Tenants at the new Galleria see red over low traffic and sales that barely cover rent

FED-UP tenants at the posh new Galleria area of Suntec City Mall say shopper traffic is so low that they can barely cover the rent. Yet, they say, the landlord has not done much to help them out.

Ten tenants, including retail giants Robinsons and Ossia International, have written to ask the landlord, Suntec Reit, to address their continuing losses.

They also said that not enough is being done to promote the upmarket shopping zone.

Ossia executive chairman Joe Goh said: ‘We are paying Orchard Road rents. It’s too expensive, and the traffic is too low.’

Some retailers have stopped paying rent, another has closed down, while others are trying to find alternative tenants to take over their leases. There are some that are even talking about taking legal action against Suntec Reit.

ARA Asset Management, which manages Suntec Reit, has declined to comment.

The situation at Roots - one of Ossia’s two shops at Galleria - mirrored the complaints made by other tenants to The Straits Times.

Business is so poor that sales cannot even cover the monthly rent of more than $30 per sq ft (psf), and the shop now sells other brands to increase sales, said Mr Goh. It is also getting advice on taking legal action against the landlord.

‘We are requesting to pay $20 psf,’ he added.

Robinsons, which has the Fat Face and Principles outlets at Galleria, is facing a similar plight.

Mr Shia Yew Peck, general manager of finance and administration at Robinsons, said the rent at Fat Face is already 100 per cent of sales.

‘Rentals have to be commensurate with the traffic,’ he added.

Timberland, which opened a Galleria store in June last year, closed for a few months because of poor traffic, while another shop shut in January after just three months, said some tenants.

Average rents at Galleria, which is near the convention centre, are $24 psf, while the entire mall averages $10.92 psf.

The six tenants who spoke to The Straits Times yesterday are paying between $25 psf and $35 psf, and all are requesting relief in the form of lower rents, rental rebates or a few months’ rent waiver.

A typical rent guide would be the equivalent to 15 per cent to 25 per cent of sales, they say.

A comparable situation arose at The Cathay, which opened in 2006. Its landlord gave tenants rental rebates of up to 50 per cent to ride out the slow sales period.

A similar move does not look to be on the cards at the Galleria.

‘It’s got to the stage where it (property manager) won’t even listen to the tenants. All our pleas are ignored,’ said Mr Charles Guerrier, managing director of Oosters Belgian Brasserie.

Some tenants were offered rent reductions of 5 per cent, but they said the amount was too low.

A consultant, who declined to be named, said: ‘The rentals are actually not very high. It appears high only because of their poor sales. There are a lot of people walking through the mall, but it is just transient traffic.’

Still, there may be better news on the traffic front with the underpass connecting CityLink mall to Suntec City now open. The temporary bridge to Suntec City will be dismantled next Monday.

Meanwhile, at least two hard-pressed tenants have tried to find other retailers to take up their space - but to no avail.

Retailers in trouble

With sales barely covering the rent, tenants are in a bind.

• One shop has closed down.
• Some retailers have stopped paying rent.
• Other retailers are trying to find alternative tenants to take over their leases, without success.
• Yet others are considering taking legal action against the landlord

Deja vu

A comparable situation arose at The Cathay, which opened in 2006.  

• Its landlord gave early tenants rental rebates of up to 50 per cent to ride out the slow sales period.
• Galleria tenants are asking for a helping hand in the form of lower rents, rental rebates or a waiver of a few months’ rent.

Source : Straits Times - 8 May 2008

Flats much sought after because of spillover demand from private homes market, but agents say rents are unlikely to rise much more
 
The rental market for Housing Board flats remains hot, with rents up in the first quarter as more home owners apply for permission to rent out whole flats.

Rents for some executive flats in Queenstown have gone as high as $2,900 a month, a price previously seen only with private apartments.

Property agents say that although prices are flattening out, rental demand for HDB flats remains strong, thanks partly to spillover demand from the private homes market, where rents surged dramatically last year.

More Western expatriates can be found renting HDB flats these days. However, demand for HDB flats still comes mainly from Malaysian, Chinese and Indian nationals working in Singapore, says Mr Eugene Lim, an assistant vice-president of ERA Realty Network.

‘Although HDB rentals have gone up, HDB flats are still among the cheapest forms of rental housing for them,’ he said.

‘Demand will continue to rise mainly because of the continuous influx of foreign talent, especially with the upcoming casino and international events such as Formula One,’ said Mr Steven Tan, the executive director of the residential division at OrangeTee.com.

Nevertheless, rentals are unlikely to surge from current levels. ‘We are starting to see some resistance,’ said Mr Tan.

In Toa Payoh, which is close to town, first-quarter median rents ranged from $1,400 for a three-room flat to $1,780 for a four-roomer and $2,150 for a five-roomer, going by HDB data.

A little farther up north, first-quarter median rents in Ang Mo Kio started at a lower $1,300 for a three-room flat and moved up to $1,880 for a five-roomer.

While Tampines might be some distance from town, median rents for flats in the regional commercial hub ranged from $1,480 for a three-room flat to $1,950 for a five-roomer.

How much a flat can fetch depends on its location. Those next to MRT stations tend to command more, agents say.

Five-room flats in Choa Chu Kang fetched a median monthly rent of $1,480; those in Bukit Merah, $2,000.

Executive flats, some of which used to fetch monthly rents similar to those for five-room flats, now go for more, starting from $1,530 and going as high as $2,900.

‘HDB rentals are quite high now. I think this is the limit,’ says property agent Germaine Ng. ‘I already saw resistance two months ago. Fewer tenants are coming to the market.’

Even if rents remain at current levels, HDB flats would make attractive investments, albeit only for those who are eligible to rent them out. Flat owners can rent out their entire unit after occupying it for three years. This minimum occupation period goes up to five years if they bought the flat with a subsidy or housing grant.

For instance, a five-room flat in Ang Mo Kio might be worth just $400,000 but it could fetch a monthly rent of $1,800, which would give a yield of 5.4 per cent.

‘This is a very good yield considering that rental yields for private homes usually fall below 4 per cent,’ said Mr Lim.

This explains why more and more people want to rent out entire flats. In the first three months of this year, 3,581 flat owners - most of them with three- or four-room flats - were given approval to rent out their flats.

Last year, 12,808 sub-letting approvals, of which about a third were for three-room flats, were given. In 2006, 8,544 approvals were given.

HDB flat owners can apply online for sub-letting approvals. Those who want to rent out just the rooms do not need HDB approval to do so, but they must continue to live in the flat and comply with other sub-letting conditions.

QUICK TIPS

How you can improve your rentals

• The flat should be in move-in condition, with a fully fitted kitchen, washing machine and television set. Air-conditioning will be a plus.
• Keep the flat simply decorated. Do give it a fresh coat of paint if it needs one.
• Flats with interiors that resemble a condominium’s can fetch more. A three-room flat near Tanjong Pagar MRT station was rented out at $2,600 a month after the owner spent $40,000 to renovate it.

‘When you walk into the flat, it feels like a condo,’ says agent Germaine Ng.

Source: Agents

What you need to know as a landlord

• While you can rent your flat to several people, there is a limit you must observe.
• HDB allows a maximum of four occupiers in one- and two-room flats, six in three-room flats and eight in four-room or bigger flats.
• Make sure your sub-tenants do not further sub-let the flat, which is not allowed.
• If you rent your flats to foreigners, make sure they entered Singapore lawfully and are remaining here lawfully. Otherwise, you might be guilty of harbouring immigration offenders.

Source: HDB

Source : Sunday Times - 4 May 2008

SINGAPORE is the ninth most expensive place to rent a three-bedroom apartment, according to a survey.

Rents surged by 33 per cent last year, boosted by companies expanding operations at a time of limited supply of property, said the survey report, which was released yesterday.

A three-bedroom unit in popular expatriate areas such as Orchard Road costs about US$4,460 (S$6,046) a month on average to rent, compared with about US$3,364 in 2006.

But Singapore’s rents are far below those of Hong Kong, which is the world’s most expensive place to rent a three-bedroom apartment.

The annual survey by human resources firm ECA International collected rental costs in 92 locations last September and converted them to US dollars.

A three-bedder in Hong Kong rents for about US$9,700 a month, compared with Asia’s average of US$3,820 and a global average of US$2,950.

Moscow was second on the global list, followed by New York, Tokyo, London and Mumbai, with Seoul in seventh place. Caracas in Venezuela took eighth spot, with Singapore one notch ahead of Ho Chi Minh City.

ECA International Hong Kong general manager Lee Quane said demand for high-end apartments in the territory had driven up rents.

If it is a bargain you want, try Karachi in Pakistan, the world’s cheapest place to rent an apartment.

Source : Straits Times - 17 Apr 2008

But Republic still competitive for firms moving staff into region: ECA

SINGAPORE’S residential rental rates for a three-bedroom apartment have increased by 33 per cent over a year - from 2006 to 2007.

This makes Singapore the fifth most expensive location in terms of residential rentals in Asia and ninth globally, according to a recent survey by ECA International.

ECA International is a knowledge and solutions provider for international human resources professionals.

The annual Accommodation Survey compares rental prices in 92 locations worldwide.

A three-bedroom apartment in a popular expatriate area in Singapore costs about US$4,460 per month in 2007, up from US$3,364 the previous year.

The 33 per cent increase is also the largest in Asia.

Lee Quane, general manager of ECA International Hong Kong, attributes the steep rise to rising demand and limited supply.

‘Companies (are) expanding their operations in Singapore together with government initiatives to attract skilled workers from overseas. But at the same time, the supply of property available has been limited by a number of factors such as en bloc purchases by developers, which have exacerbated the situation.’

In Hong Kong, the most expensive location in the world as ranked by the survey, rental is twice that of Singapore’s for an equivalent property.

It costs 60 per cent more to rent in Tokyo, the second most expensive location in Asia, than in Singapore, which ‘remains a competitive location for companies moving staff into the region’, Mr Quane says.

In addition, Mr Quane explains that exchange-rate fluctuations also make a difference.

Rental prices have gone up where the local currency has strengthened against the US dollar, as in Singapore.

Six of the top 10 most expensive locations in the world are in Asia - Hong Kong (1st), Tokyo (4th), Mumbai (6th), Seoul (7th), Singapore (9th) and Ho Chi Minh City (10th). New York (3rd), Moscow (2nd), London (5th) and Caracas (8th) are the other four.

Average rental prices in Asia are around US$3,820, well above the global average of US$2,950.

Some of the survey’s biggest rank movements have been experienced in the Middle East in Abu Dhabi, Sharjah and Doha, but Dubai remains the most expensive location there.

Source : Business Times - 17 Apr 2008

Foreigners could be switching from leasing to buying property, says Savills Singapore

Residential leasing transactions have stagnated in the past two years after falling from a recent high of 33,874 in 2005.

According to an analysis of Urban Redevelopment Authority data by Savills Singapore, transactions were about 15 per cent lower at 28,928 in 2006 and 28,893 in 2007, versus 2005.

Savills Singapore director of marketing and business development Ku Swee Yong said that as leases are generally renewed on a two-year basis, the drop between 2005 and 2006 should imply a rise in 2008.

But figures for the first two months of this year indicate that residential leasing is not likely to pick up. Indeed, Savills’ analysis reveals only 3,495 transactions.

The lowest number of quarterly transactions since the start of 2000 was 4,024 in Q1 2003, while the high of 9,917 was recorded in Q3 2005.

Mr Ku, who reckons foreigners make up about 90 per cent of the leasing market here, said it will be important to watch the figures over the next few quarters.

He thinks fewer financial-sector expatriates may relocate here due to the global credit crunch.

But according to some foreign business associations, there has been no let-up in the influx of expatriates so far.

American Chamber of Commerce executive director Dom LaVigne said: ‘Due to the strong business conditions in Singapore and based on what we’ve heard from our members hiring more employees, we think that the number of American expats living here will continue to rise in the coming years. Two years ago, there were 14,000 Americans in Singapore. Today there are 15,000 Americans and more than 3,000 US businesses here.’

The number of British expatriates here has also increased over the past two years, with the British Chamber of Commerce (BCC) saying about 20,000 British nationals now live in Singapore.

BCC spokesman Roman Scott, who is also managing director of the Calamander Group, said: ‘Although everyone is moaning (about rents), it’s mourning the end of a particularly good deal, not complaining that the recent sharp rises are unfair.’

BCC, which tracks the cost of housing and offices, believes the rise in rents is a function of market forces and a ‘long-overdue cyclical correction from artificial lows’.

Pointing out that rents fell sharply 10 years ago, Mr Scott said: ‘Given that real wages and wealth have actually risen in those 10 years in Singapore, this means rents are still cheaper in real terms than the previous high 10 years back, and affordable compared with other global cities, particularly Hong Kong and Tokyo.’

Rents, however, have been increasing rapidly. Based on Savills’ basket of properties, rents for high-end homes increased about 30 per cent year on year in Q4 2007. Savills noted that a 2,885-sq-ft unit at Ardmore Park was recently leased for $20,000 a month or about $7 per square foot (psf) a month.

For high-end properties, Savills says the quarterly average rent is now $6.68 psf a month.

January saw a particularly low number of new leases, with just 1,474 transactions. District 10, the most popular district, suffered a 42.2 per cent drop to 203 transactions, compared with 351 a year earlier.

Other districts in the top five, including districts 15, 9, 14 and 16, saw transactions fall 39.2, 50, 19.8 and 43.2 per cent respectively.

A shrinking pool of leasing properties due to collective sales could have exacerbated the drop in numbers, especially in the prime districts. But as Savills’ Mr Ku points out, demand should have spilled over into other districts, keeping the overall number of transactions up.

He believes foreigners could be simply switching from leasing to buying property.

‘This was helped by the attractive low cost of mortgages in Singapore and also the favourable tax advantages foreigners from certain countries enjoy from owning properties in Singapore,’ he said. ‘We certainly saw many tenants convert from leasing to owning in 2006-2007, starting with a change in US Federal Tax on US nationals’ housing benefits overseas.’

A separate analysis of property data by Chesterton International seems to support this assertion.

Comparing data from 1995 - during the run-up to previous property market peak - and 2007, Chesterton’s head of research and consultancy Colin Tan notes that while the percentage of foreigners, including permanent residents (PRs), buying non-landed private property increased from 17.9 per cent in 1995 to 29 per cent in 2007, the percentage of acquisitions by PRs alone doubled from 6.7 per cent to 14.4 per cent.

The relevance of this, according to Mr Tan, is that PRs tend to buy for owner-occupation while foreigners are more likely to buy for investment.

He said: ‘In recent years we have seen many purchases by Indian and Chinese nationals who are buying for owner-occupation, not investment. These people eventually become citizens. I personally know a number of them.’

Source : Business Times - 8 Apr 2008

8.4% surge driven by banks with eye on private wealth management in Asia

OFFICE rents in Singapore continued to power ahead in the first quarter of this year, despite a slowdown in the US economy and possible fallout for Asia.

According to a Jones Lang LaSalle (JLL) report, the CBD core Grade A gross effective office rent now stands at $17.35 per sq ft per month - an increase of 8.4 per cent from $16 psf per month in Q4 2007.

JLL said: ‘Amid a slowdown in the US economy, the Singapore office market remains positive with sustained rental growth recorded island-wide.’

Chris Archibold, JLL’s national director and head of commercial markets, said he was ‘quite surprised’ by the 8.4 per cent increase in Grade A rents, especially as it represents almost half of JLL’s projected rental increase of around 18 per cent for full-year 2008.

JLL says demand for CBD core office space continues to be driven by the banks and financial institutions, ‘many of which have set their sights on the burgeoning private wealth management in Asia’.

CBD core Grade B office rents rose by a more sanguine 11.2 per cent to $13.80 psf per month in Q1 2008 from Q4 2007. Noting the rise, Mr Archibold said CBD core Grade B office rents are ‘catching up’.

‘While Singapore office rental growth in Q1 2008 is some cause for optimism in this uncertain market, the increase in rental value is largely a spillover from the previous quarters,’ he said.

‘The supply environment will remain in the landlord’s favour for a few more quarters before any significant increase in supply tilts the balance towards the occupiers.’

Supply of office space here remains tight.

According to a report by CB Richard Ellis (CBRE), the Grade A vacancy rate remained below one per cent in the first quarter of the year, even though at 0.6 per cent it was slightly higher than the 0.2 per cent rate in Q4 2007.

CBRE executive director (office services) Moray Armstrong said: ‘There is currently an excess of demand over available space and landlords will still be able to achieve high rents on rent and lease renewals due to the absence of alternatives for occupiers. Further rental advancement is likely in selected buildings that enjoy full occupancy.’

According to CBRE, prime rents averaged $16 psf per month while Grade A rents averaged $18.65 psf per month in Q1 this year, reflecting respective increases of 6.7 per cent and 8.7 per cent from the preceding quarter.

CBRE noted that the rate of increase in Q1 2008 moderated compared with the four quarterly increases in 2007.

It also estimates that 10.3 million sq ft of office space could be completed between 2008 and 2012, the bulk of which will come on stream in 2010 and 2011.

Mr Armstrong said: ‘The overall volume of confirmed office supply does not appear excessive, but we believe the government needs to be sensitive to the forces of demand and supply - prudence in future Government Land Sales programmes is required.’

Source : Business Times - 8 Apr 2008

But analysts say some cities, including S’pore, may see slowing rental growth, reports UMA SHANKARI

BUOYED by limited office supply in some cities and high GDP growth, all major office markets in Asia are expected to see rental growths in 2008, but the pace of growth will vary from city to city, property analysts say.

‘Across the board, we still see positive demand for office markets across Asia,’ said Megan Walters, director of research and business analytics for Asia Pacific at Cushman & Wakefield (C&W). ‘But obviously the problems in the financial markets in the US have not been played out yet, and we have yet to see how it will affect investment markets in the region.’

The firm expects all offices markets in key cities across Asia to record increasing rents in 2008. However, about half the cities profiled - Singapore, Beijing, Shanghai, Chengdu, New Delhi, Mumbai, Kuala Lumpur and Bangkok - are expected to see slowing rental growth. The other cities - Hong Kong, Tokyo, Seoul, Taipei, Bangalore and Ho Chi Minh City - are still seeing accelerating rental growths.

Industry players here will perhaps be most interested in what is happening in Singapore and Hong Kong - long been seen as rivals in the region as a centre for international office services. The slowing rental growth in Singapore will be welcomed by many on the back of fears that the Singapore office market was overheating.

Rents here have been pushed up over the last few years mainly by expansion in the financial services sector owing to factors such as domestic growth, economic restructuring that resulted in the expansion of the service industries as well as the influx of both regional and global jobs into the market.

Rentals are not just climbing - they are climbing at a pace faster than ever seen before. Industry veterans have expressed fears that this could make Singapore less competitive compared with Hong Kong, where rents are rising at a more sedate pace.

For example, data from C&W shows that rents at Raffles Place in Singapore’s Central Business District (CBD) have risen 100 per cent in the last year unlike Hong Kong’s more moderate 15 per cent. And according to some reports, it is now more expensive to take up office space in Singapore than in Hong Kong.

Data released by Jones Lang LaSalle (JLL) yesterday shows that CBD core Grade A gross effective office rent in Singapore for the small space category (less than 10,000 square feet) stands at $17.35 per square foot per month (psf pm), up 8.4 per cent quarter on quarter from the $16.00 psf pm seen in Q4 2007. This is marginally higher than the quarterly rental growth of 7.4 per cent registered in Q4 2007, JLL said.

‘In comparison with Hong Kong, the current gross effective rent of Grade A offices in Hong Kong Central - equivalent to Raffles Place in Singapore - stands at US$15.10 psf pm,’ said JLL’s report. ‘This is some 21 per cent higher than Singapore’s CBD core prime Grade A gross effective rental value of US$12.50 psf pm (or $17.35 psf pm).’

However, things should even out with more supply coming onstream in Singapore. Market watchers say that the rate of rental growth will slow and occupancy rates will fall this year. ‘The growth in rental values is expected to moderate this year after a record increase in 2007,’ said Cheng Siow Ying, DTZ Debenham Tie Leung’s executive director.

Chris Archibold, head of commercial leasing at JLL, similarly noted that the rapid rental increase seen in Q1 2008 is mainly due to spillover demand.

He said: ‘While Singapore office rental growth in Q1 2008 is some cause for optimism in this uncertain market condition, the increase in rental value is largely a spillover from the previous quarters.’

And a new report by DTZ says that islandwide office occupancy dipped in the first quarter of 2008, easing half a percentage point quarter on quarter to 97.1 per cent. The dip followed a 0.1 point drop in Q4 2007 from Q3.

The average occupancy of office buildings at Raffles Place dropped half a percentage point to 97.8 per cent in Q1, while that at Marina Centre rose 0.7 percentage point to 99.8 per cent.

DTZ attributed the slight dips in occupancy partly to two office buildings coming onstream. Together, The Central and VisionCrest Commercial added some 538,100 sq ft of new office space - raising islandwide office stock one per cent quarter on quarter to 56.6 million sq ft. Both buildings are not even fully leased yet.

Some occupiers are beginning to exercise caution in their medium-term leasing requirements, DTZ’s Ms Cheng said. Going forward, the demand for CBD core office space in Singapore is expected to continue to be strong on the back of more demand from banks and financial institutions, many of which have set their sights on the burgeoning private wealth management in Asia.

But there will be some moderation for both rents and capital values. ‘Although the financial and business sector is still expected to remain robust, the more modest economic growth projected will see companies limiting their expansion of office space requirements,’ Knight Frank noted in a recent note. ‘Some landlords would also be more accommodating of tenants in order to attract or retain these users of office space.’

And for the rest of Asia, a lot depends on how the sub-prime crisis in the US plays out, property analysts said. The region’s investment markets - including for the office sector - are expected to emerge from the credit crunch better than their US or European counterparts.

Source : Business Times - 8 Apr 2008

Rentals for HDB and mass market private apartments are set to rise in the coming years, with more foreign workers heading for Singapore.

Property agents expect rents to climb by about 10 percent this year.

They say HDB flat-owners could gain from the spike in demand.

Singapore’s two integrated resorts will be ready in the next two years.

Besides attracting more tourists, they are also expected to draw thousands of foreign workers to the city state.

Resorts World at Sentosa says it will be hiring 10,000 people directly.

And 40 percent of these jobs will go to foreigners, in view of the manpower crunch in Singapore.

Property agents say some of the foreign workers, especially higher-ranking staff, will have the means to purchase private residential properties.

But they expect the bulk of the workers to tap into the rental market for their housing needs. And this will push prices up in the short-term as supply plays catch up.

On average, monthly rentals for private apartments range between $2,500 and $3,500 dollars.

This may be too much for some workers.

Mohamed Ismail, CEO of PropNex, said: “The public housing becomes next best alternative where today people are still able to rent at $1,500 to $2,000. I expect this trend to continue, as far as estates that will have a greater demand … such as those in Telok Blangah, Bukit Merah, Bishan, Toa Payoh. Anything that is not too far away from town or to the integrated resorts will definitely have greater take-up rates.”

Industry players say private residential properties currently enjoy a rental yield of some 5 percent, while that of HDB flats is between 8 and 10 percent - among the highest ever in Singapore for public housing.

All in, agents expects rentals to climb by some 10 percent in the next two years. - CNA/de

Source : Channel NewsAsia - 3 Apr 2008

Q I AM wondering if I should continue to rent out my property or dispose of it and use the proceeds to buy an annuity that will provide a retirement income.

Rentals will rise with inflation while an annuity is more or less fixed and will not keep up with inflation.

Being a landlord, however, also has its minuses. As the property gets older, repairs and maintenance will get more costly. Also, in a recession or if supply exceeds demand, rentals will fall.

What would you advise?

A IN RECENT months, property investments and annuities have generated much debate among Singaporeans.

Improper management of these financial vehicles could have an adverse impact on your retirement plans, so let us look at the key characteristics of these two asset classes.

Property investments are popular because of their potential capital gains. In a boom cycle, they offer attractive capital appreciation. In contrast, annuity products have no potential for capital gains.

On the income side, rentals fluctuate as demand and supply conditions change. Thus, property investments may not be able to provide the constant and predictable cash flow that annuities can.

This uncertainty could be painful for retirees who rely solely on rentals for their retirement income. Furthermore, repairs and maintenance are unavoidable and potentially troublesome.

The most attractive benefit of an annuity is that you have a guaranteed stream of regular income throughout your lifetime. You need not worry about outliving your savings. This makes annuities an apt choice for many retirees.

Also, the introduction of the National Lifelong Income Scheme, or CPF Life, which is essentially an annuity scheme, allows you to explore more ways of generating a retirement income, as you can pledge your property towards the Minimum Sum.

If you sell a property that has been pledged, the money from the sale of the property would be returned to your Minimum Sum. This could then be used for an additional stream of income for life.

In your case, this certainly sounds like good news. You can keep your pledged property for rental income and enjoy any market upside, while the monthly payout from the Lifelong Income scheme covers your basic living needs.

When planning for retirement, you must first ensure that your minimum cost of living over your lifetime is provided for - in this case, with an annuity product. Indeed, the CPF Board has effectively addressed the basic retirement needs of many Singaporeans with the Lifelong Income scheme.

You can supplement your income by investing in other asset classes, such as pension endowments, real estate investment trusts or dividend-paying stocks. You can even take up an additional private annuity.

A well-diversified retirement portfolio will provide a staggered stream of income from various sources as you get older. As it is becoming increasingly common for people to have more than one source of retirement income, it is important to manage all these financial instruments properly.

I would advise you to engage a professional financial planner to work out your retirement expense cash flow and assess how your annuity or rental income can complement your current retirement portfolio as a whole. Do this before you decide to sell your property , buy a private annuity or choose a CPF Life option.

Xanne Leo Sen Yun
Associate Manager, New Independent

Advice provided in this column is not meant as a substitute for comprehensive professional advice.

Source : Sunday Times - 30 Mar 2008