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Archive for September 6th, 2008

Sentosa to review transport links in time for IR

Posted by luxuryasiahome on September 6, 2008

New chief also plans to create fresh masterplan and ensure smooth opening for attractions

THE new chief of Sentosa said the resort island is evaluating its transport network to make sure it can handle the hordes of visitors expected to accompany the opening of its integrated resort (IR) in 2010.

Mr Mike Barclay said the island’s cable cars, buses, skytrains and roads would be examined to ensure they can accommodate up to 15 million people a year.

Sentosa’s new chief Mr Barclay with visitors (from right) Mitchel Toh, eight; Clara Sim, seven; and Ms Chan Pye Lin, 37. — ST PHOTO: SAMUEL HE

He said: ‘The opening of the IR will bring many challenges for areas like infrastructure. We must make sure we can handle the capacity.’

Mr Barclay, who became Sentosa’s chief last month, was speaking for the first time about his outlook for the island. Along with re-evaluating the transport grid, Mr Barclay hopes to create a new 10-year masterplan and see several new beach attractions open next year.

When it opens in the first quarter of 2010, Resorts World at Sentosa is expected to more than double the six million people who visit the area annually. It will include attractions such as Asia’s first Universal Studio and a Marine Life Park with whale sharks.

Two weeks into the job, the 41-year-old said he is unable to give more concrete plans on what he intends to do. He took over from Mr Darrell Metzger, who quit last April.

However, Mr Barclay said he wants to ‘enrich a very good model that we have here’.

His short-term goal is to make sure four new attractions slated to open on Siloso Beach by next year do so smoothly.

The beach will have a new zipline, a sky diving simulator and a machine that creates waves up to 3m high for surfers. It is also expected to feature a watersports centre that will have food and beverage outlets as well as various sea sports.

Mr Barclay is also working on a new 10-year masterplan for the development of the island after the last masterplan spearheaded by his predecessor was completed earlier this year. Mr Metzger was credited with turning around the island’s fortunes, reviving lagging visitor numbers and lacklustre attractions.

The new masterplan is expected to be up by the end of the year. Mr Barclay said: ‘It is an exciting time ahead for us.’

However, one hotel project that was supposed to have opened on the island this year has stalled. The $45 million Palawan Beach Resort by NTUC Club is back on the drawing board amid rocketing land construction costs.

The 200-room resort was announced three years ago as a high-end hotel for the working class.

A NTUC Club spokesman said it is ‘reviewing the concept and plans of the resort’ to ensure that it will ’serve our social mission to provide an affordable social and recreational facility for our members and the masses’.

Source : Straits Times – 6 Sep 2008

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Top-tier London homes still hot; wider market cools

Posted by luxuryasiahome on September 6, 2008

LONDON’S housing market may be cooling, but not when it comes to 10-bedroom mansions with designer interiors, indoor swimming pools and private gardens in the capital’s most sought-after neighbourhoods.

Demand for these homes – known as the ’super-prime’ or even ‘uber-prime’ slice of the market and typically priced upwards of £20 million (S$50.7 million) – is still far ahead of supply. And, fuelled by oil and commodity prices, which are adding to the wealth of emerging market millionaires, the appetite is showing no sign of slowing under the weight of the credit crunch that is crippling average homeowners, lenders and businesses.

Eliza Leigh, a partner at estate agent Knight Frank, said that the company in early July launched a flat for Grosvenor, the firm which manages the Duke of Westminster’s property estate.

‘In the first 48 hours, we generated 18 viewings for a property with a £25 million guide price,’ she said. ‘We achieved that by close of business on Tuesday, having launched at 9am on Monday, and that purchaser exchanged contracts by Friday.’

Analysts expect UK house prices to tumble at least 20 per cent from their peak as a decade-long boom turns to bust. The majority of agents say that business has ground to a halt and even the so-called ‘prime’ market – roughly, homes between around £1 million and £10 million – has slowed as once spendthrift bankers and executives draw back.

But ’super-prime’ is blossoming, helped by London’s enduring popularity and – critically – by a lack of properties at the very top end. There are few coveted addresses and even fewer families moving out.

Source : Business Times – 6 Sep 2008

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US to take control of mortgage giants: reports

Posted by luxuryasiahome on September 6, 2008

The US government plans to put government sponsored mortgage finance companies Fannie Mae and Freddie Mac under federal control, the New York Times and Washington Post newspapers reported late Friday, in what could be the largest financial bailout in the nation’s history.

The two government sponsored enterprises (GSEs) own or guarantee almost half of the country’s US$12 trillion in outstanding home mortgage debt.

The The Wall Street Journal reported earlier on Friday that the US Treasury Department is close to finalising a plan to buttress the two companies that includes changes to their senior management. The plan could be announced as early as this weekend, the paper said.

The plan could be announced as early as this weekend, the Journal said.

US Treasury spokeswoman Brookly McLaughlin declined to comment on the Journal report on Friday.

Fannie Mae and Freddie Mac spokesmen also declined to comment.

The two firms would be placed in ‘conservatorship’, the Wasington Post said, citing sources familiar with the discussions.

The value of the company’s common stock would be diluted but not wiped out, while the holdings of other securities, including company debt and preferred shares, would be protected by the government, the Washington Post said.

Senior Bush administration and Federal Reserve officials called in top executives of Fannie Mae and Freddie Mac on Friday and told them that the government was preparing to place the two companies under federal control, officials and company executives told the New York Times.

Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson were present at meetings with James Lockhart, the director of the Federal Housing Finance Agency, the regulator of the two companies, and with Fannie Mae CEO Daniel Mudd and Freddie Mac CEO Richard Syron on Friday, Reuters can confirm. There were separate meetings with the two CEOs.

Mr Daniel H. Mudd, chief executive of Fannie Mae, and Mr Richard Syron, his counterpart at Freddie Mac, are expected to step down from their posts eventually, the Wall Street Journal reported.

Earlier, Mr McLaughlin had told sources the department was ‘making progress on our work’ with Morgan Stanley, the Federal Housing Finance Agency, and the US Federal Reserve.

The US Treasury had hired Morgan Stanley on Aug 5 to advise it on whether the companies were adequately capitalised and help it determine how it would use its new powers to support the GSEs.

The housing legislation signed into law by President George W. Bush in July requires the companies agree to a Treasury backstop.

Shares of the two government sponsored enterprises (GSEs) have plunged about 80 per cent since mid-May this year as the US housing market slump resulted in the two companies reporting about US$14 billion in losses in the past four quarters, eroding some of their capital.

‘People have priced in an equity infusion that would wipe out shareholders,’ said Mr Chuck Gabriel, managing director at Washington-based consultants Capital Alpha Partners. ‘On the other hand, they have come to understand you wouldn’t have such an event without the GSEs agreeing to it.’

The Wall Street Journal, citing people familiar with the matter, said the plan was expected to involve the creative use of authority the Treasury won from the US Congress to pump capital into the two government-sponsored enterprises if it believed it was necessary.

Instead of giving each company a big capital infusion up front, the government plans to make quarterly infusions as the companies’ losses warrant, sources told the Washington Post late Friday. This would be an attempt to minimize the initial cost of the rescue, the paper said.

Shares of Fannie Mae and Freddie Mac, which had rebounded since Aug 21 on speculation a government intervention might be averted, plunged in after-hours trading in New York on Friday.

Fannie Mae stock fell 16.9 per cent to US$5.85, while Freddie’s shares declined 7 per cent to US$4.74.

Analysts at Citigroup, Merrill Lynch, and Goldman Sachs since mid-August have issued reports saying the companies had plenty of capital to operate for the near term, and both companies have successfully rolled over debt on schedule in the meantime. Yield spread premiums on the companies’ senior debt narrowed as traders bet government funding would cut their risks.

However, the major credit rating companies since Aug 22 all cut their ratings on preferred stock of the two GSEs on expectations that the share price declines had cut access to capital, increasing the need for emergency financial support.

The companies never lost their access to capital markets where they raise money to support the US housing market, but the biggest buyers of the debt have grown more cautious.

Foreign central banks reduced their holdings of ‘federal agency’ debt in custody at the Federal Reserve in the past week for the seventh week in a row.

Russia has continued reducing its holdings of agency debt, Mr Alexei Ulyukayev, first deputy chairman of Russia’s central bank, said on Friday.

The US Congress created Fannie Mae as a government agency in 1938, during the Great Depression, to buy government-insured mortgages from lenders, providing them fresh money to make more loans.

Fannie continued to function as a government-run agency during the 1940s and 1950s, even as it took steps towards privatisation. In 1968, President Lyndon Johnson decided to turn Fannie into a shareholder-owned company.

Source : Business Times – 6 Sep 2008

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Maybank launches two home-loan promotions

Posted by luxuryasiahome on September 6, 2008

Maybank Singapore has launched two home-loan promotions, including a variable-rate loan that charges just 1.68 per cent interest in the first year. The interest payable on the three-year variable-rate mortgage rises to 2.48 per cent in the second year and 2.88 per cent in the third year, before adjusting to the bank’s full board rate – now 3.75 per cent – for the fourth and subsequent years.

The rates for the first three years are based on the current level of the board rate less a discount, and would vary if the board rate were to change. Maybank introduced a single board rate for all its home loans in Singapore in February last year and has not changed it so far.

Maybank is also offering a four-year fixed-rate home-loan package starting at 2.28 per cent for the first year and rising to 2.88 per cent in the second year, 3.38 per cent in the third year and 3.88 per cent in the fourth year, before adjusting to the board rate.

The rates for the first four years are fixed and would not vary even if the bank were to change the board rate.

The promotional rates for both the variable and fixed-rate packages are available for a ‘limited period’, Maybank said. They apply to HDB and private property loans and are available to new home buyers or those who want to refinance their existing home loans.

Helen Neo, head of consumer banking at Maybank Singapore, said the promotional offers are to mark the 48th anniversary of the bank’s presence in Singapore, its largest overseas market. It has 22 branches island-wide. ‘We are proud to have made Singapore our home for 48 years now,’ she said. Two weeks ago, Standard Chartered Bank launched a home loan package priced at 0.8 percentage points above the three-month Singapore interbank offered rate (Sibor) on the first business day of the month at the start of the loan, for the first three years.

The package also allows customers to link their other accounts with the bank and use the interest earned on their deposits to offset the interest payable on their home loan. The three-month Sibor on Sept 1 was 1.25 per cent. In July, HSBC introduced a home-loan package also pegged to the three-month Sibor but with an interest rate spread that falls after the first year.

The spread is 0.75 percentage points above the Sibor in the first year, 0.65 points in the second year and 0.55 points subsequently.

Source : Business Times – 6 Sep 2008

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Future returns from green moves today

Posted by luxuryasiahome on September 6, 2008

CDL’s eco-friendly practices have not only won the developer most Green Mark Awards but also raised its public profile

As the call for environmental protection resonates around the world, property developers in Singapore have not missed the message and have begun riding the green wave. Ninety-five Green Mark Awards were given out to environment-friendly buildings in 2007, a jump from 17 in 2005.

But ‘building a green development is more than just placing a couple of eco-friendly features within a property’, said Kwek Leng Joo, managing director of City Developments Ltd (CDL). ‘It takes concerted and sustained efforts that cut across the entire development chain and its stakeholders.’

Even before the green movement gathered such a momentum, CDL says it was already engaged in eco-friendly practices. They have become an integral part of property development and management, as well as corporate social responsibility (CSR) activities today. Green initiatives in property development undoubtedly contribute to environmental sustainability. But less known, perhaps, are the other rewards CDL reaps from its efforts. Eco-friendly practices have raised CDL’s public profile, it says. ‘Going green equates to value for home buyers and enhances our reputation and goodwill,’ said Mr Kwek.

BT approached several industry watchers who generally agreed. The initiatives are ‘definitely beneficial in terms of the image’ and will ‘probably reinforce CDL’s credentials and standing in the Singapore property market’, said CIMB-GK analyst Donald Chua. At a conference here in May, Merrill Lynch singled out CDL as a case study for strong CSR practices. Not just CDL, companies around the world believe environmental issues can shape their image. In a McKinsey Quarterly survey last December of more than 2,100 global executives, 68 per cent felt climate change is a somewhat or very important factor to consider when managing corporate reputation and brands.

Besides winning public favour, green initiatives can help launch companies onto institutional investors’ radar screen. ‘CDL is the only Singapore developer listed on the FTSE4Good Index series since 2002,’ said CDL’s chief financial officer Goh Ann Nee.

The series measures the performance of companies which meet globally recognised corporate responsibility standards and facilitates investment in those companies. Benchmarks like these are useful to the increasing number of professional investors who watch out for how environmental, social and corporate governance issues can affect the performance of their portfolios.

For instance, more than 400 global investment institutions managing assets exceeding US$15 trillion have signed up to the United Nations-backed Principles for Responsible Investment. These are best-practices for incorporating such issues into mainstream investment decision-making and ownership activities. ‘Most of our major shareholders are institutional Western-based funds who are familiar with socially responsible investments (SRI) and even have proactive investing policies,’ said Ms Goh . ‘We have found that increasingly, investment funds are asking more questions relating to the company’s CSR efforts and commitment, beyond just financials.’

Even small acts can impress. After a meeting at CDL’s office recently, ‘(three European institutional investors) commented that they noticed the green stickers on switches which highlight the importance of switching off lights after using the room’, said Ms Goh. ‘They were pleasantly impressed that CDL was taking proactive steps towards cultivating eco-friendly habits within the office.’

However, some industry watchers believe that the broader market still needs time to warm to developers’ green initiatives. As one analyst pointed out, ‘SRI funds are still very small right now’ and many are pure environment funds which focus on sectors such as green energy.

Some investors could also be concerned that going green incurs higher costs. CDL typically allocates 2 to 5 per cent of a project’s cost to green features. For its residential project The Oceanfront @ Sentosa Cove, it earmarked 3.8 per cent of the construction cost for green features. But CDL seeks to draw out the bigger picture. ‘It is a common misperception that an eco-friendly approach to building happens at the expense of the bottom line,’ said Mr Kwek. At the end of the day, the triple bottom line – financial, economic and social – also counts.

Going green also leads to savings in the long term. CDL’s City Square Mall, for instance, could enjoy cost savings of $48,000 per year from water-efficient designs alone.

Another analyst said with tongue in cheek that beyond impressing the investment community, eco-friendly property developers could ’score some brownie points with the authorities’. The government has certainly been paying attention to environmental issues. Under legislation that came into effect on April 15, all new buildings and major retrofittings under certain criteria will have to meet minimum Green Mark certification standards.

‘(The legislation) has no impact on our business as we have already been practising this for some time,’ said Mr Kwek. ‘Being an early adopter of these practices has enabled us to harness extensive knowledge and expertise.’ Ultimately, ‘the fundamental motivation behind our green practices is our care for the environment and our future’, he added.

Since the introduction of the Green Mark Awards in 2005, CDL has attained the highest number of Platinum and Gold Plus awards among developers. And it looks like it will be going strong with its green initiatives.

Source : Business Times – 6 Sep 2008

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Key shareholder not taking up Oei’s offer

Posted by luxuryasiahome on September 6, 2008

Aizawa has in fact been raising Japan Land stake since bid was launched

Japanese investment banking and securities firm Aizawa Securities may well turn out to be a force to reckon with for tycoon Oei Hong Leong in his bid for Japan Land. Aizawa, which owns 22 per cent of Japan Land, has indicated its reluctance to accept Mr Oei’s offer, which was launched in late July. Mr Oei, who owns 4.01 per cent of Japan Land, wants to buy the remaining shares he does not already own at 60 cents each.

Aizawa managing director Tetsuo Akaike told BT: ‘We are a long-term shareholder of Japan Land. We do not intend to sell our shares, and may consider increasing our stake as and when conditions are favourable.’ Aizawa has, in fact, been gradually raising its holding through open-market purchases since Mr Oei made his takeover offer, bringing it above the one-fifth mark.

Why is Aizawa rejecting the bid? Mr Akaike said Japan Land’s new direction in the Internet data centre (IDC) business is promising. Japan Land is participating in an IDC project in Singapore with IT consulting services provider CS Technology, its second IDC project and the first outside of Japan.

‘We also believe that the corporate value of a company should take into account its intangible assets, which belies the growth potential of the firm,’ Mr Akaike said, pointing to other net revaluation surpluses that could be derived from Japan Land’s 14.13 per cent associate, Japan Asia Holdings Japan (JAHJ).

Will Aizawa then make a rival bid? ‘We’ve not decided on that,’ Mr Akaike said.

BT understands that the emergence of a competing bid for Japan Land may trigger an extension of Mr Oei’s takeover offer.

DMG & Partners Securities, the appointed independent financial adviser, recently advised Japan Land directors and shareholders to reject the offer, citing ‘insufficient compelling reasons’. According to DMG, the offer price is at a 7.14 per cent premium to Japan Land’s net tangible assets (NTA) per share of 56 cents as at March 31. But after factoring in gains from the sale of a 48 per cent stake in KHC Ltd in April, the offer price is at an estimated 9.09 per cent discount to Japan Land’s adjusted NTA per share of 66 cents.

DMG also estimated that Mr Oei’s offer price could be at a discount of 13.04-21.05 per cent to Japan Land’s revalued NTA after factoring in a share swap between JAHJ and Jasdaq-listed ATL Systems as well as potential gains from a listing of Tokyo Stock Exchange (TSE).

JAHJ, the single-largest shareholder in TSE with a 3.52 per cent stake, may gain when TSE goes for listing next year. Aizawa itself owns a separate 1.76 per cent stake in TSE.

Source : Business Times – 6 Sep 2008

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Outlook bleak for global economy: Forum

Posted by luxuryasiahome on September 6, 2008

US growth to remain stagnant while China’s is not sustainable, say seminar speakers

GLOOM was the order of the day at the annual CapitaLand International Forum yesterday.

Most of the invited speakers – ranging from Goldman Sachs managing director Michael Buchanan to Ms Gail Fosler, president of United States research organisation Conference Board – shared a largely bleak outlook for the global economy.

Ms Fosler kicked off the seminar by saying that while the US economy is not in a recession, it will remain stagnant for the coming period. ‘This is a period of rolling adjustments, that goes from sector to sector, that will keep the US growth rate low in the 1 to 2 per cent range for the foreseeable future,’ she said.

The seminar was attended by more than 350 CapitaLand business associates, board members and staff, as well as corporate bigwigs such as Temasek Holdings chairman S. Dhanabalan and CapitaLand International Advisory Panel chairman Philip Yeo.

‘For those of you who follow the US economy, you realise that 1 to 2 per cent in a US context feels like a recession, even if it’s not technically a recession.’

But it is not only the US that is in trouble. ‘Signals of a global slowdown are intensifying,’ she added. ‘In China, we’re seeing one of the most severe signs of slowdown since the Asian financial crisis.

‘Country by country, people are going to take a more sober view of the economic situation.’

Giving a more in-depth look on the Chinese situation was Professor Shawn Xu Xiaonian, who teaches economics and finance at the China Europe International Business School.

He said China needs to transform its economy through structural changes, as the traditional growth model is not viable any more.

China’s strength is built on being a low-cost supplier, but high inflation is quickly eroding this advantage and making it difficult for the country to adapt to the changing environment, explained Prof Xu.

China’s current growth is also too energy-consuming to be sustainable, he added. ‘We consume so much energy it’s no surprise oil prices jumped to more than US$100 a barrel,’ he said to laughter from the audience.

Finally, Mr Buchanan, who is also Goldman Sachs’ chief economist for Asia excluding Japan, wrapped things up by echoing Ms Fosler’s view.

‘We’ve had a quarter-century of declining inflation and interest rates; that’s been good for almost every asset class,’ he said.

‘It’s not necessarily a reversal now, but it’s not going to continue like it used to be. It’s not just a short-term blip and everything is going to go back to normal.’

Source : Straits Times – 6 Sep 2008

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Power, pride and prejudice

Posted by luxuryasiahome on September 6, 2008

LAST year Singaporeans objected to the dead being sited near them when people in Sin Ming estate protested against the building of a funeral parlour there.

This month they are objecting to the living. Serangoon Gardens residents are up in arms about foreign workers being housed in a vacant school building within the estate.

You can bet on it: ‘Not in my backyard!’ will be heard more frequently in Singapore in the coming years. With land already scarce and the population still growing, the contest for space can only get more intense.

Anecdotally, I have heard of protests against columbariums, kindergartens, car parks, childcare centres, playgrounds – necessary facilities all, just ‘not in my backyard’.

The real contest is however not about space. It is about power, pride and prejudice.

Power, because the ones most vocal in these protests and petitions tend to be middle-class folk, the socio-economic equals of their MPs and the bureaucrats who make decisions on siting of facilities.

Pride, because inherent in any group’s attempt to push some facility away to another part of Singapore is an implied statement that their area is superior and entitled to the right not to be encumbered with undesirable amenities – or what one blogger has called ‘disamenities’.

Prejudice, because underlying many of these protests are stated and unstated fears and assumptions.

In the Serangoon Gardens case, all three came together when residents got together to start a petition against turning the Serangoon Gardens Technical School building into a temporary dormitory for 1,000 foreign workers.

Serangoon Gardens is a staunchly middle-class estate that dates back half a century. Unlike nouveau riche middle-class Singaporeans, its residents are largely English-speaking and socially conservative.

Their spoken and unspoken fears: The foreign workers will litter, loiter, spit, steal, speak loudly, molest children and rob old people.

Founded or unfounded? We don’t really know.

Fears about littering and loitering may be founded, but who is to say that there are not segments of Singaporeans who litter and loiter on the same scale.

As for the other fears, the prejudging is probably excessive.

Foreigners who come to Singapore to work do so in search of a living. Few would be foolhardy enough to jeopardise their stay by breaking the law – which they well know is strictly enforced here and has a long arm.

True, there may be some who are driven to crimes by momentary temptations or fits of desperation. But this would be no less true of locals.

Most foreign workers are well-briefed by their employers and agents when they come to Singapore. Among other things, they are told not to be rowdy, not to get drunk, and not to cause unhappiness to the locals in any way.

Near where I live are a number of houses and apartments housing foreign workers, and I can tell that they are obeying the advice.

Their decorum is exemplary. When they get home, they open their main doors as soundlessly as possible. They try not to stare (imagine the super-human effort that must take). They even hang their laundry very neatly.

Some still litter, but I imagine they will kick that habit after a few more months here.

Serangoon Gardens residents voiced a concern about the values of their homes being reduced as a result of proximity to a foreign worker dormitory. With the property market already softening noticeably, that will happen, with or without the dormitory.

In any case, with an entire school building used as a dormitory, the facility can be self-contained. There can be recreational facilities within. The foreign workers need not be on the streets outside at all, save when travelling to work or going to the grocery shops.

To their credit, a number of the Serangoon Gardens residents who were at the dialogue with their MPs, Minister George Yeo and Senior Minister of State Lim Hwee Hua, prefaced their remarks by acknowledging the important role foreign workers play in Singapore.

But they went on nevertheless to list their concerns. Why?

Was it because they have led very sheltered lives? Ensconced for years in a middle-class cocoon, perhaps they genuinely fear the encroachment of more than a thousand foreign workers into their midst?

Perhaps they see visions of swarthy, moustachioed men breaking into their homes at night?

Whatever the case, these fears are probably disproportionate to the reality. The foreign workers, after all, are human beings too and probably have more fears about their stay in Singapore than we can ever imagine.

For a country that is predominantly a land of migrants, the xenophobia here can be astonishing.

One friend used a Chinese saying to describe these fears: guo qiao shao qiao. Burning the bridge after you have crossed it, so that no one can come across on it after you.

Will the residents who signed the petition get their way?

Some 1,600 have signed. The total number of households in the estate is however far higher – 4,000 to 7,000, depending on where you draw the boundary. So the petitioners are actually a minority.

The Government has been very careful in its approach to housing for foreign workers. It is releasing 11 new dormitory sites to house over 65,000 foreign workers, but their construction will be completed only in 2010.

In the meantime, it is looking at using vacant Government buildings, such as the former View Road Hospital building in Woodlands and recently tendered sites at Cochrane Crescent in Sembawang and in Changi East.

If it goes ahead, the Serangoon Gardens dorm will probably be the first large scale one in a landed residential estate. It will test the ability of middle-class Singaporeans to overcome prejudices and co-exist peacefully with working class foreigners. In today’s globalised world, this is a good ability to acquire.

Source : Straits Times – 6 Sep 2008

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Mortgage rates still at rock bottom

Posted by luxuryasiahome on September 6, 2008

HOMEBUYERS and sellers, hit by the recent market malaise, have at least one comforting constant in a market plagued by uncertainty – low interest rates.

Despite various economic woes – inflation, volatile oil prices, slowing economic growth – Singapore’s banks are continuing to offer rock-bottom mortgages.

The latest to reaffirm Singapore’s low interest rate home loans environment was Malayan Banking (Maybank), which yesterday launched a new three-year variable home loan that offers a low interest rate of 1.68 per cent a year for the first year.

Still, after that, the rates increase to 2.48 per cent for the second year and 2.88 per cent in the third.

Maybank’s new package followed two other home loan launches by Standard Chartered Bank (Stanchart) and HSBC.

Both offer competitive interest rates, albeit through slightly more creative housing loans that are pegged to the Singapore Interbank Offered Rate (Sibor).

Stanchart’s MortgageOne Sibor is priced at 0.9 per cent a year above the three-month Sibor for the first three years.

It comes with a unique offset feature that allows customers to use the interest earned on their deposits to reduce the interest payable on their home loans.

HSBC’s latest Sibor-pegged home loan comes with a progressive interest rate reduction feature – the first of its kind here.

On top of the prevailing three-month Sibor rate, customers pay an additional interest of 0.75 per cent in the first year. The rates fall to Sibor plus 0.65 per cent in the second and, from the third year onwards, Sibor plus 0.55 per cent.

With interest rates so low, many home owners naturally consider refinancing their home loans with packages that are pegged to a faltering Sibor.

DBS Bank head of deposits and secured lending Koh Kar Siong said Sibor-pegged loans offer customers more transparency and also allow them to enjoy lower interest rates in the current market environment.

Mr Gregory Chan, OCBC Bank’s head of secured lending, agreed. He said OCBC customers preferred home loans pegged to market rates because these are ‘more transparent and bear greater significance for consumers during uncertain times’.

Source : Straits Times – 6 Sep 2008

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