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Archive for December 4th, 2008

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Singapore-listed property counters down 61% year-to-date

Posted by luxuryasiahome on December 4, 2008

Singapore-listed property counters have been massively sold down in recent weeks.

They are underperforming the benchmark STI, with losses of about 61 per cent year-to-date.

With the outlook for the sector still cloudy, analysts say they would prefer to remain cautious on these property stocks for the year ahead.

Weak new home sales in Singapore have translated into soft earnings, a poor outlook, and falling share prices for residential developers.

For example, Keppel Land, Ho Bee and Wing Tai have seen their share price drop by some 70 to 80 per cent this year.

“The market is concerned that going forward developers will not be able to rake in new sales from the new launches, as well as concerns raised over the possibility of developers writing down their residential land bank,” said an investment analyst at DMG & Partners Securities, Brandon Lee.

CapitaLand and City Developments are now some 60 per cent lower than where they started the year.

And some market-watchers say valuations are looking very attractive.

“A lot of these property counters are actually trading below 1x price-to-book ratio which indicates value. Also they are also trading at substantial discounts to their realisable net asset value. So this is another factor which indicates value in property counters right now,” said an analyst at Fundsupermart.com, Wong Weiyi.

However, Wong notes that the realisable net asset value may get devalued in 2009 due to poor sentiment.

Analysts say they see more downside in the near term for property counters in general, as the world heads into a global recession, depressing sentiment and stalling sales.

Most market analysts tell Channel NewsAsia they would advise caution for investors planning to invest in the sector.

For DMG however, CapitaLand is one counter than stands out.

Lee said: “It has a diversified stream of revenue, not just from residential sector. It also has about S$25 billion worth of private equity funds and five REITs. And these businesses could actually drive in a stable stream of income and mitigate the fall in contribution from the residential space.”

Meanwhile, OCBC Securities has buy recommendations on Keppel Land, UOL and Soilbuild.

Analysts say a recovery in share prices for property counters could only happen toward the end of 2009 or early 2010, on the back of a turnaround in the global economy.

Source : Channel NewsAsia – 4 Dec 2008

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S’pore is 12th most expensive city in Asia

Posted by luxuryasiahome on December 4, 2008

Singapore is the 12th most expensive city in Asia, according to a global survey on cost of living by international human resource company ECA International.

The country jumped 27 places, and is one of Asia’s biggest movers.

Hong Kong was ranked 6th, while Tokyo took the top spot.

For the first time, Beijing overtook Hong Kong as the most expensive Chinese city.

The survey noted that the cost of living for Asian cities such as Beijing, Hong Kong, Singapore and Taipei has gone up in the past year due to fluctuating currency and inflation rates.

Cities all over the world are reeling from exchange rate fluctuations brought on by the economic crisis.

This in turn has a big impact on the average costs of living for expatriates.

Living costs in Hong Kong are now approximately 15 per cent higher than in Singapore, an increase from 12 per cent last year.

According to ECA International, the last two months have seen goods and services in Hong Kong swing from being 10 per cent cheaper than in London to being almost 10 per cent more expensive.

Beijing is now three times more expensive than Singapore compared to last year, while cost of living for foreigners visiting Korea and Singapore is now almost on par.

One of the wildest swings is in Japan.

Goods and services in Japan are now 68 per cent more expensive than in Singapore.

This is up from 43 per cent in September last year.

The unravelling of the carry trade resulting in the strengthening of the Japanese yen is mostly to blame for this.

In contrast, Islamabad is the cheapest location in Asia.

Goods and services there are 70 per cent cheaper than in Japan.

In Europe, Moscow is the most expensive location, replacing Oslo.

The weakening of the pound has seen central London off the list of the world’s top ten most expensive cities.

ECA’s survey is carried out twice a year and compares a basket of 125 consumer goods and services commonly purchased by expatriates in over 370 locations worldwide.

Source : Channel NewsAsia – 4 Dec 2008

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No new sites for MND’s H1 2009 Govt Land Sales Programme

Posted by luxuryasiahome on December 4, 2008

Ministry of National Development (MND) has decided not to add any new sites to the Government Land Sales (GLS) Programme for first half 2009.

The H1 2009 slate – comprising entirely reserve list sites, as previously announced – will have a total of 38 sites. These comprise 37 plots that are being carried over from the H2 2008 reserve list slate and the unsold executive condo site at Punggol Road/Punggol Field which had been tendered under the confirmed list of H2 2008.

The sites that will be available in the H1 2009 GLS Programme can potentially yield some 7,920 private homes, 512,000 sq metres gross floor area (GFA) of commercial space and 5,160 hotel rooms.

‘The Government will not add any new sites to the GLS Programme for H1 2009,’ MND said.

In formulating its policy, the Ministry took into account the current economic uncertainties and noted that the global economic outlook is likely to remain weak in 2009 and this would have an impact on Singapore’s economy, including the property market.

Giving an update on land supply outside the GLS Progamme, MND said there will be a reduced supply of commercial space and no new supply of private residential units from Government agencies. The H1 2009 supply from this source will comprise about 40,000 sq metres GFA of commercial space and 240 hotel rooms.

This is smaller than the land supply for 20 private residential units, 143,000 sq m of commercial space and 240 hotel rooms outside the GLS Programme for H2 2008.

Source : Business Times – 4 Dec 2008

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No new sites added to land sales programme for first half of 2009

Posted by luxuryasiahome on December 4, 2008

The Singapore government will not be adding any new sites to its land sale programme for the first half of next year.

The National Development Ministry (MND) says this is because the global economic outlook remains weak in 2009.

This is expected to have an impact on Singapore’s economy and property market.

MND released its list of land parcels available for sale in the first half of next year on Thursday.

It will be carrying over 37 sites from this year’s list.

Another unsold executive condominium site at Punggol Road will also be added.

All the sites will be made available through the reserve list.

This means the government will only put a site up for sale via tender, after an interested party has pledged to bid for the site at an acceptable minimum price.

MND says the 38 sites on next year’s list can potentially yield 7,920 private homes, 512,000 square metres of gross floor area and 5,160 new hotel rooms.

The ministry says commercial space that will be released in 2009 outside of the land sale programme will be reduced and confined to only projects that are meant to meet strategic economic or development objectives.

In all, there will be another 40,000 square metres of commercial space, including space at One-North, Sentosa, parks and MRT stations.

Source : Channel NewsAsia – 4 Dec 2008

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Half of Marina Bay Sands retail space taken up

Posted by luxuryasiahome on December 4, 2008

Singapore’s Marina Bay Sands integrated resort will unveil details of plans for its retail space after the Chinese New Year in January next year.

Recent reports said its parent company, Las Vegas Sands, is facing financial difficulties. But the Singapore firm remains confident about prospects for its retail business.

The S$5.4-billion Marina Bay Sands project is still being built. When completed, it will have 800,000 square feet of retail space which can house about 300 stores.

The Marina Bay Sands Shoppes will be 20 per cent smaller than Singapore’s largest shopping mall at VivoCity.

VivoCity has about 1.04 million square feet of net lettable floor space. Prior to the construction of VivoCity, Suntec City Mall was the largest shopping centre in Singapore with 888,000 square feet of retail space.

The resort said half of that space has already been taken up, and will feature over 30 brands that are new to Singapore.

David Sylvester, vice president, Retail Development Asia, Las Vegas Sands, said: “We will have a lot of leading-edge retail… It will be a mixture of European, some American brands, some Japanese, some Korean.”

Marina Bay Sands said it would start marketing campaigns to attract more retailers to lease shops at the resort from February next year. These efforts will include trade shows and talks in Europe.

However, there are currently no plans to adjust rentals to match the slowing economy, and Sands remains positive about the future.

“Obviously, there have been a lot of concerns about the economic environment globally, but everybody has been very positive on the Marina Bay Sands because by the time we open, we are talking about end of 2009. We’ve got to think that things will turn around by then,” said Mr Sylvester.

Competition in the retail sector is expected to be stiff in 2009, with four new malls coming up along Orchard Road, Singapore’s prime retail belt.

The four malls are ION, Orchard Central, Mandarin Gallery and 313@Somerset. Sands said its retail operations will complement these new malls rather than compete with the offerings there.

The retail component of the resort will open in two phases – the luxury stores are due to do business at the end of next year, while the rest will be ready in 2010.

Las Vegas Sands has transferred about 16 staff from its Hong Kong office to Singapore to drive its retail marketing and leasing operations at Marina Bay Sands.

Source : Channel NewsAsia – 4 Dec 2008

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Bella Ville @ Siak Kew Ave

Posted by luxuryasiahome on December 4, 2008

Bella Ville

There is a sparkle in the air at Bella Ville. Enjoy special moments in one of our 6 clustered bungalows or 4 semi-detached homes where languid days and nights roll by patios and balconies under blue, blue skies.

Location: Siak Kew Ave (District 13)
Type of Development: Cluster Bungalow and Semi Detach
Tenure: Freehold
Total Units: 10
Expected Completion: 2011
Unit Types:
Semi-Detach ~ 5+1 3089sqft / 3444sqft.
Bungalow ~ 5+1 4047sqft / 4424sqft.

Bella Ville is located near Potong Pasir MRT Station (North-East Line). Amenities like Macpherson eateries, convenience shops and supermarkets are within short walking distance. Popular schools such as St. Andrew Junior School are within close proximity.

Contact us at info@lushhomemedia.com or +65 9631 8037 with the following for more information:

Belle Ville / Name / Contact # / Unit Type Interested

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Life after DPS won’t be crippling for developers

Posted by luxuryasiahome on December 4, 2008

Study shows they can weather even 20% default rate by buyers under scheme

A NEW report, which looks at the potential impact if buyers who bought homes under the deferred payment scheme (DPS) choose to walk away from their deals, concludes that developers are not likely to be too badly hit even under a 20 per cent default scenario. The report by DBS Group Research captured the impact of defaults in projects expected to get their Temporary Occupation Permit (TOP) in 2009 on developers’ earnings, operating cash flow, net gearing and interest cover. For this analysis, analyst Adrian Chua covered two default scenarios: 10 per cent and 20 per cent of all DPS units defaulting. Both scenarios assume the developers do not resell the default units within the year.

‘Gearing ratios for the developers do not deteriorate significantly even under a 20 per cent default scenario,’ Mr Chua concluded. ‘Operating cash flow and earnings would come down (which is a given) but not to the extent where it leads to a negative operating cash flow or loss-making situation. Interest cover continues to be healthy.’

But among the developers, the smaller players would be more impacted in terms of proportional decline in earnings and interest cover, the report concludes. It investigated the impact of defaults on six developers – CapitaLand, City Developments, Ho Bee Investment, Keppel Land, UOL Group and Wing Tai. Allgreen Properties, SC Global Developments and United Industrial Corp were excluded as they have no projects currently expected to obtain TOP in 2009. Wheelock Properties, which did not offer the DPS, was also left out.

The DPS has been a sticking point between analysts and developers. Many analysts have predicted that large numbers of homebuyers could walk away from their purchases once projects obtain TOP, when the bulk of the purchase price is due under the DPS.

Developers dispute this view. Developers DBS Research spoke to have maintained the likelihood of default risk is low, given that speculation in 2006-07 did not reach the property bubble levels of 1995-96, the firm said in the note.

But part of the speculative intention could be masked under the DPS, which was not part of the property landscape back in 1995-96, noted Mr Chua. ‘As such, the real speculative activity in the market could become completely apparent only upon TOP of these units,’ he said.

In addition, the recent property upcycle also saw active participation by foreign buyers, which adds an additional unknown to the equation: whether these buyers will follow through on their payments upon TOP. The unwinding of global financial markets and the spectre of a prolonged economic downturn and asset devaluation could force these foreign buyers to default on their property purchases here, Mr Chua said.

The research note concluded that while a 20 per cent default is not likely to hurt developers too much, the effect of DPS defaults is just one of a few challenges facing the developers in 2009. Certainly, an asset devaluation scenario in line with declining capital values could potentially bring down developers’ book value and correspondingly increase their gearing, the note said.

‘We remain cautious over the short term for the residential developers, in light of a lack of catalysts from the physical market and poor economic sentiment,’ said Mr Chua.

Source : Business Times – 4 Dec 2008

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Developers head into crisis with more cash

Posted by luxuryasiahome on December 4, 2008

Gearing improves as developers pare borrowings, increase cash held from divestments

Developers have entered the latest slump in much better shape than they were in during the last property downturn in 2001, a comparison of their cash positions and debt-to-equity ratios then and now shows.

In fact, between the second and third quarters this year, some developers worked to better their gearing ratios. ‘Among the larger-cap developers we track, most reported stronger balance sheets at end-Q3 2008,’ said OCBC Investment Research analyst Foo Sze Ming.

‘On average, the net debt-equity ratio had come down from 0.52 times in Q2 to 0.49 times in Q3. And the improvement was generally attributable to a stronger equity base, paring of borrowings and an increase in cash held from divestments.’

CapitaLand, City Developments and GuocoLand all cut their debt-to-equity ratios in Q3, OCBC’s data shows.

The same trend holds true when comparing developers’ financial positions at end-2001 and Q3 2008. Data gathered by DMG & Partners on selected developers shows most companies now have smaller debt-to- equity ratios. They also have more cash on hand. ‘They are definitely stronger this time around,’ said DMG & Partners analyst Brandon Lee.

Singapore’s big three listed developers – CapitaLand, City Developments and Keppel Land – exemplify this trend. At end-2001, CapitaLand had $1.9 billion of cash and a gearing of 0.87 times. Now, it has a whopping $4.2 billion in cash and a gearing ratio of 0.51 times. Similarly, City- Dev has increased its cash holding from $701.8 million to $813.3 million and cut its gearing from 0.8 times to 0.46 times. KepLand has also increased its cash holding, from $120.9 million to $663.4 million, and cut its gearing from 1.33 times to 0.54 times.

Property companies are expected to continue to try to improve their cash balances and reduce gearing over the next few quarters. SC Global Developments, for example, recently drew $100 million from reserve facilities to boost cash on hand. But the pace of divestment is expected to slow as buyers get cold feet in the poor economic climate.

Analysts reckon things do not look as bad as feared for developers for another reason – in the Q3 earnings reporting season, much- feared provisions for landbanks acquired at high prices, which analysts had predicted, did not materialise.

Analysts have changed their tune and now expect developers to make provisions only in the second half of 2009, or even later. Some also reckon the provisions could be less than what the market has already priced in.

In 2001 and 2002, several developers, including CapitaLand, CityDev and Keppel Land, made massive write-downs on their Singapore residential landbanks, which hit their results badly. But this time around, the write-offs may be smaller, some analysts say.

Keppel Land was one of the first developers to make provisions in 2001, announcing $455 million of write-downs in the value of its residential landbank in November that year.

But the risk of a landbank write-down in the current downturn is lower for KepLand because the company did not buy any land in Singapore last year and its current landbank is carried in its books at relatively low cost, said OCBC’s Mr Foo.

CIMB analyst Donald Chua said: ‘We are not seeing provisions yet because prices have not fallen that much yet. Developers are probably waiting to see how the market pans out next year.’ In light of this, provisions are unlikely for Q4 unless things take a turn for the worse, Mr Chua said.

In the 2000-2003 property downturn, the residential price index for private homes recorded a quarter-on-quarter drop in Q3 2000. However, the provisions and write-offs only came towards the end of 2001. This time around, the quarter-on-quarter dip in the price index appeared only in Q3 2008, so provisions are only expected around end-2009.

Downward revaluations of investment properties are still expected in Q4 2008 when developers do their yearly valuations. And for many developers, landbank write-downs will definitely take place at some point in time if ‘things keep going this way’, an analyst said.

Source : Business Times – 4 Dec 2008

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Thakral signs MOU with Aussie developer

Posted by luxuryasiahome on December 4, 2008

Proposed A$117.5m investments part of move to become a property player

AS PART of its bid to reposition itself as a pan-Asian property player, consumer electronics distributor Thakral Corporation has signed a memorandum of understanding (MOU) with an Australian developer for investments totalling up to A$117.5 million (S$115 million).

The proposed transactions with Australian-listed Payce Consolidated came after Hong Leong Asia (HLA) failed in its bid against the MOU. Board representatives from HLA’s indirect subsidiaries had opposed the MOU resolution but were outvoted.

Of the proposed investments of up to A$117.5 million, some 13 per cent or A$15.73 million will be funded in cash; 63 per cent or A$73.55 million in debt; and 24 per cent or A$28.22 million through the issuance of new shares and share options to Payce, possibly making it a strategic shareholder.

Of three proposed transactions, the first involves Thakral acquiring a A$32.5 million warehouse from Payce. The Bay Park property, with a remaining tenure of seven years, is currently leased out on a net lease rental of A$2.12 million per year.

The purchase will be 60 per cent funded by borrowings but Thakral expects Bay Park to be yield-accretive after servicing the debt. There is also redevelopment potential when the lease expires.

Under the second proposed deal, Thakral will invest A$77 million in property-linked notes with a special purpose vehicle owned by Payce. The notes are structured upon 179 completed residential units in Sydney, which will be sold over the next four to five years.

From the notes, Thakral will receive a running yield and deferred interest calculated based on sales revenue received.

As for the third proposed transaction, Thakral will obtain from Payce an option and a last right of refusal to jointly develop a residential site in Sydney. Thakral will have the right to purchase up to 49.99 per cent of the underlying economic interest for a maximum price of A$8 million.

In all, Thakral could be issuing shares and options to Payce at an issue price of S$0.002 above its net tangible assets as of Oct 31, after allowing for all reasonable provisions. Assuming that new shares are issued at S$0.085 and no options are exercised, Payce could gain an 11.3 per cent stake in Thakral.

Thakral said that this would help it gain a ’strategic shareholder with property expertise’ to help it become ‘a pan-Asia property vehicle’.

The execution of the MOU is subject to several conditions. For instance, Thakral has to first obtain shareholder approval to move away from its core business of consumer electronics distribution. Until definitive agreements have been reached, ‘there is no assurance that any of the transactions contemplated in the MOU will be completed,’ said Thakral. Shareholders ‘are advised to exercise caution in their dealings in the shares of the company’.

Payce is a property investment and development firm that is 14.99 per cent owned by Babcock & Brown. Babcock has a stake of about 8.9 per cent in Thakral.

Source : Business Times – 4 Dec 2008

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Citi axes Asia property investment banking team

Posted by luxuryasiahome on December 4, 2008

Citigroup fired most employees at its real estate investment banking team in Asia after slumping property prices stifled share sales and acquisitions in the industry, three people familiar with the matter told Bloomberg News.

The New York-based bank dismissed at least five people two weeks ago, the people said, declining to be identified because they aren’t authorised to discuss the matter publicly. Departures included Edmund Ho, a managing director who headed the team, and Director Edward Yeh, they said.

On the local front, Citi Singapore clarified that real estate investment banking is carried out by the local investment banking and corporate banking arms, which are separate from the company’s real estate investment banking division based in Hong Kong.

“In Singapore, we maintain active real estate coverage teams through our local investment banking and corporate banking teams that continue to work closely with our clients in the real estate sector,” said Mr Adam Rahman, director of Citi Singapore corporate affairs.

“We have a long-term partnership and relationship with all of our real estate clients in Singapore and remain committed to serving their financial needs.”

Citi, however, declined to reveal the number of employed real estate staff in Singapore.

Citigroup, which in November embarked on a plan to shed 52,000 jobs worldwide, will serve property clients through its country and corporate bankers after closing down Ho’s team, the people said.

Singapore, Hong Kong and China accounted for most of Citigroup’s real estate investment banking transactions in Asia excluding Japan in the past two years, according to data compiled by Bloomberg.

Source : Today – 4 Dec 2008

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