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Colliers says the same trend can be expected for the second half of ‘07

The auction market here is being fuelled by the en bloc fever.

Colliers International observed that the Singapore auction market has witnessed a burgeoning increase in the number of property owners choosing the auction route to sell properties with en bloc potential - a trend in tandem with the sizzling collective sale market. ‘Competitive bidding for properties with en bloc potential was seen among keen buyers, with final transacted price being 20-30 per cent above the opening price,’ said the property firm.

‘It is really an interesting phenomenon - we see a striking difference in the number of bidders present in the auction hall on the days when there are properties with en bloc potential being put up for sale, compared with those days when there are none,’ said Grace Ng, Colliers’ auctioneer. ‘The number of attendees jumps from the usual 100 to as many as 200 people, jam-packing the auction hall.’

Attendees comprise punters, ’specu-investors’, speculators, investors and home sellers/buyers alike, Ms Ng said.

Some examples of properties with en-bloc potential that were successfully sold at auctions include a unit in Watten Estate Condominium which was sold for $2.4 million, a residential unit in Lagoon View that went for $910,000 and a shop unit in Katong Shopping Centre which sold for $280,000.

The same trend can be expected for the second half of the year, Colliers said. ‘With the en bloc fever still running high, we can expect to see positive response for condominium and apartment units in the suburban areas from HDB upgraders and collective sale owners who are priced out of the prime areas, for the second half of this year,’ Ms Ng said. All this activity is adding to the robustness of the auction market. Colliers’ figures show that the total sale value of properties (owners’ sale and mortgagee sale) sold at auctions climbed 25 per cent to $263 million in the first half of 2007, up from $210.3 million in the second half of 2006.

Similarly, Knight Frank, which yesterday auctioned off a conservation bungalow at 781 Mountbatten Road for $13.95 million, said that the number and value of properties sold at auctions scaled new heights in the first half.

The firm estimates that with 132 properties sold in the first six months of the year, the number of properties sold rose by more than 36 per cent versus the second half of 2006.

It put total sales value for the first half of 2007 at about $286 million - also about 36 per cent higher than sales in the year ago period.

Going forward, the auction market will remain robust in the second half given the strong performance in the economy and property market as well as assurance from the government that it will not clamp down on the current buzzing property market, predicted Mary Sai, Knight Frank’s auctioneer. She expects a greater variety of properties will be offered at auctions in the coming months.

Source : Business Times - 30 Jun 2007

A VETERAN lawyer has been convicted for his role in a ‘cashback’ property deal, with the judge admonishing him for carrying on with what was clearly a scam.

Bachoo Mohan Singh, a lawyer for more than 30 years, was convicted in a district court yesterday of helping a Housing Board flat owner make a false declaration in April 2004.

Although the agreed selling price of Mr Koh Sia Kang’s five- room Redhill flat was $390,000, it was inflated by $100,000 as part of the so-called cashback scam.

Such a scam involves a pro- perty seller declaring a higher price in order to secure a higher loan for the buyer.

The cash difference between the actual and declared price is either kept by the buyer or split with the seller. These scams were rife before the relevant law was tightened two years ago.

Singh, 59, got into trouble as a result of the sale falling through. He acted for Mr Koh, 53, a taxi driver, who sued the buyers.

Mr Koh went to court, claiming he was cheated of money in the transaction. He also sued the pro- perty agent who had arranged the aborted sale to a couple.

Property agent Kereen Teo Pei Pei, 28, was the first person to be convicted. She was fined $8,000 last year for trying to cheat DBS Bank by inflating the selling price of Mr Koh’s flat by $100,000. Her manager was similarly fined.

Mr Koh has yet to be charged with any offence.

In arriving at his decision, District Judge Bala Reddy agreed with the prosecution that Singh knew all along about the cashback deal.

The judge added that when Mr Koh went on to make the false $490,000 claim against the couple, Singh continued to act for him to sue them based on the false claim. Singh had thus abused the judicial process, he added.

He showed no emotion when the judge announced his decision.

Soon after, he sought permission through his lawyer to return to Perth in Australia. His immediate family is in Perth.

His lawyer, Mr Ang Cheng Hock, said Singh was not a flight risk as his sister and mother are still living here.

However, Deputy Public Prosecutor Vincent Leow objected, arguing that because Singh’s family is in Perth, he was a potential flight risk.

The judge will decide on Tuesday if Singh may leave the country. The mitigation hearing is set for July 27.

Singh is now out on $20,000 bail. He could be jailed up to two years and fined.

Source : Straits Times - 30 Jun 2007

Risk managers and traders are worried about the increased risks, MAS survey shows

Prices of assets including equities and property have become so ‘frothy’ in a global financial system awash with money that many analysts are bracing themselves for a ‘big shock’.

The warning came in a recent survey by the Monetary Authority of Singapore (MAS), which found that many risk managers and traders are getting twitchy despite the global stock market and property boom.

Trade and Industry Minister Lim Hng Kiang told 400 bankers at the Association of Banks in Singapore’s (ABS’) annual dinner last night that some market players even ’speculated this shock could happen before the end of 2008′.

Mr Lim, who is also MAS deputy chairman, said the survey sounded an alarm of ‘a heightened level of risk in the macroeconomic and financial environment’. ‘Most respondents believed that asset prices were frothy and that a big shock could happen.’

Survey respondents - many of whom are based in Singapore - also pointed to ’shock events’ such as a terrorist attack or geopolitical instability that could disrupt markets.

They raised the danger of ’speculative liquidity’, or floods of cash in search of investments, that has led to historically unprecedented asset prices. They pointed to new players such as hedge funds and private equity outfits, who hold sway in financial markets. Respondents spoke of these players as being ‘highly leveraged’ and holding ‘large speculative positions’.

They also ‘expressed concern about the systemic risks’ posed by these funds, Mr Lim said.

Even as Singapore’s financial sector looks set to enjoy yet another sterling year, banks must not be ‘lulled into a false sense of security by the external environment’s bullishness and resilience to shocks’, he warned.

He cautioned banks not to let their guard down or get ‘overconfident with (their) knowledge and analyses’ of the risks out there. ‘As bankers, you will be familiar with the saying that bad loans are made in good times. This serves as a reminder that vigilance is our constant responsibility.’.

Mr Wee Ee Cheong, chief executive (CEO) of United Overseas Bank (UOB), echoed Mr Lim’s comments in his address as outgoing ABS chairman. Mr Wee, who was sick, had his speech delivered on his behalf by UOB senior executive vice-president Terence Ong.

‘While many factors are beyond our control, we must continue to be vigilant (and) to invest,’ he said.

Bankers at the dinner held at the Meritus Mandarin hotel told The Straits Times that they concurred with the MAS survey findings but said they did not foresee a meltdown.

ABN Amro Singapore CEO David Wong noted that Asia had ‘learnt its lessons well’ from the 1997 financial crisis and is now ’significantly stronger’ and more resilient to shocks.

Ms Chng Sok Hui, DBS Bank’s head of group risk management, said the bank has robust processes to monitor global imbalances, which may last many more years. ‘It is difficult to predict when and whether they will correct,’ she added.

Mr Mateos Atamyan of Bank Julius Baer (Singapore) commented that Singapore’s financial sector ‘can absorb many more shocks and excesses’ compared with 10 years ago, but a ‘risk and challenge’ to its growth is a shortage of human resources, especially well-trained financial advisers.

Mr Lim also highlighted another concern closer to home for banks - ‘reputation risk’. He pointed to the recent public outcry over transparency and fairness of bank practices such as multiple home loan board rates and promotional fixed deposit rates.

While these issues have limited impact on a bank’s short-term profits, they ‘can affect the longer-term reputation and consumer confidence’.

Mr Lim urged banks to be proactive and address customer concerns early. It was a message picked up by incoming ABS chairman David Conner, the CEO of OCBC Bank. ‘Consumers, both companies and individuals, are increasingly vocal in clamouring for higher service standards and more value,’ said Mr Conner, who unveiled plans to educate consumers.

These will include debt management seminars for individuals with an annual income of $20,000 to $30,000, to whom the banks will offer unsecured credit in the coming months.

Sounding alert

Survey respondents raised the danger of ’speculative liquidity’, or floods of cash in search of investments, that has led to historically unprecedented asset prices.

They also pointed to new players such as hedge funds and private equity outfits, who hold sway in financial markets.

Respondents spoke of these players as being ‘highly leveraged’ and holding ‘large speculative positions’.

They also ‘expressed concern about the systemic risks’ posed by these funds.

Source : Straits Times - 30 Jun 2007

MARKETING sales manager David Li was badly burnt when the Asian financial crisis and global downturn sent property prices tumbling 10 years ago.

He had spent HK$3 million (S$590,000) on a 475 sq ft two-bedroom home in Quarry Bay when prices were at their peak just months before the handover.

‘I cut my losses and sold it for about HK$1.65 million in 2005, when there was a rebound in the sector,’ the 41-year-old told The Straits Times. ‘Even now the place is worth just HK$1.8 million.’

Luxury homes aside, the overall property sector remains 30 to 40 per cent below prices seen at the peak in 1997 - a time when the Hong Kong economy was booming from increased trade with mainland China and the rest of the world.

‘Things are more stable now, and most people are much more realistic after the experience of the financial crisis as well as Sars,’ said Mr Michael Ng, a managing director at property firm Savills.

Mass-market homes now average HK$3,500 to HK$4,000 per sq ft in a city where the median monthly income was HK$17,250 last year.

A recent boom in the luxury home sector - typically units exceeding 100 sq m - has spilled over to the suburbs.

Some projects in places like Sai Kung, Tai Po and Sheung Shui are commanding prices once reserved for high-end districts such as Repulse Bay and the Peak.

‘In the mid- to long run, there is the danger that the average person will be priced out of his dream home,’ said City University professor James Sung, who sits on public advisory boards.

‘This is a hot potato facing the current administration, which could turn into a big social and political problem if not properly addressed.’

The government recently resumed sale of public homes, reserved for lower-income groups, to cool the market as well as to meet rising demand for more such homes.

It had stopped building the public flats in 2002 to arrest a five-year property slump.

Mass-market apartments are forecast to appreciate by around 5 per cent this year, while luxury homes are expected to rise by 10 per cent to 15 per cent on average.

A bubble, however, is unlikely to form, analysts said, citing the fact that apart from the top-end homes, the rest of the property sector is still cheaper than the 1997 levels.

But Mr Li has learnt his lesson. He now rents a 900 sq ft place for HK$18,000 a month, because of the ‘reduced risks’.

Source : Straits Times - 30 Jun 2007

A Well-Heeled Singapore buyer has outbid four others to lay claim to a large conservation bungalow on Mountbatten Road in the East Coast area.

The buyer, known only as Mr Koh, paid $13.95 million for the 20,222 sq ft plot at an auction held by Knight Frank yesterday. About 89 bids were received for the property, classified as a rare ‘early bungalow’ built in the 1860s, said Knight Frank’s auctions director, Ms Mary Sai.

Bids opened at $9.5 million, with the winning offer coming in at almost 40 per cent over the indicative price of $10 million, she added.

While transactions for conservation bungalows are too infrequent to be easily comparable, the last similar deal was done in 2004, she said.

SC Global then paid $11.05 million for Chansville, a Mountbatten Road bungalow with grounds of 55,000 sq ft. It has since restored the house, built four new ones and sold all five.

The bungalow sold yesterday was put under the hammer by a High Court order. But more properties going on auction these days are sold by their owners, according to two separate reports by property firms.

Knight Frank research showed that the number of properties auctioned by owners climbed 38.9 per cent in the first half of this year, compared with the preceding six months. Those properties that were sold this year had a total value of $207.8 million, up from $115 million for those sold in the second half of last year.

Another major auctioneer, Colliers International, said 421 properties have been put up by their owners since January, up from about 350 properties in the preceding half-year.

It added that the auction market is being boosted by properties with the potential for a collective sale. On the days when such properties are put up for sale, ‘the number of attendees jumps from the usual 100 to as many as 200′, observed Ms Grace Ng, the deputy managing director and auctioneer at Colliers.

Bids are competitive for these properties as well, she added. A shop unit in Golden Wall Centre recently sold for $1.07 million, while a shop unit in The Adelphi also fetched $460,000.

For the auction market, $263.02 million worth of properties have been sold since January, up from $210.29 million in the six months before that, said Colliers.

Owners’ sales made up more than half of this number, with 52 deals worth $177.42 million.

Source : Straits Times - 30 Jun 2007