,” saidMr Liew Mun Leong, chief executive of CapitaLand. “The mass market take-up rate is still very good and for the mid-range tier, the prices are holding out well. But people will not be buying aggressively for the high-end sector now.”

He likened last year’s rush to buy luxury homes to watch-collecting.

“If you observe the high-end buyers, they are not buying for investment purposes but as a second or third property in Asia.” he said. “For the high-end property, the prices will still hover around$3,000 per square foot.”

In coming months, CapitaLand is targeting to launch 186 units at The Wharf Residences and 127 units at Latitude. Both are mid-tier developments in the River Valley area.

The recent slowdown in both local and regional property markets reduced CapitaLand’s profits in the first half of this year.

It yesterday posted earnings of $762 million, some 44 per cent lower than $1.5 billion recorded this time last year when profits were boosted by an exceptional gain from the sale of Temasek Tower.

“We have done well for this period, the profits booked so far have surpassed the $750 million for the full year of 2006.” said Mr Liew.

Even so, the slowdown in the Singapore property sector locally is evident, with overseas earnings contributing 54 per cent of the earnings before tax, up from 31 per cent last year.

On the international front, CapitaLand has a Malaysian retail real estate investment trust of about RM2 billion ($840 million) on track to launch by year-end. The fund will be listed in Kuala Lumpur and would bring its stable of property trusts to six.

While in Abu Dhabi, CapitaLand is building about 9,000 homes in joint venture with Mubadala Development Company. Sales are due to begin in late this year.

Source : Weekend Today – 2 Aug 2008

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CapitaLand gains dive, flat property market expected

Posted by luxuryasiahome on August 2, 2008

Interim earnings halved to $763m, but condo launches won’t be held back

Property giant CapitaLand expects the market to stay sluggish for a while but it is still preparing to launch three mid- to high-end condos here before Christmas.

‘For outlook…it’ll probably be very flat,’ said chief executive Liew Mun Leong at a results briefing yesterday that unveiled a plunge in first-half profit.

Prices in general will be ‘quite flat’, with a correction seen in the high-end segment, said Mr Liew after the meeting. He added that demand for mass market homes is ’still very good’ while mid-end home prices are holding well.

The picture in the high-end segment is not as rosy as prices have fallen after buyers bailed out of the market overnight. But CapitaLand said high-end prices remained relatively high.

‘High-end volume will slow down, prices will not hit $5,000 psf but will still be above $3,000 psf,’ said Mr Liew. ‘As I keep saying, it is much more than pre-Asian financial crisis prices.’ Home prices reached around $2,400 per square foot (psf) at the 1996 peak.

CapitaLand said in its results statement that sentiment in the local property market is likely to remain cautious for the rest of the year until there is greater stability in the global financial markets and improved credit environment.

But demand is still there, it said. Against this backdrop, CapitaLand is planning to release two projects in River Valley – the 127-unit Latitude in Jalan Mutiara and the 186-unit The Wharf Residence in Tong Watt Road.

It will also launch Urban Resort, which will have about 70 units on the former Silver Tower site in Cairnhill, at above $3,000 psf.

Pre-launch sales have started at the two River Valley projects. CapitaLand said it has sold 11 out of 40 units at an average of $2,400 to $2,500 psf during the preview for Latitude in the first half of the year. It has also sold ‘close to 30′ of 80 units at $1,500 to $1,900 psf since the preview for The Wharf held three weeks ago.

Meanwhile, CapitaLand reported a 43.5 per cent drop in second-quarter net profit to $515.2 million on the back of a 12.3 per cent fall in revenue to $820.1 million. The drop came largely on lower home sales and amid an absence of one-off gains.

First-half profit was $762.7 million, down nearly 50 per cent, while revenue fell 7.7 per cent to $1.45 billion.

CapitaLand has had to delay the launch of residential projects in China due to bad weather delaying construction.

Earnings before interest and tax from overseas contributed 54 per cent of the total, as China’s contribution rose on the fair value gain of Raffles City Shanghai. Australia’s contribution fell nearly 82 per cent due to provision for foreseeable losses on development projects and lower fair value gains.

Second-quarter earnings per share was 18.3 cents, down from 32.6 cents last year, while net asset value per share reached $3.68, up from $3.54 at the end of last year.

CapitaLand shares fell 23 cents to $5.47 yesterday.

Source : Straits Times – 2 Aug 2008

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URA gets $51m bid for hotel site

Posted by luxuryasiahome on August 2, 2008

At Kallang and Jellicoe roads, the 45,451 sq ft site costs $249.6 psf ppr

The Urban Redevelopment Authority (URA) has received a committed bid of $51 million for a hotel site at Kallang and Jellicoe roads.

This works out to $249.6 per sq ft per plot ratio (psf ppr) for the 45,451 sq ft site, which is on the reserve list of the Government Land Sales programme.

The site, which has a maximum permissible gross floor area of 204,363 sq ft, will now be put up for public tender.

Knight Frank director (research and consultancy) Nicholas Mak believes that barring any major shocks to the economy, the tender could attract bids in the range of $400-$450 psf ppr.

‘This is a relatively good site only two MRT stations from Raffles City and close to the future Kallang Riverside,’ he said.

But poor market sentiment or lower-than-expected visitor arrivals in the coming months could result in lesser bids of $330-$400 psf ppr.

While public tenders always draw bids higher than the trigger price, one property consultant said that he is surprised the site at Kallang and Jellicoe roads was even triggered, given the state of the global economy and rising construction costs.

‘Investors will have to now factor a much longer period for their return on investment,’ he noted.

The public tender for the site follows poor response to hotel development sites in Balestier Road and Race Course Road, with the former attracting a top bid of $172 psf ppr and the latter drawing no bid at all. URA has said that the government is evaluating the tendered bids for the Balestier Road site, the tender for which closed on July 16.

In this light, Mr Mak said that the trigger price for site at Kallang and Jellicoe roads, which can be compared to the government’s reserve price, seems ‘realistic’.

URA projects that a 455-room hotel can be built, which Mr Mak reckons would be positioned as a business-class establishment.

Including the site at Kallang and Jellicoe roads, there are 10 hotel development sites on the GLS reserve list.

According to URA, the reserve list for second-half of 2008 provides for total potential supply of 5,050 hotel rooms, including a white site at Outram Road.

There is one site on the GLS confirmed list, and including a commercial site at North Bridge Road, the confirmed list could potentially yield 700 hotel rooms.

Source : Business Times – 2 Aug 2008

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Urban Resort: CapitaLand to launch freehold condo soon

Posted by luxuryasiahome on August 2, 2008

CapitaLand plans to launch in the second half of this year a freehold condo – Urban Resort – with about 70 units on the Silver Tower site in Cairnhill. The average price is expected to be above $3,000 psf, CapitaLand Residential Singapore CEO Patricia Chia told reporters after the group announced second-quarter results.

CapitaLand has also sold 11 of the 40 units released so far at Latitude at Jalan Mutiara in the River Valley area at an average price of $2,400 to $2,500 psf. Over at Tong Watt Road, it has sold close to 30 of 80 units released recently at The Wharf Residence; prices range from $1,500 to $1,900 psf.

CapitaLand leads a consortium that will redevelop Farrer Court which is slated for launch in the first half of next year.

Asked about his outlook for the Singapore residential market, Mr Liew said: ‘Demand is still very good for the mass market. (For) the mid-range, there are still good signs of take-up; I think prices are still holding well for the mid-range.

‘But in the high-end, there’s not going to be massive demand. (In terms of prices), obviously it won’t be the $5,600 psf record price that we achieved for a penthouse at Orchard Residences last year. But prices will still be above $3,000 psf.

‘So prices will still be way above the last peak, pre-Asian crisis. Demand is still there. People who sold their properties through en bloc sales still have to buy apartments,’ he said.

Given Singapore’s limited land resource and with population projected to grow to 6.5 million, in the ‘long term, property prices will go up’, Mr Liew said, adding: ‘It’s a no-brainer.’

‘I think we’re overinfected with the housing slump in the US. That sort of mood comes to Singapore that property prices (here) will (also) go down. But look at the fundamentals, look at demand fundamentals. I think we are much stronger in Asia,’ Mr Liew noted.

The group’s earnings are underpinned by progressive recognition of $4 billion residential sales in Singapore in 2006 and 2007.

CapitaLand’s chief investment officer Kee Teck Koon said that in Singapore, the group has hardly any residential stock or inventory that it is holding. ‘So there is no issue of writing down. Most importantly, those new projects we’ve got, we have underwritten a value that is very supportable even at current prices,’ he added.

Source : Business Times – 2 Aug 2008

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Private home rents may wobble but won’t crash

Posted by luxuryasiahome on August 2, 2008

Fears of their decline next year may be somewhat exaggerated

Recent media reports predicting that private home rents will take a steep dive next year are certainly alarming. But a closer look at the numbers suggests that they may not take such a beating after all.

Last week, CB Richard Ellis (CBRE) said that it expects rents to fall by 5-10 per cent on average next year. In the prime areas, rents could slide by up to 15 per cent, the property firm said.

The projections are based on two major assumptions: that a record number of homes will be completed next year; and that the tenant pool here will shrink significantly as corporations stop hiring expatriates or, in some cases, even send some expats home.

‘It’s a double blow,’ said CBRE Research.

However, developers and other analysts say that the number of completed homes may not be that high and the economic situation next year not that bad.

According to CBRE’s data, 13,400 homes will be completed next year. But official estimates from the Urban Redevelopment Authority (URA) put the number of landed and non-landed private homes expected to be completed in 2009 at a more modest 10,418.

Likewise, CapitaLand’s in-house estimates say that about 12,000 units will be completed from the second half of 2008 to end-2009.

‘It is a comfortable number,’ Patricia Chia, head of CapitaLand’s Singapore residential unit, told reporters at the developer’s second-quarter results briefing yesterday. Over the past six years, 8,000-8,500 private homes were completed on average each year, she said.

There are also demolitions to consider. CBRE said there will be 1,700-1,850 units demolished in 2009. Net supply next year could therefore come in even lower.

Take, for example, Q2 2008 numbers. According to Citigroup, while 2,587 units were completed in the second quarter, net supply was only 761 – implying that some 1,826 units were demolished. This partly helped occupancy rebound slightly to 93.9 per cent following three consecutive quarters of decline, the bank said in a recent report.

Rentals will also be helped by other factors, developers point out. Many of the new units coming onstream in 2009 and 2010 have already been sold, and not all of them will end up on the rental market.

The HDB market, where prices rose 4.5 per cent quarter-on-quarter in Q2, is also cause for optimism. The number of HDB resale applications also rose 22 per cent quarter-on-quarter.

‘HDB upgraders who buy mass market private units will not rent out their new homes,’ said one developer. ‘Many of the units in new mass market condos completed in 2009 and 2010 will not be part of the supply for renters.’

For now, while rental growth is slowing down, it is still on the uptrend. Citigroup said that rentals rose 2.5 per cent quarter-on- quarter in Q2 – much slower than the 6 per cent increase seen in the first quarter.

But the other, bigger factor which could also lead to rents taking a precipitous plunge next year – the state of the macroeconomic environment – is still up in the air.

CBRE, for example, adopted scenarios in which the economic climate either stays the same or worsens in 2009 to arrive at its forecasts.

Other analysts, on the other hand, expect things to turn around in the second half of 2009.

For now, jobs growth is continuing apace, they point out. 70,600 new jobs were created in the second quarter, down only slightly from a record 73,200 jobs in Q1 and the second highest job creation rate on record.

The slowdown in services jobs creation to 37,600, from a record 46,500 jobs in Q1, was however a cause for concern. ‘We suspect much of this may have reflected a slowdown in financial services hiring,’ said Citigroup economist Kit Wei Zheng.

But while firms in the financial sector may hold off on hiring, companies in other industries should continue hiring next year. The overall pool of renters should therefore continue to climb in 2009.

‘There should be enough people looking to rent in the next 12-18 months,’ said Ku Swee Yong, director of marketing and business development at Savills Singapore.

Growth in mass market and HDB rents should continue next year, he said. But asking rents at large high-end apartments – of 4,000 sq ft and more – could fall as companies cut back on housing allowances for their employees, Mr Ku added.

As for overall rents, it’s anybody’s guess. Much depends on how quickly the world recovers from the US sub-prime mortgage crisis – or how much worse things get. But private home rentals here are unlikely to make a large reversal.

Source : Business Times – 2 Aug 2008

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