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Govt looking into speeding up compensation payments to contractors on public sector projects

The Government might consider expediting compensation payments to contractors on public sector projects to help their cash-flow woes following the recent spike in the costs of raw materials, Minister for National Development Mah Bow Tan said yesterday.

Prices for sand and granite aggregates have shot up following Indonesia’s ban on land sand exports in February, and the recent disruption to granite supplies after Indonesia detained barges suspected of smuggling sand.

The Government has promised compensation for contractors, but as yet no timetable for this compensation package has been set.

For many contractors, particularly smaller companies having to cope with price rises of more than 100 per cent, it cannot come soon enough.

Some contractors told The Straits Times recently that they could not absorb the price hikes for long.

Last week, Singapore Contractors Association president Desmond Hill said compensation should be made progressively, because the survival of the industry depends on a healthy cash flow.

Meanwhile, Mr Mah confirmed yesterday that the seized granite barges have not yet been released.

This is despite recent announcements from Indonesia that it has not banned granite exports to Singapore.

Minister of State for National Development Grace Fu said last week that the Government was sourcing granite from countries like Malaysia, Vietnam and China.

But prices have still increased dramatically, due to the increase in transport and logistics costs, Mr Mah said.

The price of sand has gone up from $25 to $60 per tonne, while that of granite has increased from $25 to $70.

Sand and granite are used to make concrete, the price of which has also shot up from $70 to around $200 per cu m.

The Government has said it will pick up the tab for 75 per cent of the additional costs for public sector contractors, but has not confirmed when these payments will be made.

‘We have an index for how much additional cost is involved and the agencies are now working it out,’ said Mr Mah.

As for the private sector, Mr Mah said the government agencies will try to mediate a solution.

‘I don’t expect, with a disruption like this, that everybody will come out with a perfect solution overnight.

‘But I really hope that all parties concerned, including the developers and contractors, will find a way to resolve this because it’s not in everybody’s interest to see any one party suffer unduly as a result of this.

‘The burden has to be shared more or less equally by all parties concerned,’ he said.

Source : Straits Times - 29 Mar 2007

Punggol development will have 712 units and is expected to be ready in 2011

CORRIDOR lights powered by solar panels, common areas washed by recycled rainwater and plants growing vertically covering the exterior of walls.

Singapore’s first truly ‘green’ housing project was unveiled yesterday with the launch of Treetops@Punggol.

Featuring all the environmentally friendly technology in the HDB’s arsenal, it is the culmination of efforts to make public housing here more in sync with nature, Minister for National Development Mah Bow Tan said yesterday.

The other eco-friendly features at the build-to-order project - which means that it will only be built if there is enough demand - include:

Trees planted in the basement carpark which emerge onto a garden on the roof, which itself will be covered with lush greenery. This will reduce outdoor temperatures by as much as 4 deg C;

‘Cool’ walls - made of concrete and foam - which lower temperatures inside flats and reduce the need for air-conditioning, thereby cutting power bills.

An ‘integrated wash basin’ which channels used water into the toilet cistern for the next flush.

A centralised chute for recyclable material on every floor.

Treetops@Punggol - comprising 712 units in seven 16-storey blocks - is expected to be completed in 2011.

If demand for the flats is good, more such apartments will be built, Mr Mah said yesterday while launching the project at the HDB Hub in Toa Payoh.

‘This is the first of its kind, and we will use it as a test-bed for some of the features we are trying out,’ he said.

Prices at Treetops will range from $139,000 for a three-room unit to a maximum of $383,000 for a five-roomer - ’slightly more expensive’ than flats at similar locations, said Mr Mah.

But this has do with several factors, such as location, balcony space and spiffier features, rather than just the ‘green’ aspect.

The apartments are a few minutes’ walk from the Punggol MRT and Damai LRT stations.

Ranging from 67 sq m to 147 sq m, they will be fitted with premium finishes such as porcelain ceramic tiles and timber flooring in the bedrooms.

And each of the 14 five-room loft units, located at the tops of blocks and unique to Treetops, will have large living rooms and an open terrace.

Mr Mah said the total project cost is yet to be calculated, but added that the expense of incorporating the ‘green’ features will largely be absorbed by the HDB. He added that service and conservancy charges will also be maintained at current levels.

Treetops has been awarded the highest accolade by the Building and Construction Authority - the Platinum Green Mark Award - which rates buildings for their environmental impact.

Some other estates have green features, too - Bukit Panjang, for instance, has solar panels on a carpark roof - but Treetops is the first housing project being built from scratch with eco-friendliness as a dominant factor.

The project was driven by the HDB’s Committee of Environment Sustainability, set up in 2004 to formulate a long-term strategy to create sustainable towns and estates.

The BTO exercise for Treetops is currently open. Applications will close on April 17.

Those interested can apply online at www.hdb.gov.sg

Source : Straits Times - 29 Mar 2007

PEACE Centre and Peace Mansions in Sophia Road are for sale through an expression-of-interest exercise at an indicative price of $470 million, in what is one of Singapore’s biggest mixed-development collective-sale offerings so far.

Steven Ming, director of investment sales at marketing agent Savills Singapore, said yesterday the indicative price for the 76,618 sq ft site translates to $880 per sq ft per plot ratio, including an estimated $82 million charge to reset the 37-year-old development’s leasehold tenure to 99 years.

Mixed-development collective-sale sites transacted previously include Eng Cheong Towers, Kim Tian Plaza and, most recently, Kim Seng Plaza. Peace Centre/Peace Mansions, however, has the biggest price tag.

The development comprises a nine-storey commercial block and a 32-storey part-commercial, part-residential tower. There are 86 apartments, 137 offices, 95 shops and a car park.

Mr Ming says 70 per cent approval for a collective sale has already been achieved.

Subject to official approval, the site can be redeveloped up to its current gross floor area (GFA) of 627,852 sq ft, which happens to exceed the permissible plot ratio of 4.2.

A new, purely residential development is unlikely, says Mr Ming. More likely is a mixed development with a shopping mall, service apartments, medical or even an educational institution.

CapitaLand is developing a new shopping mall and service apartments nearby on the site of the former Selegie Complex.

Last year, Lend Lease Real Estate Investments bought the neighbouring Paradiz Centre for $138 million.

Source : Business Times - 28 Mar 2007

 Far East, Frasers Centrepoint team up to buy privatised HUDC estate

Frasers Centrepoint and Far East Organization are teaming up to buy Tampines Court, a privatised HUDC estate, through a $405 million collective sale, BT understands.

The price works out to about $260 per square foot of potential gross floor area, including development charges and a premium to upgrade the site’s lease to 99 years from a remaining term of 79 years.

The purchase of the 702,162 sq ft site is subject to approval by the Strata Titles Board (STB). The land is zoned for residential use with a 2.8 plot ratio - the ratio of potential maximum gross floor area to land area. It can be potentially redeveloped into a new condominium with about 1,580 units averaging 1,300 sq ft.

Market watchers reckon that given the huge size of the plot, Far East and Frasers Centrepoint will most likely develop it in phases.

This is the second time the property heavyweights are teaming up for an acquisition. In their maiden tie-up in May last year, they signed a deal to buy Waterfront View, a privatised former HUDC estate facing Bedok Reservoir, for $385 million. This reflected a price of $241 psfper plot ratio.

The purchase was approved by the STB last month. But a couple who own a unit there are appealing against the ruling in the High Court.

Tampines Court comprises an existing development of 560 units. It is on a site with a lease of 101 years that started on Dec 1, 1985. The sale of Tampines Court was brokered by Dennis Wee Group, with Phang & Co representing the majority owners.

Far East and Frasers Centrepoint were among the biggest property buyers in Singapore last year. Far East, controlled by Ng Teng Fong, put about $1.6 billion of acquisitions under its belt, including the former Glutton’s Square site, Angullia Mansion and Amberville.

Frasers Centrepoint is a fully-owned unit of listed Fraser & Neave, whose group chief executive Han Cheng Fong partnered Mr Ng’s Far East group in Singapore and China during the previous property bull market in the 1990s when Dr Han was at the helm of DBS Land.

Last year Frasers Centrepoint bought over $800 million of properties in Singapore including Far East Mansion and a site near Novena MRT Station.

Source : Business Times - 28 Mar 2007

SC Global’s Simon Cheong expects HDB resale values to appreciate

High-end developer Simon Cheong predicts that the price gap between HDB resale flats and the mid-segment of the private housing market will narrow over the next three years as HDB flat values appreciate.

The HDB segment, which houses the vast majority of Singapore’s population, is currently ‘undervalued’. And a price gain will be driven by the higher quality of public housing, he reckons.

But there will be no slowdown in the near future in the price appreciation for luxury homes as Singapore continues to draw international investors as it positions itself as a global city, he said in a recent interview with BT, speaking in his capacity as listed SC Global Developments chairman and CEO.

‘The high-end market defies economic theory. It’s a luxury item, very emotional purchase. As Singapore shapes up as a global city, well-heeled international buyers that we are trying to attract to Singapore will use Singapore as a ’six-star hotel’, if you like.

‘This breed of global rich are buying super-prime properties in major cities, even if they occupy them just for a few weeks in a year. They’d rather keep their apartments empty the rest of the year than rent them - to maintain their exclusivity. It’s a different group of people,’ Mr Cheong says.

He defines the high-end or luxury housing market as homes priced at about $3,000 psf currently, and mid-segment private homes as those selling for about $1,000 psf.

The price gap between the high-end/luxury and mid-market tiers of the private housing sector is set to widen, and certainly the gap between the luxury and HDB resale flat prices will also increase.

But Mr Cheong does not find this widening gap unique to Singapore, as it is common to global cities. It is not a social issue, as luxury homes - for all their hype - are a very small percentage of homes in any property market, he reasons. ‘Frankly, the luxury property segment is not even on their (HDB upgraders’) radar screen, it’s not something that will bother the masses.’

While some market watchers see the declining share of HDB upgraders among private home buyers as a sign that they are being priced out of the private housing market because of rising prices at property launches, Mr Cheong offers a different perspective: ‘Frankly, I’m not surprised. All it tells you is that the HDB quality has improved and it’s less compelling to move to a private home.

‘Don’t forget, our HDB flats are among the best public housing in the world and probably the equivalent of many countries’ high-end housing.’

Mr Cheong adds: ‘The gap between HDB and private has already narrowed in terms of quality and space/layout. Many upgraded HDB estates are as good as private estates. In Singapore, HDB is the most affordable housing but it’s also of very high quality. There is going to be less and less product differentiation between HDB and private.

‘The bottom line is, HDB flats are probably undervalued today and this means there’s a strong chance of appreciation in the next few years.’

So the narrowing of the price gap between HDB flats and mid-segment private homes that Mr Cheong predicts will take place over the next three years will happen not because the prices of mid-market homes will come down but more because HDB prices will go up.

He thinks that ‘many Singaporeans are finding that buying a HDB resale flat and sprucing it up is still cheaper (than buying private)’.

‘It makes sense. I think that is going to be the trend. HDB values will go up.’

Demand for HDB resale flats will also receive a boost from some segments of the new foreign talent Singapore is wooing from the region - highly qualified people from China or India.

Mid-tier private homes will benefit from demand for replacement homes by those who have sold their prime district homes through en bloc sales. ‘Many of the en bloc sellers are ageing, and may not need the same-sized, say 2,600 sq ft, apartment to replace the one they’re selling. For the square footage they are giving up in buying a smaller new home, they’re moving to a more efficient apartment, with a better lifestyle.’

The mid-market private housing segment should also benefit from the inflow of new expatriates into Singapore.

Source : Business Times - 28 Mar 2007