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One of the biggest initial public offerings (IPO) this year made a disappointing debut yesterday – a casualty of the uncertainties afflicting financial markets.

Despite a generally upbeat stock market, Parkway Life Real Estate Investment Trust (Reit) opened trading in the afternoon session at $1.27, a cent below the offer price of $1.28, and steadily fell before ending at $1.19 a unit.

Ms Daphne Roth, vice-president of equity research at ABN Amro Private Banking, said: “This is really wrong timing. The full risk appetite has not come back.”

The Reit was established by Parkway Holdings to invest mainly in income producing Asia-Pacific real estate especially for healthcare and healthcare-related purposes.

Parkway Holdings sold 288.9 million shares at $1.28 apiece and investors applied for about 12 times the available stock.

The strong demand had some market participants speculating that the Reit could open as high as $1.48, with generally buoyant market sentiment pushing the units as high as $1.50 apiece.

Still, UOB KayHian said that the Reit’s yield is comparable to hospitality Reits such as CDL Hospitality Trust and Ascott Reit.

“Its yield is much more attractive when compared to Reits investing in commercial, retail or industrial properties,” it said. — AGENCIEs with additional reporting by Cheow Xin Yi

Source : Today - 24 Aug 2007

First-timers should consider flats in newer towns, where priority scheme applies

Letter from Kee Lay Cheng
Deputy Director (Marketing & Projects)
for Director (Estate Administration & Property),
Housing & Development Board (HDB)

I refer to the three letters, “No flat, so wedding has to wait” (Aug 16).

The writers, Ms Jamie Tan, Ms Jesline Soh and Ms Alice Lim, expressed disappointment that the improved priority for first-timers applying for new flats is only applicable to HDB’s Build-To-Order (BTO) and Balloting Exercises (BE) and not the Bi-monthly Combined Balloting/Walk-in exercise for unsold flats.

Under the previous Walk-in Selection (WIS) system, applicants selected their flats on a first-come first-served basis. To gain a better queue position, some applicants have even queued overnight outside the HDB Hub in anticipation of sales launches.

In response to public feedback and to do away with the need for queuing, HDB introduced the Bi-monthly exercise, which incorporates the features of the balloting and WIS systems.

Under this system, all applications received are subject to an equal-chance ballot.

The flats offered under the Bi-monthly exercises are mainly units that have remained unsold from previous BTOs and BEs, where the various priority schemes have already been applied.

Even after the balloted applicants have had a chance to select their flats, there is normally a balance of flats still available for immediate booking. As of July 31 this year, there were about 500 unsold flats in the North/West and North-east zones — available from the previous two Bi-monthly sales exercises launched in April and June.

While HDB understands the desire of flat buyers to buy a new flat in mature HDB towns, it is not possible for the board to offer enough supply to satisfy the high demand due to the limited land available in these locations for building new flats.

Thus, only a small number of flats in the mature estates can be offered to the public.

Buyers are advised to consider applying for a new flat in newer towns such as Punggol or buying a flat from the resale market (where eligible first-timers can enjoy a $30,000 or $40,000 CPF Housing Grant, as well as the Additional CPF Housing Grant).

Ms Jesline Soh questioned the purpose of scheduling flat selection appointments for those whose queue number exceeds the offered flat supply.

Because not all shortlisted applicants will select a flat when it comes to their turn, there are usually some flats still available for selection — even for those with high queue numbers. If all available flats have been taken up, our sales office will inform the applicants accordingly.

Ms Soh also mentioned that she is looking for a flat in the North-East area. So far, HDB has launched three BTO Exercises in Sengkang (picture) and Punggol this year — the latest being Punggol Vista on Aug 14.

She may wish to consider applying for a flat under BTO in the future — where first-timers like herself will enjoy priority.

Source : Today - 24 Aug 2007

It increased at the fastest pace in 12 years last month

If it seemed to you that seeing the doctor or eating out is becoming more expensive of late, you were spot on.

Inflation rose at the fastest pace in 12 years last month — as the Goods and Services Tax (GST) hike kicked in, food costs rose and rents soared.

The Consumer Price Index (CPI) rose 2.6 per cent from a year earlier after rising 1.3 per cent in June, the Department of Statistics said yesterday. The rise was the fastest since January 1995.

Compared to a year ago, gains were the sharpest for healthcare, as more expensive Chinese herbs and higher medical consultation fees pushed the category up by 5.7 per cent.

Food, which has the largest weightage in the CPI, increased 2.9 per cent from a year ago, as the costs of cooked food, fruits, fish and milk powder went up — the last due to higher global prices.

July also marked the first month the surge in real estate prices finally hit headline inflation. While housing prices went up by 0.7 per cent from a year ago, it crept up by 4.9 per cent compared to June as electricity prices climbed and rents increased.

Public housing rents — which hit a 10-year high last month — is included in the CPI’s housing component, unlike private rents.

The Monetary Authority of Singapore expects inflation this year to be at the upper half of its 0.5- to 1.5-per-cent range, before rising to about 2 per cent next year.

But private-sector economists expect full-year inflation to exceed 1.5 per cent this year. UOB economist Alvin Liew, whose forecast is 1.8 per cent, said the impact of the GST hike would be “felt for the next 11 months”.

Also, bad weather in the region has led to supply disruptions that may continue to bolster food costs, CIMB-GK economist Song Seng Wun told Dow Jones Newswires.

Source : Today - 24 Aug 2007

New borrowers with HSBC’s variable rate home loans are to be allowed to defer their repayments for a month each year, six months after taking out a loan.

The bank, which announced the new ‘payment holiday’ feature this week, said each deferred monthly instalment will be added to the outstanding balance on the loan, which means customers who choose to defer a payment will need to pay higher subsequent monthly instalments.

Wendy Lim, the bank’s head of consumer banking in Singapore, said the option of a payment holiday would give customers greater flexibility in managing their finances.

A customer can take a one-month payment holiday for each anniversary year of the loan, but the first deferment can be made only after six months. The monthly instalments will be revised after each payment holiday.

The bank has also launched new home loan packages directly linked to the three-month Singapore interbank offered rate or Sibor, a common benchmark for banks’ loans to businesses here.

Interest rates charged on these home loan packages will be the published three-month Sibor on the first business day of each month, plus 0.7 of a percentage point, a bank spokesman said. In recent months, other banks here have also introduced mortgages based on publicly available benchmark rates.

Source : Business Times - 23 Aug 2007

The first such tender for a 15-yr leasehold Newton plot attracts 11 bids

The Urban Redevelopment Authority (URA) is expected to release more transitional office sites after the maiden tender yesterday for a plot on a 15-year lease next to Newton MRT Station attracted a whopping 11 bids.

Strong Draw

The highest offer of $37 million or $219 per square foot of potential gross floor area came from Scotts Spazio, a joint venture between Hwa Hong Corporation unit Singapore Warehouse and KOP Capital.

Hwa Hong and KOP are believed to be weighing their options, but some observers suggest they may have placed their bid - which was 19 per cent more than the next highest offer from a unit of Sin Soon Lee Realty - with a view to developing the site into offices for lease to a single tenant, possibly in the insurance business.

Some market watchers tip the potential tenant as Prudential, which has been looking for space to expand.

The 1.04-hectare site can be built up to 168,627 sq ft of gross floor area, yielding about 140,000 sq ft net lettable area of offices.

‘Based on the highest bid submitted, the breakeven cost for a new project on the site is likely to be around $500 psf per plot ratio, and this would provide the successful bidder with a decent yield of around 12 per cent for the 15-year leasehold site, based on a gross monthly rent of about $6.50 psf,’ said CB Richard Ellis executive director Li Hiaw Ho.

‘This sort of rental level is roughly half what a tenant would pay for similar size office space in the CBD.’

Interestingly, KOP Capital has a tie-up with a unit of Emirates Investment Group to develop a condo on the Hotel Asia site further down Scotts Road.

The other parties that bid in yesterday’s tender include Sim Lian Land; MV Land, controlled by Lim Kim Hong and Lim Huixing; Hersing Corporation; United Engineers; Sino Holdings; Newton Centre, owned by Ho Kiau Seng, Phua Seng Hua Paul and Lau Kau Chin; and Khai Wah Development, part of Ho Lee Group.

Wing Tai and Soilbuild Group placed the lowest bids, of $74 psf ppr and $61 psf ppr respectively.

Market watchers expect URA to release more transitional office sites soon, given the strong demand in yesterday’s tender.

URA extended the lease period for the Scotts Road plot from an initial 10 years to 15 years after market feedback that most investors wanted a longer lease period to recoup their outlay and cater to potential tenants’ requirements.

Transitional office sites are one of the government’s initiatives to provide short-term relief from the office space crunch. In addition, URA has stepped up mid and longer-term office supply by offering more 99-year leasehold plots that can be developed into offices in the CBD.

These include two commercial plots in Anson Road, as well as several sites with minimum stipulated office components - two ‘white’ sites at Marina View near One Shenton, the former Beach Road camp, and a ‘white’ site above Outram Park MRT Station.

The tender for a plot in Anson Road closed last month and the site was awarded to a Mapletree Investments unit at $1,021 psf per plot ratio. The Beach Road tender closed last month and is being evaluated under a dual-envelope system under which the concepts proposed by tenderers will have to be acceptable before their price envelopes are opened.

The tender for the second plot in Anson Road closes on Aug 28 and that for the first plot at Marina View closes on Sept 19. The tender for the plot nearby is slated to close on Nov 13.

Source : Business Times - 23 Aug 2007