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PROPERTY giant CapitaLand is going shopping in India and China - for malls.

The developer said yesterday that it is setting up two new property funds worth US$1.2 billion (S$1.81 billion) to buy retail assets in the two most populous countries in the world.

Each fund will be worth US$600 million. CapitaLand will take a stake of about 40 per cent in CapitaRetail India Development Fund and 45 per cent in CapitaRetail China Development Fund II.

This brings CapitaLand’s equity stake in both funds to about US$510 million. The remaining stakes in the funds are expected to go to insurance firms, pension funds and corporations.

Both funds will invest in malls that are under development. The Indian fund will close in September, while the China one will close in October.

CapitaLand’s Indian fund is the group’s second retail-related move in the country, after it partnered India’s largest retailer Pantaloon in April last year.

They tied up to manage malls and to set up and manage property funds that develop or own malls in India.

Since then, CapitaLand has identified several retail investment opportunities in India. The new fund will allow it to grow its retail presence in India over time.

But CapitaLand added that it was too early to disclose which specific malls it was looking at.

As for China, the new retail fund is CapitaLand’s third in the country, after CapitaRetail China Development Fund I and CapitaRetail China Incubator Fund.

All three funds could feed into CapitaLand’s China mall trust. While the incubator fund focuses on completed malls, the other two funds will be used for projects still being developed.

Already, the funds in CapitaRetail China Development Fund I - also US$600 million in size - are 90 per cent committed, the developer said.

That is why a second fund is needed to invest in the pipeline of malls coming from CapitaLand’s recent joint ventures in China, such as its tie-up with China Vanke this month.

CapitaLand Retail chief executive Pua Seck Guan said the funds have already received overwhelming indications of interest. He is confident that the closing of the funds will be ‘a resounding success’.

‘Professionally managed organised retail concepts are relatively lacking in China and India, where we have identified immense opportunities,’ he added.

CapitaLand owns or manages more than 70 malls in 28 Chinese cities, and is looking to replicate its China strategy in India.

Source : Straits Times - 31 Jul 2007

They will have to scrutinise potential clients’ profiles, sources of funds

Lawyers will soon be barred from holding funds from unnamed sources, and will have to check their clients’ backgrounds before agreeing to represent them.

The rules, which were published under the Legal Profession Act recently, will kick in on Aug15 and are meant to prevent lawyers from being used by their clients to launder ‘dirty money’.

These rules will apply to legal work done in areas such as real estate, securities accounts management or mergers and acquisitions.

They also apply to matters related to the amount of money to be held, the complexity of the case, and the business or risk profile of the client or parties with controlling interest over the client.

Lawyers will have to be satisfied that there is nothing untoward in the business relationship, or between the client and any other party to the case.

A lawyer who comes up against a cagey client is obliged to drop the case. If a lawyer suspects illicit activity linked to drug trafficking, corruption or serious crimes, he has to report this to the Commercial Affairs Department.

The Law Society’s governing council, as enforcer of these rules, can ask a lawyer to produce documents or an explanation if a complaint is filed.

The society’s spokesman said last Tuesday that the rules have been put in place to enable Singapore to play its part as a member of the Financial Action Task Force, an inter-governmental body set up to develop, promote and monitor policies that fight money laundering and the funding of terrorism.

No known cases have been reported so far of unsavoury characters who park gains from shady businesses with lawyers to give the funds an appearance of respectability.

The rules have been seen as a landmark move by lawyers here, who liken them to measures in place for banks.

Just as banks follow KYC or Know Your Customer checklists before accepting client transactions, these rules will forbid lawyers from accepting monies from clients with fictitious names.

Due-diligence checks may involve database searches and inquiries, which will require a prospective client to show he has a legitimate business and that his funds are coming from lawful sources.

Lawyer Amolat Singh said: ‘In a way, lawyers are like part-time bankers in that they, too, hold deposits for clients. The new laws make explicit the need for checks to protect them from being a conduit for illicit funds.’

With the rules in place, an overseas client will no longer be able to deposit monies here with a lawyer for a specified purpose and then cancel the deal months down the road and move the funds to third country without a satisfactory reason, he added.

Drew & Napier LLC director Wendell Wong described the rules as a ‘paradigm shift’ that subjects professional and commercial interests to national interest and public-policy considerations.

He said: ‘While for lawyers, it means more work has to be done, it is in the interests of good governance and it is a good start, bearing in mind we are up against organised syndicates involved in money laundering.’

Source : Straits Times - 31 Jul 2007

Finance and real estate professionals expected to do particularly well: Poll

CRITICAL staff shortages in certain key professions in Singapore could lead to pay rises of up to 40 per cent in the next 12 months, a new survey has found.

Professionals in the finance sector are expected to be the biggest winners on the salary front. They are set to command pay rises of 15 to 30 per cent as Singapore cements its status as a global financial hub, said global recruitment firm Michael Page International.

These include staff involved in the booming private banking and wealth management field - catering to the swelling ranks of cashed-up types. In fact, some professionals in this sector with special skills could be looking at pay rises of up to 40 per cent, the survey found.

Not surprisingly, jobs in the booming property and construction sector are also among those set for hefty pay hikes. A salary rise of 15 to 20 per cent is on the cards for project management roles in construction.

And real estate professionals are in line for a 10 per cent pay rise as the property market continues to flourish over the next 12 months.

The findings are from an annual survey, involving 1,400 employees and 170 employers in Singapore.

The latest results were released on Friday last week. They point to a tightening labour market in which employers will need to offer higher salaries to attract and retain professionals.

Said Ms Florence Ng, managing director of Michael Page International (Singapore): ‘Competition for skilled workers will only intensify, when you consider that 96 per cent of the employers we surveyed predict staff numbers to remain constant or increase in the coming year.

‘Employees recognise that they are in a strong bargaining position and their expectations are high.’

One-third of the 1,400 employees surveyed expect their next pay rise to be 10 per cent or more.

Ms Ng added: ‘Employers need to offer competitive salaries to secure and retain talent, but they must be careful not to incur labour costs which are not commercially viable over the longer term.

‘One way of doing this is to increase the bonus component of salary packages and link financial reward to productivity and performance levels.’

Another way for firms to retain staff is to show a greater commitment to training and career development, which, she said, would improve productivity, and allow employers ‘to be better able to absorb wage growth’.

Industry experts say the competition for talent in Singapore is heating up.

Said Ms Annie Yap, chief executive officer of human resources consultancy GMP: ‘The turnover rate has increased by 30 per cent compared to last year, as companies expand and increase their budgets. It’s the biggest supply crunch I’ve seen since 1998.’

Added Robert Walters Singapore’s managing director, Mr Mark Ellwood: ‘The mid-tier to senior management is seeing the biggest demand and the least candidates. People know there are a lot of opportunities in that area, so from a salary perspective, it’s hard to retain people.’

A similarly buoyant wages theme emerged in a Citigroup report released yesterday. Economist Chua Hak Bin noted in the report: ‘Wage pressures are emerging. The labour unit cost of manufacturing rose by about 6 per cent in the first quarter - the highest increase in four years. Civil servants are getting a 3 to 33 per cent wage increase.’

Michael Page said employers need to direct packages towards variable components such as bonuses.

Mr Kenny Yap, the executive chairman of mainboard-listed ornamental fish retailer Qian Hu, said that he faces difficulty expanding his finance department because of stiff competition from the banks and big firms.

Source : Straits Times - 31 Jul 2007

The three Chow brothers, now embroiled in a bitter lawsuit, played together as children in this house. They talk to CRYSTAL CHAN about their past

For about half a century, this huge house on sprawling grounds in Tanglin was the home of a happy family.

The children - three boys and a girl - played together and helped one another with their studies.

Eventually, they all moved away.

But it was still home and they stayed there whenever they had areunion.

Until their parents died.

Ater that, everything changed.

The four siblings all ended up in court, fighting cases related to their inheritance.

There were at least six suits involving all ofthem.

Today, the house is silent and empty. They don’t go there atall.

The three brothers, who all live in Hong Kong, stay in hotels when they are in town. Each of them is not on speaking terms with the others.

They can’t even agree to get rid of the house, for all the millions it isworth.

It can be sold only when there is a settlement of the disputes about their parents’ estate.

Yet, the place is full of memories of a close-knit and boisterous past.

Said the youngest son, Dr Chow Kwok Ching, 62: ‘Our house was so big that you could play any game you wanted. We played basketball, table-tennis and badminton.’

Said the eldest, Dr Chow Kwok Chi, 69: ‘We never fought when we were children. In fact, we were close in our childhood. We were like any happy family.’

Kwok Ching said: ‘We also helped each other in our studies.’

The three brothers continued to be on good terms until they began to disagree about their inheritance.

Kwok Ching was even the best man at Kwok Chi’s wedding.

The New Paper met Kwok Ching and second brother Kwok Chuen, 65, over lunch on separate occasions, and memories of their life in the bungalow at 35 Ridout Road came pouring out.

Kwok Chi also spoke to us on the phone from Hong Kong.

The old family house is on primeland.

Their father, property tycoon Chow Cho Poon, bought it soon after he moved to Singapore from Hong Kong, with his wife Grace and their four children, in the ’50s.

He began investing in property here too.

Today, the Chows own more than 20 pieces of property in Singapore and Australia worth more than $100 million.

One of their cases went to trial at the HighCourt last week and has been adjourned to a later date.

The three brothers studied at Anglo-Chinese School while their sister studied in a convent school.

The family was rich, but Kwok Ching insisted they were not spoiltbrats.

‘We didn’t often have holidays because our parents worked very hard to keep the business going,’ he said.

They did get pocket money but ‘our parents wouldn’t buy us whatever we wanted’.

Kwok Ching added: ‘My father kept saying we had to study hard to have a good future. If you’re spoilt, you won’t want to work hard.’

Kwok Chi recalled: ‘The house was so big each of us had our own room.’

He declined to say how many rooms or servants the family had.

‘Our parents were strict but whenever we did something wrong, they would just have a good talk with us and tell us where we went wrong.

‘They didn’t believe in caning or hitting us,’ Kwok Chi said.

‘They wouldn’t pamper us too. Even when we studied for our exams, they wouldn’t do things like brewing chicken soup for us. We were very much left on our own.’

As the children grew up and went their separate ways, they drifted apart.

Their sister Betty married heart surgeon Joseph Sheares and became a daughter-in-law of former president Benjamin Sheares.

The brothers went to study abroad.

Kwok Chi and Kwok Ching studied medicine in the UK and became eyesurgeons.

Said Kwok Chuen, who studied architecture in the US: ‘I had been interested in buildings since childhood, and my father respected my independence.’

He joined a US firm after graduating and moved to Hong Kong to work.

Kwok Chi and Kwok Ching married Hong Kong women and moved there to practise medicine.

The brothers continued seeing each other for meals.

DRIFTED APART

But slowly, they began seeing less of one another.

Kwok Chuen said: ‘I had to travel frequently to Europe and America, so meeting up was hard.’

Kwok Ching said: ‘The only time I could get away from work was during Chinese New Year.’

The brothers continued visiting Singapore during Chinese New Year and their parents’ birthdays. Those were the only times that the whole family got together.

In the ’70s, the brothers became directors in the family’s three companies, but Kwok Chi and Kwok Chuen gave up their directorships as they were busy with their careers.

In August 1997, their father died.

Mrs Chow, Kwok Ching and Kwok Chi each got two-sevenths of his estate.

Kwok Chuen got the remaining share and their sister was given $1,000.

And that was when things really began to fall apart.

Mrs Chow’s final will gave each of her three sons 30 per cent of her estate and the rest to her daughter.

She had tried to tried to reconcile them before her death in 2002.

In August 1998, Mrs Chow again made all her three sons directors in the family’s companies.

But they would still meet only at board meetings, though all three were living in Hong Kong.

In 2004, their sister accused them of cheating her of her inheritance and sued them.

Last year, Justice VK Rajah ordered the brothers to settle their inheritance, but their disputes remain.

Their parents’ estate has not been divided because it has debts that are disputed.

Two weeks ago, the High Court heard Kwok Chi’s application to wind up the companies.

He wants to do this so his parents’ assets can be divided and the brothers can ‘go their separate ways’.

Last week, Kwok Ching sued his older brothers, claiming they denied him his rights as a shareholder in his parents’ companies. He wants them to buy over his stake, which is worth more than $5 million.

Kwok Chuen said: ‘I don’t have any hard feelings. I just feel sad.’

Kwok Ching wants to move on.

He said: ‘I really hope the court cases will end soon. There’s already no more brotherly love between us, and I don’t want any more acrimony.’

Meanwhile, the house has remained unoccupied since their mother died.

Two maids and a gardener look after the place.

Kwok Chi said: ‘I really don’t know what’s going to happen to the house now until the court case is over.’

When a photo of the house was featured in The New Paper last week, Kwok Ching asked this reporter if we had gone inside.

When I said we had photographed only the exterior of the house, Kwok Ching said: ‘Oh, I thought you went inside. The photo looks very close-up. The house hasn’t changed much since my mother’s death.’
 
Source : New Paper - 31 Jul 2007

They make up 47% of total loans by commercial banks at end-June

As the property boom chugs full steam ahead, banks’ exposure to the sector has been steadily widening and their risks may be deepening, especially as a result of the prevalence of deferred payment schemes.

Steady Rise

As at end-June, housing and bridging loans as well as loans to the building and construction sector made up nearly half - a high of 47 per cent - of the more than $200 billion loan portfolio of commercial banks here, according to preliminary figures obtained from the Monetary Authority of Singapore (MAS).

This has been a steady increase from the 33 per cent from about a decade ago (end-1996) around the height of the last property boom, and the 42.5 per cent at the start of the current property boom at the end of 2002.

In absolute terms, the housing and bridging loans were worth some $64 billion as at end-June, compared to about $63 billion six months ago.

Loans to the building and construction sector stood at about $30 billion as at end-June, an increase of 21 per cent from a year ago, said MAS.

Not surprisingly, the run-up in property prices has led to an increase in housing and bridging loans (the consumer loans), but this rise has slowed dramatically from the early years of the current boom.

Right after the current property boom started, housing and bridging loans surged 17 per cent between end-2002 and end-2003 to reach $52.2 billion. Since then, the increase has slowed to about 2 per cent for the first six months of the year and from end-2005 to the end of last year, the value of housing and bridging loans increased by only 2.2 per cent.

Housing and bridging loans’ share of the total loans of commercial banks - while still the biggest - has also declined over the last couple of years. Their share of total loans, after building up over the years to a peak of 33.8 per cent at end-2005 has dipped over the last one-and-a-half years to about 32 per cent as at end-June this year.

What is perhaps more significant for the financial sector is that the loans to the building and construction sectors including loans made to developers have been expanding much faster over the past few years and have been taking up a bigger share of total loans extended by banks.

Loans to developers have an added element of risk because of the deferred payment scheme which allows home buyers to pay only a fraction of the property’s price upfront.

Loans to the building and construction industry, after contracting between 2004 to end-2005 as the construction industry went through the doldrums, surged 14.4 per cent to $26.3 billion as at end-2006. The further growth to $30 billion as at end-June this year represents a growth of 21 per cent from end-June 2006.

‘As MAS has previously said, the use of the deferred payment scheme by property developers introduces additional risks to the developers, and to the banks which finance these developers, because property purchasers under this scheme are not subject to credit checks by developers.

‘This is unlike property purchasers who apply for housing loans and are subject to credit assessment by banks. MAS expects banks to exercise prudence in their financing to the property developers and be fully cognizant of the additional risks from the use of deferred payment schemes,’ a spokesperson from MAS told BT.

Last week, during the release of MAS’ annual report, Heng Swee Keat, the authority’s managing director had said that MAS is keeping a close eye on developments in the property boom. As Singapore’s central bank and the regulator of the financial industry, MAS’s concerns with regard to the property boom are how rising prices impact inflation and the risks posed to the stability of the financial system.

Mr Heng had noted that the banking sector’s exposure to the property and construction sectors is ’significant’ and that housing and related loans have grown over the last few quarters. ‘So for both of these reasons, we will be watching developments in the market very carefully.’

The Urban Redevelopment Authority (URA) price index for private homes, released on Friday, has risen 13.5 per cent for the first half of this year.

URA figures also revealed that developers sold 9,385 uncompleted private home in the first six months of this year, less than a thousand units shy of the record 10,363 units sold through all of last year.

Source : Business Times - 30 Jul 2007