Lushhomemedia

Archive for January 9th, 2009

More looking to refinance home loans with lower interest rates

Posted by luxuryasiahome on January 9, 2009

More people are looking to refinance their home loans in the past few months with lower interest rates, but not without difficulties.

Key benchmark interest rates have been dropping since governments around the world embarked on their rate cutting campaign a few months ago to revive the slumping economy.

As a result, the Singapore Interbank Offered Rate (SIBOR) has more than halved in the past three to four months. From as high as 2 per cent in September, the 3-month SIBOR is now below 1 per cent, at around 0.97 per cent as of Friday.

Many housing loan packages here are pegged to the SIBOR.

Spokesperson for loan consulting firm Housing Loan SG, Dennis Ng, said the rate decrease over the past few months has prompted more homeowners to look at the refinancing of their mortgages.

He said: “If they were to refinance their housing loans right now, they can save easily more than S$10,000 in interest savings. So as a result of this, we are seeing a surge in demand for refinancing, probably more than 50 per cent increase in the last three to six months.”

Some banks, including HSBC, also said they have seen considerable growth in such enquiries in the last six months.

But while there is an increase in interest, spokesman for another mortgage consultancy firm My Housing Loan, Goh Eck Hong, said many of the enquiries do not materialise into transactions.

Mr Goh said: “For the refinancing cases, we get quite a number who are actually looking to get additional equity term loans, and that is quite hard in this credit climate.

“And the second thing is of course valuations as well; valuations have actually fallen for quite a number of properties. If they refinance now, they actually have to top up cash to do so, so the clients could not afford to actually do so.”

Mortgage specialists said interest rates will likely remain low in the period ahead, as major global economies are expected to continue to lower rates to stimulate lending and growth in the current recessionary environment.

Source : Channel NewsAsia – 9 Jan 2009

Posted in Finance, General | Tagged: , , , , | Leave a Comment »

Testing time for Commercial-Mortgage Backed Securities refinancing

Posted by luxuryasiahome on January 9, 2009

The global credit crunch and increasing competition for funding spell tough times ahead for Commercial-Mortgage Backed Securities (CMBS) in Singapore.

Fitch Ratings says such securities will face difficulties when it comes to refinancing this year.

This is due in part to growing competition for funding from various real estate and casino developments in Singapore.

However, the recent strong cash flow performance of CMBS transactions is expected to help mitigate the refinancing risk.

Eleven Fitch-rated public Singapore CMBS worth about S$6 billion were outstanding at the end of last year.

The tightening credit supply also means that various refinancing alternatives – including bank lending, sponsor financing and CMBS – are likely to become more popular.

Fitch says Singapore’s commercial property market has had several years of rental and capital value growth.

Source : Channel NewsAsia – 9 Jan 2009

Posted in Finance, General | Tagged: , | Leave a Comment »

Bargain hunting starts in tepid property market

Posted by luxuryasiahome on January 9, 2009

Four recent sub-sales have been transacted at 20% below launch prices

THE hunting season seems have begun in the property market, with at least four buyers making a killing.

A UBS report says that according to URA data, four recent sub-sales have been transacted at 20 per cent below launch prices.

Two units at Ardmore II were sub-sold for $2,000 per sq ft, compared with the last-transacted price of $2,400 psf. One unit at Scotts Square was sold at $3,050 psf, compared with the last-transacted price of $3,850 psf in the second quarter of last year.

And one unit at Sky @ Eleven was sold at $880 psf, compared with the last transacted price of $1,270 psf in Q2 2007.

‘Prior to this, we believe there has not been a single sub-sale transaction more than 11 per cent below the new sale price for the same unit,’ said UBS analyst Regina Lim.

UBS believes that the sharply lower sub-sale prices signal a major change in buyers’ risk appetite and the outlook for Singapore residential property.

It noted that some projects sold in 2006 and expected to be completed by Q4 this year could be the subject of defaults by buyers if sub-sale prices fall 30 per cent below launch prices.

‘This is especially as 40 per cent of buyers of new apartments above $1.5 million were foreigners or companies in 2006 and 2007, and it may be difficult not to repudiate the sale-and-purchase agreements for these buyers if they default,’ UBS said.

Cushman and Wakefield managing director Donald Han said that he does not expect many sub-sales to be transacted at big losses because developments that will receive their temporary occupation permit (TOP) this year – and hence, requiring loan draw-downs – are likely to have been launched in 2006 before prices peaked.

But he added: ‘People that bought in 2007 and 2008 will want to get out of the market.’

Knight Frank director (research and consultancy) Nicholas Mak said that ‘not all sub-sales lose money’. Some recent sub-sales showed price increases, he noted.

Still, prime properties are likely see the biggest drop in prices, as these rose the most in the past few years, he said.

In its report, UBS says that prices in the primary market have also been cut.

Among new launches, the 104-unit Newton Edge, priced at $1,201 psf, is some 23 per cent cheaper than Viva, where 15 units were sold in Q3 last year for around $1,550 psf. And at RV Suites in River Valley Road, 19 units have been sold at $1,350 psf, which is 15 per cent below Wharf Residences at $1,600 psf and 38 per cent below Martin 38.

Source : Business Times – 9 Jan 2009

Posted in General, Market Reports | Tagged: , , | Leave a Comment »

SMEs feel pinch of rising rents

Posted by luxuryasiahome on January 9, 2009

Some petition landlords for reductions; others seek help over disputes

SOARING rents for some industrial properties are becoming a hot issue among small and medium-sized enterprises (SMEs), with flashpoints opening up on a couple of fronts.

Worried tenants at Toa Payoh Industrial Estate have petitioned their landlord, Mapletree Investments, to reduce their rents by 20 per cent.

And the Singapore Business Federation (SBF) has helped to mediate bitter stand-offs between owners and tenants in recent weeks over rental demands.

The most serious dispute involved a landlord who tripled the rent for a local medical firm employing 75 staff.

The SBF said the firm will not renew its lease ‘and the business will have to be shut down because the owner cannot afford the rise in rent’.

Tenants at Mapletree’s estate in Toa Payoh North fear the same situation and have demanded a 20 per cent rent reduction.

One SME boss, who did not want to be identified, said: ‘I understand that about 80 per cent of the tenants here have signed the petition and Mapletree has said it is now reviewing our request for the rent cut.’

The director of a graphic design firm, located at Block 970 Toa Payoh North, said his three-year contract will need to be renewed soon.

‘My business volume has gone down by some 20 per cent but yet I have heard from my neighbours that Mapletree has increased rents by some 30 per cent – that is not a good sign for us,’ he said.

While there have been some delayed payments by tenants, Mapletree said the arrears situation at its properties is ‘well under control’.

‘There has been no perceptible trend increase in the monthly arrears from July 2008 to December 2008,’ said a Mapletree spokesman.

‘For tenants who are facing genuine difficulties in paying rent, we will sit down with them to work out solutions.’

The SBF acknowledged yesterday that landlords have a case for increasing rents, but it said the timing of rate hikes is a bugbear for firms already feeling the pinch.

The federation said five local firms, each employing between 20 and 100 staff, have asked for help over rental issues.

‘They said that they are seeing rental adjustments of between 20 and 100 per cent, and in some isolated cases, even higher,’ said SBF chief executive Teng Theng Dar.

‘In one particular case…the adjustment came up to about 2.5 to three times the old rate.’

Mr Teng said ‘there’s nothing wrong from a commercial standpoint’ as landlords are just adjusting rents to market levels, which are referenced to 2007 rates.

‘However, the economic slowdown and poor business sentiment make it extremely difficult for companies to manage when they are suddenly slapped with a spike in rent,’ he added.

SMEs already grappling with tighter credit markets have few options when it comes to rent hikes.

They could either relocate their operations, which involves considerable cost; grin and bear the higher rents and hope to struggle on; or, in the worst-case scenario, be forced to shut down.

While the situation may appear dire for some firms, the SBF said it is not critical yet and rents may still moderate.

In fact, new figures from DTZ Research show that rents of private conventional industrial space declined in the fourth quarter of last year – the first time since the third quarter of 2003.

Rents for first-storey and upper-storey private industrial space have also dipped by 2.1 per cent and 2.4 per cent respectively.

And rents for high-tech industrial property slipped 4.4 per cent in the last three months of last year compared with the same period in 2007 – the first fall since the second quarter of 2004.

The Straits Times polled 30 tenants in JTC Corporation and Mapletree properties, and found that those that renewed contracts within the last quarter of last year either did not have a rent increase or paid an additional 5 to 10 per cent.

Yet rent is a potent issue in a business community already battling a decline in orders.

All the SMEs that The Straits Times spoke to said they were hoping for rental rebates in the Budget later this month.

The SBF has raised the issue with the Government and hopes for some respite over rents, but it also cautioned against overreacting.

‘We have provided feedback to the Government that this is an issue we are concerned about, but we still need more facts, so we are now watching the situation very closely,’ said Mr Teng.

‘The global economic crisis is unprecedented and its scale and depth are something we are trying to understand, so we need to avoid speculating and just focus on getting ready for the worst-case scenario.’

Leading industrial landlords JTC, Mapletree and HDB have assured tenants that any rent adjustments will not be made without factoring in the economic conditions.

PAIN OF HIGHER RENTS

‘I understand that about 80 per cent of the tenants here have signed the petition and Mapletree has said it is now reviewing our request for the rent cut.’ – A director of a graphic design firm located at Block 970 Toa Payoh North

Source : Straits Times – 9 Jan 2009

Posted in General, Industrial, Rental | Tagged: , , , | Leave a Comment »

Sands puts eggs in S’pore basket, will open on time

Posted by luxuryasiahome on January 9, 2009

LVS says it has sufficient cash and will scrimp and save on costs elsewhere

Las Vegas Sands (LVS) needs US$4 billion to complete the Marina Bay Sands (MBS) and says reassuringly that it currently has US$6.2 billion in borrowings and liquidity.

Speaking at an investor conference in the US, LVS president and COO William Weidner said that its ‘revised business plan’, which includes the monetisation of non-core assets, has put the company in a cash position (borrowings and liquidity) of US$6.2 billion.

‘The total need that we have is about US$4 billion to get us to the opening of Singapore (Marina Bay Sands). So there is cash available to open Singapore (Marina Bay Sands) in the first quarter of 2010,’ Mr Weidner said.

While LVS has ‘moth-balled’ development of sites five and six at the Cotai Strip in Macau, it is also developing other projects concurrently in the US, notably the Sands Bethlehem.

However, part of LVS’ revised business plan includes massive cost cutting at its Las Vegas operations. ‘If we take a look at our plan and the risk to that plan, the risk is the underperformance in Las Vegas. We are mitigating that by a tremendous amount of cost cutting,’ Mr Weidner said.

He revealed that LVS expects to cut US$100 million in cost in 2009 by cutting expenses, labour, head count and benefits. ‘Everywhere that doesn’t effect the customer experience, we are cutting, cutting, cutting,’ he said.

Indeed, LVS will be focusing on opening MBS on time. ‘Our focus is on the current operating environment and stickhandling through 2009 to the opening of Singapore (MBS),’ he said.

And for good reason too.

By cornering a good chunk of the 4- and 5-star hotel market around Marina Bay, Mr Weidner projected that with its 2,600 rooms, and an average daily rate of US$269 per room by 2011, LVS hopes to rake in an ebitda (earnings before interest, taxes, depreciation and amortisation) of US$161 million. He also forecasted a rental revenue from its retail component at US$179 million.

More important is that assuming a gross revenue of US$2 billion for MBS, which is about the same as its Macau operations currently, Mr Weidner said that earnings generated from the US$2 billion revenue in Singapore would amount to US$940 million because of the favourable tax regime compared to only US$504 million in Macau.

Mr Weidner’s bullish comments come after a particularly tough quarter fraught with speculation that LVS could file for bankruptcy. In November, it had made a regulatory filing that said it was unlikely to meet the maximum leverage ratio covenant, triggering defaults on loans needed to complete projects.

Since then, LVS has announced that it has raised US$2.1 billion of capital.

Addressing the issue of debt, Mr Weidner said: ‘The debt that we have is extraordinarily valuable. No one can generate about US$9.8 billion of debt at a blended rate of about 5 per cent in this environment.’

He said that the first maturity of this debt is in May 2011 of about US$800 million followed by May 2012 of about US$776 million.

Confirming the opening of Marina Bay Sands, a spokesman for MBS said it is still targeted to open by the end of 2009.

Source : Business Times – 9 Jan 2009

Posted in General, Marina Bay / CBD | Tagged: , , , | Leave a Comment »

Banks should pass on lower interest rates: Case

Posted by luxuryasiahome on January 9, 2009

I REFER to the letters, ‘Bank unfair to existing home loan clients’ by Mr Khor Eng Hao (Dec 31), and ‘Home loans: No interest savings despite falling market rates’ by Mr Toh Hai Joo on Monday.

The Consumers Association of Singapore (Case) agrees with Mr Khor and Mr Toh that banks should pass on the lower interest rate to consumers, especially when interbank interest rates had fallen. We strongly urge the banks to do so.

We are also of the view that banks should be more transparent and disclose how they compute the housing loan interest rate (whether called Special Mortgage Rate or otherwise) charged for their housing loans. Case has written to the Association of Banks in Singapore and the banks directly on the matter and will follow up with the authorities concerned if required.

Meanwhile, Case will continue to monitor the situation in the market, and will review feedback received, so as to raise the issue with the banks and regulatory authorities where appropriate.

We thank Mr Khor and Mr Toh for their feedback.

Seah Seng Choon
Executive Director
Consumers Association of Singapore

Source : Straits Times – 9 Jan 2009

Posted in Finance, General | Tagged: , , , , | Leave a Comment »

Punggol the next big thing?

Posted by luxuryasiahome on January 9, 2009

PM Lee’s vision of water town has made once-sleepy town hot

WHEN business development manager Roy Lim moved into Punggol five years ago, he wondered if he had made a big mistake.

The infrastructure was lacking and the amenities were inadequate.

As a result, Punggol was often viewed as the poorer cousin to the up-and-coming, bustling Sengkang, which was just a street away.

Mr Lim, 34, who wondered then if he should have bought in Sengkang instead, may have the last laugh after all.

Like many Punggol flat-owners, he is now eligible to sell his five-room flat after fulfilling the minimum five-year occupation period.

To his delight, he found out that resale flat prices in his estate are higher than similar flats in Sengkang.

For example, the median resale prices for five-room flats in Punggol was about $391,500 in the third-quarter of last year, compared to $374,000 in Sengkang, according to figures from the HDB website.

A check on HDB’s resale transaction records showed that 20 out of the 58 five-room flats sold in Punggol last month fetched at least $400,000.

In contrast, only 12 out of the 57 five-room flats sold in Sengkang fetched $400,000 or more.

For Mr Lim, all those years of enduring the ‘ulu’ (Malay for remote) estate and its lack of facilities are finally paying off.

He and his wife put their place up for sale recently. Its current valuation is about $410,000.

They are looking at a tidy profit of about $160,000, as they had bought it for about $247,000 in 2003.

Said Mr Lim: ‘I was quite surprised but happy to find out that the valuation is so high. The money will come in useful because it’ll be a tough year. We’ll also be able to free up some cash to keep aside for a rainy day.’

The couple are planning to upgrade to a condo in the east.

He initially regretted buying a place in Punggol.

Mr Lim said: ‘It was frustrating when we first moved in. The LRT station was not opened, there were no coffee shops or provision shops nearby and my block wasn’t even cable-ready.

‘I couldn’t watch soccer and had to go to my friend’s place every weekend to catch the matches.’

To make matters worse, his handphone signal was so weak in the flat that it constantly switched to an Indonesian service provider.

Nights were depressing because many of the blocks seemed deserted, with few lights coming from the units. Many owners didn’t move in because of the lack of amenities.

But the situation has improved with the opening of the LRT stations, a mall, more bus services and schools over the couple of years.

So, what’s the appeal about Punggol?

Its prices received a boost when Prime Minister Lee Hsien Loong unveiled the Punggol 21-plus vision during his 2007 National Day Rally speech, said property watchers.

The coastal town will boast features such as a freshwater lake and a waterway running through the estate.

Also, Punggol’s condo-like and newer units add to their desirability.

HSR Property Group executive director Eric Cheng said that the Punggol 21-plus endorsement stirred up valuation prices in that area.

He said: ‘The estate is certainly more bustling now, with more amenities than before. I remember when I was in that estate many years ago and I couldn’t get a taxi. The situation is much better now.

‘If it’s going to be the only water town in Singapore, buyers will pay some premium for it. It will be the next big thing to come.’

Mr Cheng said that Punggol flat-owners typically enjoy higher profits from the sale of their units compared to Sengkang residents.

This is because the first batch of Punggol flats were eligible for sale at the end of 2006, when the property market was already on the mend.

In comparison, the first batch of Sengkang flats were available for sale in 2003, when the property market was still in the doldrums.

ERA Asia Pacific associate director Eugene Lim added that Punggol buyers are also looking at their purchases as a form of investment.

He said: ‘With the concrete plans to do up Punggol estate, flats there will command a higher premium compared to Sengkang.

‘If you go to Punggol, it’s not so congested. Some people are willing to pay more for a less built-up area, even though amenities are still quite lacking.’

Source : New Paper – 8 Jan 2009

Posted in General | Tagged: , | Leave a Comment »

Bank’s rationale behind home loan rates

Posted by luxuryasiahome on January 9, 2009

I REFER to Mr Toh Hai Joo’s letter on Monday, ‘Home loans: No interest savings despite falling market rates’.

We thank Mr Toh for his feedback and would like to clarify that under a Variable Rate Home Loan Package, interest rates are generally tiered over the first two to three years with the interest rate for the first year being  lower than the later years, and in some instances, lower than the prevailing interbank interest rates.

Hence, an interest rate increase may be due to tiering up of the interest rate as part of the two- to three-year package deal and not due to Board Rate increases. The offer of lower first-year interest rate followed by tiering up of interest rates in the next years is, in part, to assist the customer in his cashflow management and, in part, a function of how Variable Rate Packages are structured.

Board Rate adjustments, if any, are made after taking into consideration various factors such as the interest-rate environment when the loan was first taken up, the prevailing rate environment, market dynamics, as well as the costs in carrying the loan. Market interest-rate trend is one of several factors that determine any Board Rate adjustments.

We have since contacted Mr Toh to address the issues he had raised.

Gregory Chan
Head, Consumer Secured Lending
OCBC Bank

Source : Straits Times – 9 Jan 2009

Posted in Finance, General | Tagged: , , , , | Leave a Comment »