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Duke Development’s bid of $436.55 psf ppr beats 5 others for 99-yr leasehold.

A COMPANY controlled by stockbrokers Han Seng Juan and David Loh Kim Kang of UOB Kay Hian yesterday emerged as the surprise top bidders for a 189,812 sq ft site next to Kovan MRT Station and the Kovan Melody condo.

Through Duke Development Pte Ltd, they bid $290.02 million or $436.55 psf per plot ratio (psf ppr) for the 99-year leasehold site, which can be developed into a condominium project with possibly about 600 units averaging 1,200 sq ft.

Duke Development outbid five other contenders at yesterday’s state tender conducted by Urban Redevelopment Authority. The others were:

Far East Organization’s Bishan Properties, which bid $280.1 million or about $422 psf ppr;

A tie-up between Hong Leong Holdings unit Kingston Development and ASPF II Delta GmbH ($273 million or $411 psf ppr);

Frasers Centrepoint ($262.4 million or $395 psf ppr); Allgreen Properties ($256.8 million or $387 psf ppr); and

GuocoLand unit GLL Ventures ($227 million or $342 psf ppr). Property market players were busy yesterday evening trying to find out just who Duke Development was. The company is a fully owned subsidiary of Duchess Development, whose shareholders are Mr Han, Mr Loh and Angela Loh Moo Cheng, a companies search showed.

Mr Han and Mr Loh, in addition to being prominent stockbrokers at UOB Kay Hian, are also known to be corporate investors, who control stakes in companies like Summit Holdings and Pine Agritech.

They are also well known for pre-IPO China investments, and are dubbed the ‘David and Han Team’ and ‘The Dream Team’, according to stockbroking circles.

Industry players believe that based on Duke Development’s top bid of $437 psf ppr at yesterday’s tender, its break-even cost for a new condo development on the site could be in around $730 to $750 psf.

CB Richard Ellis executive director Li Hiaw Ho said: ‘It is likely the selling price would range from about $850 to $950 psf. The 778-unit Kovan Melody has sold out and there could be pent-up demand for new homes in this location. Units in Kovan Melody in the secondary market were transacted recently in the low-$800 psf range.’

Prices of suburban condo sites have been rising as the residential recovery spreads to the mass-market. Last month, a plum 99-year condo site next to Ang Mo Kio MRT Station fetched a top bid of $601 psf ppr, a new record for a suburban condo plot.

Mr Han and Mr Loh are well known for pre-IPO China investments and are dubbed the ‘David and Han Team’ and ‘The Dream Team’, according to stockbroking circles.

Source : Business Times - 3 Oct 2007

$225m sale price is 70% up from price it paid in Jan for space in Springleaf Tower.

TWELVE floors in Springleaf Tower that were bought in January for $134 million have been sold again for $225 million - an increase of almost 70 per cent.

The seller is Macquarie Global Property Advisors (MGPA) which made headlines recently by submitting the top bid of $2.02 billion for a development site at Marina View.

The buyer of the SpringLeaf Tower space is SEB Asset Management (SAM), part of German pension fund manager SEB, which bought SIA Building from CLSA Capital Partners in April for more than $525 million.

SAM said in a statement yesterday the Springleaf Tower investment is its second in Asia for its new SEB Asian Property Fund, after it acquired an office tower in Shanghai’s Puxi district in a 50-50 joint venture with Pacific Star at the beginning of September.

In Singapore, churn in the office sector appears to be increasing.

CLSA Capital Partners, for instance, acquired the SIA Building for $344 million in June 2006 before selling it less than a year later for 50 per cent more.

MGPA acquired Temasek Tower in March for $1.04 billion. And with capital values rising, it too could sell for a quick profit.

According to a report by CB Richard Ellis (CBRE), the average capital value of prime office space was an estimated $2,900 per square foot in Q3 2007, reflecting an increase of 16 per cent quarter on quarter and 114.8 per cent year on year.

CBRE said prime office yields were 4.32 per cent - up only slightly from 4.23 per cent in Q2 2007. But that has not stopped investors buying offices.

It said the office investment market remains active, with $3.459 billion of transactions in the third quarter. Notably, a fund linked to Goldman Sachs bought Chevron House for $366.4 million or $2,780 psf of net lettable area, setting a new benchmark that exceeded the $2,650 psf that British-based property fund Develica paid for One Finlayson Green in June.

SAM expects an internal rate of return of 9 per cent per annum on its investments.

Source : Business Times - 3 Oct 2007

Minority owners’ counsel point to several defects in application.

The Horizon Towers appeal continued in the High Court yesterday, with the minority owners - those who didn’t agree to the en bloc sale - presenting their objections as to why the Strata Titles Board’s (STB) decision should not be overturned.

And while it was a distinctly more muted session than the previous day’s, sly barbs were still exchanged between the various lawyers - with the atmosphere remaining charged.

The inclusion of the buyers - Hotel Properties (HPL) and its partners - represented by Allen & Gledhill (A&G) in this appeal has been the source of much consternation among the other parties and it obviously continued to rankle some of the lawyers yesterday.

Senior Counsel KS Rajah of Harry Elias Partnership, who represents a group of minority owners, said A&G’s lawsuit was akin to ‘holding a gun to the heads’ of the owners. ‘And yet they dare to come into this courtroom and preach to us what’s right and what’s wrong,’ Mr Rajah complained.

Senior Counsel Michael Hwang, who also represents one of the minorities, took issue with A&G’s tactics. He said A&G Senior Counsel K Shanmugam had ‘outstayed his welcome in these proceedings’ in asking the court to make certain orders for the ‘express purpose of influencing a possible outcome’ of the suit between the buyers and the majority owners.

The viewing public also didn’t spare Mr Shanmugam, who must have felt like the party’s most unpopular guest. Members of the gallery booed him when he said: ‘We are not in the business of suing people except in the case of serious misconduct.’

This ongoing appeal is meant for the High Court to determine if it should set aside STB’s decision in August to dismiss Horizon Towers’ collective sale application, on the grounds that it was defective because it was missing three signatory pages. The buyers have, in the meantime, sued the majority owners over the botched application. That suit has been stayed, pending - among other things - the outcome of this appeal.

Doreen Siow, a former member of the sales committee and one of the majority owners, turned up to witness the court proceedings yesterday - braving the torrent of criticism that has been levelled against her. It is A&G’s position that Ms Siow tried to sabotage the en bloc sale.

The emotional outbursts from the crowd prompted Mr Shanmugam to comment that ‘this should not be treated as a circus’ - which moved Justice Choo Han Teck to tell the court officer to keep the public gallery in order.

Mr Shanmugam went on to remind the court and its participants that his clients’ interests are in line with those of the majority owners of Horizon Towers - which is, to see the collective sale through.

The afternoon was taken up by the minority owners’ lawyers, who argued that STB’s decision should be upheld. Mr Hwang and Kannan Ramesh of Tan Kok Quan Partnership both agreed that neither STB nor the High Court had the jurisdiction to amend the defects in the collective sale application, and cited various statutes and case law to support their position.

Mr Ramesh also pointed out that STB has since 2000 required strict compliance with collective sale applications and that, even if the non-compliance were of a technical nature - as the majority sellers and buyers are arguing - it would still strip the board of its jurisdiction to rule a defective application as being valid.

Mr Ramesh and Mr Hwang also agreed that there were more defects in the application than just the three missing pages. Mr Hwang related how, in August, he was interrupted in his cross-examination of the first witness at the STB hearing - when the board decided suddenly to throw out the application. He said there were ‘lots of other cases of discrepancies’ which hadn’t yet been heard and would have to be brought up if the case was sent back to STB. ‘So it isn’t just a matter of these small technical issues,’ he said.

Mr Rajah took a more impassioned tack, saying the missing three pages ‘isn’t just a technicality, it’s a crime’. He also told the court that the law is meant to protect the minorities.

The hearing will continue today, with the majority owners making their replies to the minorities’ submissions. Judge Choo has indicated he will take a week to rule on the matter.

Source : Business Times - 3 Oct 2007

SINGAPORE’S property market is setting the pace as real estate prices soar across the Asia-Pacific region.

The country posted a ‘remarkable house price growth’, year on year, of 21.05 per cent for the 12 months ended June, up from 6.08 per cent the previous year, an online research house, Global Property Guide, said yesterday.

That placed it fourth in the overall ranking of 42 countries and top in the region.

Singapore’s property market recovery from an ‘eight-year house price slump’ was ‘thanks to its booming economy’, the report added.

Top spot went to the Baltic state of Latvia while its neighbour, Lithuania, came in third. Bulgaria was second. All three recorded price rises of 25 per cent or more for the year ended June compared with the same period a year ago.

Some other Asia-Pacific economies that made the rankings included the Philippines, which had price growth of 14.29 per cent, placing it seventh, and Hong Kong - in 14th position with 8.78 per cent growth.

Unlike most Asian countries, Thailand’s prices dropped by 3.47 per cent for the period after a rise of 3.92 per cent for 2006.

While prices in the Asia-Pacific are heating up, Europe’s price growth continues its moderate trend, said the report.

Source : Straits Times - 3 Oct 2007

HORIZON Towers minority owners said yesterday that the Strata Titles Board (STB) was right to throw out the estate’s collective sale application over a paperwork glitch.

Mr Ramesh Kannan, who is representing some minority owners, told the High Court that rules should be followed particularly strictly, because they involved compulsory acquisitions of assets.

‘The approach must be strict compliance…when it comes to the forced acquisition of people’s homes,’ said Mr Kannan, adding that the STB had consistently advocated strict compliance in previous cases. The sellers argued on Monday that the glitch - three missing pages - was a technicality that STB could overlook.

They want the court to reverse the STB’s August decision to abort the deal. This would allow the $500 million sale to a group headed by Hotel Properties to go ahead.

But Mr Kannan and Senior Counsel K.S. Rajah, who is representing another group of minority owners, argued that the STB had no powers to disregard the missing pages.

Mr Kannan also noted that upcoming changes in legislation will give the STB the power to ignore technical irregularities, as long as no owner’s interest is prejudiced.

The introduction of this rule proves that Parliament recognises that the STB now has no such powers, he said.

Mr Kannan, Mr Rajah and Senior Counsel Michael Hwang are acting for different groups of minority owners but all argue that the STB’s decision be upheld.

But while the floor was largely given over to the minority owners’ lawyers yesterday, Senior Counsel K.Shanmugam - acting for Horizon Towers buyers - made a brief appearance.

He told Justice Choo Han Teck that his clients’ only interest was to see the sale through. If this happens, the buyers will withdraw their suit against the sellers for breach of contract, without claiming costs, he said. The buyers are claiming up to $1 billion in lost profits.

‘We are not in the business of suing,’ he added, to sneers from the public gallery, where about 40 residents of Horizon Towers were sitting.

The hearing ends today, with the sellers’ lawyer responding to yesterday’s arguments. A decision is expected from Justice Choo in about a week’s time.

Source : Straits Times - 3 Oct 2007