News Highlights Thursday 20 March 2008

West Coast condo plot draws whopping 12 bids
12 firms submitted bids for a 99-year leasehold condominium in West Coast Crescent, which had a Hong Kong-linked firm as the highest tender so far. Billion Rise, which is linked to the Cheung Kong group, bid $110.44 million for the site - $305 psf of gross floor area. Tian Hock Properties, which has Far East Organization chief executive Philip Ng as a shareholder, tendered $108.9 million or $305 psf. MCL Land was next with $103.5 million or $286 psf. Other bidders included Sim Lian Land, Hoi Hup Realty, Frasers Centrepoint and Allgreen Properties. Consultants said the top bid of $305 psf will translate to an estimated break-even price of $680 psf to $720 psf for new condos. CBRE executive director said that the overwhelming response from major and mid-size developers and contractors signals developers’ confidence in the suburban segment despite the current lukewarm response to new projects. The West Coast Crescent site suits a mass market condo project and can be built up to 36 storeys.

- The Straits Times, H24 and The Business Times, P32



Horizon Towers case back in High court
2 out of the nine sets of minority owners fighting the sale have dropped out of the High Court appeal that started yesterday. Minority owners are appealing a decision in December last year by the Strata Titles Board (STB) to approve the $500 million sale of the 99-year leasehold Leonie Hill estate. Hotel Properties, Morgan Stanley Real Estate and Qatar Investment Authority agreed to pay $500 million, but the minority owners felt they were getting a raw deal. The sale price of less than $900 psf is below prevailing market rates, said an industry source.

- The Straits Times, H24



Asian shares rally on US rate cut but rebound short-lived
The Dow Jones Industrial Average shot up 3.5% or 420.1 points, after a 0.75% point cut in the federal funds rate by the Fed. The STI surged by more than 80 points in the first hour, before closing down a mere 0.37 points, due to profit taking. Tuesday’s rate cut is unlikely to be the last but some analysts fear the Fed’s aggressive rate slashing will fuel inflation.

- The Straits Times, H26



Stress test for builders as steel price soars
Industry players report that the price of steel reinforcement bars (rebars) and structural steel has gone up by around 80-100% over the past 15 months. This is a result of the higher global demand especially by developing economies and hikes in the costs of the raw materials used to make steel. The development is a setback for the construction industry, which was veering towards using more steel to reduce dependence on concrete, which is more prone to supply-side shocks.

- The Business Times, P1



Roxy-Pacific profits soars on good show by property, hotels
Group net profit for newly listed Roxy-Pacific Holdings, a Singapore specialty property and hospitality group, surged to $19.3 million for the full year ended Dec 31, 2007 from $4.84 million the previous year. Revenue more than doubled to $102.7 million from $48.8 million and was driven by strong performances by the key segments of property development and hotel ownership and property investment. Executive chairman and CEO of Roxy-Pacific said that the company remains optimistic about the property market, especially for the mid-tier and mass market segment which is the focus of their existing projects. The company intends to launch 8 residential projects comprising 290 units this year.

- The Business Times, P6



Macquarie to start wealth business here
Australia Macquarie Group will launch an Asian private wealth business with its first office in Singapore – its first step outside Australia. Rather than targeting Australian expatriates in Singapore, the bank will be looking at ultra-high net worth individuals (UHNWI) in Asia. Head of Macquarie Private Bank said that as the world’s fastest growing private banking and wealth management centre, Singapore is set to become a regional hub for Macquarie private bank and they intend to house their Australian back office for the private bank here. Singapore has experienced one of the greatest increases in high net worth individuals in the region, with their estimated wealth standing at US$323.73 billion, according to the Capgemini/Merrill Lynch 2007 Asia-Pacific Wealth Report.

- The Business Times, P9



India’s BPO industry spreading out
Business Process Outsourcing (BPO) firms are looking at smaller and lesser known cities such as Mysore, Coimbatore and Jaipur for new operations as firms seek to lower costs and deepen their human resource base. India’s BPO industry is growing strongly, with exports reaching US$8.4 billion for FY2006-07, up 35% from the previous year. Prospects for the industry are good: industry body Nasscom predicts that exports will continue to grow, reaching some US$10.5-11 billion in 2008. The Tier 1 location will continue to be the prime locations for BPO operations due to factors such as well-developed labour markets, established lobby groups and developed supporting industries. These cities will be popular with first-time investors to India seeking to minimize risk. Business association Assocham calculated that Tier II cities offer an average cost advantage of 15% over Tier 1 cities. Relatively untapped real estate markets mean lower direct costs and less waiting time for permits. The importance of established labour markets, supporting industries, access to policy-makers, and prestige factors will mean that Tier 1 locations maintain their pre-eminent status.

- The Business Times, P21



CityVista Residences – The Premier Luxe Life (advertisement)
Located at Peck Hay Road in the exclusive District 9, the freehold CityVista Residences offers a lifestyle for a privileged few. More than 50% of the units were snapped up in November 2007. Three-bedroom units range from 2,121 to 2,142 sq ft, while four-bedders range from 2,626 sq ft to 2,809 sq ft. There are also 2 exclusive five-bedroom penthouses with private lap pools. As it is located in the Cairnhill area, units in the project are good buys for investors looking for long-term opportunities. CityVista is jointly developed by CEL Development Pte Ltd and VM Mauritius Holdings.

- The Business Times, P29



Mumbai land sales signal prices may fall
Mumbai’s metropolitan authority received no bids for the sale of 2 of 5 plots at Bandra-Kurla Complex and sold another site to the sole bidder yesterday. A global equity selloff and the sub-prime crisis in the US have reduced investor appetite for real estate stocks and may herald an end to a 4-year property rally. India’s developers will begin to lower prices, signaling a dip in property demand. The BSE Realty Index fell 47% since January.

- The Business Times, P31



CapitaRetail China Trust eyes tripling assets to $3b by end-2009
CapitaRetail China Trust (CRCT), which owns eight China malls worth $1.1 billion, is confident it will be able to raise new equity when required and cap borrowings at 35% of assets. Despite failed equity raising efforts by other Reits because of weak market conditions, CRCT remains optimistic about the China market due to investors’ enthusiasm in China’s retail sector. Its pipeline of new properties includes 16 existing malls and another 49 that will open in the next few years.

- The Business Times, P32