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Far East also keen in first collective sale of commercial building

IN WHAT could become Singapore’s first collective sale of an all-commercial building, Ming Arcade on Cuscaden Road could be about to change hands.

Hotel Properties Ltd (HPL), which has a significant presence near the arcade, is said to have made the highest offer so far, of about $61 million, for the freehold property.

Agent Jones Lang LaSalle is looking for agreement for an en bloc sale from owners controlling the minimum 80 per cent of share value at Ming Arcade.

HPL’s offer reflects a unit land cost of $1,200 psf of potential gross floor area. No development charge is payable.

Far East Organization, which owns Orchard Parade Hotel right next to Ming Arcade, is also believed to have bid for Ming Arcade.

While it remains to be seen who eventually ends up buying the property and at what price, the collective sale of Ming Arcade could help to blaze the trail for other strata commercial properties in the vicinity - including Far East Plaza, Far East Shopping Centre and Delphi Orchard - and help rejuvenate Singapore’s prime shopping belt.

Ming Arcade was completed in the 1980s by the late Ho Kok Cheong. It stands on a 12,132 sq ft site zoned for commercial use with a 4.2 plot ratio (ratio of potential gross floor area to land area) and a maximum height of 20 storeys.

Jones Lang LaSalle, which is marketing Ming Arcade, declined to comment when contacted yesterday.

The property consultancy said in August that the site has potential for several redevelopment options such as a small office, home office (Soho) development, corporate headquarters, a high-end boutique, retail or mixed development.

Part of the new development could also be used for medical suites, given strong demand for such properties, JLL said at the time.

BT has reported that HPL owns five of Ming Arcade’s 88 units. The group’s presence in the area covers HPL House (just opposite Ming Arcade), Four Seasons Hotel, Hilton Hotel and The Forum.

Owners of several other commercial properties are also headed for the en bloc trail, but generally, property industry veterans reckon the number of commercial collective sale deals is likely to be lower than that for residential collective sales.

The method of working out who gets what from the proceeds of an en bloc sale is particularly complex for retail properties, where factors such as the floor level, a shop’s distance from an escalator and its orientation may affect its value - assuming that owners are prepared to sell anyway.

Source : Business Times - 31 Oct 2006

Developers hurried to lock in DC rates before big hike: market watchers

DEVELOPERS scrambled to secure provisional permission from the Urban Redevelopment Authority for 16 major private residential projects in the third quarter, up from nine in the preceding three months.

Fifteen of the 16 approvals were secured in July or August with only one obtained in September, according to Q3 real estate data released by URA on Friday last week.

Market watchers reckon developers were probably in a hurry to lock in development charge (DC) rates in anticipation of the sizeable hike in residential DC rates for prime locations from Sept 1 this year.

Securing provisional permission by Aug 31 would have allowed developers of sites to lock in the earlier March 1 2006 DC rates. DC rates are revised twice a year and are payable for enhancing a site’s use or for building a bigger project on it.

Not every project that secured provisional permission in Q3 is liable for DC payment. But as Knight Frank managing director Tan Tiong Cheng explains, their developers would still have an incentive to speed up the securing of approval for development - as many of them are being built on collective sale sites bought in recent months at high prices.

‘Most of these are in prime locations so the differentiation among the projects may not be that great. As a result, there’s competition to get the projects ready for launch as soon as possible.’ These days, developers can secure the necessary approvals for a project’s launch within six months of receiving provisional permission, added Mr Tan. ‘Another point to note is that these days, developers do not practise landbanking and hence, there’s a tendency to push out sites bought for development as soon as possible,’ said Mr Tan.

Among the major private housing projects which received provisional permission in Q3 were Far East’s 413-unit proposed condo on the Amberville site in Katong, as well as two condominiums (with 700 and 742 units) to be developed by a Frasers Centrepoint and Far East joint venture on the Waterfront View site facing Bedok Reservoir. Both are privatised former HUDC estates and were sold this year.

In the traditional prime districts, SC Global Developments’ Taraville Pte Ltd received approval for a 248-unit condo on the former Hilltops Apartments and adjoining terrace houses site at Cairnhill Circle. City Developments also won URA’s approval for a 252-unit condo on the Lucky Tower site along Grange Road that it bought in May this year for $383 million or $1,134 psf per plot ratio inclusive of the then-prevailing DC.

Lippo received approval for its 252-unit condo on Kim Seng Road, while Hong Leong Holdings got the go-ahead for a 200-unit condo on the Eastern Mansion site in the Amber Road area which it bought through a collective sale last year. Other projects that bagged provisional permission in Q3 include a 330-unit condo project by City Developments at Jalan Datoh in the Balestier area and Singapore Press Holdings’s unit Evol Media for a 264-unit condo on Thomson Road.

Besides residential projects, several high-profile commercial developments also secured provisional permission in Q3. These include the project on the Business and Financial Centre site (180,000 square metres of office and 7,730 sq m of retail gross floor area), and two prime mall projects on Orchard Road - one by CapitaLand and Sun Hung Kai Properties above Orchard MRT Station and the other by Far East Organization next to Specialists’ Shopping Centre.

Source : Business Times - 31 Oct 2006

The Caribbean is blazing a trail for the launch of more intelligent condos, reports

BESIDES breathtaking sea views and a grand marina, the Caribbean at Keppel Bay has another feature which sets it apart from most other condominiums in Singapore, although the distinction is hardly noticeable from the outside.

At the core of the development is a sophisticated IT infrastructure melded seamlessly with its concrete and steel facade. The result - a ’smart’ home which allows residents to do everything from turning on the air conditioner with a mouse to keeping tabs on their kids from the living room couch as they play in the baby pool.

Hardly a new term, the digital home is a much-bantered concept among major technology players in the last few years, driven largely by the advent in networking technologies and the expanded connectivity options in tech gadgets and consumer appliances.

What is different in the Caribbean’s case is that developer Keppel Land applied IT thinking to the entire project from the onset, and not merely individual units, making it one of the first private residences to be embedded with extensive IT ‘intelligence’.

‘There is huge potential in iBuilding (intelligent building) deployments in the region over the next few years. Some of the key initiatives are the integrated resorts, the setting up of new R&D regional centres and also high-end luxury residential projects,’ said Chew Weng Keng, director of network services, Hewlett-Packard (HP) South-east Asia.

According to Mr Chew, developers of commercial and residential projects are trying more and more to increase the allure of their offerings through technology enhancement so as to cater to more IT-savvy buyers. The Caribbean is one such example. From the conceptualisation stage in 2000, Keppel Land wanted to accentuate the aesthetics and amenities offered by the 969 apartments with a host of technology tools that is bound to set it apart from competing developments.

Gadgets galore

The strategy materialised in the form of implementing an underlying wired and wireless network infrastructure to distribute information and commands around the home and to other parts of the estate. Building on this technology foundation, residents can have access to conveniences in a way that other home owners can only dream about.

For example, proximity sensors throughout the condominium give residents keyless entry into private lifts, apartments and clubhouse facilities. The Caribbean even features a state-of-the-art audio-visual intercom system which utilises technologies such as voice and data over Ethernet. A Webpad located at the lift lobby allows residents to screen visitors before granting them access to their private lifts.

Through an $8.56 million wide-ranging technology deal with HP, Keppel Land also introduced a special condominium portal for residents and each apartment unit is even equipped with the computer maker’s TC1100 tablet PC. In fact, the Caribbean was the largest tablet PC deal HP has ever struck in Singapore.

Customised for the Caribbean’s residents, the computer comes preloaded with applications to allow users to access the intercom unit and Web surveillance system, as well as the condominium portal.

Through the online interface, which mirrors the actual layout of their homes, owners can have central and remote control over functions like lighting and other networked home appliances. This means residents can turn all the lights on with a mere click of a mouse and the central air conditioning and be activated as they make their way home from work. In addition, the condominium portal even allows residents to shop for groceries, book facilities like tennis courts and even send e-mails to neighbours.

Convenience aside, the gadgetry is also used to power a high-tech security system consisting of motion and heat sensors located in the home and throughout the estate. Residents will automatically be alerted through voice messages when incidents like intrusions or fires are detected.

And judging from recent trends in the property industry, the Caribbean is blazing a trail for the launch of more intelligent buildings in our city-state.

The Equatorial, a private development along Stevens Road, is another example of buyers getting more bang for the technology buck.

Touch-screens in the home allows Equatorial residents to control the lift, book facilities, view footage from security cameras and even leave online messages for other family members. High speed wired and wireless connectivity is readily available and an integrated home automation system lets residents control lighting, air-conditioning and windows through a single control or handheld keypad. The control can also be extended to the Web so users can control these functions through the Internet or by phone.

And such perks are not confined solely to condominium owners. As early as 2002, the Infocomm Development Authority of Singapore had started trials for high-tech residences under its Connected Homes Programme. More than 400 homes, both private and HDB properties, were involved in the tests, many of which involved the kind of technological conveniences that is now a reality for owners in the Caribbean and the Equatorial.

Source : Business Times - 30 Oct 2006

Despite big chunk of payment going towards interest costs, experts warn against repaying home loans too quickly

MR GILBERT Goh Keow Wah recently sold his condominium unit when he got tired of paying nearly $2,000 a month for his mortgage.

The bulk - 85 per cent - of that went to paying the interest, he said.

‘Most people would be shocked to know that of our repayment, only about $300 was principal repayment while close to $1,700 was interest servicing. Our loan amount hardly moved,’ he wrote in the Inbox column of this newspaper last Sunday.

His letter sparked scores of postings on several Internet finance forums. Some writers said they did not realise so much of a repayment could go to cover the interest cost.

A writer at www.sgfunds.com suggested that everyone should clear his home loan in 10 years or less. Among his ideas for achieving this is to repay some of the capital every few months, when one has spare cash or Central Provident Fund (CPF) savings.

But some financial experts The Sunday Times spoke to disagreed with a ‘pay up as fast as you can’ approach. In the first place, Mr Goh’s experience of having his interest cost amounting to 85 per cent of his mortgage repayment is rare.

Figures of about 60 per cent and below for the initial period of a loan are more common - according to a Sunday Times calculation and checks with mortgage experts.

That is based on the following loan assumptions:

Loan of $300,000 repayable over 30 years; and

An interest rate of 3 per cent a year in the first three years and 3.75 per cent in subsequent years.

Those interest rates reflect market rates as they are roughly the average of rates charged by some packages available at DBS Bank and United Overseas Bank (UOB).

One thing to note is that typically, the interest portion of a mortgage repayment is highest in the initial years, declining to practically nothing at the end of the repayment period, says Mr Bryan Ong, a senior associate manager at real estate firm PropNex. So even if 85 per cent went to paying the interest on Mr Goh’s mortgage, this percentage would tumble over time.

Anyone keen on reducing his interest payment could opt for a shorter loan tenure. If the tenure were 15 years for the mortgage package cited above, the interest portion would be 35 per cent in the first year and would decline from then onwards.

Aside from a long loan tenure, another cause of high interest components is simply the interest rate charged on the mortgage.

In his letter, Mr Goh did not say what rate he was charged but when contacted, he said it was 6.25 per cent a year. He could have refinanced to obtain a lower rate.

But Mr Goh, who has switched to a Housing Board (HDB) maisonette, said he could not get a new loan as he has been delinquent in paying up when he was unemployed during the 2001 recession.

In any case, he is happier now. ‘My wife and I are fortunate to be free of loans for this new purchase, given the amount of CPF savings we have accumulated over the years.’

Mr Goh, 45, now works as a career consultant with a statutory board. For his previous loan of about $350,000, he had estimated he would be paying close to 100 per cent of that amount in interest alone after 25 years.

Again, his case is rare and is based on a very high interest rate.

The total interest paid comprises 39 per cent based on the mortgage scenario cited earlier involving a loan of $300,000 repaid over 30 years. If the same loan package is shortened to 15 years, the total interest paid is only 22 per cent of the total repayment.

Pay up slowly?

SO MUCH for the numbers. When it comes to the idea of paying off a mortgage as soon as possible, some experts think it is not necessarily the best route for everyone.

Mr Ong, the property manager, says he would rather invest his surplus money in stocks and unit trusts as the stock market is booming.

The Straits Times Index reached record highs this month. Similarly, other regional stock markets have been climbing strongly.

You would have made investment gains far exceeding the 2.6 per cent a year interest cost of an HDB loan.

Stock markets are volatile and if you are risk-averse, it can still make sense to invest your money in fixed deposits and Singapore Government bonds paying more than 3 per cent a year, notes Associate Professor Benedict Koh of the Singapore Management University.

The choice gets tougher if your loan comes from a bank that charges, say, 5 per cent a year in interest.

Not everyone is savvy enough about investing. ‘And investments don’t always behave the way we would love them to,’ says Ms Rosie Tang, a certified financial planner.

‘Think about it, by paying up the loan, you are effectively making a ‘no risk’ return of 5 per cent a year!’

If you would rather scale down your mortgage debt and steer clear of the stock market, she says: ‘Don’t rush off to redeem your loan. Review your overall finances, other needs and investments carefully and consult a financial adviser.’

Russell Investment Group director Lim Meng Tat says you should pay off your mortgage early but not at the expense of having little money left for long-term investments. To that end, people should not take up an overly huge housing loan, he adds.

Mr Dennis Ng, 37, a certified financial planner, says he could afford to pay off his mortgage right away but wants to stretch it till he is 51.

‘Have you seen people who have cashflow problems and regretted paying off or reducing their mortgage? I’ve seen many. They ask if I can help them apply for a loan on their house again to tide over their cashflow problems. I have to tell them ‘no’.’

With the establishment of the Credit Bureau in 2002, people who have defaulted on their loans have had little or no chance of getting a loan, he says. Worst off are those who have paid off their HDB mortgages, or even partially paid off the mortgages.

HDB rules do not allow such home owners to apply again for mortgages on the same homes from banks or the HDB, says Mr Ng.

He adds that people would not be making a rational decision if they pay off their home loans but take up a car loan that charges rates of about 6 per cent, the current market rate.

What if you want the best of liquid cash and reduced interest cost on your mortgage? Consider mortgages that will pay you the same interest rate on your cash as the interest rate that is charged on your mortgage.

Citibank, HSBC, Standard Chartered and UOB offer such schemes.

The bottom line is that Citibank’s customers enjoy an average of 10 per cent savings on their interest payments, says Mr Tan Chia Seng, its business director for secured assets group. With the savings, they can pay off their loans faster, he says.

Source : Sunday Times - 29 Oct 2006

Q I UNDERSTAND that the only asset a bankrupt can continue to own is the money in his or her Central Provident Fund (CPF) account.

What happens if a bankrupt withdraws his CPF savings on reaching 55? Does he or she have to declare the withdrawn money to the Official Assignee (OA) and surrender it?

A You are correct in saying that a bankrupt can continue to own his or her CPF account.

When you reach 55 and withdraw your CPF savings, you are not obliged to inform the OA about the money, let alone surrender it to him.

As a bankrupt, you can also own an existing Housing Board (HDB) flat or buy one.

There is no need to apply to the OA for consent to buy HDB flats that are of five rooms or smaller.

However, if you intend to buy an HDB executive/maisonette flat, you must obtain the OA’s approval and similar consent is required for all bankrupts who want to sell their HDB flat.

They may also continue to own term life insurance policies with no cash value. Life insurance policies with cash values will be taken over by the OA.

Certain property is protected against your creditors by law, which means it cannot be sold or taken over by the OA.

They include trust property, HDB flats, CPF contributions, necessary household furniture, personal effects, limited tools of trade, life insurance policies that are expressly for the benefit of your spouse or children and compensation awarded for personal injuries or wrongful acts against you.

Under the CPF Act, CPF money withdrawn by a bankrupt on reaching 55 is protected from creditors.

You may apply to withdraw your CPF savings at 55 but you have to first set aside the following three amounts before withdrawing the excess in one lump sum:

Amount to meet living expenses between age 55 and 62, which is about $30,000.

Amount to meet retirement needs from age 62 (that is, the Minimum Sum which is $94,600).

Amount to meet hospitalisation expenses (that is, Medisave Required Amount which is $8,300) or Medisave Minimum Sum ($28,000), whichever is higher.

If you are unable to set aside the above amounts at age 55 or after, you will be able to withdraw only a monthly payment which is based on the Minimum Sum monthly payout for a member who retires in the same year you turned 55.

However, CPF savings (other than the three amounts mentioned above) used for the purchase of private property, are not protected from the mortgagee when the bankrupt reaches the age of 55.

Leong Sze Hian President Society of Financial Services Professionals

Source : Sunday Times - 29 Oct 2006