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MND slashes development charge rates

Posted by luxuryasiahome on February 28, 2009

THE government yesterday announced bigger cuts to development charge (DC) rates, which are payable for enhancing the use of some sites, compared with the previous revision six months earlier. It used lower condo/apartment prices and weaker office rentals as evidence, given the dearth of land transactions.

The average DC rate was chopped 15 per cent for non-landed residential use, 10 per cent for hotel and hospital use and 4 per cent for commercial use. The average rate was also trimmed 4 per cent for business zone commercial use (which covers the warehouse retail scheme).

However, the Ministry of National Development (MND) left completely untouched DC rates islandwide for landed residential and industrial uses, and for this reason, some market watchers described yesterday’s adjustment as ‘conservative’.

‘More corrections are expected in future DC rate revisions in light of the economic climate and sentiments,’ said Chua Yang Liang, Jones Lang LaSalle (JLL) head of research (SE Asia).

Colliers International director Tay Huey Ying too reckons that ‘we could see adjustments made to those areas which did not see corrections this round’.

She was also disappointed that the government had stuck to its DC calculation formula, which creams off 70 per cent of the enhancement in land value, instead of reverting to its pre-July 2007 formula of 50 per cent.

MND reviews DC rates in consultation with the Chief Valuer, taking into account current property market values.

A spokeswoman for the Chief Valuer said: ‘As there was very little land sales evidence during the past half-year, we had to look at other indications of property values such as sales of apartments/condos and office rents, and use the residual valuation method to derive the land values – in the case of non-landed residential and commercial use DC rates.’

In trimming hotel use DC rates, the Chief Valuer looked at the price fetched for a hotel site at Kallang/Jellicoe roads at a state tender that closed in October last year, which was about 10 per cent lower than the land value implied by the Sept 1, 2008 DC rate for the location, and proposed an average 10 per cent islandwide drop in the DC rate for hotel use, she added.

DC is payable to the state in exchange for the rights to enhance the use of some sites or to build bigger projects on them. DC rates are revised twice yearly, on March 1 and Sept 1. They are specified according to use groups (such as landed residential, non-landed residential and commercial) across 118 geographical sectors or locations across Singapore.

For yesterday’s revision, which takes effect tomorrow, non-landed residential DC rates fell in 115 geographical sectors by between 7.1 per cent and 30 per cent. The Ardmore/Draycott, Leonie Hill and Oxley areas saw 30 per cent reductions, followed by Sentosa, with a 29.4 per cent decrease, according to JLL’s analysis.

Noting the big corrections in Districts 9 and 10 and Sentosa, JLL said that these are the areas with luxury residential projects that have also seen the greatest price correction over the past six months.

Hotel DC rates were slashed across all 118 sectors. The falls ranged from 7.1 to 11.1 per cent.

However, commercial DC rates were cut in just 48 sectors by between 4 and 17.6 per cent, with the largest reduction in the area around Somerset MRT Station. Office strongholds in the CBD – including Raffles Place/Golden Shoe, Marina Centre, Marina Bay and Fullerton Road – all saw commercial use DC rates ease 16.7 per cent.

Colliers’ Ms Tay wondered why commercial DC rates were not cut islandwide, unlike the case for hotel use. ‘That’s not very balanced.’

She also said that the government was being conservative in not trimming DC rates for industrial use at all, despite the fact that JTC Corp has revised downwards its land rent and land premium since the start of the year.

DC rates are tracked in property circles as they reflect land values. However, the latest DC revision is not expected to have much market impact as developers are unlikely to have much appetite for buying sites in the near future.

Says JLL’s Dr Chua: ‘Despite the large revisions to non-landed residential DC rates, there’s unlikely to be a sudden rush by developers to reinitiate en bloc deals or change their development plans.

‘Our market understanding is that most developers had locked away the earlier DC rates when they made their planning applications to capitalise on the exemption of bay windows and planter boxes from gross floor area calculation prior to rescission of policy on Dec 31, 2008. The savings in DC rates is not sufficient to warrant such a move.’

Colliers’ Ms Tay said yesterday’s revisions indicate that ‘the government has recognised the market has taken a turn for the worse, but it probably took the approach of erring on the side of caution’.

During the last DC rate revision effective Sept 1, 2008, MND left DC rates largely unchanged, except for an average 6.3 per cent cut for non-landed residential use.

At the time, property consultants said that there may not be sufficient evidence yet of declines in property values, and that rates could be cut at the next revision if stronger evidence emerges of falling values.

The last revision also saw MND change boundaries for eight sectors in three precincts – the Race Course Road area, Jurong Lakeside area and Pulau Brani.

Yesterday’s revision saw no change to sector boundaries. However, some industry observers reckon that changes could be on the cards in future for locations in the vicinity of new MRT stations opening this year and next.

Source : Business Times – 28 Feb 2009

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Standoff at the mall

Posted by luxuryasiahome on February 28, 2009

IT is an old-fashioned stalemate in the retail industry. Retailers are saying that rent cuts of at least 20-30 per cent are an ‘absolute necessity’ for them to survive, while landlords – who have given no indications that they are looking at granting significant rent cuts – insist that they are doing all they can to help tenants.

On Thursday, the Singapore Retailers Association (SRA) said that 20,000 retail employees – or some 20 per cent of the workforce – could be retrenched unless store rents are slashed. Members’ income has dived 20-30 per cent in the past few months, said SRA, which represents close to 300 retailers. But occupancy costs, on the other hand, have climbed 50-80 per cent over the past three years.

A rent cut is needed for retailers to survive, said the industry body, adding that retail landlords don’t seem to understand the current plight retailers are facing.

But when contacted on Thursday and yesterday, landlords here said that they are doing what they can to help their tenants. Many of them have passed on the 40 per cent property tax rebates granted to them by the government to their tenants in full – although this works out to a less than 5 per cent drop in rents for most retailers.

Most of them also reiterated that they are working with tenants to find customised solutions. ‘A 20-30 per cent across-the-board rate cut isn’t needed for every retailer,’ said one landlord.

‘During this downturn, we recognise that not all retailers are affected equally and in the same way,’ echoed a spokesman for CapitaLand, Singapore’s largest retail landlord. ‘We continue to stay close to our retailers, work with them individually to better understand the specific issues that they are facing, so that we can customise a solution jointly with them.’

Other property landlords agree.

But SRA has said that the initiatives offered to date are inadequate as they do not address the main concern of the retailers – that of cost containment in these difficult times. Likewise, a retailer said that only a sharp cut in retail rents can immediately reduce cost and improve cash flow, which are the two main problems that retailers are facing. ‘Other forms of support by landlords to generate more traffic and sales will not be effective,’ he said.

Another issue is the rent increases that landlords are proposing when negotiations for renewal of leases begin. As one retailer put it: ‘Is now really the time for it?’

Retailers told BT that landlords are asking for as much as 20-30 per cent more when negotiations begin. When talks for lease renewal for the Mothercare store at VivoCity began, the mall asked for 22 per cent more, said Pang Kim Hin, chairman of the baby goods retailer. The landlord did say that rent is ‘negotiable’, but even then, a 22 per cent starting point is ‘too high’, Mr Pang said. ‘Even if it is just posturing, you have to be reasonable with the posturing.’

VivoCity is owned by Mapletree Investments (which is fully owned by Temasek Holdings) and managed by CapitaLand.

Sales at his VivoCity outlet have fallen by about 30 per cent since Chinese New Year, Mr Pang said.

Source : Business Times – 28 Feb 2009

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Hotel rates up, occupancy down during F1 period

Posted by luxuryasiahome on February 28, 2009

IT’S finally the moment of truth.

Data reveals that local hotel room rates surged 150.4 per cent on average to $616 during the 2008 Formula One (F1) race period of Sept 24-28. But at 75 per cent for the five-day period, occupancy was six percentage points lower than the overall average occupancy rate (AOR) for 2008.

Revenue per available room (Revpar) came in 132.3 per cent higher at $462, compared to overall Revpar for 2008. The average length of stay recorded by foreign visitors was more than five days, according to figures released yesterday by the Singapore Tourism Board (STB).

Some $168 million was chalked up in incremental tourism receipts – significantly higher than the $100 million projected initially – as over 100,000 spectators attended the race, of which some 40 per cent were tourists. The Singapore leg was watched by over 110 million viewers worldwide.

And given the ailing tourism industry, the F1 hotel levy – which required trackside and non-trackside hotels to fork out 30 and 20 per cent of room revenue respectively during the 2008 race period – is in the final stages of review. An announcement is expected soon.

Last year, hotels hiked room rates sharply for the race period and some also stipulated a minimum number of nights, which could explain the occupancy rate of 75 per cent.

While many hotels later slashed rates as tourists seemed unwilling to pay such steep prices, the inflated room rates may have kept some tourists – F1 and non-F1 fans alike – at bay.

Meanwhile, January tourism figures continued the downward slide in a testament to the weakening global economy.

Despite the Chinese New Year holidays, visitor arrivals for the month were down 12.9 per cent year-on-year to 771,000 as travel worldwide continues to wane.

Indonesia, China, Australia, India as well as Malaysia accounted for about half of all tourist arrivals during the month. However, tourist numbers from Vietnam were 53.6 per cent higher year-on-year, thanks to air travel promotions as well as the Chinese New Year holidays.

Singapore gazetted hotels pulled in $124 million in room revenue, a staggering 29.9 per cent less than the corresponding month in 2008.

Average room rates (ARR) for hotels were 11.7 per cent lower year-on-year at $209, while AOR dropped to 67 per cent, a 17.7 percentage point fall from January last year, and Revpar plummeted 30.2 per cent to $140.

Hotels in the mid-tier scored the highest AOR of 69 per cent, while economy-tier hotels saw the smallest decrease in ARR and Revpar year-on-year, with a 3.4 per cent dip and a 26.8 per cent decline respectively. Upscale hotels saw the biggest fall in ARR – down 13.7 per cent – while luxury hotels were down 12.6 per cent.

Source : Business Times – 28 Feb 2009

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Hotel occupancy plunges to 60%

Posted by luxuryasiahome on February 28, 2009

HOTELS bore the brunt of the impact from a steep slide in tourist arrivals last month, with average occupancy tumbling to the 60 per cent mark – the lowest level since the 2003 Sars outbreak.

Average hotel room rates, which had been on the uptrend for the past two years, also took a beating, and are now at levels not seen since 2007.

The cause of the fallout: A 12.9 per cent drop in tourist arrivals for January compared to the same month last year.

In all, Singapore saw just 771,000 visitors last month, compared to 883,000 in January last year.

Visitor numbers from all but four of Singapore’s top 15 markets fell, with Indonesia – the Republic’s best ‘customer’ – dropping 24 per cent.

The only ones that grew were Vietnam, Hong Kong, the Philippines and Germany.

The Singapore Tourism Board (STB) said the overall decrease was due to the ‘impact of the current global economic slowdown on consumer sentiments and discretionary spending’.

January’s fall was swift but not unexpected. Though Singapore had been bracing itself for the impact of the global recession on tourism, numbers had been falling since last June, sparked by what STB referred to as ‘challenging global economic environment’.

As a result, expectations for a record-breaking year fell meekly by the wayside in July, and last month, the STB predicted that the number of visitors to Singapore this year will drop to 2005 and 2006 levels of between nine million and 9.5 million.

Hoteliers interviewed said that things might get worse.

Grand Mercure Roxy’s general manager Kevin Bossino said the real test will come in March and April, when business travel usually picks up.

He said corporate travellers curtail their travelling during festive periods like Chinese New Year, which fell in January this year.

But, once the festivities are over and people go back to work, they are expected to travel to make deals and attend meetings and conferences.

If the numbers stay bad this month and next, he said, they will point to a really bad year ahead.

Established hotels are also looking over their shoulders at new kids on the block, who are expected to make competition for the shrinking market even more cut-throat.

Rendezvous Hotel general manager Kellvin Ong is taking no chances. He has lowered rates from $200 to $190.

Such moves may mean that a price war might break out among hotels, said Shatec Institutes chief executive officer Steven Chua.

However, he advises against manic price-cutting as this could compromise service levels.

Instead, his advice for hoteliers is to focus more on adding value for the same price.

The knock-on effects of tourism’s downward spiral are being felt elsewhere too, such as at attractions, restaurants and nightspots.

Mr James Heng, chief executive officer of Singapore Duck & Hippo Leisure Group, said business has dropped by 30 per cent since financial markets began going south last September.

He said: ‘For the first time since our inception, we are not expecting to turn in good numbers.’

Source : Straits Times – 28 Feb 2009

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Tax cut will enhance value

Posted by luxuryasiahome on February 28, 2009

THE Government has responded to the weakening property market by slashing the charges developers pay when they enhance the value of a site by such things as building a bigger project on the land.The move to cut development charges, or DC as the fees are called, will give developers some relief but the effect will not be significant, given the weak market.

Dramatic reductions were made for non-landed homes – mainly private condominiums – with cuts of up to 30 per cent in prime areas and an average of 15 per cent islandwide.

Rates for this segment were also cut in the previous six-monthly review last September, when they were reduced by an average of 6 per cent. The rates for other property segments were largely unchanged then.

In the latest review, on average, cuts of around 10 per cent were made for development charges in the hotel and hospital sector and about 4 per cent for commercial property projects.

The National Development Ministry sets the rates every March and September, taking into account market values, in consultation with the Chief Valuer. The new rates apply from tomorrow.

While the cuts mean developers will save on developing sites, the impact will be muted.

The savings are not enough to warrant any rush by developers to reinitiate collective sales or change their development plans, said Jones Lang LaSalle’s local director and head of research, South-east Asia, Dr Chua Yang Liang.

The lower DC for commercial sites would also have little impact in the next six months as developers will be concentrating on office and retail projects already under construction rather than acquiring land, said CBRE Research’s executive director, Mr Li Hiaw Ho.

The biggest cuts in the non-landed homes segment are in areas with luxury residential projects that have seen the greatest price correction over the past six months, said Jones Lang LaSalle.

Areas in District 11 and the Marina Bay vicinity have seen prices plunge around 20 per cent, it said.

‘While transactions have been few and far between in the light of the present poor market sentiment, it is widely understood that land values have become depressed and will start to moderate during the course of this year,’ said Mr Li.

The comparatively lower prices for new residential launches in the past six months were probably the main reason for the cuts in DC for non-landed residential use, he said.

In the commercial use segment, the core central business areas of Raffles Place, Marina Bay and Marina Centre saw DC cuts of 15 per cent to 16.7 per cent, said CBRE.

In the Orchard Road and surrounding areas, the DC has fallen by around 15 per cent to 17.6 per cent. However, islandwide, the average cut is only 4 per cent.

Charges for the hotel and hospital use segment have been cut by 7 per cent to 11 per cent. There were no cuts six months ago. The current cut was expected, due to the likely fall in demand for hotel rooms, given the drop in tourism, said Mr Li.

Two property segments have had no changes to their DC – industrial land and landed homes – but they are unlikely to remain untouched for long.

Knight Frank’s director of research and consultancy, Mr Nicholas Mak, said the DC for the landed homes and industrial segments are ‘very likely to come down’ the next round.

Further DC cuts are also expected in the non-landed homes, commercial and hotel sectors, he said.

Source : Straits Times – 28 Feb 2009

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Renewing the urban landscape

Posted by luxuryasiahome on February 28, 2009

MORE than half the world lives in cities. According to the United Nations, the urban population is growing by an average of 1.6million people every 10 days. By 2030, two in three people will be city-dwellers.

Larger countries may still be able to afford the old model of urban sprawl, where the city boundary grows ever outwards.

In smaller countries like Singapore, however, evolving a city of the future will be very different.

When the Republic gained independence 44years ago, urban development focused on the country’s needs: public housing to address a housing shortage, and infrastructure catering to low-technology and labour-intensive industries.

As Singapore’s needs have evolved, so has the urban landscape.

The country has grown without choking on its own exhaust fumes, via measures such as limiting the car population and having an established and vigorously enforced environmental policy.

We are unique, and we need to develop our own holistic model and solutions for future sustainable urban development.

Sustainable construction refers to the adoption of building designs, construction methods and materials that are environmentally friendly.

It also means using materials and resources that have sustainable supplies.

The issue of sustainability came under the spotlight in 2007 when an unexpected disruption in the supply of sand and granite from Indonesia resulted in the prices of these materials tripling virtually overnight.

This is just one example of how over-dependence on imports of materials from overseas can put the construction industry in a stranglehold.

Research on sustainable development at institutions such as the National University of Singapore is ongoing.

A number of interesting projects are targeted at developing sustainable solutions to meet challenges unique to Singapore.

One project involves using microwave rays to increase the yield and quality of recycled materials.

This novel technique utilises microwave heating to separate the components of recycled concrete for reuse. Heating causes mortar, which sticks to the surface of granite particles, to peel off like the layers of an onion.

Such work aims to provide a sustainable supply of construction materials available locally, which can reduce an over-reliance on imported sand and aggregates, and temper the negative impact of any unexpected disruption in supply.

Another project funded by the National Development Ministry which is being worked on in conjunction with the Housing Board, is to design high-rise buildings which – like building blocks – can be disassembled and reused.

When en bloc fever reached a peak here last year, many older buildings were demolished to make way for new ones.

Unfortunately, there are no recyclable buildings here yet, so many were demolished even though they had plenty of service life left in them.

If they had been designed for disassembly, they could have been reincarnated as new buildings.

Currently, most of the recycled concrete aggregates from demolition debris have been used in land reclamation, roads, and in non-structural applications, such as in carparks and pavement slabs, as they cannot fully replace fresh stocks of aggregates used in constructing new structures.

Also, additional resources are needed to reuse them – they have to be sorted, then crushed, sieved and graded.

Reuse of precast concrete structural components in new buildings would actually take recycling a step further, by removing the need for these steps.

Premature demolition, which generates demolition waste for disposal, would be unnecessary, together with the need for fresh stocks of construction materials for the new building.

The Design for Disassembly (DfD) process involves the management of resources throughout the lifecycle of a building; from the extraction of raw materials, through manufacturing, design, construction and operation, to the eventual demolition.

The DfD building system takes full advantage of the flexibility, convertibility, addition and removal of future buildings.

With this concept in place, the next generation of buildings constructed in Singapore can be viewed as store houses of future building materials.

Spiralling construction costs are here to stay, due to increased global demand and the rising costs of construction materials and manpower.

With dwindling resources and an urgent need to preserve the environment, the concept of unlimited supplies of construction materials is no longer viable.

Stakeholders in the construction industry and members of the public must work together to develop a uniquely Singaporean model, so that future generations will also be able to live, work and play comfortably in Singapore.

The writer is deputy head (infrastructure and resources) at the National University of Singapore’s Department of Civil Engineering.

When en bloc fever reached a peak here last year, many older buildings were demolished to make way for new ones.

Source : Straits Times – 28 Feb 2009

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Government lowers development charge for properties by 4%-15%

Posted by luxuryasiahome on February 27, 2009

The government has lowered the redevelopment tax on non-landed residential property by 15 per cent on average – a more drastic cut than the 6 per cent it made half a year ago.

The biggest reductions affect higher-end properties in prime locations, including Marina Bay, Robertson Quay, River Valley, Orchard Road, Grange/Tanglin, Newton and Holland Road areas.

Some market watchers had been hoping for even deeper reductions, given the weak property market due to the current recession.

But property consultant Chesterton Suntec International said the 15 per cent drop is an accurate reflection of current land valuations.

Chesterton Suntec analyst Colin Tan said regular review of the development charge or DC rate is based on actual transaction values in the previous six months, and not on market sentiment.

He said the cut could help the slumping property market.

“Of course, we are just seeing the beginning of a drop so it will take a lot more, maybe the next DC rate cut, to ensure that it’s profitable now to move forward. Generally, the taxes do not act as an incentive or disincentive, it’s the market. But it lessens the obstacles,” said Mr Tan.

According to CB Richard Ellis, land values are expected to moderate in the course of this year. It said DC rates for non-landed residential use probably fell because of comparatively lower prices for new launches in the residential market in the last six months.

The DC rates for hotel and hospital properties fell by 10 per cent and business zone commercial use properties decreased by 4 per cent.

The development charge is levied when a property is redeveloped into a more valuable project, for example, after an en bloc sale.

The Singapore government adjusts the DC rate every six months to reflect the value of land here. The latest revision will take effect from March 1.

Source : Channel NewsAsia – 27 Feb 2009

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CapitaLand eyes more investment opportunities in China

Posted by luxuryasiahome on February 27, 2009

Singapore’s property giant CapitaLand is busy looking at investment opportunities in key markets like China, as part of a strategy to weather the current economic downturn.

The developer has been successful in developing projects in Shanghai and Beijing, and is now looking into second-tier cities on the Chinese mainland.

Last year alone, CapitaLand China more than doubled its earnings to a record US$646 million, and the mainland now accounts for almost half of group profits.

Channel NewsAsia interviewed CapitaLand’s CEO Liew Mun Leong, who is in Hong Kong to receive financial magazine Asiamoney’s award for Singapore’s top executive of the year.

Mr Liew gave his views on his strategy for 2009.

He said: “We would like to call ourselves an aggressive discipline. While we manage our capital, we would develop our business franchise, through the 4-5 sectors that we’re very strong in. We are not just in one sector of real estate. We are in residential, very big, shopping malls.

“We are probably one of the largest shopping mall owners in Asia. We are in offices, in mixed development, Raffles City, and we are in service apartments. So all these franchise will be intensified, but with stringent capital management approach,” he said.

Mr Liew also commented on CapitaLand’s sizeable war-chest of about US$4 billion.

He said: “There are in the crisis period a lot of opportunities in some of these key markets that we’re interested in – Singapore of course, China, Japan even Australia, where we can look at distressed assets, distressed companies.

“We are quite good at managing distressed assets. We have done quite a fair bit in Beijing, in fact. So those are the sort of programmes that we will be scrutinising, but we will not deploy our war-chest so easily.”

On his plans for China, Mr Liew said: “We started out in Shanghai, then we went to Beijing, then two, three years ago, we have gone to Guangzhou area, we have even gone to Chengdu and the western states. We are therefore putting our footprint of CapitaLand in China.

“We are very strong in shopping malls, we have today in our pipeline, 58 malls, 20 in operation and more than 30 being constructed. In fact, we opened more than one mall a month in China this year.

“And frankly there are lot of people courting us to build Raffles City, but it has got to be attractive enough in terms of footage, people walking through.”

Apart from China, Mr Liew also expressed CapitaLand’s interests in other markets, namely Vietnam and Japan.

He added: “Vietnam is very interesting, Vietnam has very strong demand fundamentals. The demographics are very good, a young population, a growing population. Stable government, I would say.

“People are hard-working and there’s a lot of demand for urbanisation. So the physical demand is there. I am also interested in Japan. Japan has grown, some big problems in their real estate and there’s where opportunities can come about.”

On the outlook of Singapore’s residential property, Mr Liew said: “It is not really a question for those who want to buy our real estate, it is not affordability, but timing. And timing is determined now by confidence level.

“And I think right now with what’s happening globally, the confidence level has not been restored. But all our planning is based on baseline recovery in the middle of next year. Hopefully, if the banks recover faster, the economy will be resolved of all its woes, then maybe the end of 2009.”

Source : Channel NewsAsia – 27 Feb 2009

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A plea for survival

Posted by luxuryasiahome on February 27, 2009

Association calls for landlords to cut rents by 20-30 per cent, with 20,000 jobs on the line

WITH sales plunging by 20 to 30 per cent and profit margins “almost negligible if not negative”, 20,000 jobs – that’s a fifth of retail employees – are at stake as stores face the real prospect of folding.

This is red alert sounded by the Singapore Retailers Association (SRA) after an emergency meeting on Wednesday of council members and leading retail figures. In a strong statement yesterday, it called on landlords to give rental rebates of “at least 20 to 30 per cent” immediately – the “bare minimum” to ensure survival.

Even as occupancy costs have risen 50 to 80 per cent over the last three years, landlords “have proven slow to acknowledge or respond to the current downturn”, the SRA said. This, even after the Government announced a hefty property tax rebate for landlords on Jan 22.

Except for Government landlords, SRA’s executive director Ms Lau Chuen Wei told Today, the rest “are currently not willing to budge, and some even have the audacity to increase their rental rates.”

She declined to name names, only adding that SRA has written to “all landlords and are seeking audience with them one by one”.

While some mall landlords, like CapitaLand, Mapletree and Lend Lease, have announced they would pass on the full 40-per-cent property tax rebate to tenants – it would amount to 40 cents out of every $10 in rent – Ms Lau said some retailers feel this is “too little too late”.

“What the retailers need urgently is a reduction off the base rent, as this is what’s cutting very sharply into their bottom line,” she said.

One tenant at Square 2 in Novena told Today that when he renewed his lease last month, he got a 5-per-cent rental cut, though he had asked for a 10-to-20 per cent reduction. There was no mention of rebates or other form of help.

“At Square 2, more shops are closing down than tenants are moving in. On the ground floor alone, there are five or six units vacant at the moment,” he said.

Mr Lee Han Fong, director of cafe chain Secret Recipe which has 14 outlets here, said when the lease for a town outlet was renewed in end-2008, the rent was raised 15 per cent.

But “some landlords have recognised the (bad economic) situation and have been active in stepping up to help tenants, mostly through marketing,” Mr Lee said.

“In our nine years of business, this is the only time … we’re really worried because sales have been affected. We‚re more worried about the middle and end of the year, when consumers feel more effects of the downturn”.

The chain will ask for lower rentals when other outlet leases come up for renegotiation this year.

SUBHD: What landlords are doing: Just lip service?

A report yesterday by property consultancy CBRE showed, in the fourth quarter, prime Orchard Road retail rents slipped 1.9 per cent on-quarter, the first drop since 2003, even as retail sales volume declined by 5.9 per cent in the same period according to latest government figures.

When contacted, Maple Tree – which owns Vivo City and HarbourFront Centre Retail – said it is doing its best to help tenants survive the slowdown.

Other than passing on the full benefits of the property tax rebate, “we are also looking into individual cases where our tenants are facing short-term cash flow problems,” said Ms Shae Hung Yee, vice-president of corporate communications.

Specific assistance measures include restructuring the leases. “We feel this focused approach would better channel our limited financial resources to cases where help is most needed, rather than an across-the-board rental rebate.”

A spokesperson from Frasers Centrepoint Limited – which runs The Centrepoint, Causeway Point and Northpoint among others – said it will also pass on the tax rebate benefits and is now “working out the details”.

CapitaLand, the first to announce it would pass on the rebate, adds that it will continue to “stay close to our retailers, work with them individually to better understand the specific issues that they are facing so that we can customise a solution jointly with them”. It manages Tampines Mall, Junction 8 and Hougang Plaza, among others.

The other mall landlords contacted, Far East Organization and City Development Limited, did not respond to TODAY‚s queries as of press time.

SRA‚s Ms Lau, however, is sceptical. “So far, it‚s only lip-service and PR gestures on the part of the landlords. They don‚t seem to understand the plight of the retail tenants,” she told TODAY.

Sales are there yes, but slowing, and “anecdotal evidence” suggests many retailers‚ topline figures are shrinking. Should stores fold, this would have a knock-on impact on industries that feed off the health of the retail sector, such as media, F&B and advertising, she noted.

“This is the reason the SRA is indicating that retailers really need a reprieve of base rent reductions by at least 20 to 50 per cent, at least for a temporary period, until things look up.”

Source : Today – 27 Feb 2009

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En bloc sales partly to blame for ‘vanishing’ Singapore

Posted by luxuryasiahome on February 27, 2009

I REFER to Mr Vincent Paul Carthigasu’s lament on Tuesday, ‘Where did you go, my Singapore of old?’, about the eradication of ‘almost everything’ in Singapore in the name of ‘change and development’. He believes ‘Singapore has lost much of its soul’ in its ongoing policy of redevelopment.

Allow me to go a little further in asserting that for many, Singapore has indeed lost its soul to ‘progress’ in recent years. To thousands of Singaporeans who have been uprooted from their condominiums and other strata-titled properties, many of which are freehold, their grief at losing their homes against their will via collective sales, and the consequent trauma of relocating to new homes, are unnerving.

Concomitant is the acrimony of court cases and blatant vandalism, which may threaten the ‘kampung spirit’ built up so arduously over the years.

Perhaps the authorities, during this lull in the property market, should revise the rules on future collective sales. One area they should look into is the physical condition of a development, regardless of its age. It is heart-rending to see an ‘old’ development in good condition demolished to make way for a new development.

Han Soon Juan

Source : Straits Times – 27 Feb 2009

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