News Highlights Tuesday 29 April 2008

Asia - some bright spots amid challenges
A few positive assessments of the market provided some bright spots at a property conference held by Citi yesterday. Banyan Tree executive chairman Ho Kwon Ping said that the US sub-prime crisis and credit crunch have had minimal impact on the high-end hospitality business. Citi's Asia-Pacific director of research said that although Asia will not be immune from the sub-prime crisis, it is in good shape to weather the real estate downturn, underpinned by low loan-deposit ratios and strong liquidity.


- The Business Times, P29








Record $3,125 psf paid for office building in volatile market
Commerz Real, a subsidiary of Germany's Commerzbank, has bought 71 Robinson Road, setting a record in the process. The price paid for the building, which was owned by a partnership of Lehman Brothers and Kajima Overseas Asia, was not disclosed by Commerz Real. But sources say it was $3,125 psf of net lettable area (NLA), or $743.8 million. While the selling price represents a healthy capital appreciation, it is understood that the acquisition comes with a coupon payment of 4.5% by Lehman/Kajima to Commerz Real - or about the investment yield for Commerz Real for the duration of construction. A Commerz Real management board member said that they have seen strong interest from major financial development and expect to attract rents in the region of $15 psf. JLL believes this year could see more such assets held by opportunistic funds go to core funds like Commerz Real.


- The Business Times, P1






Wanted: Rich, foreign entrepreneurs to start businesses in S'pore
The Economic Development Board (EDB) is now turning its sights on rich individuals. It has teamed up with the Ministry of Manpower (MOM) to scour the globe for rich, entrepreneurial foreigners to start businesses in Singapore. Together, EDB and MOM will run Contact Singapore - an 11-year-old programme previously run by MOM alone. It will include attracting overseas entrepreneurs and high net worth individuals who could potentially invest and do business in Singapore. Contact Singapore will be setting up three new offices in San Francisco, Beijing and Sydney to add to its current four - Boston, Chennai, London and Shanghai - to help with this increased role. The offices will be open by the end of the year.


- The Straits Times, H18








The Russians are coming, with M'sian firm in tow
Mikhail Bolotin, one of Russia's richest men, reportedly paid US$100 million for Dunham-Bush in Malaysia, got it delisted and is now moving the company's headquarters to Singapore. He is seeking a listing on the stock exchange here to raise US$1 billion. The company has a Singapore office and aims to set up its regional and global HQ here by the end of the year.


- The Business Times, P1








Slowdown looks unlikely in China
China's real estate market will not see a major slowdown in 2008 despite Beijing's intensified efforts to cool excessive price rises. Urban property prices rose less rapidly in March than in the first two months, and the property outlook index continued to decline in March after peaking in November. But the Chinese Academy of Social Sciences (CASS) said that it was still premature to draw the conclusion that the market was heading south. China's urbanisation and residents' desire for better housing, compounded by the scarcity of land and the government's tightened grip on land supply to curb investment, would put pressure on prices in the long run. The National Development and Reform Commission also said that upward pressure on property prices would increase in the second quarter as more people put their money in property to avoid the erosion of returns faced by bank deposits.


- The Business Times, P29








PropNex takes home buyers to court over fee dispute
PropNex is seeking about $4,000 in commission or a service fee in a case that is likely to turn the spotlight on the issue of whether home buyers should pay a fee to sellers' agents. The issue of commissions payable by independent buyers, or buyers who deal without agents, has been hotly debated. The Consumers Association of Singapore has, in recent years, questioned the practice of agents taking commissions from both buyer and seller in the same transaction, citing a possible conflict of interest.


- The Straits Times, H4








Allgreen Q1 profit plunges 65%
Allgreen Properties yesterday posted net earnings of $17.5 million for the first quarter ended March 31 - a 65% slump from $49.6 million in the same period last year. Revenue sank 52% to $87.9 million. Citing the US sub-prime crisis as a factor, Allgreen said the property market was subdued, which led to lesser transactions in the residential sector. The group held back launching residential projects. But landed properties launched at Pavilion Park, Bukit Batok saw good take-up. The saving grace for Q1 was investment property revenue, which improved from Q1 2007 due to higher rents from offices, serviced apartments and retail space. Despite the lacklustre first quarter results, Allgreen said it expects to be profitable in 2008. Allgreen expects a pick-up in activity in the second half of 2008.


- The Business Times, P8