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The residential property sector may be cooling but the office sector is still relatively hot.
United States investment bank Lehman Brothers and the regional arm of Japan-based Kajima have just sold an office building development at 71 Robinson Road to a German buyer.

The price was a hefty $743.75 million, sources say, though the sum was not officially disclosed.

In October 2006, they had paid just $163.4 million for the site. Last September, the pair said they would spend about $450 million to develop it.

Kajima will complete the building as the contractor before it is delivered to the buyer, German real estate asset manager Commerz Real’s real estate fund hausInvest global.

The fully-owned unit of Commerzbank said yesterday that it is buying the site for an undisclosed sum from the partnership of Kajima Overseas Asia and Lehman Brothers. It said it wants to ride on the ongoing growth in Singapore’s office sector.

The fund’s price translates to a record $3,125 per sq ft (psf), based on 238,000 sq ft of net lettable area. The nearby Hitachi Tower was sold early this year for $811 million or $2,901 psf.

The 15-storey top grade building, in the Central Business District, has a gross floor area of 280,000 sq ft and is due to be completed in the second half of next year.

Jones Lang LaSalle said they had embarked on a global marketing campaign after the sellers appointed them to look for a buyer late last year.

There were other contenders, said its managing director for Singapore and South-east Asia, Mr Chris Fossick. He said they are now in serious talks with a number of parties wishing to lease space in the building.

‘There is keen interest in the Singapore office market, particularly from international investment funds which take a medium to long-term view of the market,’ said Mr Fossick.

Commerz Real management board member Hans-Joachim Kuehl said they expect to attract rents of about $15 psf.

Commerz Real, which was advised by CB Richard Ellis, is no stranger to the office market in Singapore. Late last year, the same fund hausInvest global bought 78 Shenton Way for $650 million, or $1,857 psf.

Source : Straits Times - 29 Apr 2008

The broader economic backdrop for the Singapore property market generally looks weak in the next 18 months, says Mr Don Hanna, Citi’s global head of emerging markets economic and market analysis.

‘The level of economic activity that we foresee in general continues to weaken this year and next,’ he told reporters on the sidelines of Citi’s closed-door Asia Pacific property conference at the Ritz-Carlton Millenia hotel yesterday.

One of the implications of the United States subprime crisis is that central banks in Singapore and many other nations are more concerned about the way real estate is financed, he said.

‘In an economy like Singapore, which is probably the most open in the world, where you are going to see weaker global demand and lower trade flows, and as a result, lower income,’ he added. And that would affect general demand for property, he said.

But Asia is in much better shape to ride out the downturn, said Citi Investment Research’s director of research for the Asia-Pacific, Mr Adrian Faure.

He told reporters that a speaker from US home-loan lending giant Fannie Mae had said that there has never been a time when the US saw a fall in property prices all across the nation.

‘But all of us in this part of the world are used to extreme and sharp up-and- down cycles, where these markets tend to be very efficient. They correct rapidly,’ said Mr Faure.

In good markets, investors tend to be less choosy but as credit conditions get tougher, companies with high quality credit will have it easier, he said.

‘Inevitably, this downturn is going to be a great opportunity for the big (firms) to consolidate, and to get better access to capital and projects.’

Source : Straits Times - 29 Apr 2008

Case hangs on whether flat buyers who deal without agents should pay a commission, too

A Couple who bought a home and refused to pay the seller’s agent the 1 per cent commission are being taken to court by a property company.

PropNex associate director Ricky Low Yong Sern is seeking about $4,000 in commission or a service fee in a case that is likely to turn the spotlight on the issue of whether home buyers should pay a fee to sellers’ agents.

He was the exclusive agent handling the sale of a terrace house in Whampoa built over 30 years ago and classified as a Housing Board flat.

Marketing specialist Loh Yi Min, 29, and his wife, polytechnic lecturer Ariel Wee, 33, bought it for $400,000 in April last year. They had acted on their own without engaging an agent.

In documents submitted to court, Mr Low claimed that he had a right to collect a commission as he had exclusive rights to market the property. He also claimed that he had provided services to the buyers.

However, the couple refused to sign the commission agreement when they inked the sale last year. They claim they had made no deal to pay him a fee in the first place.

Both sides will attempt to reach an agreement when they attend a court dispute resolution session next month.

This is the first lawsuit of its kind started by eight-year-old PropNex.

The issue of commissions payable by independent buyers, or buyers who deal without agents, has been hotly debated in recent years.

While there is no law fixing the fees payable, property sellers typically pay their agents a 2 per cent fee, while buyers pay their agents a 1 per cent fee.

Many agents marketing HDB flats also charge independent buyers a 1 per cent fee, but this is not practised in private property deals. Property veterans said this disparity was due to the lower prices of HDB flats, which amount to a lower commission for agents.

Some independent buyers have complained that sellers’ agents inform them that they have to pay a commission just before the purchase documents are signed, leaving them with little time to find out about their rights.

Once the buyers sign the commission agreements, they are bound to pay the fee.

However, agents have countered that independent buyers often leave the paperwork to the sellers’ agents but refuse to pay a service fee.

Major real estate agencies contacted by The Straits Times have varied responses to such situations, although all maintain that independent buyers of HDB flats should pay a fee.

HSR property group chief executive Patrick Liew said his company takes three to four independent buyers to the Small Claims Tribunal each year for similar claims and has won payment each time.

ERA Singapore’s assistant vice-president Eugene Lim said his company does not take independent buyers to court when no commission agreements are signed.

Meanwhile, the Consumers Association of Singapore has, in recent years, questioned the practice of agents taking commissions from both buyer and seller in the same transaction, citing a possible conflict of interest.

Source : Straits Times - 29 Apr 2008

A Group of 31 home-owners - most of them facing en bloc battles in condominium estates islandwide - have showed their support for one of their ilk, who was featured on the cover of Weekend Today.

Yesterday, representatives of the group, who call themselves the “Stayers”, delivered an envelope containing a letter and $520 to Today’s newsroom, in a symbolic show of support for business consultant Ken Lee.

Mr Lee, 52, had earlier got an en bloc application for his condominium, Airview Towers on River Valley Road, voided. But on Thursday, the Court of Appeal overturned the High Court’s decision and Mr Lee - who represented himself - was ordered to pay his opponents’ legal costs.

Today understands this amount, to be decided in court, could be anywhere from $150,000 to $300,000.

In the letter with 31 signatures, the group - residents from estates such as Bayshore Park, Horizon Towers and Mandarin Gardens - expressed their “admiration” for Mr Lee’s fight and said they wanted to “start a fund to help him pay his efforts”.

“We, in our own condos, are fighting against the en blocs affecting all of us and would like Mr Lee to know that we share his sentiments, and we too will oppose the sale of our homes even if we have to fight alone, like him, to do so,” the group wrote.

A member of the group, sales director Augustine Cheah, who lives in Bayshore Park, said the en bloc issue needed to be told from the point of view of the resident.

“The case for en bloc is being presented by developers and agents and they are all profit motivated,” he said.

Members of the group, who come from some 13 estates, had met each other online by word of mouth and share an interest in resisting en bloc attempts.

When shown the letter, Mr Lee said he was “touched by the gesture and appreciate the kind thoughts”, but doesn’t know what to do with the money yet.

He added that he would consult a lawyer on the issue of repaying the legal costs.

Source : Today - 29 Apr 2008

Radac-accredited company refused to use the Radac Standard Contract

Letter from Raymond Ng

About three weeks ago, I was sourcing for home renovation contractors. After performing some due diligence and referring to the Singapore National Registry of Accredited Renovators 2007 - a book given to purchasers by the Housing and Development Board (HDB) on the day of the final sales transaction - I contacted a company that was a member of the Renovation and Decoration Advisory Centre (Radac).

I specifically stipulated my requirement that a Radac Standard Contract be used. Initially, the sales designer had confidently acknowledged this.

However, after three weeks of negotiation, the sales designer came up with the company’s own agreement with their own terms of payment, claiming that was the Radac Standard Contract.

I advised him to purchase a copy of the contract from Radac to use and waited for a week before he finally replied.

He stated that his boss would not sign the Radac Standard Contract as his firm does not use it. I called off the deal, after having put so much faith on Radac and its accredited member scheme, as well as having expended so much precious time.

Under the eight “commandments” of renovation published in the registry, the fifth one states that: “Consumers should ensure that a proper contract is drawn out before renovation. They are advised to use the Radac Standard Contract for Radac Accredited Renovators.”

According to the Radac website, the contract contains legal terms and obligations covering negotiable payment terms and warranties, among other clauses, to protect both parties.

The contract drafted by the firm was not equitable.

I urge Radac to constantly review their members’ activities and ensure the members abide to the standards as stated in the Radac constitution and live up to the corporate mission.

I would also suggest that the Ministry of National Development or the HDB look into the feasibility of introducing a Standard Renovator Contract and publish quarterly renovation cost data and guidelines to help educate and protect consumers from errant contractors.

Source : Today - 29 Apr 2008