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Archive for August 27th, 2008

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New system to promote efficient use of state land, properties

Posted by luxuryasiahome on August 27, 2008

To instil greater discipline in the holding of government properties pending development, the Law Ministry plans to introduce a reservation framework for public sector agencies.

Senior Minister of State for Finance Lim Hwee Hua told the House that agencies making such reservations would have to pay for planning and feasibility studies.

Responding to a question by Nominated MP Gautam Banerjee on what is being done to ensure that state land and buildings are managed effectively, Mrs Lim said her ministry has reviewed and reduced office space norms.

Agencies exceeding these norms will have to pay a surcharge and also a rental charge to highlight the opportunity cost.

Mrs Lim said: “We will also be looking to extend this framework for office space to other types of uses, such as staff apartments, chalets and institutional buildings. The framework will also strengthen the monitoring of vacant space.” – CNA/ms

Source : Channel NewsAsia – 27 Aug 2008

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Developers weigh odds for launches after Ghost Month

Posted by luxuryasiahome on August 27, 2008

Some may want to test market now rather than risk deterioration in sentiment

Some developers have been quietly oiling their launch machinery in the past few weeks as they get ready for previews and launches, especially with the Hungry Ghosts Month ending this Saturday.

Boulevard Vue’s facade will be designed by well-known Japanese interior designer Super Potato. The freehold project’s 26 apartments (one per floor) are about 4,500 sq ft each, while the two duplex penthouses occupying the top four levels are 8,000-plus sq ft and 11,000-plus sq ft.

With the property outlook expected to worsen before it gets better, there may just be an incentive for some to launch their projects sooner – or wait it out till late-2009/2010, a seasoned property consultant told BT.

Another consultant, Knight Frank executive director Peter Ow, said: ‘Whatever name you call it – preview, private invitation, etc, the aim is for developers to test the market. If the response is sufficient at the price they want, they’ll begin sales. If the response isn’t up to what they want, they won’t sell. As a developer, you don’t want to risk launching a project, selling a few units and getting stuck.’

Projects that have begun to be previewed this month include Far East Organization’s 85-unit freehold Miro at the corner of Lincoln and Keng Lee roads (at an average $1,600 per square foot) and a 54-unit cluster housing project at Greenwood Avenue. Units in the 103-year leasehold development range from 3,000 to 3,700 sq ft.

Over at Nathan Road, Tat Aik Group has been inviting potential buyers to view Nathan Residences, a 91-unit freehold project priced at around $2,000 psf on average.

Keppel Land is also expected to release this weekend in Hong Kong and Singapore about 30-40 units under the next phase of Reflections at Keppel Bay.

The average price is expected to be similar to the earlier phase launched around April last year, at about $1,800 to $2,000 psf. Deferred payment is expected to continue to be offered.

Hong Fok Corporation’s 360-unit Concourse Skyline apartments at Beach Road, KepLand’s 56-unit freehold Madision Residence near the junction of Bukit Timah and Keng Chin roads, and City Developments Ltd’s The Arte at Thomson are understood to be other projects that could hit the market soon.

In the high-end segment – where sentiment is weakest – Far East Organization, which has already sold two units at its 28-unit luxury development Boulevard Vue at Cuscaden Road, opened its showflat for the project recently and is expected to step up marketing activity.

The project’s 26 apartments (one per floor) are about 4,500 sq ft each, while the two duplex penthouses occupying the top four levels are 8,000-plus sq ft and 11,000-plus sq ft. Prices for low- and mid-level units in the 33-storey freehold project range from $3,600 psf to $3,900 psf.

BT understands the price tag for the bigger penthouse will likely be around the $4,500 psf mark, working out to an absolute sum of about $50 million. If achieved, the absolute amount would set a new record for a penthouse in Singapore.

Boulevard Vue’s facade will be designed by well-known Japanese interior designer Super Potato. BT understands that the unit layouts will be customised to buyers’ preference.

A critical factor affecting developers’ launch decisions is pricing, given the bearish sentiment.

‘Pricing will be more realistic for fresh launches, but for projects released earlier, it would be difficult for established developers to trim prices without upsetting earlier buyers, especially VIPs,’ the seasoned property consultant said.

Agreeing, Jones Lang LaSalle Singapore’s residential head Jacqueline Wong said: ‘Such developers may just hold the remaining units in the project if necessary and have another shot at selling them upon the project’s completion. For new projects too, the financially stronger players can hold off developing for a while.

‘However, developers who are fairly new or need the cashflow will have to be realistic in their pricing and will be more amenable to negotiating with buyers.’

Another industry observer said that instead of outright price cuts, it may be easier for developers to attract new buyers into existing projects by offering furnishing vouchers, guaranteed yields (for newly completed projects) or arranging for attractive mortgage packages.

A mid-sized developer said: ‘We have to accept the fact that prices have to be marked to market; otherwise we can’t sell enough units to generate the required cashflow. For sites bought within the past 12 months, developers would need to sell at least 50 per cent of the development to generate sufficient cashflow to finance the project’s construction – taking into account high land price paid and rising construction costs, among other factors.’

Source : Business Times – 28 Aug 2008

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Measures put in place for better use of public sector office space

Posted by luxuryasiahome on August 27, 2008

Surcharges will be imposed on agencies in breach

GOVERNMENT agencies that do not make optimal use of their office space will face penalties such as surcharges and rents, Parliament was told yesterday.

Senior Minister of State for Finance & Transport Lim Hwee Hua said the aim is to encourage better management of office space in the public sector.

The ministry of finance (MOF) has reviewed and reduced office space norms. Surcharges will be imposed on agencies in breach of the norms, while rent will be imputed to highlight the opportunity cost.

MOF plans to ‘extend this framework for office space to other types of uses such as staff apartments, chalets, and institutional buildings’, Mrs Lim said.

In addition, vacant properties that are not required by public agencies will be put out to the market for lease if possible.

‘We have, in fact, done this in the past two years to meet the growing demand for office space,’ Mrs Lim said. ‘However, the quantum and pace will need to take into account the market situation.’

To instil greater discipline in the reservation and holding of government properties for development, the law ministry will introduce a framework for public sector agencies.

Under this framework, a charge will be imposed on agencies for reserving state properties for planning and feasibility studies.

‘This will encourage agencies to make land reservations only when necessary and for the optimal period of time,’ Mrs Lim said.

‘MOF and MinLaw will continue to review and enhance our systems and policies to raise the effectiveness and accountability of public sector agencies in the management of land and buildings.’

Source : Business Times – 28 Aug 2008

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Sim Lian net profit up a third to $44m

Posted by luxuryasiahome on August 27, 2008

PROPERTY and construction group Sim Lian has posted a 33 per cent jump in fiscal full-year net profit to $44.1 million despite rising raw materials costs, thanks to higher revenue, a reversed impairment loss and a divestment.

Sim Lian also plans to launch three projects in fiscal 2009 at Surrey Road, Keng Lee Road and its second design, build and sell scheme project at Simei Road, it said in its financial statement, but added that they are not expected to contribute significantly to 2009 financials.

The company declared a first and final cash dividend of 1.6 cents per share.

Revenue rose 22 per cent to $389.6 million for the 12 months ended June 30, 2008. Property development sales were up 20 per cent to $250.4 million due mainly to revenue recognised from its projects, The Premiere @ Tampines and Carabelle.

Other operating income rose 92 per cent to $5.2 million due mainly to the divestment of its data centre.

Sim Lian’s construction division posted a 22 per cent rise in revenue to $116.7 million, thanks to higher-value contracts clinched this year as well as a higher percentage of project completion.

Earnings per share rose to 7.8 cents from 6.3 cents, while its cashflow fell 33 per cent to $53.3 million.

The cost of raw materials and consumables jumped 56 per cent to $13 million, mainly due to pricier industrial lubricants.

The company also posted a negative balance of $258,000 in other operating expenses, thanks to a $6 million increase in valuation of its investment property and a $2.2 million reversal of impairment loss on property, plant and equipment. Stripping that out, other operating expenses would have jumped 58 per cent to $7.9 million due to a higher exchange loss recorded by its Malaysian subsidiary and in allowance for doubtful trade receivables.

Projects including The Premiere @ Tampines and Carabelle, as well as Clover by the Park at Bishan and The Amery at Telok Kurau – which were launched in June – are expected to contribute positively to the company’s performance in fiscal 2009, said Sim Lian.

Despite rising construction costs and weak sentiment in the property sector, the company expects to achieve profitable operating results in fiscal 2009.

Source : Business Times – 28 Aug 2008

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KOP Capital buys 50% stake in Stein Group

Posted by luxuryasiahome on August 27, 2008

SINGAPORE-BASED property firm KOP Capital has forked out US$250 million for a 50 per cent stake in luxury hotelier Stein Group International. And the collaboration could offer travellers a new hotel brand in the next few years.

‘We’re adopting an aggressive expansion plan,’ said KOP Capital’s managing director Leny Suparman. ‘We have plans to set aside another US$250 million to US$300 million for further expansion in Asia- Pacific.’

KOP Capital is part of KOP Group, a diversified property investor and developer that is majority- owned by the Dubai Group.

KOP Capital and Stein Group International aim to build a global presence in the small luxury hotel sector. One target is to add up to 20 hotels in Asia to the portfolio in the next three to five years, with at least one up by 2010.

The partnership could own the hotels or manage them under contracts. Stein Group International’s chairman, David Stein, recognised the benefits of expanding through management contracts. ‘We are talking to owners of hotel properties in Asia,’ he said.

But he added that ‘we would like to own the majority because that protects the brand more’.

Small luxury hotels have an average of 75-80 rooms each, and room rates would be similar to those of the top five hotels in the region, said Mr Stein.

Stein Group International currently has 15 small luxury hotels across seven European countries under the ‘Stein’ name. But upcoming hotels may have a different brand.

‘It’s something we’re evaluating,’ said Mr Stein. ‘This gives us an opportunity to look at everything we’re doing in a new way.’

KOP Capital and Stein Group International are focusing on expansion in Asia and North America, but the Middle East, Africa and Latin America could be the next targets.

‘The small luxury hotel sector is really a new and fast growing sector in the hotel industry,’ said Mr Stein. ‘Travel and tourism is going to expand dramatically in the next decade and beyond.’

The global economic slowdown today could affect occupancy and room rates, but ‘(Stein has) a loyal following and smaller hotels are easier to fill than big hotels’, he said.

The planned foray into the small luxury hotel sector will add to the KOP Group’s activities in the residential, commercial, hotels and resorts property markets.

‘This is to fully integrate KOP as a real estate company,’ said group CEO Ong Chih Ching.

As KOP grows, some of its arms could go public, said Ms Ong. But she added that as a group, ‘we are quite happy to be a private company because that’s when you can be nimble’.

Source : Business Times – 28 Aug 2008

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Second Chance net up 31% to $24m in FY08

Posted by luxuryasiahome on August 27, 2008

RETAIL and real estate company Second Chance Properties (SCP) yesterday reported a 31 per cent jump in net profit to $24.1 million for the year ended June 30 and said it will increase dividend payments for the next two years.

SCP said FY2008 was its sixth straight year of record profits and it will pay a tax-exempt dividend of 3.5 and 3.8 cents respectively for FY2009 and FY2010.

Although the economic slowdown has affected property prices, the retail sector has remained relatively resilient, it said. ‘On June 30, a valuation of all our properties done by Jones Lang LaSalle showed an increase of $15.1 million, of which $13.8 million was for our investment properties and $1.3 million was for properties occupied by the group and classified as fixed assets. The total value of all properties now stands at $118.4 million.’

FY08 revenue grew 10.4 per cent to $53.2 million, while operating profit was 35 per cent higher at $20.5 million. Net cash generated from operating activities rose from $6.2 million to $9.1 million, while gearing now stands at 0.31.

On its retail operations in Malaysia, SCP said the uncertain political situation north of the Causeway has clouded the economic picture: ‘In view of this, management has deemed it prudent to slow down our First Lady expansion in Malaysia and now operate a total of 30 stores throughout the country.’

Source : Business Times – 28 Aug 2008

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New Dubai registration law to curb speculation

Posted by luxuryasiahome on August 27, 2008

Sales of unfinished properties must be registered before they can be resold

Dubai has issued a new law to regulate the sale of real estate still under construction in an effort to curb speculation that has sent property prices in the Gulf Arab emirate skyrocketing, an official said on Tuesday.

Under the law issued this week, sales of off-plan properties in Dubai must be registered with the department before they can be resold, Marwan bin Ghalita, chief executive of the Dubai Real Estate Regulatory Authority (RERA), said.

Standard Chartered Bank warned in July that Dubai’s property market showed signs of overheating as speculators betting on quick gains inflate prices of units still under construction.

‘It will help to curb speculation,’ Mr Marwan said of the mew law. ‘In Dubai we are introducing laws step by step . . . Now everything is going to be transparent because it is with the Land Department.’

Dubai property prices have surged 79 per cent since the beginning of 2007, Morgan Stanley said earlier in the month.

Demand for real estate in Dubai, home to the world’s tallest tower and three man-made islands in the shape of palms, has surged since the government first allowed foreigners to invest in properties in 2002.

The government passed a freehold property law in 2006 granting foreigners the right to own properties at selected developments.

The off-plan law follows the issuance of a mortgage law last week as part of a drive to regulate the Gulf Arab business hub’s booming real estate sector.

It will also prevent master and sub-developers from charging transfer fees on off-plan sales, Mr Marwan said. Developers however can be paid administration fees of 1,000-3,000 dirhams (S$386-1,157) for each transaction after approval by the Land Department, he said.

Property prices will probably jump 35 per cent this year and another 8.5 per cent in 2009, when they are expected to peak as Dubai takes measures to weed out short-term speculators, a Reuters poll showed on Tuesday.

The analysts said property prices would fall at least 15 per cent from peak to trough. — Reuters

Source : Business Times – 28 Aug 2008

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Top British home builder reports loss on writedowns

Posted by luxuryasiahome on August 27, 2008

It’s yet to seal loan deal with banks, says Taylor Wimpey

Britain’s most popular house builder, Taylor Wimpey, slumped to a £1.54 billion (S$4 billion) pretax loss on falling property values and merger costs and said it has yet to agree to a crucial loan deal with its banks.

Its shares, which have crumbled over 75 per cent this year, had dropped 11.06 per cent to 46.25 pence early yesterday as the company said it saw no real recovery in its main markets in the near term and scrapped its interim dividend.

Britain’s biggest house builder, as measured by homes sold, yesterday said it remains in full compliance with its debt covenants and debt levels are stable.

It said its priority is to reach an agreement with lenders to avoid breaching its existing interest cover covenants next February, and it expects a satisfactory outcome to negotiations by the end of the year.

‘Whilst the group comments that it believes negotiations will reach a satisfactory conclusion by the year-end, there is no conclusion yet,’ Panmure Gordon analyst Mark Hughes said.

‘On that basis, we feel there are too many negatives surrounding the stock at the current time and therefore maintain our sell recommendation.’

The company reported £4.3 million in profit before tax and exceptionals for the six months to end-June, compared with £119.8 million last year and two analysts’ estimates of £61.2 million and £48.9 million.

Taylor Wimpey, formed last year via a merger of Taylor Woodrow and George Wimpey, reported exceptional items worth £1.55 billion, which include £690 million in land writedowns already announced and a writedown of goodwill, intangible assets and the George Wimpey brand for a further £816 million. The remaining £40 million arise from restructuring costs in the UK, following the announced 900 job cuts and closure of 13 offices.

Taylor Wimpey said in July that it needed to raise £500 million to avoid breaching banking covenants but had failed to raise the money, which halved the value of its shares in one day.

‘The current operating environment in the UK housing market remains very challenging and we do not anticipate any recovery in the short term,’ the company said, echoing sentiment expressed recently by peers Persimmon and Bovis Homes.

‘We do not anticipate any material recovery until 2009 at the earliest in the US housing market,’ it added. Home completions for the six months were down 31 per cent at 8,494 units and it said debt remained stable at around £1.7 billion – a level that ranks among the highest in the sector, but which the company expects to reduce in the full year. — Reuters

Source : Business Times – 28 Aug 2008

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Japan regulator looks into BNP Paribas deal

Posted by luxuryasiahome on August 27, 2008

Concern over bond and swap deal disclosure, insider trading, says sources

Japan’s financial regulator is looking into a deal between French bank BNP Paribas and a collapsed property developer amid criticism over its disclosure and concerns insider trading laws may have been breached, sources at the regulator said.

The deal in question is a 30 billion yen (S$388.6 million) convertible bond and swap agreement BNP Paribas struck with developer Urban Corp a few weeks before it failed on Aug 13 owing about US$2.4 billion, the biggest collapse in debt terms by a listed Japanese firm in six years.

Japan’s Financial Services Agency (FSA) has commenced an unofficial hearing to examine whether BNP Paribas violated laws, a normal step in such a case and not necessarily the prelude to action against the bank, the sources, who declined to be identified, said.

BNP Paribas spokesman Kunihiro Murata said the company would not comment on the Urban deal.

The regulator will focus on the decision not to disclose the swap component until Urban’s collapse on Aug 13 – more than a month after the bond was issued on July 11 – even though the swap was causing Urban losses and starving it of funds.

They will also look into the possibility that BNP Paribas broke insider trading rules as filings show that it traded Urban’s stock before full details were made public, sources said.

‘There might not have been a problem if the swap agreement had been made public,’ said one regulatory source.

‘So why is it that Urban did not disclose it? And what was Paribas’ intention and did it have any designs? It is natural that the regulator would look into these things.’

Under the swap deal, the French bank was repaid the 30 billion yen in proceeds from the bond as a deposit and was only required to give that money back to Urban gradually based on the level of its share price. The lower the stock price the less money Urban would be paid.

The stock slid 70 per cent between July 11, when the swap was put into action, and Aug 13. During that time Urban did not reveal the swap portion of the deal.

‘If Paribas people with that information traded Urban stocks and it most likely helped the bank earn profits before the swap deal was announced on Aug 13, then the chance is big that Paribas has touched the insider rule,’ said Toshiaki Yamaguchi, a partner at Yamaguchi Law Office in Osaka.

Urban said at the time of its collapse it had received only 9.2 billion yen from BNP Paribas, less than one-third the announced amount of the bond. On top of that it suffered a 5.8 billion yen non-operating loss because its stock fell far below a pre-calculated level at which it would recoup its funds.

Urban spokesman Shinichi Kobori said the company believed the swap was a private deal and did not need to be disclosed.

Lawyers point to the possibility BNP Paribas breached a so-called ‘basket clause’ in the Financial Instruments and Exchange Act that broadly refers to trading with knowledge of other material facts that would significantly impact investor decisions.

In general BNP Paribas likely knew three major facts that could cause problems under law, legal experts said.

The bank knew that Urban was under strong pressure to raise 30 billion yen to pay taxes and repay loans by the end of August, the swap was causing Urban losses, and it knew that Urban had received only a part of the 30 billion yen.

‘BNP Paribas’s move could have breached the insider trading law under the basket clause, said Chuo Law School corporate law professor Kenichi Osugi.

‘To see if Paribas’ move has come under the basket clause, however, factors such as the CB issue, swap deal and Paribas’ equities transactions need to be examined to get a rational view of the big picture,’ he said.

Regulators may also try to ascertain the intentions of BNP Paribas in structuring the deal and whether the bank played a role in Urban’s decision not to disclose the swap, sources said.

Urban sought legal advice from their lawyers at Mori Hamada & Matsumoto at least twice, and both times were told to make all materials including the swap agreement public, according to two Urban sources who asked not to be identified.

Three sources told Reuters there was heated debate within Urban about whether to disclose the swap, but that in the end management decided to keep the swap private because that was what Paribas insisted and it was desperate for funds.

‘At that time, Paribas’ deal was the only choice Urban had left so executives couldn’t let that slip from their hands,’ said one source at Urban. — Reuters

Source : Business Times – 28 Aug 2008

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Lend Lease to sell its 50% stake in US mall

Posted by luxuryasiahome on August 27, 2008

Lend Lease Corp, the Australian developer building London’s 2012 Olympic Village, plans to sell its 50 per cent interest in Pennsylvania’s King of Prussia Mall.

Lend Lease put its share of the 2.6 million square-foot mall in King of Prussia, Pennsylvania, up for sale, according to Holliday Fenoglio Fowler, the broker that’s marketing the property. It was the third biggest US mall by square footage as of 2006, exceeded only by South Coast Plaza in Costa Mesa, California, and Bloomington, Minnesota’s Mall of America, according to the International Council of Shopping Centers.

The mall is in a ‘dominant retailing position’ north-west of Philadelphia, said Glenn Whitmore, Holliday Fenoglio senior managing director, drawing shoppers from New York, New Jersey, Delaware and surrounding states. It is ‘one of just a handful of retailing locations able to generate over US$1 billion in annual sales’, he said.

Lend Lease chief executive Greg Clarke said in 2006 the company wanted to sell or reduce its stakes in the King of Prussia Mall, as well as the Bluewater Shopping & Leisure Centre in Kent, England, to free money to pursue new investments.

The mall’s anchor stores include Neiman Marcus, Lord & Taylor, Bloomingdale’s and Macy’s, plus almost 400 other tenants, including Apple, Tiffany, Thomas Pink and Coach. It is partly owned by Simon Property Group of Indianapolis, the biggest owner of US shopping malls.

Lend Lease shares in Australia are down 45 per cent this year, compared with a 41 per cent drop in the Bloomberg Asia Pacific Real Estate Index.

Lend Lease reported a 47 per cent fall in full-year net income on Aug 21, as it wrote down the value of some assets.

Source : Business Times – 28 Aug 2008

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