Finance Ministry, too

http://www.todayonline.com/singapore/EDC091201-0000069/Finance-Ministry-too


Finance Ministry, too
05:55 AM Dec 01, 2009
Tell the Ministry of Finance what initiatives you would like Budget 2010 to include, to enhance the economy while being the best home for all Singaporeans.

Launched yesterday, the feedback exercise in partnership with Reach invites the public to share both their general feedback and specific suggestions at www.singaporebudget.gov.sg; via SMS at 9-Speak-Up (9-77325-87); or via phone (1800-226-0806), fax (6332-7435) or mail (Ministry of Finance, 100 High Street, #10-01 The Treasury, Singapore 179434).

Dialogue sessions and school debates will also be organised.

HDB accidents drop

http://www.todayonline.com/hotnews/EDC091201-0000083/HDB-accidents-drop


HDB accidents drop
05:55 AM Dec 01, 2009
The Housing and Development Board's accidents rate dropped for the first nine months of this year, despite there being more construction and upgrading projects. The figure of 0.36 accidents per million man-hours was much lower than last year's rate of 0.52, and far below the industry average of 2.9.

However, the HDB will further drive workplace safety efforts, as it opens up the construction market to consultants and contractors who are new to HDB works and, thus, unfamiliar with its safety requirements.

Worksite briefing, safety assessment and checks have been stepped up, while four contractors have been taken to task for not following proper construction procedures: They were fined and barred from bidding for jobs for between three months to a year. BYRON HO

Set commission, scope of work?

http://www.todayonline.com/hotnews/EDC091126-0000092/Set-commission-scope-of-work


Set commission, scope of work?

These are among several suggestions for new regulatory framework
by Tan Hui Leng
05:55 AM Nov 26, 2009
SINGAPORE - A property seller signs a commission agreement to pay the property agent 2 per cent on the deal but later complains to the Singapore Accredited Estate Agencies (SAEA), saying that he should not be paying so much as the agent had not "fulfilled his responsibilities".

A scenario like this could soon become a thing of the past if a proposal - that the Government set a standard commission guideline and implement a standardised form that sets out what an agent is expected to do - becomes part of a new regulatory framework for the real estate industry.

"We would usually ask what is the scope of work committed in a commission agreement but there's usually nothing more than that of an agent who will procure a buyer for the seller," said SAEA chief executive, Dr Tan Tee Khoon. "When this is done, his work is done."

With agents' commissions being a touchy issue, it comes as no surprise that one suggestion the Ministry of National Development (MND) has received in its public consultation on the regulatory framework is that of regulating the commission rate of property agents.

Some respondents suggested that the Government should set standard commission guidelines to curb undercutting among agents and protect less-educated consumers from being overcharged.

The public consultation - carried out between Oct 13 to Nov 17 - drew over 200 independent comments and suggestions, some of which may not be feasible, said industry players.

The suggested commission fee guideline for one, may not be viable. There was already such a guideline from the Institute of Estate Agents (IEA) previously but it was removed last year because the Competition Commission of Singapore had deemed it to be anti-competitive.

"The consumer feedback may not be in the spirit of existing laws or rules, it is also in the consumers' favour to let the market dictate," said PropNex chief executive, Mr Mohamed Ismail.

IEA president Jeff Foo, however, is for restoring the fee guideline as it would help consumers gauge the market rate for commissions.

Other suggestions to regulate the industry include standardising real estate industry practices; limiting the size of agencies for better control of agents; and disallowing agencies and agents from direct buying of properties from sellers or developers.

The last point is a breach of "basic human rights" to invest, said Dr Tan. This should be allowed as long as there is proper disclosure and the transaction is above board, he added.

In general, the public was supportive of key features proposed, including mandatory accreditation of agencies and agents; maintaining a public central registry for accredited agents; setting up an independent tribunal specialising in the industry; and introducing a demerit points system for errant agents.

MND will consolidate views from various channels when refining the regulatory framework - with the key elements expected to be announced early next year.

Too early to give a rollback date

http://www.todayonline.com/hotnews/EDC091124-0000053/Too-early-to-give-a-rollback-date

Too early to give a rollback date

05:55 AM Nov 24, 2009

SINGAPORE - Measures taken to cool the property market seem to have had the desired effect, said National Development Minister Mah Bow Tan, who signalled that the Government may remove certain anti-speculative measures in future if the property market stabilises or weakens - but it is yet too early to say when.

Mr Mah noted that since steps were introduced, starting with the ban on the Interest Absorption Scheme (IAS) and Interest-Only Loans, private home sales fell 37 per cent on-month in September and another 29 per cent last month.

The Government also reinstated its Confirmed List for its land sales programme in the first half of 2010.

It will continue to monitor the market closely to assess its response to the measures, before deciding whether further anti-speculative steps are needed, Mr Mah told Parliament.

"We want to curb erratic spikes in prices due to excessive speculation, inaccurate information or market manipulation. But we must let market forces determine prices, based on genuine demand from home-buyers and investors," he stressed.

Credo Real Estate managing director Karamjit Singh reads this as meaning that the property market should function with minimal intervention. "It's difficult to say when the Government would reinstate the (IAS and interest-only loans), since the property market changes year to year. The measures may be recalled to prevent a meltdown, but I don't see that happening in the short term," Mr Singh said.

PropNex CEO Mohamed Ismail, who credited the Government's action with bringing "sanity to the property market" by curbing speculators, concurred: "We do not think it is necessary for IAS restoration within the next one year." Yasmine Yahya and Esther Fung

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'Buffer flats' for urgent needs: Mah

http://www.todayonline.com/hotnews/EDC091124-0000073/Buffer-flats-for-urgent-needs-Mah

'Buffer flats' for urgent needs: Mah

by Esther Ng

05:55 AM Nov 24, 2009

SINGAPORE - To meet the demand for public housing, the Housing and Development Board (HDB) projects it needs to build some 10,000 to 12,000 flats annually over the next five years.

That should provide sufficient flats for all first-time homebuyers, usually young couples, National Development Minister Mah Bow Tan said in Parliament yesterday.

But even as the HDB anticipates demand, does it do enough to meet the housing needs of those who book their flats and have to wait until they are built?

MP Cynthia Phua (Aljunied) asked if the Government would set aside 10 per cent of new flats as buffer accommodation. "There are a lot of families who are in urgent need of a home over their head, for example, a pregnancy before marriage," she said.

As this and other housing issues got an airing in Parliament, Mr Mah revealed for the first time that while the policy does not set out to have a buffer, in the "scheme of things" a buffer of that size already exists.

"These are the flats which are available from other programmes like Sers (Selective En bloc Redevelopment Scheme) flats and some buy-back flats," he said. Flats marked for redevelopment, and which have yet to be demolished, are available through a managing agent at "reasonable rentals".

In addition, there are now 2,000 flats available under the Sale of Balance Flats and extra flats from the Build-To-Order (BTO) scheme.

"We will build when, say, the take-up rate is 70 per cent, so there will always be another 30 per cent not taken up ... Once the programme is launched, we will put this 30 per cent on the market for sale," he said.



BTO projections are flexible

The BTO scheme, Mr Mah added, may rely on HDB's medium-term projections but is flexible enough to be ramped up.

For example, HDB is offering 13,500 flats this year, up from the 6,000 originally planned, due to strong turnaround in the second half of the year.

"If the take-up of BTO flats remains strong, we will continue to push out more flats under BTO next year - at least one every month if necessary," he said.

PropNex CEO Mohamed Ismail believes the current HDB supply and projections are "adequate", and

that any more would be an "oversupply" which could "dampen the asset value" of flats, given that there is a "continual supply of resale flats".

But should the economy recover well, a buoyant resale market would result in buyers having to pay more cash above flat valuations, he said.

"In that case, the Government should be prepared to release more than the projected number of 12,000 flats per year," he said, as newly-married couples would not have enough cash on hand.

Mr Mah noted that 80 per cent of new flat buyers pay for their mortgage loans fully using their Central Provident Fund monies.

His message for new home buyers, though: Do not expect to walk into HDB and buy a ready-to-move-in flat as soon as they get married, even with a buffer stock.

They can shorten the waiting time by booking a new flat ahead of their marriage under the Fiance-Fiancee Scheme, and move in once they get married. "Forty per cent of first-time flat buyers make use of this scheme today," he said.

Those who want a flat immediately upon marriage can buy a resale flat, using housing grants.

Member of Parliament Lam Pin Min (Ang Mo Kio) wanted to know if the HDB would refund the registration deposit under the Fiance-Fiancee Scheme, if matrimonial plans "genuinely" failed.

To laughter in the house, Mr Mah wondered how Dr Lam would define "genuine", but added that his ministry would "look into it, as (they) have always done".

 

Higher property taxes in 2010

http://www.todayonline.com/hotnews/EDC091119-0000116/Higher-property-taxes-in-2010  

Higher property taxes in 2010

To cushion the rise, Govt to give a one-off rebate of 50%

by Esther Ng

05:55 AM Nov 19, 2009

SINGAPORE - Expect to pay higher property taxes next year, but the rise will come with some cushioning. The Inland Revenue Authority of Singapore (Iras) has announced that it is raising the Annual Value (AV) of Housing Development Board (HDB) flats.

The move comes on the back of rising resale prices and rents.

The tax authority noted that while rents for HDB flats have stabilised after a moderate decline between the end of last year and the middle of this year, rentals have begun to rise since.

"As a result, current values of HDB rentals, as well as HDB resale prices, are still significantly higher than levels observed in 2007. The AVs of HDB flats will therefore have to be adjusted," said Iras.

The last time there was a revision in the AV for HDB flats was in January last year.

Even though HDB rental increased by up to 37 per cent last year relative to 2007, Iras deferred adjusting the AV for the start of this year because of the "uncertainty in market rental trends" in a recession.

To help HDB flat owners cope with the increase in January, the Government will give a one-off property tax rebate of 50 per cent of the tax payable, capped at $120. This applies to all those who live in the flats they own.

To help those in smaller flats, Iras will offset the total tax amount for households which have to pay property tax of $50 or less. This would mean that two-roomers will not need to pay property tax.

"It will help soften the blow," said real estate consultant Nicholas Mak.

He added that owner-occupiers of HDB flats will not be affected that much as "property tax on HDB is lower than (that of) private property".

On average, the increase will in property tax will be $72 for three-room flats, $97 for four-room flats, $107 for five-room flats and $103 for those in executive flats.

For those renting out their HDB flats and who will not receive the rebate, Mr Mak said that with demand still buoyant from the immigrant population, the "increase in rentals could offset the increase in AV". As of March this year, HDB has approved 22,754 applications by owners to rent out their units.

The Government will have other help measures for the "down-and-out", added Member of Parliament Ho Geok Choo, a Government Parliamentary Committee member for national development.

A higher AV may also have implications for inflation, although economists were mixed about the expectations of the

impact

"It will be benign because underlying inflation is low," said DBS economist Irvin Seah.

While others expect headline inflation to go up, unlike in Jan 2008 - when the government last raised the AV of public flats - it will not hit the heights of 6.6 per cent then.

"The housing component is a large contributor to the CPI basket and inflation might reach 2 to 4 per cent by the first quarter," said CIMB-GK economist Song Seng Wun, who added, though, that higher food, utility and COE prices could present greater upside pressure.

 

When To Tax Property Gains

Straits Times July 8, 2009

When to tax property gains

By Goh Eng Yeow

A PROPOSED change to income tax laws will make clearer to property sellers when they will be taxed on their profits.

Anyone who sells only one property in any four-year period will not be taxed on his profit, according to a proposed amendment to the Income Tax Act.

But if he sells another property within four years of the first sale, the profit from the second sale may be taxable.

If the proposal becomes law, it will provide certainty for owners who now cannot be sure if the taxman will come calling after they sell.

Under existing rules, an individual does not pay tax on gains made from selling a property unless the taxman decides that he is trader - someone who buys and sells multiple properties within a short time span. And there is no way for the seller to know in advance if he might be deemed a trader.

The new way of taxing property profits is one of many changes listed in a draft Income Tax (Amendment) Bill 2009 put up for public feedback last month by the Finance Ministry. If implemented, the change will take effect from January.

A ministry spokesman told The Straits Times on Tuesday that the proposed change aims to provide certainty of non-taxation to individuals who own property.

Once it takes effect, the individual who sells a property for a profit can be sure that his gains will not be taxed - provided he had not sold any other property in the previous four years.

If he sold other properties within that period, the spokesman said, the Inland Revenue Authority of Singapore (Iras) will decide whether he should be taxed, 'based on the facts and circumstances, no different from the present tax treatment'.

The draft Bill can be read at the Finance Ministry website www.mof.gov.sg and the public has up to next Tuesday to give feedback. The Bill is expected to go before Parliament later in the year.

New Homes Set To Raise Level Of City Centre Buzz

June 1, 2008

New homes set to raise level of city centre buzz

With office units in short supply, condos make a good option for investors: Analysts

By Jessica Cheam

Singapore's city centre is set to get bigger and bolder in the next decade, with the injection of around 23,000 homes that promise to take the buzz to another level.

And if Singapore's urban planners have their way, more office buildings will sprout at Marina Bay, along with mixed-use developments in the Beach Road and Ophir-Rochor areas - bringing people closer to their jobs.

All this will come to pass while hotels and lifestyle hot spots in Little India and the Singapore River surroundings ensure that the city teems with activity.

And even if you need a quick getaway from the city's frenzy, green open spaces such as the upcoming Gardens by the Bay and Esplanade Park are all within walking distance.

This vision for Singapore's 1,650ha central area was unveiled by the Urban Redevelopment Authority (URA) last week as part of its latest masterplan, which outlines Singapore's land use over the medium term.

With all these grand plans and more, is it time for investors to hunt within the city for a good buy?

Property experts say this depends on the location of the property, the timing and how quickly URA's blueprint materialises in the next few years.

Let us start with the Central Business District (CBD).

Office space investments are limited, although there are some strata-titled commercial units available, such as those at The Arcade in Raffles Place and International Plaza in Tanjong Pagar.

However, there is only a small pool to shop from, and units in good locations could be beyond the reach of the average investor. Units at The Arcade, for example, changed hands at around $5,000 per sq ft (psf) at the end of last year.

Knight Frank director of research and consultancy Nicholas Mak said there are 'very few good strata-titled office spaces in the city'. A more obvious choice would be to shop for homes.

With the government's latest strategy to repopulate the city centre and bring people closer to their jobs, investors can rest assured that this pool will only get bigger.

Some projects that have already been launched include The Sail@Marina Bay and Marina Bay Residences. Further inland, One Shenton Way and Scotts Square also offer units in the heart of the city.

The latest URA data shows Marina Bay properties transacting at around $2,100 psf. This is a slight dip from the peak prices seen in the property boom last year.

At Scotts Square in Scotts Road, units are being sold at an average price of $3,700 psf this year, down about 8 per cent from $4,000 psf in last year's fourth quarter.

At One Shenton Way, the latest sale went at $2,069 psf in January.

Prices might be falling at some condos now, but as these homes were launched at just below or around the $1,000 psf level, the question remains whether the upside is limited if one buys now, say some market watchers.

It is possible that prices might drop further, given the current cooling of the market, but Mr Mak added that owners are unlikely to let go of units if they would incur a loss.

Savills Singapore's director of business development and marketing, Mr Ku Swee Yong, said that sellers are more likely to negotiate now given the current market sentiment.

For investors holding out for drastic price drops, he said it is unlikely that home prices in the city will drop as much as 30 per cent, as recent bank reports have predicted.

'Current market conditions do not support that. At the most, we will see a 5 to 10 per cent decrease for top-end luxury homes.'

Mr Ku said that even at the $2,000 psf level, city homes can command rental yields of about 4 per cent as they are attractive properties to rent, catering to the international expatriate community.

At DTZ Debenham Tie Leung, senior director of research Chua Chor Hoon agreed.

'City centre homes fetch pretty good rentals and therefore give good yields...URA's data shows that rentals for condos such as Icon were in the range of $6.50 to $7.50 psf a month,' she said.

Mr Ku added that investors who are in for the long haul might find that their investments will pay off in the next five to 10 years, especially after the Marina Bay integrated resort opens and the city gets busier.

Other homes to consider include those at Robertson Quay and Tanjong Pagar.

The condos include Robertson Blue, RiverGate and Watermark at Robertson Quay; at Tanjong Pagar, there are the Pinnacle @ Duxton and Icon. Units at these projects have changed hands for $1,400 to $1,600 psf in the last three months.

The other option for investors is to wait for further government land sales, for more new homes to be developed, said Mr Mak. These developments would probably be in the Marina Bay area, he added, unless URA allows city properties to be converted into mixed-use projects.

Around Beach Road and the Ophir-Rochor area - touted as the northern gateway to the city - investment opportunities are more diverse.

There is a good mix of shophouses and strata-titled commercial and residential units on the market for the average investor.

The 101, Premier Centre and The Plaza, for example, are all strata-titled properties with a mix of commercial and residential units. At The Plaza, transacted apartment prices have gone up 28 per cent, rising from $600 psf in June last year to $900 psf currently.

Commercial units in this area have generally stayed at the $1,500 psf price level this year, though transaction volumes have fallen since last year, said Mr Ku.

Over at Tanjong Pagar, shophouses are also a staple of the district. These properties are usually more affordable, added Mr Mak, although he warned that they are more sensitive to market downturns.

If plans for a revamped Kallang Riverside and Paya Lebar Central go ahead, the city centre will also benefit from the buzz added by these new, nearby commercial hubs.

How soon investors will see price movements in city investments will depend on the pace of development. Market watchers agree it is still too early to see the price effects from URA's masterplan.

'Prices are peakish now, so one should consider the investment time horizon and yield before making a purchase,' said Ms Chua.

Private Banks Roll Targeting Mega-Rich

Straits Times May 2, 2008

Private banks roll out special units targeting mega-rich

Individuals with over US$30m in investible assets are moving more wealth to Singapore By Grace Ng

 

MORE private banks in Singapore are rolling out new special units to cater to Asia's super wealthy - a lucrative but largely under-served segment.

Banks observe that the region's mega-rich, who have well over US$30 million (S$41 million) in investible assets each, are moving more wealth to Singapore.

They do this to diversify their wealth beyond traditional ultra-high net worth banking hubs like Switzerland and Hong Kong.

The super wealthy grew in number to well over 17,500 in 2006 across the Asia-Pacific region, up 12 per cent from the previous year, according to a Capgemini/Merrill Lynch report.

While there is no official data for the amount of assets ultra-rich clients booked in Singapore, one senior banker reckons growth rates may be anywhere from 10 per cent to 25 per cent for some banks last year.

Ultra-high net worth clients in Asia who book assets in Singapore are largely entrepreneurs from Indonesia, the Philippines, Thailand, China and India. Banks say this is a particularly lucrative segment as the clients require a wide range of services, from investment banking to asset management.

They also tap the banks' expertise in key areas such as setting up a family office, a private company that manages investments and trusts for a wealthy family, as well as in specialised lending, private equity and philanthropic advisory service, said Mr Rajesh Malkani, head of Standard Chartered Bank's (Stanchart's) private bank in South-east Asia.

Singapore trusts are becoming popular, with many ultra-high net worth clients using these for estate planning, he added.

One sign that Singapore is increasingly becoming popular as a booking centre for the super wealthy is that banks here are setting up dedicated units and teams to serve them.

New players, such as Australia-based Macquarie, which is purely focused on clients with at least US$30 million in investible assets, recently made Singapore its regional wealth management base.

Other niche players already in the country, such as Pictet & Cie, mostly serve clients with at least US$100 million already with the bank.

Just a few months ago, Stanchart, which set up its private banking headquarters in Singapore in July last year, saw the need to set up a 'specific ultra-high net worth proposition', said Mr Malkani.

He said the growth of this segment had 'exceeded expectations', as Stanchart's private bank was able to tap its large base of relationships with entrepreneurs who had been using its expertise and network in Asia, Africa and the Middle East for decades.

Major banks acknowledge that they have not focused enough resources on Asian clients in the past, so this segment is still under-served in Singapore.

Citi Private Bank relocated Mr Akbar Shah to Singapore less than a year ago to head its mega-wealth division in the Asia-Pacific, setting up a new team to serve clients with a net worth of more than US$250 million each.

The team had been operating in Hong Kong for many years, but Citi decided it was time to use Singapore as another base.

'Many of these clients are from Indonesia and other South-east Asian countries, but there are also several Middle Eastern and European investors who are more keen to explore business opportunities in Asia and are also looking to place part of their liquid assets here,' said Mr Shah.

Citi's rivals are matching its moves.

UBS has a dedicated 'competency centre' in Singapore to create services and products just for its ultra-rich clients.

Credit Suisse is on the lookout for senior bankers to help it 'sharpen its penetration for ultra-high net worth clients', said Dr Francois Monnet, the head of private banking for South-east Asia and Australasia.

The margins earned from serving ultra-rich clients may be thin - thinner than for those in the high net worth segment, say bankers.

The average size of each transaction or trade, however, is considerably larger, said Citi's Mr Shah. So banks stand to earn hefty revenues from just one transaction for an ultra-high net worth client.

Worst May Be Over For Equities

Business Times - 23 Apr 2008

Worst may be over for equities

Three of four fund managers and analysts polled also paint bullish picture for Asia and emerging markets, reports GENEVIEVE CUA

WILL it be a severe recession for the US or a relatively mild one? To what extent would Asia and the emerging markets suffer? Views gathered by Executive Money from fund managers and analysts reflect optimism for the medium term for Asia and the emerging markets. Valuations, they say, are looking attractive, and equity markets could resume their bullish trend before the end of the year.

As for the current market gyrations, three out of the four polled believe that the worst may be over for equity markets, even if volatility remains fairly high. Markets, after all, are a discounting mechanism and historically in past crises have recovered well ahead of an economic upturn.

If you are sitting on cash, price weakness is an opportunity to buy. Jim McCaughan of Principal Global, in particular, gives insights on some assets that offer value and attractive yields to boot.

Mark Mobius, executive chairman of Templeton Asset Management

The worst is over for credit and equity markets, say the man who oversees some US$47 billion in funds. 'The credit crisis is over,' he declares in a recent visit to Singapore. 'Markets - stocks, bonds and money markets - are leading indicators. Now, the rebuilding is taking place.

'Yes, you'll still hear of bad news, but in essence, the crisis is over. The worst of the market drop has happened.'

He said that emerging markets are looking attractive on a number of metrics, including price to book value, price earnings and PE to growth ratios. These include China, Thailand, Taiwan and even India, which until the recent correction, was seen to be overvalued.

'The support for emerging markets is based on fundamental factors. The most important is economic growth. Growth in these markets will be about 7 per cent compared to 2 per cent for developed countries. That will feed into earnings. We're expecting reasonably good earnings.'

Based on the Templeton Emerging Markets Fund end-February fact sheet, the flagship fund with US$1.54 billion in assets is 19 per cent invested in Brazil; 16 per cent in China and 13 per cent in Russia. In terms of industry exposure, it is 25 per cent invested in energy and 21 per cent in materials.

Yet, the fund has underperformed the MSCI Emerging Markets Index by a wide margin. Over one year, the fund returned 20.7 per cent, against the index's 33.6 per cent. Over three years, the fund returned 75.8 per cent, against the index's 114.9 per cent.

Mr Mobius says: 'We invest with a long-term framework. We can't change the portfolio so often . . . If you want to track the index, you can buy a tracker. Our purpose is to find good, safe stocks we can hold and that tends to deliver better results.'

Inflation, he says, is a concern for emerging markets. 'Inflation with strong emerging market currencies is something to watch carefully. If inflation expectations move up, it will be an incentive for central banks to raise rates. That's not good unless rates are lower than inflation, and real rates are negative . . . But we don't see this happening anytime soon.'

He says that one way to hedge the inflation risk is to buy consumer-oriented stocks which are able to pass on costs through higher prices.

Jim McCaughan, chief executive of Principal Global

He believes that yield-hungry investors will find lots of value in three types of assets that have suffered greatly in the current credit crunch. These are global real estate investment trusts; preferred securities - usually issued by financial and insurance firms; and commercial mortgage-backed securities (CMBS).

The other asset that he is positive about is emerging market equities, which until the recent bear market, have enjoyed a bull run for the last four years or so.

On global real estate, he says that the credit crunch has caused financing facilities to be withdrawn from the real estate market. 'Less finance being available means less development, and oversupply can't emerge. That's good for existing investors. I see quite a good medium-term strategic outlook for commercial real estate. It's not over-built in the US.'

In the fixed income market, de-leveraging by major institutions and funds have thrown up value in a number of segments. One of these is preferred securities, which are a fixed income type of asset, subordinated to other senior debt a company may issue.

Mr McCaughan says that a portfolio of preferred securities could yield 7.5 per cent, at a time when 10-year Treasuries are yielding 3.5 per cent. 'We think that (spread) overstates the risk. There is risk, but in a diversified well-researched portfolio, we think the yield more than compensates for the risk.'

Yet another depressed segment is CMBS, where spreads have widened significantly. 'The mortgages underlying CMBS have virtually no defaults. Higher quality CMBS have a loan to value ratio of 65 per cent and 150 per cent interest cover. Corporate America has to stop paying rent for a problem to develop . . . Those are high quality yields of 7-9 per cent. Investors can lock in the yield and get a good performance in the next two to three years.'

Mr McCaughan believes that the worst may be over for equity markets. He reckons that a US recession would be relatively mild, even if the credit crisis is as bad as any previous financial crisis. 'I doubt that the credit crisis translates into a severe economic recession. The developed economies are too diversified and competitive to see that happen . . . Productivity remains a strong underpinning.'

Christophe Caspar, Russell Investments chief investment officer (Asia-Pacific)

Markets could still retest recent lows, and that warrants some caution, he says. 'The reason I'm cautious is that when you look at the spread of Libor against the Fed rate, we're at 25 basis points. Banks are still not comfortable lending to each other.

'It may be true that the worst of the sub-prime news is behind us, but bad news may still shake markets. If banks were more confident to lend to each other, that would give confidence that there are no more hidden issues.'

He believes, however, in a V-shaped economic recovery for the US. This would be very positive for Asian markets, which could resume its bullish uptrend. The reason for his optimism is that the Federal Reserve is expected to cut interest rates further; the financial effects of tax rebates are still to take effect; and the weak US dollar is a boon to exports.

On a price-earnings basis, he says that Asia is now more attractive, although it now fetches a premium compared with developed markets. The PE has fallen from about 19 times six months ago to 12-13 times. The latter represents a premium of about 4 per cent over developed markets. 'Usually, Asia trades at a discount of about 20 per cent, so it doesn't look cheap.'

He adds: 'Asian markets are on a structural uptrend. Companies are better managed than they used to be. We're not having an Asian crisis but a global crisis, putting a temporary brake on Asia. I think people shouldn't give up on Asia. When the market rebounds, it's always difficult to know when to get back in, and you end up not getting back in.'

Paul Nesbitt, Fortis Private Bank technical analysis director

He looks for patterns in the market for an indication of the likely or most probable forward path of markets. Drawing on a number of approaches - Fibonacci series, the Dow four-year patterns, the 'decennial' pattern, among others - he believes that equity markets may have hit their 'corrective lows'.

'All the evidence suggests we've seen the corrective low and markets will rally from here and make new highs. On balance, the trend for next year should be up.

'It may not feel like that in the next month or two. But once we get into the third quarter, a lot of confidence will come back - unless there is a totally new problem. We'll still get bad news and downgrades.'

The exception to his reading is Japan.

Technical analysis examines the historical path of markets. The Fibonacci approach, for example, looks into the magnitude of market rises and falls to discern probable outcomes. Academics, however, say that there is little evidence that this approach to investing delivers outperformance.

For example, the Dow Jones four-year cycle approach posits that the index forms a low every four years, roughly in the second year of one cycle. In Mr Nesbitt's reading, the current cycle began around 2007, following an extended bull cycle between 2002 and 2006. 'In the first year of the cycle, if there are problems to be sorted out, tough decisions are made. That causes a dip in the second year . . . Sometime between now and 2010, we'll get a bull run and make new highs. Once the cycle low happens, the following year in every occasion is up.'

At the moment, he isn't making an outright call yet to buy the market. 'It's too early to be 100 per cent confident,' he says. 'You can pick up your favourite stocks on the bad days of the market. I don't think it's a buy-and-hold market yet. But ultimately, the stocks that will perform best will be the dogs. The financials have to perform if the market is to take a bullish outlook.'

 

Straits Times April 23, 2008

Deferred payment scheme: Up to 4,200 homes may be dumped

No URA figure on units sold but experts say 30% could be offloaded

By Jessica Cheam

THE hugely popular deferred payment scheme (DPS) - scrapped last year - may now be a thing of the past, but what sort of shadow will it cast on the Singapore property market going forward?

This has been the question on market watchers' lips since the Urban Redevelopment Authority (URA) revealed last week that as many as 29,250 homes offered under the DPS, including 5,760 unsold units as at the end of last month, will be completed from this year to 2013.

The concern is that speculators who bought homes under the DPS could dump their units at below-market prices, and this could drastically drag down overall sentiment.

But just how many units are at risk of being sold, and how big will the impact be?

The URA said while it has the number of units approved under DPS, it does not have data on how many units were actually sold under the scheme.

But four property experts The Straits Times spoke to estimated that up to 30 per cent of homes sold under the scheme last year could be held by speculators who may offload homes as the completion date nears. This translates to roughly 4,200 homes, going by a back-of-the-envelope calculation.

That is because out of the 23,490 units approved under the DPS and sold, only about 50 to 60 per cent - or roughly 14,000 - are likely to have been sold under the DPS, say property consultants and agency bosses from Knight Frank, Savills Singapore, HSR Property Group and PropNex.

The remaining 40 to 50 per cent were not bought under the DPS. Either developers did not eventually offer it, or buyers chose to pay via progressive payments, because buying a home with DPS usually means a further 2 to 3 per cent added to the price.

Next, property experts estimated that of the 14,000 or so homes sold under the DPS, about 20 to 30 per cent were probably sold to short-term investors or speculators.

This means that as a group, speculators could be holding on to as many as 4,200 units.

Why are speculators prone to selling their units as they near completion?

The DPS allowed buyers to pay just 10 or 20 per cent of the sale price upon purchase, with the rest due only when the unit received its temporary occupation permit (TOP) on completion.

Speculators would, therefore, typically opt for the DPS and hope to sell their units for a profit before the TOP. Any later and they would have to pay up for their homes by arranging for bank loans or other means of financing.

Industry experts were, however, divided on the impact these 4,200 homes would have on the market.

Some maintained that panic selling is not likely, given Singapore's strong economic outlook, which is backed by upcoming mega projects such as the integrated resorts and the 2010 Youth Olympics.

Mr Eric Cheng, HSR's executive director, noted that homes set to be completed this year and next are less likely to be sold indiscriminately, since their owners are probably sitting on healthy gains.

But those who bought at the peak of last year's buying frenzy, from April till October, are most likely to be at risk. These homes are likely to be completed after 2010.

Mr Ku Swee Yong, Savills' director of business development and marketing, said the sell-off will likely be staggered, because investors have different levels of holding power.

Also, investors have bigger coffers compared to the last property peak in 1996, he added.

But he warned that if too many units in a single large project get dumped at below-

market prices, overall market sentiment may be hit.

Mr Colin Tan, Chesterton International's head (research and consultancy), thinks that the potential risk created by the DPS is relatively high.

He added that data on homes sold under the DPS should be collected and made public, so investors know 'what they're getting themselves into'.

The DPS was scrapped abruptly last October after a decade-long run to remove excessive speculation and ensure financial prudence in the property market.

Straits Times Feb 19, 2008

IndoChine rolls out red carpet for high rollers

Group targets ultra-wealthy with new offerings like social networking portal for the rich and super limousine service

By Nicholas Fang

 

SINGAPORE'S fast-growing millionaire population and burgeoning status as a popular travel destination for rich and powerful businessmen have spurred IndoChine to target the ultra-affluent.

The restaurant and hospitality group has long focused on attracting high-earning diners at its 14 outlets in Singapore and establishments in Germany, India and Malaysia.

But Singapore's business environment coupled with the growing number of high net-worth individuals - that is, those with at least US$1 million (S$1.41 million) in financial assets - has prompted the company to launch a stream of new initiatives focused on the super-rich, said IndoChine founder and chief executive Michael Ma, 40.

He told The Straits Times yesterday that Singapore was ideally positioned to be the 'Monaco of the East'.

'The environment here is very safe and the infrastructure is great for supporting businessmen. But more needs to be done on the fun side,' he said.

IndoChine said Singapore was reported to have one of South-east Asia's fastest-growing millionaire populations, with the numbers having risen by 21.2 per cent to 67,000 in 2006.

'Globally, the number of ultra-high net-worth individuals grew by 11.3 per cent in the same year and we want to play a role in attracting international high rollers to Singapore,' said Mr Ma.

With events such as the Formula One Grand Prix race set to hit Singapore's shores later this year, as well as the integrated resorts being built, the IndoChine boss is lining up a range of services to cater to big spenders.

Earlier this year, he announced the setting up of Lotus Limousines, which features Singapore's largest passenger vehicle in the 8.05m special version of the Chrysler 300 stretch limo.

The car, which costs $500,000, seats up to 10 people and features a mini bar and a plasma television. It can be rented out for $350 an hour to partygoers looking to arrive in style.

And to ensure peace of mind for such guests, IndoChine is also working with certified security agencies such as Singapore-based Star Security, to provide bodyguard services with a twist.

'We work with these security firms to ensure that their personnel know that, even as security professionals, they need to be able to assist our guests with basic queries such as where the toilets are, for example,' he said.

'They are not only providing security, but are also the face of IndoChine at events, and are a part of the whole experience for our guests.'

Mr Ma is also an investor in the Diane Fay website, an invitation-only social networking portal for the rich and powerful that was launched last year.

The website allows members to network with one another and also provides services such as yacht rentals or purchases, and information on buying property, art, antiques and vintage wines.

'Senior executives who are constantly on the go can use Diane Fay to manage their professional schedules as well as their lives after work with true style,' said Mr Ma.

'The average IndoChine clientele is typically an upper-management executive who pulls in US$100,000 a year.

'But we have also had five of the 50 Russian billionaires under the age of 40 visit our establishments and that is the market we are looking to target in the future.'

URA data on performance of property market in 2007

http://www.ura.gov.sg/pr/text/2009/pr09-04.html

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Find out how Progressive & Deferred payment scheme works

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To all my clients/friends here in Singapore & offshore

To all my clients/friends here in Singapore & offshore

Just how do we make sense of turbulent markets all around us.  It is indeed scary that we see prices in Singapore real estate tumble from (using not a luxury but high-end condo to illustrate)  its high of $2000psf to current $1200psf in a year! We are now looking at prices retraced back to the 2006 levels.

However take heart from past patterns of real estate prices peaking in 1985, 1996, 2007 .. it tells you what goes down must come up again in a (about) 12-year cycle in and around 2017-2018.

What we need is more than a little bit of patience, and good savvy advice. So remember the following tips for real estate investment in 2009!

• Now is the best time to sell public-housing (HDB properties) in Singapore and upgrade to a private condo - to defy the norm for once you can actually sell high and buy low!
  

• Always buy private property in prime district 9/10/11 or near prime 15/16 where capital value appreciation is going to be 10X more in 2018 then in the other-lying areas - rather buy a smaller studio or 2RM in prime than a 3RM in outskirts!
    

• Consider buying your 1st investment property in prime district 9/10 in the next 6-12 months
  

• As you trade down, asset value drop & hence risk will be smaller. Bell curve demand distribution inherent means a property trading in the $1000-1500psf will drop less than one already in the $800-1000psf.  
  

• The best bargains presents itself in properties to TOP in 2009/2010! Sometimes even lower than resale properties in the same precinct.
  

• Finally where are the best condos and location to invest for both asset value growth and yield? To find out, join my ever-growing mailing list above .. (wink)