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Archive for January 30th, 2009

Redesigning luxury

Posted by luxuryasiahome on January 30, 2009

As the economic malaise spreads to every corner of the globe, conspicuous consumption – especially in the luxury-lifestyle segment – has dried up faster than you can say ‘credit crunch’.

Luxury goods and services have been among the hardest hit as the markets for designer goods, luxury travel and high-priced vacation properties have suddenly dissipated, while a significant proportion of new hotel and resort projects in many countries has either been cancelled or put on hold.

Bright and airy: An indoor outdoor room at WOHA Architects’ Alila Villas Uluwatu project in Bali with furniture custom-designed around Indonesian traditional forms (above). The cavern of light at Dubai Corridor by Mr Seah’s MOD is made up of a multitude of fibre-optic strands. The Koh Samui Lounge Deck View, also by MOD, where each luxury villa is an artful ensemble of airy sunlight-dappled portals that resemble modern salas

Even as occupancy rates drop and revenues plummet, hotel developers and their architects are searching for innovative ways to cope with the situation – in particular, how to gain a competitive edge by distinguishing their luxury product from the rest.

It’s no longer sufficient to simply flash the cash and follow an outdated policy of pursuing excess. Well before the current financial meltdown, high-end hotels from big urban brands to individual boutique properties had started to take a different approach to hotel and resort design – one that appears to be more appropriate for the times.

‘Luxury per se is a bad word these days,’ says Sim Boon Yang, a partner of architecture firm Ecoid, which has several hotels and resorts under its design belt, including The Metropolitan in Bangkok, W in the Maldives, The Four Seasons in Phuket and Naumi in Singapore. ‘What is clear now is that people are looking for a new value system – the trend is to hark back to basic values, create a personality for a place so that it can be differentiated.’

He adds: ‘The smaller establishments will be quick to adapt to the situation. With the bigger hotel brands I’m working with now, the concept is how to make a property feel as intimate as possible – these brands have cottoned on to the fact that boutique hotels do it best.’

Smaller looks

Designers can make a property look smaller than it actually is by breaking up the lobby to make it smaller, for example – the smaller scale appeals more to consumers these days, he says.

‘Previously, the brief with resorts was more about pure luxury and maintaining brand standards, but people were lazy about crafting the property to make it unique, with its own storyline,’ says Mr Sim.

Among his current projects is a resort hotel on a private island off Abu Dhabi, with plans to include animals and game birds for hunting. ‘You must have that environmental, sustainable aspect woven into the hotel’s selling point – apart from the architecture and the interiors, the packaging of the total experience of a luxury resort is very clearly a pattern that’s emerging.’

As for hotel design, there are all sorts of solutions, without having to revert to the full-on fantasy recreations that were the rage in places like Dubai, says Mr Sim, who adds that the Abu Dhabi project is a modern abstraction of local culture, with certain Arabic influences. ‘Where the design direction of the last few years has been characterised by a move towards more elaborate details and statement-making flamboyance, this is now changing,’ he says. ‘Design is undergoing a form of detox,’ says Mr Sim. ‘Luxury in hotel and resort design will be defined by concepts of purity, authenticity and simplicity – new-minded clients understand and desire this concept of ‘barefoot luxury’.’ His firm will strive to borrow from natural organic forms, for example – such as a roof form inspired by an organic cluster of boulders by the sea.

There is also a need for discreet and private indulgence in the form of intimate spaces that suggest calm and introspection, he adds. ‘Spaces will focus on the enhancement of the natural setting, be it framing the iconic view or being close to earth and water.’ As for that ‘total experience’, hotels will incorporate locally sourced material and indigenous culture, while materials will include sand-blasted timber and a hand-chiselled stone finish – ‘a natural material palette that suggests a lived-in comfort that is chemical-free’.

Environmentally sustainable design is also high on the agenda for local firm WOHA, which touts one of its latest hotel projects – the soon-to-open Alila Villas Uluwatu in Bali – as an example of successful integration of vernacular architecture, contemporary detailing and the natural environment.

Hotel development is very cyclical, says Richard Hassell of WOHA. ‘Each cycle, something changes – technology, politics and norms – and the hotels change with them.’ He adds that the previous cycle in Asia was in the early 1990s, when architects started looking at traditional architecture as a source for contemporary resorts.

‘The Amanresorts brand pioneered this approach, together with the boutique resort and resort-villa mix,’ says Mr Hassell. ‘This approach then moved into both big branded chains and individual local developers – the focus was on luxury and consumption, and the holiday as a taste of the high life.’ Resort spas, which did not exist before, appeared towards the end of the 1990s.

According to Mr Hassell, the Asian financial crisis of 1997-98 put a huge damper on resort development until around 2004, when the lifestyle experience was created and where guests were encouraged to tailor their individual resort experiences. ‘The current crisis has resulted in a definite slowdown in new resorts and the travel industry is likely to suffer severely over the next year or two,’ he says. As a result, sustainability will become an essential element in the hotel development process.

Less bland style

‘Sustainability can be social, economic as well as environmental, so hopefully we will see a less bland international style and more emphasis on how a resort interacts with the place – taking into account the physical climatic and social environments,’ says Mr Hassell.

‘We think our Alila Villas Uluwatu is one of the first of this next generation. The design is inspired by Balinese architecture but it also refers to (iconic Western architects) Carlo Scarpa and Mies van de Rohe, so it is a dialogue between local and global and how the two might fuse to make something that is contemporary.’

He adds: ‘Stone walls use the stone dug from the site. The design is Green Globe 21 certified and incorporates green strategies from site planning to services to architecture to long-term operation. The landscape uses all local plants, grown on site in a nursery but planted in a very exciting contemporary way. The furniture is designed specially for the project, using motifs from traditional Indonesian arts and crafts.’

One by-product of a slowdown in the economy is that designers have more time to design, says Chan Soo Khian of SCDA Architects, another prominent local design firm. ‘When our clients are in less of a hurry, it gives us an opportunity to revisit the design and make it more sustainable,’ says Mr Chan. ‘It also allows architects to turn their skill sets to something different, such as industrial and furniture design.’

Wait-and-see game

SCDA also designs the interiors for some of its hotel projects, which span the world from Egypt to India and the Maldives to Bali and the Bahamas. ‘The crisis cuts across continents and the first reaction for developers is to wait and see, and this is when architects can focus more on product design,’ he says. ‘Doing a hotel is the ultimate vehicle for designing everything from candle holders to lamps to tableware.’

As for hotels, Mr Chan says that over-lavish designs are definitely out. ‘It’s not frugality, but a less conspicuous offering,’ he says. ‘The trend is to go more local – the whole idea of designing an eco-friendly hotel goes beyond the usual things like using local materials – it’s a matter of the resort growing from the earth up.’

For Colin Seah, design director at Ministry of Design (MOD), the bad economy means that ‘normalcy has returned, compared to the craziness before’ when his firm was inundated with work. Now that some projects have been delayed, he is able to focus on doing something really special. ‘It’s a careful balance,’ he says. ‘You still need to test ideas and the best way is through real interaction with great clients. For me, it allows me the time to find something more unique in design.’

He adds: ‘These bad times aside, designers need to be more long-term in their perspective. We need to redefine what true value is and what it isn’t. The ostentation of the past must give way to values that are more fundamental and less shallow.’ Mr Seah says that where before he was working at a pace that was unsustainable, now he can concentrate on producing architecture that reaches a higher level.

Current MOD projects include a gentlemen’s club in Dubai. ‘We had to re-imagine what luxury in a space could be without robbing it of a sense of drama and delight,’ says Mr Seah, who created a fibre-optic ‘cavern of light’ that weaves in practical needs with a major wow factor.

‘In Koh Samui, we are working on a very special project where luxury and nature are fused,’ he says. ‘The design of these very high-end villas is based on the Thai sala, or covered pavilion – the breezes and views become the key feature in an architecture that is very pared down and minimal.’ He adds: ‘Luxury here is about celebrating the basic elements like the sea, the wind and the sun.’

Crisis always acts as an accelerator of trends, and the current downturn is no exception, says Claus Sendlinger, CEO of Design Hotels, which publishes an annual guide to independent hotels that focuses on architecture and design and feature firms like the ones mentioned above. ‘The handbag bubble has burst and everyone is now talking about the reduction of artificial luxury – now it goes back to craftsmanship and a more classical approach, no more gimmickry,’ says the Berlin-based Sendlinger, who was in town recently.

Consumers will still spend money but get better value, he says. ‘People are tired of mediocrity and exchangeable products. In design, it just needs to be simple and – if there’s a function behind it – intuitive to operate.’ He adds: ‘Leave the unnecessary stuff out, look for natural materials that age well and be responsible with resources – then you will have a winner.’

Source : Business Times – 30 Jan 2009

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Ascendas India Trust DPU rises 35% in Q3

Posted by luxuryasiahome on January 30, 2009

ASCENDAS India Trust (a-iTrust) said yesterday that distributable income for its third quarter ended Dec 31, 2008 rose 36 per cent to $15.3 million, from $11.3 million a year earlier.

Distribution per unit (DPU) for Q3 rose 35 per cent to 2.02 cents. Distribution is semi-annual, so the Q3 distribution will be made with that of Q4. Including 3.47 cents already distributed for first-half FY 2008/09, the nine-month DPU comes to 5.49 cents.

Total property income for Q3 was $28.8 million – 7 per cent higher than the $27 million figure the previous year – while net property income grew 9 per cent to $17 million, from $15.7 million.

Property income grew on the back of higher occupancy and resilient rental rates. Expenses grew at a slower pace mainly due to the fall in oil prices. As a result, net property income rose.

‘Notwithstanding current weak global economic conditions, a-iTrust’s portfolio occupancy edged up to 99 per cent from an already high level,’ said Jonathan Yap, chief executive of the trust’s manager. ‘Average portfolio rentals also improved since our last results announcement. These results demonstrate the portfolio’s resilience and appropriateness of its positioning vis-a-vis the target customers.’

a-iTrust’s portfolio comprises 4.8 million square feet of completed space in the key Indian cities of Bangalore, Chennai and Hyderabad. About 1.2 million sq ft of this space – or a quarter of a-iTrust’s current income-producing space – was renewed or leased in the nine months ended Dec 31, resulting in a higher average portfolio rental. The real estate investment trust (Reit) aims to renew or replace expiring leases in advance, it said.

‘Looking forward, less than 6 per cent of space is due for renewal in the current financial year, and less than 13 per cent in the next year,’ a-iTrust said. ‘The leases, with locked-in terms and expiries stretching beyond 2014, will also enable the trust to enjoy income stability.’

Barring unforeseen circumstances, a-iTrust is confident of meeting the FY 2008/09 DPU forecast of 6.85 cents stated in its 2007 listing prospectus.

The trust’s shares closed unchanged at 50 cents yesterday.

Source : Business Times – 30 Jan 2009

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P-Reit expects prices of commercial property to fall

Posted by luxuryasiahome on January 30, 2009

DESPITE having the capacity to do so, the manager of Parkway Life Reit said it will not be aggressive in acquisitions this year as it believes that commercial property prices will come down further.

‘If we wait out a bit longer, we will potentially be able to have a more opportunistic buy at a more objective valuation, as well as more objective yield,’ said Yong Yean Chau, the newly appointed chief executive of Parkway Trust Management, the Reit’s manager.

Revealing the strategy at its fourth-quarter results briefing yesterday, Mr Yong also said that acquisition targets are likely to be narrowed down to those in politically safer countries such as Singapore, Malaysia and Australia.

While China remains a core market, the Reit is likely to take a more cautious approach because of legal issues related with property ownership.

‘With limited gunpowder right now, we want to be more focused and more targeted rather than hitting everywhere,’ Mr Yong added.

As of Dec 31, Parkway Life Reit has a net gearing of 23.3 per cent, with a debt headroom of $300 million before reaching its optimal gearing of 40 per cent.

It also has $210 million worth of unutilised revolving credit facilities, and a $500 million multi-currency medium-term note programme which may be used to fund future acquisitions.

The Reit has secured credit facilities with an average tenure of 2.8 years. It has also hedged against fluctuating interest rates and foreign currency.

For Q4 ended December, Parkway Life Reit posted a 15.9 per cent rise in distributable income to $11.1 million, boosted by contribution from its Japanese acquisitions.

Revenue jumped 36.4 per cent to $16.2 million, of which $3.6 million came from its properties in Japan.

This brings distribution per unit (DPU) to 1.84 cents, from 1.59 cents in the year-ago period.

Property expenses went up to $1.1 million, from $762,000. Management fees rose 35.4 per cent to $1.5 million.

The Reit suffered a foreign exchange loss of $7.93 million, as a result of a loss on a foreign currency forward contract that was entered into to lock in the exchange rate for the Japanese yen.

‘However, as the foreign currency forward was locked in at the initial exchange rate at acquisition, from a net asset perspective, the loss is offset by an increase in the value of the Japan properties, as seen by a corresponding gain amounting to $8.7 million in the foreign currency translation reserve,’ it said.

Total distributable income for the full year came to $41.2 million, bringing annual DPU to 6.83 cents. There was no comparison with FY2007 as the Reit was only listed in August 2007.

For the whole year, gross revenue came to $53.9 million, the bulk contributed by the Singapore hospitals in its portfolio.

With annual rental review pegged at one per cent above the consumer price index, the rental income from the Singapore hospitals grew at 6.25 per cent.

Source : Business Times – 30 Jan 2009

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CapitaMall Trust will pass tax rebates on to tenants

Posted by luxuryasiahome on January 30, 2009

CAPITAMALL Trust (CMT), which has pumped around $55 million into revamping Lot One Shoppers’ Mall at Choa Chu Kang, said yesterday that it will help its tenants cope with the economic slowdown through various ways.

‘We want the tenants to survive so that we can survive,’ president and CEO of CapitaLand Liew Mun Leong told the press. CapitaLand manages CMT through an indirect wholly owned subsidiary, CapitaMall Trust Management Limited (CMTML).

With the government giving out a 40 per cent property tax rebate for industrial and commercial properties this year in the Budget, CapitaLand has said that it will pass on rebates totalling $41.5 million to tenants in retail, commercial and industrial properties. This could translate to an estimated 4 per cent drop in rents, said Mr Liew.

Besides CapitaLand, other landlords such as Frasers Centrepoint Trust (FCT) have also said that they will pass on the benefits of the property tax rebate to their tenants.

But there is a fine balancing act between cutting costs for tenants and maintaining earnings. In the retail aspect, ‘the malls are invested by shareholders, the malls are also expected to have a return’, said Mr Liew.

So beyond dishing out rental rebates, CMT is monitoring retail sales and will help tenants in other ways, said the CEO of CMTML. Lim Beng Chee. Within the trust’s portfolio, discretionary spending on items such as telecommunication products and jewellery have fallen in 4Q 2008 compared with a year ago.

Tenants can consider downsizing or shifting to cheaper spots in malls, said Mr Lim. CMT will also help tenants improve sales through better marketing, said CapitaLand Retail’s deputy CEO, Simon Ho.

In Lot One for instance, comic book retailer Comics Connection has been saving $4,500 or more in rental every month since it moved into a smaller shop space located on a higher floor after the revamp.

The mall rejuvenation, which is almost complete, increased net lettable area by 6.6 per cent and also reconfigured several shop units to raise gross rent per month by 28.4 per cent. Monthly rents in the mall range from $5-$20 psf.

‘There is still a lot of scope for asset enhancement’ within the CMT portfolio and that will be the key strategy for growth in the next few years, said Mr Lim.

In last week’s Budget, the government also encouraged landlords to consider further rental adjustments and more flexible leasing and payment terms.

‘We are keeping a close tab on the situation and where necessary, will introduce appropriate measures in a timely manner to help needy tenants tide over their difficulties,’ FCT told BT.

Source : Business Times – 30 Jan 2009

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Rent-free space at Liang Court for VWOs

Posted by luxuryasiahome on January 30, 2009

LIANG Court Shopping Centre has become the fourth mall here to offer rent-free space to voluntary welfare organisations (VWOs), as part of a government plan that allows malls to add retail space while helping non-profit groups.

The River Valley Road mall will offer up to 5,000 sq ft to house three VWOs, though the tenants have not yet been confirmed.

Liang Court is the latest mall to join the Civic & Community Institution scheme, which was started by the Urban Redevelopment Authority (URA) in 2003.

Normally, if mall owners want to build more retail space than originally allotted, they have to demolish office space.

But under this scheme, they can increase their retail space if the office space is donated rent-free to community groups. Tenants have to pay only a service fee. The other participating malls are Bishan Junction 8, Jurong Point Shopping Centre and Tiong Bahru Plaza.

Ms Ang Bee Lian, chief executive of the National Council of Social Service (NCSS), said such spaces make sense from a business point of view, as they generate traffic for the mall.

But she said uptake of these spaces has slowed as non-profit organisations are uncertain about their economic situation.

The NCSS is urging the VWOs intending to take up space at Liang Court to share resources to save money, much like what non-profit groups at Tiong Bahru Plaza have done.

The Social Service Hub, which opened there last week, now houses seven VWOs. By sharing facilities such as a reception area, meeting rooms and a pantry, the groups are able to fit into the 10,000 sq ft space.

The NCSS said the hub costs $1.12 million but would have cost $750,000 more if facilities were not shared.

The VWOs also save about $127,500 a month on rent and pay only a combined service charge of $10,300 per month.

The hub also allows VWOs to share expertise. Ms Chee Wai Yee, the executive director of the Children’s Cancer Foundation which is located in the new hub, said that instead of employing a psychologist for follow-up services, she can now outsource the work to another VWO in the hub.

Source : Straits Times – 30 Jan 2009

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More malls to pass on tax rebate

Posted by luxuryasiahome on January 30, 2009

FOUR more mall landlords have said they would pass on at least part of the 40 per cent property tax rebate they are getting from the Government to their tenants.

But City Developments, Frasers Centrepoint, AsiaMalls and Marina Centre Holdings were unable to say how much of the rebate would be passed on and how it would be distributed.

News of their plan comes on the back of announcements by CapitaLand, Mapletree and Lend Lease that they would pass on all their property tax savings to their tenants.

A Marina Centre Holdings spokesman said its management was working on the details.

Retailers told The Straits Times that this was good news, but expressed preference for a cut to their monthly rentals over a one-off or periodic cash handout.

Ms Jean Yeo, who owns Leather Ark in Parkway Parade, said: ‘We are happy if we get a bit but, of course, we want a fall in monthly rent. That will really help us cut operating costs.’

Mr Samuel Chong, who owns a beauty products shop in Liang Court, said a one-time payment, while ‘better than nothing’, would be of little help if it amounted to less than 5 per cent of a year’s rent.

Mall owners said they would turn to rental rebates as a ‘last resort’.

For now, CapitaLand plans to continue trying to drive sales to its tenants by offering atrium space at discounted rates, or helping them save on rent with smaller shop units.

Frasers Centrepoint and AsiaMalls said they would improve their shop mix and run promotions to draw shoppers this year.

Source : Straits Times – 30 Jan 2009

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