HOMEBUYERS and sellers, hit by the recent market malaise, have at least one comforting constant in a market plagued by uncertainty - low interest rates.

Despite various economic woes - inflation, volatile oil prices, slowing economic growth - Singapore's banks are continuing to offer rock-bottom mortgages.

The latest to reaffirm Singapore's low interest rate home loans environment was Malayan Banking (Maybank), which yesterday launched a new three-year variable home loan that offers a low interest rate of 1.68 per cent a year for the first year.

Still, after that, the rates increase to 2.48 per cent for the second year and 2.88 per cent in the third.

Maybank's new package followed two other home loan launches by Standard Chartered Bank (Stanchart) and HSBC.

Both offer competitive interest rates, albeit through slightly more creative housing loans that are pegged to the Singapore Interbank Offered Rate (Sibor).

Stanchart's MortgageOne Sibor is priced at 0.9 per cent a year above the three-month Sibor for the first three years.

It comes with a unique offset feature that allows customers to use the interest earned on their deposits to reduce the interest payable on their home loans.

HSBC's latest Sibor-pegged home loan comes with a progressive interest rate reduction feature - the first of its kind here.

On top of the prevailing three-month Sibor rate, customers pay an additional interest of 0.75 per cent in the first year. The rates fall to Sibor plus 0.65 per cent in the second and, from the third year onwards, Sibor plus 0.55 per cent.

With interest rates so low, many home owners naturally consider refinancing their home loans with packages that are pegged to a faltering Sibor.

DBS Bank head of deposits and secured lending Koh Kar Siong said Sibor-pegged loans offer customers more transparency and also allow them to enjoy lower interest rates in the current market environment.

Mr Gregory Chan, OCBC Bank's head of secured lending, agreed. He said OCBC customers preferred home loans pegged to market rates because these are 'more transparent and bear greater significance for consumers during uncertain times'.

Source: Straits Times

President of The Conference Board, Gail Fosler, said the US economy will likely grow 1.6 to 1.8 percent this year, with growth of about 1 to 1.5 percent for each of the remaining quarters.

She said the world's largest economy will likely escape a recession, but warned that it will continue to experience turmoil caused by the subprime crisis, and see a slowdown in manufacturing too.

But she added that these developments will likely have little effect on Asia, as the region has structural strength and growth opportunities.

Nonetheless, she said growth rates in the region will moderate.

"Obviously there's a lot of construction in Singapore this year that is not going to take place next year and actually the real estate market overall will probably slow considerably. But you know, these are growth rates, these are not crisis rates. These are simply slower growth rates."

She was speaking at a CapitaLand Seminar here.

At the same session, Goldman Sachs' chief economist for Asia, Mark Buchanan, said he expects the region to continue on its growth path, given that it's reliance on US growth has dimished.

However, he's less optimistic about Asia's stock markets.

"Given the uncertainties in the global economy are particularly acute right now, and by that I mean commodity prices, the nature of the policy response in the US -- has the Fed done the right thing by keeping policy so loose? Has the ECB done the right thing by keeping policy too tight and hiking into a recession? Asia, because of the inflation problem this year, has been forced to tighten policy into a downturn. How will that play out?"

Add to this the effect of falling corporate earnings, and Mr Buchanan said Asian equities shouldn't be trading at the historical average price, as they are now -- they should be cheaper.

However, he says Chinese stocks offer a bit more protection, as China is better able than other Asian countries to react to the global economic downturn.

Source: 938Live

The group said in a statement yesterday that it sold its indirect wholly owned subsidiary Hua Lei Holdings, which indirectly owns all of the office building.

The price comprises the consolidated net asset value of the group's indirect wholly owned subsidiaries which own the property. It took into account the assignment of shareholders' loan of about US$166 million, valuing Capital Tower Beijing at US$488 million.

CapitaLand bought the development of two 35-storey towers while it was still under construction in 2005. It turned the project into an international Grade A office development and sited its own Beijing office on the 33rd floor.

CapitaLand president and chief executive Liew Mun Leong said in a statement yesterday: 'Since its completion in 2006, Capital Tower Beijing has become a well- known landmark...Because of this success, we have received unsolicited offers for the building from several prospective investors.'

Although the firm had wanted the building as one of its core long- term holdings, 'the unsolicited offer...will allow us to redeploy capital to undertake more quality developments in China', said Mr Lim Ming Yan, chief executive of CapitaLand China Holdings Group.

The buyer is a Fortune 500 company that aims to set up its corporate headquarters at the development, which has a gross floor area of 107,627 sq m. It is 83 per cent occupied.

Source: Straits Times - 04 Sept 2008

THE cautious mood in the property market has not prevented Capitacommercial Trust (CCT) from striking attractive lease deals at the prime Capital Tower and One George Street buildings.

JPMorgan Chase & Co and BHP Billiton both renewed their leases at Capital Tower, while South Korean bank Shinhan Bank is taking up space at One George Street.

The total space signed up - either on renewed leases or new deals - is about 77,900 sq ft. Both buildings are now at near 100 per cent occupancy.

A CCT spokesman said: 'Given the Grade A quality of Capital Tower and One George Street, the newly committed rents are in line with rates achieved at comparable buildings of between $16 and $20 per square foot per month.'

This is despite the current weak macroeconomic sentiments.

Ms Lynette Leong, chief executive of CCT's manager, said: 'Singapore, a global city with affordability of lifestyle for expatriates, attracts firms looking to expand in this part of the world.'

Rents at Capital Tower in Robinson Road, near Tanjong Pagar MRT Station, are hovering at around $15 to $16 psf, according to Mr Donald Han, managing director of Cushman & Wakefield.

One George Street, a relatively new building near Raffles Place, commands rent of $18 to $19 psf, he said.

With demand and occupancy still fairly strong for prime office buildings, landlords are not panicking despite the economic slowdown, said Mr Han.

But landlords with new space to let may take a little longer to find tenants as a lot of financial institutions have already gone through their expansion process, he added.

Meanwhile, CCT also announced that it has offered to lease a 1,313 sq ft ninth-floor unit in Capital Tower to CapitaLand for three years for a total rent of $449,126.

CapitaLand has an indirect interest of 31 per cent in CCT.

Source: Straits Times

Level 1 duplexes turned into single-storey units due to slow economy and lack of demand 

GLOOMIER times appear to have taken a toll on the upcoming Orchard Central mall near Somerset MRT Station.

The mall will no longer house two-storey shops, or duplexes, on its ground floor as had previously been announced, the project's developer Far East Organization has told The Straits Times.

These duplexes were intended to have been glitzy, eye-grabbing outlets likely to have been leased by top-notch brands.

Instead, the three duplexes planned for level 1 have been split into single-storey units and leased to retailers wanting smaller premises.

Industry watchers said demand for the higher-rent duplex stores is likely to have waned due to the economic slowdown.

Also, the area, considered by some to be the more downmarket end of Orchard Road, may lack the cache needed to pull in the large brands that are more likely to take those spaces, they said.

Orchard Central is one of three new shopping centres to go up in Orchard Road in more than a decade.

The 14-storey mall is slated to open early next year, and will boast underground shops, restaurants with outdoor balcony seating, as well as a special 'jewel box' - a glass-fronted shop to be suspended in mid-air outside the building.

When contacted, Far East said: 'We had more demand for single-floor units, and we are happy to report that the key level 1 shops facing Orchard Road have been snapped up. We also decided to change the original plans as this would mean more shopping diversity and choices for our customers.'

It added that the mall has one more duplex unit, on levels 3 and 4, which has attracted interest but has yet to be leased out.

Ms Lau Chuen Wei, executive director of Singapore Retailers Association (SRA), said it is 'not surprising if there is a lack of demand' for the double-storey units.

'A duplex would definitely require a higher rental commitment, which is, by and large, something that retailers find quite hard to commit to at this time.'

Property consultants The Straits Times spoke to said duplex stores have high visibility so landlords would 'normally want a very high-end brand' to occupy them.

'If I were the landlord, I'd have to give it to someone who is really worthy of it,' said one retail property specialist, who declined to be named.

'If not, splitting a unit into two will get higher rental,' he added.

Some observers also say the fact that several malls are springing up at about the same time has created more intense competition in the battle for the brands.

Previously, Far East had told The Straits Times that its 'jewel box' store, to be designed by renowned Egyptian-born industrial designer Karim Rashid, will 'as its name suggests...be occupied by an upmarket jeweller'.

But Cupid Jewels, a home-grown firm specialising in lower-priced bling, has now confirmed its tenancy there.

It has four showrooms in decidedly less swanky locales - Clifford Centre, Harbourfront Centre, Novena Square and OG Orchard Point - but said it will rebrand itself as a more upmarket jeweller at Central.

In contrast, Ion Orchard, the other mall being built at Orchard Turn, has snagged glitzy labels like Cartier and Louis Vuitton to front its duplexes, as well as haute jewellers Harry Winston, Chaumet and Boucheron to occupy its first floor.

But industry experts also defended Orchard Central's positioning, saying the area near the Somerset MRT Station is no less attractive than the strip nearer to the Orchard MRT Station.

Mr Danny Yeo, deputy managing director of Knight Frank, said: 'It's not that this part of Orchard Road does not have a draw, it's just not a main draw for the high-end segment.'

'The malls near Somerset are all internally connected to each other. And there are enough young people who will find that this side will provide a good alternative to the strip between Ion and Ngee Ann City. Now Orchard Road has two distinct and strongly positioned areas.'

And Ms Daisy Loo, head of leasing and consulting at Sandalwood Retail, said: 'Mass market brands can have duplexes too. It doesn't mean only luxury brands can afford a duplex, and it doesn't mean a duplex is the only thing that will earn you top dollar.'

Who's setting up shop at the mall

Orchard Central, which has 14 storeys, will have restaurants with outdoor seating and a special "jewel box" - a glass-fronted shop suspended in mid-air. PHOTO: FAR EAST ORGANIZATION

ORCHARD Central is a glass-clad mall next to Somerset MRT Station. Of its 14 storeys, 12 are above-ground while two are basement-level.

Developer Far East Organization has commissioned Japanese design firm Super Potato to create four food levels to suit all budgets.

The first floor has been fully leased to retail tenants.

Its 'jewel box', to be suspended on the facade of the building, will house local jeweller Cupid Jewels. It is designed by Egyptian Karim Rashid.

Other confirmed tenants occupying Orchard Central's 1.2 million sq ft of shopping space include:

Japanese eatery Ootoya

Kenko's Fish Spa

Levi's

Dockers

Lee Coopers

Homegrown multi-label boutique Tyan, which will stock Malaysian fashion ingenue Khoon Hooi for the first time in Singapore.

Source: Straits Times

But one estate solves them by roping in workers for patrols 

A DORMITORY for foreign workers may be half a kilometre away, but its problems could still end up on the doorsteps of its neighbours.

In residential areas like Jalan Kayu and Jurong, where foreign-worker dorms have sprung up, littering, loitering and rowdy behaviour are some of the problems residents have had to put up with.

And as more foreigners arrive to work in industries such as construction, where they will live will become a contentious issue.

Early this week, residents in Serangoon Gardens banded together to petition against housing workers in a former school in the neighbourhood.

Though complaints have subsided in Jalan Kayu, where two dorms housing 6,000 workers were built three years ago, some residents say that the problems never really go away.

Neighbourhood committee chairman Terry Fong remembers how there was a barrage of complaints from residents when the dorms went up.

Mostly, they were about Indian and Bangladeshi workers dirtying the neighbourhood by littering and spitting. But there were also concerns about safety as workers had a tendency to loiter in big groups and become drunk and rowdy.

Knowing that something had to be done, the committee roped in several foreign workers late last year to participate in regular patrols around the neighbourhood with the police and local residents.

They were mentors to their peers, helping them understand the laws and social norms of where they lived, said Mr Fong.

There are fewer complaints now, and it is partly a result of getting workers directly involved in security, he felt.

'The majority say it is good that we have this programme, but it is something we have to keep working at,' he said.

The same problems may also plague Serangoon Gardens, if preliminary plans to convert a former school into a workers' dorm go through. Serangoon Gardens Technical School, a proposed site, is less than 10m away from the nearest house along Burghley Drive.

It made headlines this week when residents rallied against the idea. About 1,400 signed a petition, which was handed to Aljunied GRC MPs George Yeo and Lim Hwee Hua on Wednesday.

The Ministry of National Development (MND) confirmed yesterday that the school is just 'one among the sites being studied, and there is no decision to proceed yet'.

But it also noted that the growing number of workers meant that buildings such as the unused Serangoon Gardens school would be needed to meet the housing needs. 'Many state buildings, by their nature, are located in accessible areas. So some are likely to be within or near residential areas,' said the MND.

It was a reiteration of a response made earlier this year to Parliament by Minister for National Development Mah Bow Tan that, given the constraints of land, foreign workers' dorms would eventually be near residential areas.

The Straits Times checked the location of 20 dorms and found that seven were less than 600m away from an apartment block. Dorm operators who spoke to The Straits Times felt that even this distance was too close.

Mr Eric Yeoh, a director of the Ama Keng Hostel in Lim Chu Kang, said a dorm near residents would bring about 'a lot of complaints for sure'.

Another dorm operator said the situation was 'asking for trouble'. The unnamed manager said workers often hung out in groups, and would spit and litter, which people here find unacceptable.

'The workers have had these habits for 20 to 30 years, so it's hard for them to change within a short time,' he said.

In Jurong West Street 61, residents of Block 651A have to deal with boisterous workers converging on their void deck.

The nearest dorm, Blue Stars, is about a 15-minute walk away.

While workers raise their glasses and blast music from their MP3 players, residents keep their windows closed and call the police in to disperse the rowdy crowd. This happens every night.

On weekends, the party goes on till 2am, said residents. When they return to their dorms, they leave a mess behind.

FINDING SUITABLE SITES AN INCREASING CHALLENGE

'Given that Singapore is becoming more built up, it will be an increasing challenge to find suitable sites for foreign workers. Residents may find more foreign workers living in their midst, or dormitory sites located near to their premises.

We hope that Singaporeans will be more understanding and accommodating in this aspect. Foreign workers are here to contribute to our economic growth.

Employers and dormitory operators must also play a part in educating the foreign workers on the social norms and way of life in Singapore, and ensuring that the workers are properly housed.'

Mr Mah Bow Tan, on how dorms will be moving closer to residential areas, in a written parliamentary response earlier this year

Source: Straits Times

Serangoon Gardens Village to give way to mall with elevated 'forest' and sunken garden 

IT MAY not be as iconic as the Capitol Theatre building, but to those who grew up in the north-east, a 50-year-old complex in Serangoon Gardens may hold just as many memories.

But come next February, the old Paramount Theatre complex - now known as Serangoon Gardens Village - will be torn down.

In its place, a new mall will rise.

Developer Edmund Chye, 45, whose late father owned the Paramount, promises to infuse the complex with greenery, including a 3,000 sq ft elevated 'forest', a water cascade and a sunken garden.

'The whole theme will be quite lush,' he said. 'It will be like coming home to your own courtyard.'

The mall now houses a FairPrice supermarket and a mix of food and beverage outlets.

Slated for completion in the third quarter of 2010, the new complex is expected to cost $40 million.

Residents and businesses in the estate, which dates back to the 1950s, have mixed feelings about the redevelopment.

Technical officer Roger Tan, 59, said: 'I've lived here for over 30 years. Paramount holds a lot of memories. But the place is rather old, so a more modern complex will be good too.'

Ms Anne Chia, 39, who owns eatery and pub Happy Daze in a shophouse next door, worries that business could dip during the construction period.

Insurance agent Patrick Tan, 45, who lives less than 50m from the site, said he is concerned about the noise, dust and traffic congestion.

Another long-time resident, service manager James Ang, 46, said he feels 'sentimental' about Paramount, recalling watching movies there as a boy. 'It'll be nice if they can name the new place Paramount,' he said.

Mr Chye said that is an option under consideration, admitting he is nostalgic as well. 'My brother and I used to watch the movies from the projector room,' he said.

The cinema closed in the early 1980s. The place was then occupied by a series of tenants, including Fitzpatrick's supermarket, a skating rink, Burger King and appliance chain Electric City.

Today, the mall's main tenants include DBS Bank, Coffee Bean & Tea Leaf and Cafe Cartel.

FairPrice, which has been there since the early 1970s, said it is excited about the redevelopment.

Managing director Seah Kian Peng said: 'Over the years, we have built a close relationship with the community in Serangoon Gardens. Some of our staff have worked at the store for many years and have become familiar, friendly faces to many of the residents.

'We certainly want to be back there and will try our best.'

The new complex will have a supermarket as an anchor tenant and a 'gourmet floor'. Mr Chye said about 40 per cent of the space will be for food and beverage outlets. The rest will be taken up by the supermarket, shops, grooming outlets, spas and banks.

He said Chye Lee & Sons, a property development company he runs with his twin brother Edward, has received numerous inquiries about shop space from well-known firms.

The new mall will have two floors and a basement carpark twice the size of the current above-ground one.

The complex's floor area will jump to 62,000 sq ft - from 39,600 sq ft - and its shop space will increase to 38,000 sq ft from 31,700 sq ft.

A GREEN PROMISE

'The whole theme will be quite lush. It will be like coming home to your own courtyard.'

Developer Edmund Chye, 45, whose late father owned the Paramount

TIME FOR A CHANGE

'I've lived here for over 30 years. Paramount holds a lot of memories. But the place is rather old, so a more modern complex will be good too.'

Technical officer Roger Tan

FOR NOSTALGIA'S SAKE

'It'll be nice if they can name the new place Paramount.'

Service manager James Ang

Source: Straits Times

Walls, fences of two homes off Jalan Kayu affected in midnight incident after heavy rain 

RESIDENTS in a private housing estate off Jalan Kayu scrambled for help after a mudslide brought the walls and fences at the back of their homes down late on Wednesday night.

The mudslide that followed a heavy downpour that night left one occupant of a terrace house in Jalan Tari Serempi without the 2m-high wall and fence at the back and badly damaged the perimeter wall of another.

While the residents believe that the construction of a block of houses behind their homes could have something to do with the incident, the engineer and developer for the project pointed their fingers at the weak structure of the walls.

The Building and Construction Authority (BCA) has ordered construction works on the site to stop until further notice. An investigation is under way. A spokesman said the Qualified Person for structural works, or the project's engineer, has inspected the site and 'confirmed that the structural integrity of the houses had not been affected by the collapse'.

Madam Habsah Sultan, 50, a property agent who lives at 2, Jalan Tari Serempi, said there had been a lot of construction work going on since a month ago. 'With the digging and the rain, the soil might have just given way,' she said.

Her neighbour, Madam Toh Wong See, agreed, adding that in her 12 years in the neighbourhood, mudslides have never happened, not even during heavy rain.

Madam Habsah was awake when the walls collapsed around midnight.

She told The Straits Times: 'I was still up when I heard a loud sound like a thunderclap at about 11.50pm. I thought it was the storm again but when I went to the back of the house, I saw part of the backyard area had given way and the wall and perimeter fencing had buckled.'

Madam Toh, 57, a housewife who lives with her son, his wife and their two young children, was watching TV at that time and ran to the backyard to see what happened. Her walls did not collapse but there was a 1m crack on a side wall near where the earth had moved.

Both women woke up their families, alerted the neighbours and rang the police. 'Thankfully, no one was injured but who can be sure this would not repeat when it rains again?' Madam Habsah said.

Both families were adamant about staying put. 'The contractors and BCA officers came by this morning and told us the place is safe. But I just wish they would quickly repair the walls,' Madam Toh said in Mandarin yesterday.

Mr Liauw Chin Lee, the 48-year-old developer for the construction behind their houses, said that repairs are under way. 'It's too early to estimate what the repair costs are, but the walls will be up as soon as possible,' he said in Mandarin.

The authorities had told him that the walls should be up before any further construction could continue, he said.

Both Mr Liauw and the project's design engineer, Mr Chua Hock Beng, felt that the rain and the walls were to blame.

'The walls which had given way have been there a long time and weren't built very well,' Mr Chua said.

Even so, Mr Liauw said he would not argue about whose fault it was.

'I am going to live here when the construction is completed and these affected people will be my neighbours. Thankfully, no one was hurt. I'll just treat this as a costly expenditure to ward off misfortune.'

A geotechnical engineering expert told The Straits Times it appears that the wall could have collapsed after rainwater collected in the soil behind the wall, exerting pressure on it.

Professor Leung Chun Fai, from the department of civil engineering at the National University of Singapore, said: 'This can usually be avoided if 'weep holes' are constructed in walls to allow the water to pass through. The holes will then have to be cleared frequently because leaves and other objects might block them over time.'

Source: Straits Times

SINGAPORE - MacarthurCook Investment Managers (Asia), the Manager of MacarthurCook Industrial Reit (MI-Reit), said on Thursday that the manager has obtained new independent valuations for seven of MI-Reit's properties.

The revaluations have resulted in a carrying amount of $554.1 million (US$386.0 million)for MI-Reit's portfolio, up from the book value of $553.6 million reported on June 30, 2008.

The properties revalued included those in Bukit Batok Street, Pandan Crescent and Tuas Avenue 7.

Source: Business Times

SINGAPORE: CapitaCommercial Trust (CCT) has announced that its Grade A office tenants at Capital Tower and One George Street have either expanded, renewed or signed new leases.

The news brought some cheer to its share price, which has been beaten down in recent weeks. The stock closed a notch higher at S$1.73 a share, up from S$1.70, following the news on Thursday.

While rental prices were not revealed, CCT said the rates were at the higher end of the buildings' micro-market rental rates. Analysts have pegged it at about S$15 per square foot per month for Capital Tower, and S$15-S$18 per square foot per month for One George Street.

Capital Tower will soon be home to more JPMorgan staff under the new lease arrangement, while another tenant, BHP Billiton, has renewed its lease. One George Street also has Shinhan Bank taking up a new lease.

Analysts said the impact on CCT's earnings will not be significant as the 78,000 square feet represents only about 2 per cent of its portfolio's total rentable area. But they noted that this piece of good news has come at a good time.

Brandon Lee, investment analyst, DMG & Partners Research, said: "In terms of sentiments, it's fairly positive, given the recent spate of negative news about asset devaluations and drop in rental rates. With JPMorgan leasing out extra space, it shows that there's a certain kind of resilience in Singapore's service sector."

The impact of this news on CCT's share price was marginal following the massive sell-off it saw in recent weeks. Year-to-date CCT share is down by 30 per cent – a decent entry point for investors, according to analysts.

"I'm looking at this more as a dividend play rather than a capital appreciation play because if you look at the universe of S REITs, currently the counter with the highest potential in DPU growth is either Suntec REIT or CCT," said Lee, who expects a yield of between 6 and 7.5 per cent for CCT in 2008 and 2009.

Nonetheless, CCT's good news is unlikely to spill over into CapitaLand, which owns 30 per cent of it because CapitaLand is seen to be suffering more from continued weakness in markets such as Vietnam and Thailand.

Source: Channel NewsAsia

Office landlord, CapitaCommercial Trust, said today that it has renewed existing leases and secured new leases at two of its office buildings in Shenton Way

The total Grade A office space rented out in the two buildings amount to about 78 thousand square feet

Three companies, JPMorgan Chase, BHP Billiton and Shinhan Bank, signed on for the leases at Capital Tower and One George Street

CapitaCommercial Trust said the rental rates committed to were at the higher end of the respective micro-market rental rates

Giving the details in a filing with the Singapore Exchange, CapitaCommercial Trust said JPMorgan will expand its premises at Capital Tower to occupy an additional one-and-a-half floor

BHP Billiton has also renewed its lease at Capital Tower while Shinhan is a new tenant at One George Street

Source: 938Live

Singapore-listed Union Steel Holdings says one of its units will sell a property at Jalan Samulan for 6.5 million dollars.

The sale is subject to approval from relevant government authorities.

Union Steel said the transaction is expected to have a positive impact on its results for the current financial year.

Source: 938Live

US$1.5b or more to be invested in China over the next few years

(SHANGHAI) Morgan Stanley is raising US$10 billion for a global property fund and plans to put US$1.5 billion or more of that into China, shrugging off concern about a property market downturn, a banking source said yesterday.

Still bullish: Other foreign funds, including Blackstone and Carlyle, are also looking for investment opportunities in China's residential and commercial properties 

The Morgan Stanley Real Estate Fund VII Global, the latest in a series of property investment funds, is expected to begin investing worldwide before the end of this year, said the source, who had direct knowledge of the fund.

It will invest at least 10 billion yuan (S$2.1 billion) in China over the next few years, taking a gradual approach while focusing on the largest cities such as Shanghai, where the price for a luxury downtown apartment can exceed US$20 million, said the source.

The retail portion of the fund- raising has been completed with a minimum requirement of US$1 million for individual investors in Asia.

The institutional portion, which requires at least US$10 million for each institutional investor, will be completed soon, the source added.

'It should not be too difficult for Morgan Stanley to raise funds from retail investors in Asia since, as you know, in China alone the number of millionaires has been growing very fast in recent years,' the source said.

'As for the institutional portion, many of them are old friends of Morgan Stanley,' he said, referring to investors in the Wall Street bank's last six global property funds.

The source declined to be identified because he was not authorised to comment on the fund to the media. Morgan Stanley declined to comment.

Some industry watchers, including Andy Xie, formerly Morgan Stanley's Asia economist, have warned that bubbles may be emerging in the property markets of some major cities such as Shanghai, where many buyers are foreigners and investors rather than long-term residents.

A property investment arm of Morgan Stanley has plans to sell at least two high-end serviced apartment projects in Shanghai, one of its earliest China property investments, for several billion yuan, people familiar with the situation told Reuters in June.

But Morgan Stanley and other foreign funds, including Blackstone and Carlyle, are also looking for new investment opportunities in high-end residential and commercial properties in China, according to industry sources.

Last month, sources with direct knowledge of the matter told Reuters that Blackstone and others were vying to buy up to four commercial buildings in Shanghai for as much as US$1 billion. That deal is still under discussion, however, industry sources have said.

Some foreign funds have also begun shifting their focus to second-tier Chinese cities, reflecting the large number of investors and intensifying competition in the largest cities. -- Reuters

Source: Business Times

(BEIJING) China's banking regulator has urged lenders to stress-test the impact of a cooling real estate market and to set aside more cash to cover potential losses from property loans, local media reported yesterday.

'Banks must closely monitor changes in the real estate market and seek to limit the impact on them from the difficulties the property industry is facing in raising funds,' the Beijing Times quoted Liu Mingkang, head of the China Banking Regulatory Commission, as saying.

China's banks have cut lending to the property sector, especially since late last year, in the face of stringent lending quotas and stagnant property prices in some markets.

They provided 398.8 billion yuan (S$83.6 billion) in new loans to property developers and home buyers in the first half of this year, down 30 per cent from a year earlier, according to figures from the central bank. Total loans to the property sector accounted for 18 per cent of Chinese banks' local currency lending by the end of June, at 5.2 trillion yuan.

Mr Liu urged banks to carry out thorough estimates of their exposure to the sector and set aside more provisions to fend off systemic risks to the banking industry.

China's property market has entered a downturn after a raft of government measures to rein in excessive price rises and investment growth. In the southern city of Shenzhen, 1.7 billion yuan in mortgage loans had turned sour by the end of June, up 13.8 per cent from the start of the year, the People's Daily reported. -- Reuters

Source: Business Times

Home prices in the city down 4.4% between end-June and August

(HONG KONG) The value of Hong Kong home transactions fell 60 per cent to the lowest in more than two years in August, signalling that the city's property market may be poised for its biggest decline since 2003.

The total value of residential transactions last month fell to HK$15 billion (S$2.75 billion) from HK$37.8 billion a year earlier, according to a press release on the Land Registry website. The figure, the lowest since July 2006, represented a 40 per cent decline from the previous month.

Home prices fell in 23 of 25 US metropolitan areas in June from a year earlier as foreclosures pushed down values, real estate research company Radar Logic said. The impact of credit market losses may be spreading to Hong Kong, with the threat of a global economic slowdown and a slump in the stock market leading potential homebuyers to expect to pay less for properties.

'There's a tug-of-war going on between buyers and sellers,' Cusson Leung, a Hong Kong-based analyst at Credit Suisse, said in an interview. 'With the outlook for the economies of both Hong Kong and China still uncertain, buyers' future price expectations could continue to fall.'

The number of Hong Kong home transactions in August fell 54 per cent from a year earlier, and 28.9 per cent from July, to 5,284, according to the Land Registry statement.

Home prices in the city fell 4.4 per cent between the end of June and August, according to figures from Centaline Property Agency. Credit Suisse's Mr Leung, in a July 8 report, forecast a 5 to 10 per cent drop in prices in the second half.

Home values have tracked Hong Kong's economy, peaking in the second quarter of 1997, then crashing in the Asian financial crisis, leaving many homes worth less then their mortgages for years.

The bursting of the 2000 dotcom bubble, the Sept 11, 2001, terrorist attacks and the 2003 severe acute respiratory syndrome epidemic caused prices to fall as much as 70 per cent from the peak. The rebound started in late 2003 and prices doubled in the past four years.

The value of all real estate transactions, including industrial and office buildings and shopping malls, fell 59.2 per cent in August from a year earlier to HK$18 billion, according to the Land Registry. The number of transactions dropped 53 per cent to 6,402, it said. -- Bloomberg

Source: Business Times

(TOKYO) JPMorgan Chase & Co said it expects Japan's beleaguered property market to rebound and will use staff gained from its acquisition of Bear Stearns to develop its real estate financing business.

'There is a lot of interest in buying real estate right now both from domestic real estate investors and foreign investors,' Gregory Guyett, chief executive of JPMorgan Securities Japan, told Reuters in an interview. 'And those investors will look for financing. That's a business we think can be very attractive.'

JPMorgan gained some 80 employees in Tokyo when it took over troubled Bear Stearns in May, which has led it to expand its small real estate securitisation team to about 25 people.

The group, headed by a former Bear Sterns employee Rosario Antoci, may expand further depending on market developments.

In the wake of the credit crunch, a number of banks in Japan have tightened lending to small and midsized property firms, leading to a string of bankruptcies. But large firms have been relatively unaffected and some like Orix Corp have seen the downturn as an opportunity to go bargain hunting.

Mr Guyett named Fortress Investment Group, Blackstone Group and Mitsubishi Estate Co Ltd as active investors in Japan.

JPMorgan has also been hiring aggressively to develop its commodities and other businesses, and anticipates overall headcount to increase by about 5 per cent over the next year.

'You will see us in the early part of next year with a number of senior hires,' Mr Guyett said.

Recent hires include Hiroki Kazekami from Goldman Sachs Group Inc as head of its global commodities division in Japan.

'Even though commodity prices will fluctuate up and down, it's a major business that our corporate customers and investor customers are interested in,' he said.

It has hired former senior finance ministry official Yoshiaki Kaneko as a senior adviser to strengthen government and regulatory relationships, and Christopher J LaFleur as head of government relations and corporate responsibility.

Mr LaFleur once served as US Ambassador to Malaysia.

JPMorgan in June also hired Katsuyuki Kuki as vice-chairman of investment banking and head of its financial institutions group.

Mr Kuki has 20 years of experience in investment banking and worked at Lehman Brothers and UBS Securities Japan. -- Reuters

Source: Business Times

Old sense of cosy camaraderie gone as companies fight over investors

(LONDON) The mood will be more competitive than convivial when Europe's largest property firms gather for one of their biggest annual meetings this week, as they battle to survive the global property slump.

Hardened by months of collapsing property values, delegates at the European Public Real Estate Association (Epra) conference in Stockholm will be scrutinising their peers for weaknesses and plotting asset raids to accelerate their own recoveries.

'The old cosiness of the quoted real estate sector has well and truly gone - we're in the middle of a reality check,' Lehman Brothers' European property analyst Mike Prew said.

'The lack of capital mobility is pitting company against company, and there is a finite number of investors able to rehabilitate share prices,' Mr Prew said.

The Epra/Nareit Europe Index of property stocks has nosedived more than 40 per cent since January 2007, while average discounts to net asset value have widened to around 33 per cent - and there is more pain to come.

'We do see pockets of good value, but unfortunately our analysis suggests the overall sector is around 10 per cent too expensive,' said JPMorgan property analyst Harm Meijer.

'In our view, key to 'survival' are dividends, sustainability and lessons from earlier downturns. The fittest will not only outperform, but may also become predators in the end,' Mr Meijer said.

A recent spate of stakebuilding in many of the index's largest constituents has fuelled speculation that a clutch of high-profile takeovers is looming.

Last month, shopping mall owner Westfield Group and US real estate investment trust Simon Property raised their holdings in rival UK retail investor Liberty International amid rumours of a takeover swoop.

'We are probably moving into a phase of cannibalisation in an overcrowded sector,' Mr Prew said, referring to a note he published earlier this year that forecast a rise in M&A activity among Europe's stricken listed property stocks.

'The boom market saw a proliferation of smaller companies which have failed to distinguish themselves in any material way and have become increasingly irrelevant,' Mr Prew said.

A fierce fight to retain the support of a depleted pool of real estate lenders is also likely to sour the atmosphere in Stockholm this week, key market commentators said.

'The competition for debt has surprised a lot of people,' Chris Jolly, head of European real estate investment banking at Merrill Lynch, told Reuters. 'A number of potential borrowers hadn't realised quite how much the banks are being forced to ration the debt they have available for commercial real estate lending,' he said said.

The realisation that European property markets are less than halfway through expected corrections will in itself be enough to darken the mood among this year's Epra delegates.

In a half-year research note, global consultants Atisreal said Europe's real estate markets faced a 'dismal' end to 2008, with investment transactions expected to halve on 2007 levels.

'We're in what I would describe as a phoney war at the moment,' said Mr Jolly. 'Refinancing pressures are building relentlessly, but most people I talk to are still not convinced that values have fallen as far as they are going to,' he said. -- Reuters

Source: Business Times

Net cash flow of $498m; plan to redeploy capital for more developments

CAPITALAND has entered into a share purchase deed for the sale of its indirect wholly owned subsidiary Hua Lei Holdings, which indirectly owns 100 per cent of Capital Tower Beijing.

In a statement yesterday, CapitaLand said the consideration of US$352 million takes into account the assignment of a shareholder's loan of US$166 million and values Capital Tower Beijing at US$488 million.

CapitaLand said it will obtain net cash flow of about $498 million and expects to recognise a gain of $163 million. It said Capital Tower Beijing had been intended as a core long-term asset and the divestment following an unsolicited offer will allow it to redeploy the capital to undertake more developments in China.

The divestment is CapitaLand's second in less than a week.

On Friday last week it announced that it would divest its 30 per cent stake in Inverfin - whose principal asset is Menara Citibank in Kuala Lumpur - to IOI Corporation for RM586.7 million (S$244.6 million). It said it would recognise a gain of $22.1 million.

Capital Tower Beijing was completed in 2006. CapitaLand said it received unsolicited offers from 'several prospective investors' but would only say that the buyer is a Fortune 500 company that hopes to set up its headquarters in Beijing.

It is understood that CapitaLand has its Beijing office in Capital Tower Beijing and has no plans to move.

CapitaLand president and CEO Liew Mun Leong said: 'This transaction fully demonstrates CapitaLand's skill-sets and expertise in adding value to real estate projects and its ability to unlock value for shareholders despite current volatile financial markets.'

CapitaLand said Capital Tower Beijing had been intended as a core long-term asset, but that divestment will allow it to redeploy the capital to undertake more developments in China.

Separately, CapitaLand subsidiary Australand said yesterday that it has completed the final phase of its non-underwritten one-for-one entitlement offer, raising A$461 million (S$553 million). It said 769 million new stapled securities will be allotted under the offer at A$0.60 apiece.

In July 28, CapitaLand said it had given an unconditional commitment to subscribe for its 54.2 per cent pro rata entitlement.

This comprised 502,772,610 stapled Australand securities, for a total of A$302 million.

Following the completion of the entitlement, CapitaLand now holds 59.3 per cent of Australand.

Source: Business Times

CAPITALAND has sold Capital Tower Beijing in China for US$352 million (S$497.6 million) and expects to recognise a gain of $163 million from the deal.

The group said in a statement yesterday that it sold its indirect wholly owned subsidiary Hua Lei Holdings, which indirectly owns all of the office building.

The price comprises the consolidated net asset value of the group's indirect wholly owned subsidiaries which own the property. It took into account the assignment of shareholders' loan of about US$166 million, valuing Capital Tower Beijing at US$488 million.

CapitaLand bought the development of two 35-storey towers while it was still under construction in 2005. It turned the project into an international Grade A office development and sited its own Beijing office on the 33rd floor.

CapitaLand president and chief executive Liew Mun Leong said in a statement yesterday: 'Since its completion in 2006, Capital Tower Beijing has become a well- known landmark...Because of this success, we have received unsolicited offers for the building from several prospective investors.'

Although the firm had wanted the building as one of its core long-term holdings, 'the unsolicited offer...will allow us to redeploy capital to undertake more quality developments in China', said Mr Lim Ming Yan, chief executive of CapitaLand China Holdings Group.

The buyer is a Fortune 500 company that aims to set up its corporate headquarters at the development, which has a gross floor area of 107,627 sq m. It is 83 per cent occupied.

Source: Straits Times

Serangoon Gardens folk get assurance their worries will be looked into 

FOR some time now, Serangoon Gardens resident Kelvin - he did not want his full name used - has been trying to find housing for his firm's foreign workers, with little luck.

So when he found out that the former Serangoon Gardens Technical School might be converted into a foreign worker dormitory, the 38-year-old, who is in the construction business, went into a tizzy.

The reason: The proposed dorm is next to his home, and there is no way, he says, he is willing to accept 'half-naked men' sitting in his neck of the woods.

Last night, Kelvin and about 250 other indignant residents of the firmly middle-class neighbourhood trudged through the rain to make their views known to their Members of Parliament from Aljunied GRC, Mr George Yeo and Ms Lim Hwee Hua.

At a two-hour dialogue, held under a marquee at a park along Chartwell Drive, the residents listed their objections to the proposed move, with some barely able to disguise their anger over it.

Their key worries: Security, traffic congestion caused by vehicles which will ferry the foreign workers to their worksites, and insufficient infrastructure in the area to support over 1,000 new residents.

Madam Lim Chor Yeow, 71, a retired teacher, echoed a view of many when she asked: 'If we have workers coming in here, is it safe for old people?'