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It sells 50% stake in project to HPL, two private funds

Just three months after CapitaLand acquired Gillman Heights for $548 million, it has decided to sell a 50 per cent stake in the project to Hotel Properties Ltd (HPL) and two private funds.

CapitaLand would not say who the private funds are but revealed that one would take a 15 per cent stake while the other would take a 10 per cent stake, with HPL taking the remaining 25 per cent.

CapitaLand has partnered HPL on development projects in London and Shanghai but the Gillman Heights project will be the first joint venture development in Singapore.

Patricia Chia, CEO of CapitaLand Residential Singapore, said: ‘Together with our partner Hotel Properties, we will bring extra value to this prime Alexandra Road site. We plan to make it a branded residence featuring new lifestyle concepts.’

The Gillman Heights project is targeted at the ‘high mid-tier’ market and is slated for launch in 2008. ‘We will continue to be active in the market to invest in sites that will cater to the broad spectrum of home-buyers,’ added Ms Chia.

In a statement released yesterday, CapitaLand said that it will place out 500,000 ordinary shares representing 50 per cent of the total issued share capital of Ankerite Pte Ltd - also the company used to acquire Gillman Heights - for a cash consideration of $500,000.

CapitaLand said the placement is in line with the group’s ‘capital productivity strategy’, and plans to deploy the capital from the placement to invest in other residential sites.

CapitaLand said it will be the lead development manager for the project, responsible for the full spectrum of sales and marketing, product design and development and project management.

HPL and the two private funds will extend proportionate shareholders’ loans, which currently comprise primarily the stamp duty amounting to $16.4 million and the 5 per cent deposit paid for Gillman Heights. Upon completion of the deal, CapitaLand’s interest in Ankerite will be reduced to 50 per cent and Ankerite will become an associated company of CapitaLand.

In statement released yesterday, HPL said that its interest in Ankerite through its wholly-owned subsidiary HPL Orchard Place will be funded by internal resources and/or bank borrowings.

Source : Business Times - 16 May 2007

Govt measures such as scrapping property gains tax paying off: survey

RECENT measures by the Malaysian government to liberalise the property market appear to be paying off with real estate developers reporting higher sales in the intervening period, according to preliminary findings by the Real Estate & Housing Developers’ Association (Rehda).

The blanket exemption on real property gains tax (RPGT), which took effect on April 1, had the biggest impact, the survey found.

The survey, from April 21 to May 8, covered 153 property companies or slightly over 10 per cent of Rehda’s 1,000 members.

Slightly over a fifth reported receiving more enquiries from foreigners and locals. In terms of sales, 18 per cent said sales to foreigners jumped 8 per cent and to locals by 32 per cent.

Sunway City enjoyed brisk sales in the past two months, 80 per cent higher and mainly from foreigners, its managing director Wong Choon Kee observed.

The removal of Foreign Investment Committee (FIC) approvals for foreign ownership of houses costing RM250,000 (S$111,545) and above and unlimited loans for non-residents were ranked second and third, respectively, in terms of impact on sales.

An uptick in property sales aside, those interviewed saw certain issues as possibly diluting the measures. Topping the list was the fear by potential buyers of a flip-flop in the new regulations and policies - for example, how long RPGT would be held in abeyance. Such concerns were holding them back from signing on the dotted line, the survey found.

Indeed, the government has merely exempted RPGT, not abolished it, pointed out Rehda deputy president Michael Yam.

‘It is not a repeal of the Act,’ he said, adding the government could re-impose the tax should there be excessive speculation. ‘But we are almost certain for the next five years, they won’t bring back RPGT.’

Capping stamp duty charges at a maximum of 2 per cent - currently the first RM100,000 is levied one per cent, the following RM100,000 at 2 per cent and above RM500,000 at 3 per cent - would boost the new build market, Mr Yam said, and added that Rehda has asked that its request be considered.

Other challenges to the sector, according to survey respondents, include delay in state government approvals, commercial properties still requiring FIC approvals and yields on Malaysian properties being unattractive.

Respondents also found ‘affordability problems’. They said that the gap between market prices and what buyers could afford was fairly significant.

Rehda representative Jeffrey Ng, who is the association’s immediate past president, stressed prices were set to rise.

‘Costs are moving up whether we like it or not. If you don’t buy now, chances are prices will go up 12 months later.’

Despite the threat of higher prices, Malaysia has an estimated 26,000 unsold residential units worth RM4.2 billion currently, most located in areas not popular with buyers.

The government has been trying to revive the market with incentives mainly aimed at foreigners given the low prices of local properties vis-a-vis the region.

In mid-April, it said that development approvals would be shortened drastically, but developers say it is still early days. ‘It’s a bold move, but the challenge is in the implementation,’ Mr Yam said.

Source : Business Times - 16 May 2007

Recent events have been making me think about neighbourly ties, never as strong since high-rise dwellings replaced kampungs, apparently.

More than the reports of warring neighbours in court, I am disturbed by the rash of collective sales, some of them acrimonious. It is tyranny of the majority - neighbours forcing neighbours to sell their homes.

Are our homes merely financial assets? If they have no emotional ties, we are in trouble.

I thought another sign of trouble was the story of an elderly woman who fell in her kitchen and lay there for two days before neighbours noticed she had not left her house.

But that turned out to be a story of good neighbours. Once the alarm was raised, a group of them swung into action to make sure she was all right.

Maybe all good neighbours are not lost. I have been the recipient of many quiet acts of kindness from my own, most of whom, I am ashamed to say, I still barely know.

What is neighbourliness?

According to a paper by UK think-tank Smith Institute, it is not ‘heroic forms of help and support’ but ’small and unremarkable actions and behaviour that give people a sense that they are secure and at home in their own places’.

Neighbours do not need to be best friends. Keeping an eye on each other’s property, exchanging greetings and not making too much noise late at night are small things we can do for each other.

Perhaps neighbourliness has receded because we are no longer so reliant on one another. My mother had to ask the family next door to keep a watchful eye on me and my brother when she went to work because none of our nannies would stay.

These days, with many more resources, there is much less need to go next door for help.

But as the population ages, that proximity will become important. More than anyone else, elderly people who live alone and are no longer as mobile as before, need their neighbours.

Neighbourliness is a balance of reciprocity and altruism. People look out for each other not only because they expect the same in return but also because they gain satisfaction from knowing they can help. Old people do not want to be dependent on others, but interdependent.

How can we promote neighbourliness? One correlation is age and length of residence. Older neighbourhoods tend to have stronger bonds, so perhaps we should work on long-term ties.

In the end, though, a good neighbour is something we choose to be.

I hope more of us will choose it. Welfare groups say that people, especially the elderly poor, are falling through the cracks because they do not know where to get help.

Government and welfare agencies can do only so much. We are each other’s eyes and ears.

Source : Straits Times - 16 May 2007

Delays ended in deal being cancelled. Owners to keep $3m deposit, have got $42m offer from another buyer

The owners of a 10-unit residential property in the prime Somerset area have scored a victory in the High Court against a company that had sued them for cancelling a $30-million collective sale.

The owners had been keen on the deal, but delays ended in it not going through.

On Monday, Justice Judith Prakash agreed that the owners of Mayer Mansion on Devonshire Road were therefore right to rescind the sale-and-purchase agreement last month.

The 13 owners, represented in court by Mr Hri Kumar and Mr Tham Feei Sy of Drew & Napier, will also get to keep the $3 million deposit paid by Travista Development, a foreign-owned property developer.

And in a property market that is steadily hotting up, the owners have also since received a higher offer of $42 million from another buyer.

It all began on Dec 12 last year, when Travista - incorporated in Singapore just six days before this - agreed to buy Mayer Mansion to redevelop it. It offered the owners $30 million in the collective sale.

But because Travista was foreign-owned - its sole shareholder is based in the British Virgin Islands - it had to obtain government approval to buy the property.

Travista applied to the Singapore Land Authority (SLA) for the approval, known as a qualifying certificate, on Dec 21.

Eight days later, the SLA approved the application, subject to the submission of a banker’s or insurance guarantee for $3 million.

The owners’ position was that, based on the agreement, the transaction was to be completed on March 12.

When Travista failed to complete the purchase by that date, the owners issued a letter giving it 21 days to do so. By the end of the grace period, the deal had still not gone through.

According to the terms, the agreement was then considered as rescinded.

On April 3, Travista sued the 13 owners and applied for an injunction to restrain them from exercising their rights under the agreement. The application was turned down.

Two days later, the owners notified Travista that they had rescinded the sale-and-purchase agreement.

On submitting its $3 million, Travista finally obtained the qualifying certificate on April 11.

Last Tuesday, when the suit came before Justice Prakash, Travista wanted the court to declare that it was entitled to complete the purchase and that the 21-day notice period was null and void.

But the lawyers for the owners argued that Travista had been obliged to use its ‘best endeavours’ to obtain the certificate and to do so ‘without delay’.

‘While the completion is determined by the date of receipt of the qualifying certificate, the plaintiffs are not entitled to drag their feet in procuring it,’ they argued.

On Monday, Justice Prakash dismissed Travista’s case.

She declared that the agreement was rescinded, that the 21-day notice was valid, and that the deposit paid by Travista had been validly forfeited.

She also ordered that the caveats lodged by Travista - to prevent the sale of the property - be lifted.

Travista was also ordered pay the owners costs of $15,000 plus disbursements.

Source : Straits Times - 16 May 2007

HOTEL Properties Limited (HPL) and two private funds are to take a stake in CapitaLand’s investment in Gillman Heights, a former HUDC estate off Alexandra Road.

They will acquire 50 per cent of Ankerite, a CapitaLand subsidiary that bought Gillman Heights en bloc in February for $548 million.

CapitaLand will place out 500,000 shares of Ankerite to HPL and the funds for $500,000 in cash. HPL, controlled by tycoon Ong Beng Seng, will take half this stake while the funds will take the other half.

Under the deal, HPL and the funds will also extend shareholders’ loans based on Ankerite’s net tangible assets. These comprise $16.4 million in stamp duty for Gillman Heights and another $27.4 million, which represents a 5 per cent deposit on the purchase price.

CapitaLand said a statement yesterday that it will use the funds from the Ankerite placement to buy other sites ‘to cater to a broad spectrum of home buyers’.

It will be the lead development manager for the project that will replace Gillman Heights and will be responsible for ‘the full spectrum of sales and marketing, product design and development and project management’.

The deal is forecast to be completed by next month. It is not expected to have any impact on the financials of CapitaLand or HPL for the financial year ending Dec 31.

Source : Straits Times - 16 May 2007