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Boosted by sale of stake in One Raffles Quay, the firm posts a seven-fold surge in Q4 profits to $572 million

Keppel Land kicked off the current quarterly earnings for the property sector on a positive note with a strong set of results, but analysts said the sharp gains may not be repeated in the current year as businesses could face weaker business conditions.

The seven-fold surge in net profit to $572 million for the three months ended Dec 31 was boosted by a one-time capital gain from the sale of its one-third stake in One Raffles Quay (picture).

Keppel Land is proposing a final dividend of 8 cents per share and a special dividend of 12 cents per share. For the full year, it said profit after tax rose almost four times to $780 million from $200.3 million the year before.

Singapore’s second largest property developer’s results bids well for the rest of the sector, but analysts warned that property developers in general may not see such buoyant conditions this year, with weak market sentiment resulting in delays in property launches.

The launch of the Marina Bay Suites has been delayed until after Chinese New Year “to wait until people get their bonuses and perhaps, after people get their hongbao (red packet)”, said Keppel Land chief executive officer Kevin Wong.

Both housing and office property prices reached records last year, but with the US sub-prime crisis widening, companies are starting to tighten their spending on worries of a global slowdown.

The latest Urban Redevelopment Authority data showed that sales and rental prices for private residential and office properties have risen at a slower pace in the fourth quarter versus the third quarter of 2007. For the whole of last year, private home prices rose 31.2 per cent and prices of office space rose 32.6 per cent.

The rising price trend will continue and will broaden to the mass residential market, but the gains won’t be as aggressive, with analysts forecasting no more than a 15-per-cent rise in property prices on average.

“The drivers for earnings growth this year (for Keppel Land) are most likely from projects in emerging markets like China and Vietnam,” said CIMB analyst Donald Chua.

Source : Today - 30 Jan 2008

CapitaLand’s offer to buy the remaining shares of its 67-per-cent unit, The Ascott Group, at $1.73 apiece represents a decent exit price for minority owners of the luxury residences operator, according to CIMB, who said the price “is a fair valuation from a historical perspective, but attractive in the current environment of heightened risk aversion”.

Stock markets worldwide have been rocked in recent months by the fallout from the US sub-prime mortgage fiasco, and banks and property counters have bore the brunt of the volatility. The ST Index is down about 12 per cent since the beginning of the year.

In its offer document despatched to Ascott shareholders yesterday, CapitaLand’s fully-owned Somerset Capital unit said the offer was unconditional in all aspects and that payment would be disbursed 10 days after the receipt of acceptances. The offer will close on Feb 26 and the offer price will not be revised. CapitaLand intends to take Ascott private and will exercise its rights of compulsory acquisition.

Source : Today - 30 Jan 2008

A 27,000 square metre site at Yishun Avenue 1/Avenue 2 has been offered for sale under the confirmed list of the government land sales programme.

The 99-year leasehold site by the Housing and Development Board has been set aside for condominium housing.

It can yield up to 56,600 square metres in gross floor area.

The sale of the site is in line with the government’s plan to offer more housing choices in Yishun.

This is part of the “Remaking Our Heartland” plans to rejuvenate communities in middle-aged towns and estates.

Source : ChannelNewsAsia - 29 Jan 2008

Keppel Land has surpassed market expectations, with full-year earnings hitting a record S$779 million in 2007.

This is up sharply from just S$200 million the previous year - boosted by strong sales at its high-end luxury residential projects.

With money in the bank, Keppel Land is eyeing greater overseas expansion in 2008.

Reflections at Keppel Bay and Marina Bay Residence are just two of the projects that have helped Keppel Land achieve record earnings last year.

Not only was net income at a record high, turnover also hit its highest ever at S$1.4 billion.

Kevin Wong, Group Chief Executive Officer, Keppel Land Limited, said, “2007 is a record year, in terms of price increase as well as number of units taken up. Looking ahead, we see that the high-end market direction will probably be dependant on the outcome of the US sub-prime problem, but (as for) the middle and mass market segment, we expect prices to continue to go up steadily.”

The numbers include gains from the sale of its one-third stake in One Raffles Quay, as well as appreciation in the value of its office portfolio.

All in, Keppel sold more than 760 residential units in Singapore last year - a new record for the company.

Keppel Land also saw an 82 percent jump in earnings from property trading.

Overseas markets such as China and Vietnam contributed to 40 percent of total earnings.

However, Keppel Land is seeking to drive this up to 50 percent this year.

Mr Wong said, “Firstly, we spend on the shareholders - 12 cents. Secondly, what we will be doing is we would go where the market is, and Vietnam is a good place to expand; China again is a good place to expand, and we have started on some projects in Middle East, but there is no hard and fast route.”

Keppel Land is paying out a final dividend of 8 cents a share and a special dividend of 12 cents a share.

Source : ChannelNewsAsia - 29 Jan 2008

More families exceed income limit set 14 years ago. Households earning $8,000 or more a month

If your household earns more than $8,000 a month, it’s…
No new HDB flats
No subsidised housing loans
No maximum $40,000 grant to buy resale flats
 
IT’S been 14 years since the HDB last raised its income ceiling for new flats from $7,000 to $8,000.

Many things have changed since 1994 - isn’t it time for the ceiling to shift too?

Data from the General Household Survey shows that the proportion of resident households earning $8,000 and above every month has nearly doubled from 10.85 per cent in 1995 to 19.9 per cent in 2005.

This means that the proportion of households qualifying to buy new flats shrank by roughly 9 percentage points.

Flat values have also jumped since then.

Consider this. Back then, a new four-room HDB flat in Woodlands would cost you about $96,000, compared to $183,000 for a new four-room unit at nearby Yishun today.

Home-buyer Seline Wee, 29, wants the ceiling to be raised.

SANDWICH CLASS

Ms Wee, a teacher, is getting married to her auditor boyfriend next year.

She said: ‘Our combined income is just slightly above the $8,000 ceiling and we feel we’re being penalised for it.

‘Now we can’t buy a new flat and we’ve to dig deep for either a high-priced resale place or condo, which means possibly spending beyond our means.

‘The income ceiling rule has not been changed for so long but income levels and property prices have increased since then.’

A household earning above $8,000 a month also cannot get subsidised housing loans and housing grants of up to $40,000 to buy resale flats.

Knight Frank’s research director Nicholas Mak thinks the policy should be reviewed regularly because of inflation, the increase in income and property prices.

He explained: ‘This ceiling has to be reviewed regularly or otherwise you’re cutting out a certain proportion of the population who can make use of the subsidy.

‘On one hand, the Government is restricting the amount of CPF you can spend on housing. On the other hand, they’re keeping the income ceiling low, and preventing some in the sandwich class who don’t want to over-invest in property from buying new flats.’

Mr Sing Tien Foo, deputy head of the NUS’ department of real estate, said that the income ceiling is an eligibility measure to make sure Singaporeans can afford public housing.

To lift this cap, the Government has to look at market conditions and see whether public housing has gone beyond the affordability of Singaporeans.

He said: ‘A solution would be a discreet review. If income levels have gone up, is it only applicable to certain groups? And is this change in income cyclical or a permanent structural change?’

Lifting the cap may have widespread effects, he added.

‘How big is this sandwich class? By lifting the ceiling, the demand for new flats may surge and their prices may be adjusted higher.

‘The resale market will also be affected. Is that the best solution?’ he asked.

While some may argue that executive condos (EC) fulfil this niche with its $10,000 ceiling, Mr Mak said that these sites tend to be fewer in number.

HDB announced that there would be a supply of 7,000 new flats available from last November to June this year.

And another 3,200 flats will be built under the Design, Build and Sell Scheme (DBSS) and EC schemes.

Mr Eric Cheng, executive director of HSR Property group, thinks that $8,000 is a fair gauge because those earning more than that can easily afford private property.

Based on a couple’s combined income of $8,000, they can easily buy a $700,000 private property on a 35-year loan.

He calculated that the monthly instalment of around $2,300 would be quite affordable.

‘If you bring the ceiling higher, there’ll be increased demand for new flats and the resale market will be affected. Now, the resale market is quite balanced,’ he said.

The Housing Board said it has no plans to raise the income ceiling now as the vast majority of Singaporean families qualify for subsidised public housing.

Said a HDB spokesman: ‘At the current $8,000 income ceiling, about 8 in 10 Singaporean families are eligible to buy subsidised public housing.

‘Given our limited public housing budget, it is important that we target our housing subsidies to those who need it most.’

HDB said that higher income households exceeding the income ceiling have other housing options, including the purchase of resale HDB flats, which are not subject to any income ceiling.

And first-timer families with household incomes of up to $10,000 can also consider buying new EC units with a housing grant of $30,000.
 
Source : NewPaper - 29 Jan 2008