Complete Property Market Updates of Singapore

December 31, 2007

Small city can dream big with careful planning

Filed under: Construction News, Genius Thoughts, Property Trends, Regulators — Propertymarketupdates @ 11:44 pm

Marina Bay IR project, for example, can take off smoothly as the basic infrastructure is already in place

WHEN the Marina Bay Sands integrated resort opens in 2009, pundits around the world may gasp at the speed with which a mega development rose on empty tracts of land in record time.

From winning the tender on May 26 last year to its planned opening some time in 2009, it will be a sprint of a mere two-plus years from blueprint to reality.

But National Development Minister Mah Bow Tan says the reason that the Marina Bay IR site can progress so fast and so smoothly is thanks to planning that began well over 30 years ago.

Without that careful planning of land use, plans for the IR would have had to be delayed, he says in an interview on land use and the trade-offs the Ministry of National Development (MND) considers in its plans.

Such careful, thought-through proposals help tiny Singapore achieve ‘big dreams’, he says.

Plans for a bigger downtown area began back in the 70s, as Shenton Way developed. One obvious solution that would extend the city into the bayfront area: reclaimed land.

‘We reclaimed Marina Bay about 30 years ago. We started putting in the infrastructure in Marina Bay about 10 years ago: all services, power, telecommunications, gas, water, then planning for the roads.’

Development plans for the area began around 2000. Options such as residential, commercial, office or mixed uses were considered. To test the market, one site was put up for tender as a ‘white’ site, which means developers are free to choose whether they want to put up a residential or commercial building.

It was later developed into a residential building - The Sail.

By 2004 and 2005, when debate on the proposed IR intensified, Marina Bay stood ready as a prime location with infrastructure ready for development.

Planners had initially suggested the Southern Islands as the site for an IR, but Marina Bay beckoned.

‘We were able to make this offer because we actually had all this ready and waiting to go.’

Mr Mah reckons that the IR bids created more buzz because of the attractiveness of the Marina Bay site.

To Mr Mah, long-term planning is critical for small Singapore, which has to balance myriad land uses.

Apart from the usual needs of a city, such as having land for housing, commercial and office uses, as a nation it also needs land for a port, airports, energy plants, waste disposal and recreational needs.

‘If we plan ahead and by being flexible in our planning, by being able to take into account changes in our economy and our social needs, we are able to make best use of what we have.

‘In the process, I think we are quite pleasantly surprised at how much land we actually have for all these things.’

Tiny Singapore has gone through several phases in land-use planning. In the 60s and 70s, the emphasis was on rapid physical development, with reclamation to expand the land mass.

In the 80s, a rising wave of conservationist sentiments caused a rethink. Former MND minister S. Dhanabalan noted in a recent interview that young officers in MND and Urban Redevelopment Authority (URA) pushed to conserve culturally rich neighbourhoods like Chinatown and Little India.

Heritage conservation was written into the 1991 Concept Plan and remains an article of faith in urban planning.

In the 90s, as a growing population put pressure on demand for land and with limits in land reclamation, the focus shifted to ways to intensify land use, with sweeping increases in plot ratios that allowed for taller buildings.

Mr Mah says the suggestion to raise plot ratios came from a series of focus group discussions, making the point that consultation with stakeholders does result in better policy options.

Another breakthrough in land-use planning came in the decision to dig deeper, with plans for a deep tunnel system to house sewer and infrastructure systems.

For Mr Mah, land-use planning does not exist in a vacuum, but is all about balancing conflicting needs and interests.

He gives examples to illustrate his point.

A granite stockpile in Kranji raised the ire of farmers there. But to the minister, strategic interest comes first in this case. In fact, he says unapologetically, there are plans for more granite stockpiles in Singapore. But the ministry will consider carefully the pros and cons of suitable locations.

Another example of conflicting interests: a group of conservationists wanted to preserve a historic building in Amber Road slated for private development.

Mr Mah discloses that actually, the URA had considered whether to conserve the building, but realised the cost was too high. But when conservationists protested, the ministry helped bring together the activists and developer.

In the end, a ‘hybrid’ solution emerged, with the developer agreeing to retain the historic facade and changing its design to incorporate this.

This is an example of ‘how the interest of a very vocal group can be taken into account’, together with the interest of the more silent party - in this case, the developer, he says.

Mr Mah considers the outcome ‘win-win’, although he acknowledges that ‘hybrid’ solutions are not perfect and do not please either party 100 per cent.

But then, he shrugs, that’s the nature of balancing different interests.

Asked if he considers lobbying by interest groups positive or negative, he replies: ‘I would be neutral about it but I also want to make this point that their interests are not the only interests on the floor.

‘We have to come in to talk about other interests who may not be so articulate, who may not be so vocal, but whose interests are no less important.’

Source : Straits Times - Dec 13 2007

December 20, 2007

Economists see Singapore Q4 growth at 7.7%

Filed under: Genius Thoughts, Singapore Economy — Propertymarketupdates @ 11:12 am

Singapore’s economy will grow 7.7 per cent in the fourth quarter from a year ago, slowing from an 8.9 per cent expansion in the third quarter, a central bank survey showed on Friday.

But growth next year will slow to 6.3 per cent, the Monetary Authority of Singapore (MAS) quarterly survey of 18 private sector economists showed.

Full year growth in 2007 was seen at 8.0 per cent, at the upper-end of the government’s 7.5-8 per cent forecast range.

The 2007 growth forecast compares with expectations of 7.5 per cent growth in the central bank’s September survey. Last year, Singapore’s economy grew by 7.9 per cent.

However, the forecast for growth in 2008 was cut to 6.3 per cent from 6.5 per cent in the September survey. The Singapore government’s expectation is for growth of 4.5 to 6.5 per cent next year.

‘Respondents expect broad-based GDP growth across the manufacturing and services sectors to continue in 2008,’ the MAS said. Singapore’s booming construction and financial services sectors are expected to continue to lead growth in the republic’s trade-dependent economy in 2008.

The construction sector is expected to grow 13.5 per cent in 2008 from a year ago, while the financial services sector is seen expanding 9.0 per cent, the survey found.

Reflecting rising prices in the city, economists expect inflation in 2008 to hit 3.7 per cent, above their 2.0 per cent forecast for 2007. Economists had expected inflation in 2007 to be 1.5 per cent in September. — REUTERS

Source : Business Times - 7 Dec 2007

Green living scores in design contest for homes in Marina South

Filed under: Construction News, Genius Thoughts — Propertymarketupdates @ 10:47 am

A LOW-RISE eco-village, canal streets, a coastal shopping promenade and terraced communal green roofs - coupled with dramatic views and contrasting skylines. This is the living environment suggested by the winning entrants in a competition to get ideas on how Marina Bay should look.

In September, the Urban Redevelopment Authority (URA) said it will set aside 60 hectares - the Marina South Residential District (MSRD) - for 11,000 homes.

A design competition to inspire innovative ideas to distinguish the area was announced at the same time.

When the competition closed on Nov 12, 30 entries had been received from local and overseas architects. Foreign submissions came from Hong Kong, Australia, Indonesia, India and the US.

Four schemes have been selected and another two received special mention. The winners are Hong Kong’s Compass Studio and Singapore’s Khoo Teik Rong, SKPS-Project and Surbana. Special mention was given to Australia’s Chor and Singapore’s ZONG Architects.

The four winners will get $10,000 and the two special mention schemes $5,000.

‘We are impressed with the numerous interesting and novel ideas from the competition,’ said URA’s director for urban planning and design Fun Siew Leng.

‘They will serve as a starting point to stimulate reflection and inspiration to develop Marina South into a distinctive waterfront garden district for generations to come.’

MSRD will also have 1.6 million sq ft set aside for hotel use and 678,000 sq ft of commercial space. The entire project will be developed over 15 to 20 years, once supporting infrastructure has been put in place.

Source : Business Times - 1 Dec 2007

Striking ideas thrown up for Marina South project

Filed under: Construction News, Genius Thoughts, Market Watch, Regulators — Propertymarketupdates @ 10:46 am

IT’S been a hazy vision up to now but the first stunning proposals for the Marina South Residential District, unveiled yesterday, indicate that a design revolution is brewing on Singapore’s waterfront.

The four proposals - picked from a design competition that attracted 30 entries from India to Australia - promise an intoxicating cocktail of architectural flamboyance and ecological innovation in what has been touted as Singapore’s future No. 1 residential hot spot.

It is the first time a design competition has been held as part of the planning process for a residential district here.

And the ideas thrown up have not been seen here before: They include elevated condominiums, terraced buildings resembling cascading gardens, and ‘floating’ housing blocks with Amsterdam-style canals.

The winners, who each get $10,000, include local architecture firm Surbana, Hong Kong’s Compass Studio and national serviceman Khoo Teik Rong, an architecture graduate from Melbourne’s RMIT University.

The designs remain just suggestions at this stage and may not be part of the final plan, but they serve as a striking starting point for the ambitious project.

The Urban Redevelopment Authority (URA) will now compile a final plan for the 60ha site, which will be developed over 15 to 20 years and will have up to 11,000 homes.

The competition, organised by the Singapore Institute of Architects (SIA) and the URA, asked entrants to unscramble what amounted to a Rubik’s cube of design challenges.

At the basic level, 11,000 housing units had to be incorporated with commercial, hotel and community facilities on a prime site near the upcoming Gardens at Marina South and Marina Bay Sands integrated resort.

But proposals had to show how high-density living could be achieved while retaining the ambience of a waterfront garden.

The judges also looked for environmental sustainability and a sense of community, while calling for designs that would allow Marina South to showcase the City in a Garden vision.

Mr Khoo, 23, drew on inspiration from a visit to Amsterdam and opted for canals to run through the site to make the area more intimate.

‘I didn’t want a site that would have only large-scale buildings,’ he said.

The Surbana team had a ‘green and blue’ strategy. Green in the form of plants on the roofs of low-rise buildings, which would be terraced to give the appearance of gardens sloping to the marina.

Blue covered their housing idea - 30- to 50-storey-high blocks placed on shallow pools, making them appear to float on water.

Compass Studio, meanwhile, used hills as its inspiration - it wanted high-rise buildings to resemble hills that meet the lower plains. It also proposed a low-rise eco-village.

The fourth winner was SKPS-Project, a group of five architects, mostly from Singapore. They proposed lifting residential blocks 30m above the ground and planting trees underneath.

Reacting to the designs, Mr Mink Tan of Mink Architects said they were visually evocative, with ‘a mix of everything’. ‘If done successfully, this can be a…shining example of Asian urban living.’

Ex-SIA president John Ting of AIM & Associates was encouraged by the designs, but said more refinement was needed. He suggested the land can be split into smaller parcels and various architects let loose: ‘Then we can learn how to work the land better.’

Property developers and consultants were more hardheaded, telling The Straits Times that it was too early to judge if the designs were commercially viable.

The 30 entries are on display at City Hall until Dec 8.

Source : Straits Times - 1 Dec 2007

Shaping the homes of Marina South

Filed under: Construction News, Genius Thoughts, Market Watch, Regulators — Propertymarketupdates @ 10:46 am

WATERFRONT-GARDEN living that’s just minutes away from the city. That is what residents at the future Marina South Residential District can expect.

No date has been set for when people can move in.

The Urban Redevelopment Authority (URA) has set aside 60ha of land between Gardens at Marina South and the Straits of Singapore, which will host some 11,000 homes, with a mix of commercial, hotel and community facilities for all to enjoy.

To get ideas for this project, the URA and the Singapore Institute of Architects (SIA) held a competition in September.

Open to students and professionals in planning, architecture and landscape, both locally and internationally, it drew 30 entries.

Participants had to illustrate how high-density living can co-exist with a waterfront garden concept, and set a new landmark in residential development.

A five-member panel, including Mr Tai Lee Siang, SIA president, and Ms Fun Siew Leng, director of urban planning and design at URA, chose four winners who each won $10,000.

The winning ideas will serve as an inspiration and catalyst for the masterplan.

Tay Suan Chiang

The four winning and other entries are on display at City Hall, Level 3 Chambers, till Dec 8, from 10am to 10pm. Admission is free.

Design by Surbana, Singapore

THIS proposal adopts two broad housing strategies.

The first is the Blue strategy, where 30- to 50-storey-high residential towers sit directly on a vast expanse of water in a radial manner. This allows residential owners to have breathtaking views.

Carparks and vehicle movements will be limited to the basement levels, freeing up the ground level for water-themed playgrounds.

In the second Green strategy, most of the rooftop spaces will be semi-public gardens. Public gardens and spaces are also carved out between apartment blocks, creating a closeness to nature.

An internal canal system will allow residents to take boat rides around the area.

Design by Compass Studio Limited, Hong Kong

The overall design of this proposal resembles rolling hills - depicted by high- rise residential blocks of various heights - that overlook a low-rise village.

The towers are arranged such that they have views of the Gardens at Marina South and the seafront.

Connecting the buildings are several high-level terraces called ‘Sky Cloud Gardens’, and they will be used for leisure activities.

Nearer the waterfront will be a low-rise eco village. Traffic here is restricted to green means of transportation, preferably electric cars.

Design by SKPS Projects, Singapore

The focus here is on creating more open areas and creating a waterfront space for communal and commercial use. Garden decks will link this area to the Gardens at Marina South.

The residential buildings will be lifted 10 storeys above ground, so the space below can be used by the public. There are also plans to plant rainforest

Design by Khoo Teik Rong, Singapore

Khoo Teik Rong was inspired by the many canals he saw in Amsterdam and wanted to recreate the same atmosphere. His canals will be artificially created and connect the Gardens at Marina South to the sea.

There are also plans for the canals to be lined with street-level shops.

His residential blocks will consist of high-rise ones as well as townhouses and waterfront homes.

Source : Straits Times - 1 Dec 2007

Private pool or garage with your apartment?

Filed under: Developer News, Genius Thoughts, Property Add Value, Property Investment — Propertymarketupdates @ 9:48 am

NO MATTER how expensive luxury apartments become, they never seem to be short of eager buyers.

But what exactly makes these multimillion-dollar homes worth their hefty price tags, which can go up to $20 million - or even $30 million - for projects such as The Marq on Paterson Hill?

A prestigious location, spacious interiors and unblocked views are some of the essentials that push prices of luxury homes beyond the reach of most homebuyers.

The icing on the cake, however, are the designer fittings and special features that make each of these top-end developments unique.

Exclusive lines of imported furniture, $120,000 beds from Hasten Vividus and state-of-the-art entertainment systems help developers command large premiums for their residences, said Mr Ku Swee Yong, director of marketing and business development at Savills Singapore.

The new trend of hotel-branded properties, such as St Regis Residences and the Ritz-Carlton Residences, also gives homebuyers the option of having dedicated concierge and housekeeping services.

And as foreign buyers with sophisticated taste flock to Singapore, developers have had to up the ante even further.

Hayden Properties, a new entrant in Singapore, is setting the bar higher with its first Singapore development, The Hamilton, on 37 Scotts Road. The 30-storey condominium will feature a private carpark in each of its 54 units - a first in the region and the tallest project with “car porches” in the world, according to the developer.

Seated in the comfort of their cars, owners will be taken from ground level to their apartments in a special glass elevator large enough to accommodate a Rolls-Royce. They will also have parking space in the basement carpark if they prefer to leave their vehicles on the ground.

Those who want to take the passenger lift can even get a valet to park their cars for them.

Hayden is also responsible for bringing in the Ritz-Carlton Residences on Cairnhill Road, which will be the first such homes in Asia. A 24-hour concierge service, housekeeping and sommelier service will be provided for residents by staff trained and managed by the Ritz-Carlton.

Another must-have these days is a private pool. Two recent high-end launches boast this feature: Parkview Eclat on Grange Road, which will have an infinity-edge spa pool on the balcony of each unit; and, The Marq on Paterson Hill, with 15m lap pools in every apartment.

Both developments, not surprisingly, are commanding unit prices of more than $4,000 per sq ft (psf).

Meanwhile, the upcoming Hilltops on Cairnhill will be the first high-end project in Singapore to have a “resort-style steam spa room in every apartment”, said developer SC Global, which is also behind The Marq.

“The spa experience has become a regular part of the lifestyle of our high-end buyers. We wanted to offer this indulgence as a standard feature at Hilltops to provide the complete luxury experience,” said SC Global chief Simon Cheong.

For the creme de la creme, the Hilltops condo comes with an 11,000 sq ft, six-bedroom super-penthouse that will have a dedicated private lift bringing residents directly from the ground floor to their apartments. This is “a rare feature, even in the most well-designed of super-penthouses in the world”, according to SC Global.

While developers are pulling out all the stops for these one-of-a-kind features, they are also lavishing their attention on the smallest details.

No expense is spared for fittings, such as wardrobes, kitchen appliances and bathroom fixtures.

Bespoke kitchens by renowned German kitchen designer and manufacturer Bulthaup will be provided in apartments at St Regis Residences, Parkview Eclat and The Beaufort on Nassim.

St Regis Residences, in particular, is studded with well-known brands from around the world. It will feature DuPont’s Corian countertops, Miele stainless steel kitchen appliances and a wardrobe system from Germany’s Truggelmann. Residents will enjoy long baths in bathrooms designed by Kaldewei and fitted with fixtures and accessories from award-winning manufacturer Dornbracht, both German brands.

At The Orchard Residences - which holds the record for Singapore’s priciest homes with one penthouse sold at $5,600 psf - wardrobes will come from Italian furniture maker Poliform.

Units will also be outfitted with kitchens by German luxury kitchen brand Poggenpohl, as well as sub-zero wine coolers with two separate storage zones for reds and whites.

Source : Sunday Times - 18 Nov 2007

November 30, 2007

Where high finance meets high living

Filed under: Expat Community, Genius Thoughts, Market Watch, Property Trends, Singapore Economy — Propertymarketupdates @ 9:17 pm

TIRED of Orchard Road? Jaded by Clarke Quay? Finding Robertson Walk just a trifle same-old, same-old? For the Singapore consumer - probably among the most avid in the world - Marina Bay may be the next big thing.

The new downtown will be home to a casino, a financial centre and several sparkling condominiums, so not surprisingly, shops and restaurants are eager for a presence there.

‘The Marina Bay area presents many exciting opportunities for both the business and leisure market,’ said Sulian Tan-Wijaya, general manager of The Fullerton Heritage, which is developing a string of commercial properties along the waterfront.

‘Our development is at the heart of the Central Business District, the Marina Bay Sands casino, the Esplanade theatres, new high-end residences like The Sail and The Clift, and the nearby Civic District,’ she said.

Edgar Huang, manager of marketing services for Esplanade - Theatres on the Bay, said the arts-performance centre expects to see ‘even more buzz in the area, with more people coming to work and live and play here’. The theatres, open since 2002 and famous for their domes that have been likened to durians, are also adjacent to a shopping mall.

David Martin, general manager of Marina Bay Financial Centre (MBFC), which will consist of high-rise office towers as well as retail space, estimates there will be 50,000 people living and working in the ‘immediate vicinity’ of the financial hub from 2011.

Along with the visitors who are sure to flock to the adjacent Sands, ‘we believe this creates a compelling offer to potential retail tenants, and this is also the feedback we are getting from the market’, he said.

Events being held in and around the public areas of Marina Bay will also help draw in the crowds, said the Esplanade’s MrHuang.

‘Marina Bay is also currently host to many celebrations like National Day, the Fireworks Festival and the New Year’s Day celebrations,’ he said.

Upcoming events like the Chingay street parade and the Grand Prix Formula One race, which Singapore will host in September next year, will also attract visitors, he added.

To entice what promises to be a diverse range of consumers, each developer is adopting a slightly different marketing tack.

The Fullerton development, for example, is aiming to be high-end and historical.

‘In addition to the Fullerton Hotel and a new waterfront 100-room luxury hotel, the Fullerton Heritage Precinct will offer a range of chic, trendy and elegant retail and dining experiences,’ said Ms Tan-Wijaya.

‘These include conservation buildings such as The Fullerton Waterboat House, Clifford Pier and Customs House, as well as One Fullerton,’ she said.

One Fullerton will revamp its second floor and offer even more food and beverage outlets, which should attract tourists who visit the nearby Merlion Park, she said.

The Esplanade is pitching itself as a kind of natural retail extension for the arts lover. ‘It’s a lifestyle experience pegged to the arts,’ said Mr Huang.

‘Besides coming here for a show, you can start or end your evening with drinks and food,’ he added. ‘There are many shops closely related to the arts for art lovers, and those unfamiliar with the arts won’t feel out of place either.’

Mr Huang said that business at the Esplanade has been bustling since its inception.

‘It’s been positive here at Esplanade Mall,’ he said. ‘The Esplanade also presents over 70 per cent of our artistic programmes free, which means visitors will always have something to look forward to after a meal or a visit to the shops.’

He said that some of the main attractions of the mall are the food centre Makansutra Gluttons Bay, award-winning restaurant My Humble House and library@esplanade, Singapore’s first performing-arts library.

Not forgetting the small but unusual Tatami Shop - ‘the world’s first tatami furnishings retailer outside Japan’, said Mr Huang.

Suntec City Mall, which welcomed its first customers in 1997, says its retail concept is ‘a little something for everyone’. The shopping centre’s larger tenants include hypermarket Carrefour and fashion retailers Mango, La Senza and Lacoste. It also boasts the gigantic Fountain of Wealth, which attracts visitors from all over the world.

‘Also, Suntec City Mall houses the embarkation point for the many tourists going for the Duck Tours and Hippo tours,’ said Marilyn Tan, investor relations manager at ARA Trust Management (Suntec).

As for the MBFC, Mr Martin said the financial hub aims to be ‘a vibrant and prestigious, yet convenient, shopping and dining precinct for the internationally-minded’.

Retail in the MBFC would address a ‘market gap’ in the central business district for serving the needs of higher-income earners and residents, he said. ‘This group of customers wants much more than what a conventional mixed-use centre offers. MBFC is designed as a place where residents, the office population and visitors can satisfy their everyday needs without leaving the business and financial district.’

Of the development’s 160,000 sq ft of underground retail space, about half will be for shops and the other half for food and beverage, he said. In addition, there will be a restaurant on the 33rd floor of the Tower One office block.

‘MBFC is in talks with a number of leading retail interests to be located within the centre,’ he said. The development will offer dining and entertainment options for ‘a spectrum of tastes’.

Then, of course, there is Marina Bay Sands, which will open in 2009. Its developers, Las Vegas Sands, declined to comment at this stage on the specifics of upcoming shops and restaurants.

Besides the casino, the entire integrated resort, as it is called, will feature three 50-storey hotel towers, linked by a two-acre Sky Garden. Not to mention an Arts and Sciences Museum shaped like a welcoming gesture, and one-million square feet of ‘integrated waterside promenade and shopping arcade’, according to its website.

Clearly, there will be loads of shopping and dining opportunities there. So hang on to your hats, Singapore consumer - if not your purses.

Source : Business Times - 29 Nov 2007

Stephen Riady: Man with a vision

Filed under: Developer News, Genius Thoughts, Indonesia — Propertymarketupdates @ 9:16 pm

CHOW PENN NEE speaks to Lippo Group’s Stephen Riady whose business acumen has led the firm make several strategic property investments.

THE Lippo Group should be familiar to Singaporeans by now, with its brand name plastered on more than a dozen property developments across the island, and less obviously, behind the ownership of retailers Robinsons and River Island.

At the helm of Indonesian conglomerate Lippo’s business empire in Singapore is Stephen Riady, whose entrepreneurial spirit is well known.

Mr Riady, executive director of Auric Pacific Group, clinched the Strategic Investment Entrepreneur of the Year award in Ernst & Young’s Entrepreneur of the Year Awards for Singapore this year. Among the criteria for the award are traits like strong financial performance, personal integrity and entrepreneurial spirit.

His group’s move into property has been strategic, given current, sky-high property prices, and the fact that he went into the market much earlier on.

‘We started off with the purchase of Lippo Centre on Shenton Way at the end of 2004,’ Mr Riady told BT in an earlier interview. ‘You think people come to us asking us to buy? No. We went out, and at that time, there were no bidders,’ he recounted.’Wise investors are those who have a vision, they are the ones who see something that other people have not seen … Then they start taking action, instead of just waiting there.’- Stephen Riady, Auric Pacific Group executive director

The building has since been sold for $350 million - or more than double the $151 million purchase price - earlier this year. ‘There were signs that the Singapore economy was in good shape in 2005 and 2006, so we continued buying,’ he said.

Citing the hallmarks of a good entrepreneur, he said one must have the ability to understand timing and be willing to invest and take risks. ‘We should be willing to go outside our comfort zone.’

Recounting how he started investing in Singapore, he said: ‘When the Singapore government talked about plans to remake this place, lots of people heard about it. But we believed in it and took action early.’ And that, he says differentiates the wise investors from the foolish ones.

‘Wise investors are those who have a vision, they are the ones who see something that other people have not seen,’ he says. ‘Then they start taking action, instead of just waiting.’

Foolish investors, on the other hand, wait for opportunities to come but they still don’t take it, he said. ‘The opportunity leaves and then they say they regret not having taken it.’ The Lippo group has so far amassed nine residential developments, five commercial properties and two retail brands, with a total value of $4 billion in Singapore.

The Lippo group has so far amassed nine residential developments, five commercial properties and two retail brands in Singapore, with a total value of $4 billion.

Mr Riady hopes to go further, increasing the value of the group’s portfolio from $7US billion in assets at present to $20US billion within five years.

The group’s retail arm is also expanding aggressively. The business includes Auric Pacific - a distributor of fast-moving consumer food and non-food products, Robinsons, and various clothing stores.

‘The plan for our retailing business is to grow turnover from the present $2US billion to $5US billion in five years’ time,’ said Mr Riady.

His entrepreneurial instincts showed up early. Every school holiday, Mr Riady would return to the family business - set up by his father Mochtar Riady - to learn the ropes. The elder Riady started the Lippo business with a bank and has since built up a vast conglomerate spanning property, banking, and retail.

‘My dad didn’t say that I had to join the business, but since we already had it, somehow in university you just naturally major in business. You don’t think about it.’

He considers working in a family business advantageous as there is a ‘consultative environment in which both timeliness and calculated risk-taking strategies can be explored, discussed and implemented’.

‘To any entrepreneur, these two elements are key to the success of a business,’ he said.

At 46, the businessman is at the top of his game, and continually trying to improve. ‘A lot of people have mid-life crises because they get stuck and they are not inclined to grow or learn anymore,’ he said.

‘I really believe in growing because without growth, we will have crises and problems. We must train ourselves to learn.’

Source : Business Times - 29 Nov 2007

October 31, 2007

Analysts see no property bubble

Filed under: Genius Thoughts, Market Watch — Propertymarketupdates @ 8:31 pm

They’re mum on whether it’s a good time to buy, but agree Singapore fundamentals are pretty robust.

PROPERTY: boom or bust? This was the intriguing question to which a capacity turnout of about 170 investors recently sought answers, at a dinner hosted by financial advisory firm ipac. The good news is that the experts at the evening’s panel do not foresee a bubble in the offing, based on three presentations - albeit with some concern expressed by Jones Lang LaSalle’s head of research, Chua Yang Liang.

The not-so-good news is that the experts shied away from the multi-million-dollar question of whether this was a good time to buy. What is more, over the past weekend, the surprise news of a halt to the popular deferred payment scheme for uncompleted properties appears to have cast a cloud over residential property’s upward trajectory.

In a deferred payment scheme, developers effectively extend free financing to buyers of uncompleted properties. Buyers need only pay an initial deposit of 10 to 20 per cent, with the balance due when the property is completed in a couple of years.

Thanks to this form of free credit, a sizeable number of speculators have rushed in to new home launches, as a rising market gives them a window to sell their units at a substantial profit in a short period.

The base case of one panellist, HSBC senior Asian economist Robert Prior-Wandesforde, is that there are few obvious triggers for a sharp deceleration in prices.

‘If we’re in a bubble, we’re in the early stages. The fundamentals are pretty robust. The mass market is just starting to see a recovery and that’s probably the safest area for investment,’ he told the audience. The supportive factors include the expected growth in employment and personal incomes.

The cost of servicing mortgage debt also remains relatively low at just about 14 per cent of household income, compared to 50 per cent in mature markets like London.

Contacted yesterday, he said: ‘I think the measure (to halt deferred pricing) will take a little bit of froth out of the market, but with employment booming, wages soaring and the real mortgage rate at its lowest level since 1990, the outlook still looks very promising.

‘We should also bear in mind that valuations are still way below the levels of the previous boom. When adjusted for the growth in incomes, the private residential property price index is little more than half of what it was in 1996.’

At the discussion, Dr Chua of JLL expressed concern over the price gap between new and resale homes in the prime districts. The gap has widened sharply this year, reaching a peak of 60 per cent, against a medium to long-term premium gap of 32 to 38 per cent. The resale market, he says, reflects true demand better, as deferred payment schemes in the new home market have inflated prices.

In terms of rental yields, rentals in the luxury prime segment have edged below the 10-year Singapore bond yield. The clampdown on deferred payment schemes should remove the speculative froth, he says. ‘Generally prices will take a breather in the next two to three years with the sheer volume of (new) stocks coming on stream. We expect some kind of softening, not a correction, but a softening.’

Sing Tien Foo, deputy head of the National University of Singapore’s department of real estate, pointed to property’s ability to help diversify a portfolio, thanks to a low correlation with stocks and bonds.

Prof Sing’s research has shown that property provided a positive hedge against inflation between 1992 and 2007, a period in which stocks and bonds did not provide such a hedge.

While all types of property offered a more-than perfect hedge against inflation, the best hedge was that offered by detached housing, followed by semi-detached homes.

Meanwhile, advisers are sounding caution. Roy Varghese of ipac says: ‘If you’re looking to invest, be very careful. You need to have an investment objective and that includes looking into the IRR (internal rate of return). You should be able to hold it for seven to 10 years. If you bought your property at a peak, your IRR will be low.’

Joseph Chong of New Independent expects the price gap between new uncompleted homes and resale homes to narrow. ‘The market should see a more moderate ascent in prices - instead of 20 per cent, perhaps 10 per cent in line with nominal GDP.

‘You should see more upside…But if your portfolio is not big enough, I don’t think you should bet on investment property in Singapore.’

Those with modest resources are better off investing in a global property fund or Reit, he adds.

Analysts, however, remained mostly sanguine over the medium-term outlook. Merrill Lynch’s property team wrote in a paper market that sentiment will be weak over one to two months. ‘However, we are of the view that genuine buyers do not buy houses on innovative purchase schemes by developers alone. We believe the more important considerations will be where Singapore is heading, will they be able to keep their jobs or businesses and will their salaries/profits increase.’

The firm’s economics team recently wrote that Asian property prices were not high relative to per-capita income, and advances have been modest compared to those in the UK, the US and Australia. The drivers include low real interest rates and positive demographics.

Citigroup analyst Wendy Koh said that while sentiment will weaken in the short term, residential prices are supported by strong fundamentals. In a note on Friday, she said: ‘We believe the current price increase is well supported by strong fundamentals such as the extremely tight physical supply and economic and wage growth.

‘We maintain our view that rental rates for residential units will continue to climb on the back of the relative net increase in housing stock due to low completion and relatively high demolition due to en blocs. The rise in rental rates will likely continue to support further price appreciation.’

Source : Business Times - 31 Oct 2007

October 23, 2007

Property booms, busts make economy vulnerable

Filed under: Genius Thoughts — Propertymarketupdates @ 1:42 pm

PROPERTY price booms and busts make Singapore’s economic growth more vulnerable to volatile factors and should be prevented, an economist at a think-tank said here yesterday.

While the impact of a spike in property prices on overall GDP growth is ‘quite subdued’, a property price bubble causes private consumption expenditure to shrink, making the economy more dependent on foreign demand and business spending which are much more volatile, said Tilak Abeysinghe.

The deputy director of the Singapore Centre for Applied and Policy Economics (Scape) at the National University of Singapore, was speaking at the inaugural Singapore Economic Policy Conference organised by Scape at Four Seasons Hotel.

His team’s research found that while higher property prices spur construction investment, an accompanying dip in private consumption means overall economic growth does not change much as a direct result of property price inflation.

But the overall effect is still undesirable as it makes the economy far more dependent on business spending and foreign demand for its exports, both of which are more volatile than domestic consumption, he said.

The consumption expenditure share of Singapore’s GDP has fallen from more than two-thirds in 1997 to about 40 per cent today. ‘If consumption expenditure in Singapore falls further, GDP growth will be very vulnerable to external demand and investment demand,’ he said.

Research found that in contrast with economies such as the US, higher housing prices here do not seem to encourage more personal spending.

In Singapore, ‘housing wealth is relatively illiquid,’ he said. ‘You just can’t sell your house and move to a suburban house.’ This means the ‘wealth effect’ of housing price inflation seen in countries such as the US - when people spend more as the value of their homes rise - is much less noticeable in Singapore.

Also, ‘when housing prices go up, mortgage payments also increase, so people have less to spend on consumption,’ he said.

He believes policymakers here should ‘do their best’ to prevent a property price bubble because of its effect on private consumption spending and its tendency to widen the income gap between the rich and poor.

‘It should be possible’ to prevent another bubble from building by identifying the main cause of the recent run-up in property prices - likely to be people buying properties for investment rather than owner-occupiers - and introducing measures to dampen demand from this source, he said.

But he also cautioned against flooding the market with a vast supply of new homes, which could trigger a price crash and set the conditions for a new bubble.

Source : Business Times - 19 Oct 2007

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