Property boom far from over: Kwek Leng Beng

CITY Developments executive chairman Kwek Leng Beng believes that the property boom here is far from over, despite the current financial market turmoil.

‘The boom actually just started in 2005, and if you’re thinking of a relapse, I don’t think that is possible,’ he told chief executives yesterday at the Forbes Global CEO Conference.

‘Sub-prime has to some extent affected Singapore … there’s a psychological fear of what will happen.’

But ‘our banks are still lending a lot of money’, Mr Kwek noted. ‘They’re a little bit more cautious, but we have plenty of liquidity.

‘The banking and financial systems here are very well controlled … they are well regulated and the central bank has taken action to pre-empt crises like what you’ve seen in sub-prime.’

The property tycoon, who is also chairman of Millennium & Copthorne Hotels, was speaking at a panel discussion on global real estate trends.

He said that, after adjusting for inflation, high-end residential property prices have risen only about 10 per cent in real terms from their lowest level over the past decade, ‘which is not alarming’.

He said: ‘My advice is, look at it realistically – crisis means opportunity. I’m a bottom-fisher, I like to go in when the market is bad.

‘I believe there’s still a lot of upside. The mid-end is still 19 per cent below the peak of ‘96.’

In addition, he said Singapore had introduced a lot of initiatives over the past 10 years to attract foreigners to live and work here, which has fuelled demand for property.

‘You may say it’s very dull, but we are going to have the integrated resorts, Formula One, and a host of other events that will make Singapore an exciting city to live, work and play.’

Other panellists were also optimistic on the prospects for further growth in property development in China, India, and the Middle East.

Vincent Lo, the chairman and chief executive of Hong Kong-based Shui On Group, who was also on the panel, said he was ‘very bullish’ on the property market in China. ‘We have waiting lists for our office space till 2010.’

Kushal Pal Singh, chairman of DLF Group, the largest real estate developer in India, said there remained a ‘huge gap between demand and supply’ of residential property there.

Hayan Merchant, chief executive of Dubai-based Ruwaad Holdings, said the current pace of development in Dubai and the United Arab Emirates more generally was ‘unprecedented’.

The property, hospitality and tourism investment and development company is looking at moving into Asia ‘in the next three to five years’, Mr Merchant told reporters in a separate briefing. He said Ruwaad was looking particularly at Singapore, Malaysia, China and India for expansion opportunities. 

Source : Business Times – 12 Sept 2007

Plenty of upside left in mid-tier property market: Kwek Leng Beng

DESPITE woes in the United States’ housing market, there is still plenty of zing in Singapore’s red-hot property market.

Banks are still lending a lot of cash and mid-tier homes are still on offer at prices below 1996’s peak, says Mr Kwek Leng Beng, executive chairman of leading developers City Developments and Hong Leong Group.

‘I believe that there is still a lot of upside. At the mid-tier, prices are still less than 90 per cent of the peak in 1996,’ he told delegates yesterday at the Forbes Global CEO Conference.

His bullish view was echoed by his counterparts from other parts of Asia, including China, India and the Middle East.

They agreed that real estate remains hot property in their countries even as problems in the US have thrown global financial markets into a tizzy.

‘The (Shanghai) market is very strong because the inherent demand is just tremendous,’ said Hong Kong developer Shui On Group chief executive (CEO) Vincent Lo.

Residences next to the hip Xintiandi area are commanding prices of up to US$10,000 (S$15,236) per sq m, he said, adding that the waiting list for office space in the city stretches to 2010.

In the United Arab Emirates (UAE), property development is growing at unprecedented rates, said Dubai 9 Group managing director Hayan Merchant, noting that 26.5 per cent out of the world’s 130,000 cranes are in the UAE.

About 30 million sq ft of office space will be added in Dubai next year, he said, while another 42 million sq ft – equivalent to all the office space in downtown San Francisco – will come online the following year.

Singapore’s boom should continue even though psychological fears over the ongoing global credit crunch may take a little of the fizz out, said Mr Kwek. He said that lenders in Singapore are a little more cautious but there is still plenty of liquidity.

He added that historic prices over the past 10 years imply that the ‘right’ selling price for top-end properties should be about $3,600 per sq ft on average.

‘We are doing about $4,000. It’s about 10 per cent up, which is not alarming.’

The Government’s efforts to make Singapore a ‘global city’ that attracts foreigners to live here will help sustain the property bull run, he said.

He said that last weekend, he had met a group of foreigners, some of whom were developers, visiting Singapore for the first time. After four or five days, they started asking about buying high-end condominiums and office blocks.

‘All the real estate sectors – industrial, retail, commercial and residential – have kicked off. And this has to do with growing interest in Singapore as a global city.’

Source : Straits Times – 12 Sept 2007

No space to build more hotels? Float it

WE’RE open to the idea of a floating hotel, said the Singapore Tourism Board (STB).

Will it be based on a converted cruise liner or built out of lightweight material? Floating hotels can take many forms.

There’s the King Pacific Lodge in Canada which is built from native pine, fir, cedar and stone on a barge.

It has 17 guest rooms and suites, a wrap-around deck with spa, Jacuzzi and plunge pool. It’s accessible only by air from Vancouver.

There’s also one being built in Mexico out of composite materials used in navy frigates.

While a floating hotel may dock here one day, it’s unlikely to be in time for the Formula 1 races next year, STB said.

The Business Times had reported on Thursday that floating hotels may be commissioned here to accommodate 50,000 foreign guests for the F1.

It reported that STB is studying the idea and quoted a source as saying that two cruise ships, converted into floating hotels, might be moored off Changi or Labrador Park.

But in an email reply to The New Paper on Sunday, STB’s Ms Caroline Leong, director, travel & hospitality business, said discussions on the possibility of developing a floating hotel here are still at an exploratory stage.

Said Ms Leong: ‘We have yet to receive a firm proposal. Should there be firm interest from investors, an in-depth feasibility study will have to be undertaken with the relevant government agencies to establish the appropriate location and the necessary infrastructural developments required for such a floating hotel concept to work.

‘Even if we are to proceed with the floating hotel concept, it is unlikely to be ready by September 2008 when Singapore hosts its first Formula 1 Grand Prix.’

She added STB has been approached by investors keen to build hotels, and venture into creative accommodation concepts like floating hotels.

It is open to such ideas to ensure that there are enough rooms to meet the target of welcoming 17 million visitors a year by 2015.

In 2006, visitor arrivals here hit a record of 9.7 million people.

Floating hotels are not new to Singapore.

In the 1980s, the 186-room Saigon Floating Hotel was built in Singapore by the then Bethlehem Shipyard. It was stationed in the Saigon River for around seven years until it was closed in 1996 when Vietnam refused to renew its operating licence.

Before that, it spent a short time operating off the Great Barrier Reef in Australia.

The New Paper on Sunday looked at other projects around the world.

One of the most interesting is a hotel inspired by an ancient civilisation.

But the materials used to build it are so advanced, they go into the stealth corvettes of the Swedish Navy.

The engineer behind the Maya Hotel says it’s an idea Singapore may want to consider.

The hotel resembles a Mayan building and by the end of 2010 or early 2011, it should be in the waters off Cancun, a playground of the hip and trendy in Mexico.

Mr Ronny Nordell, 62, an engineer and co-founder of the $338 million project, said it is being built by the Swedish company Oceanic-Creations.

CONVERTING CRUISE LINERS

Like in many other places, Singapore appears to be considering converting a cruise ship.

But Mr Nordell, in a telephone interview from Sweden, said: ‘When ships remain still for long periods of time, they rust easily. That means a higher cost to maintain them.

‘And when materials like steel rust, fungus forms and you get a bad smell from the bottom parts of the ship.’

Even ships that sail need regular maintenance. Mr Nicholas Oh, 36, marketing manager for Top Niche, which owns a fleet of seven tugs and barges, said each vessel has to go for maintenance every 21/2 years to remove barnacles and for repainting if necessary.

He said: ‘It’s very common for fungus to form and for the ships to rust if they are at sea for a while.’

Mr Nordell said his company uses a composite material which he claims can reduce maintenance costs by 80 to 90 per cent and has been used by the Swedish Navy to build their stealth warships.

It is also light and eco-friendly. The hotel will have gas turbines which will be able to desalinate 150 million litres of water a day.

That is about twice the 76 million litres produced by Singapore’s three NEWater plants daily.

There will be 452 double rooms and 18 suites of different sizes to accommodate up to 1,200 guests.

Although the hotel can float out to sea, Mr Nordell said the Maya will be moored close to the quay for safety and practical reasons as the guests will be closer to tourist spots.

During an emergency, guests will be able to make it to land quickly.

Work on the project began in 2000 and they had to be sure they picked the right spot to locate the hotel because hurricanes are a problem in Mexico, said Mr Nordell.

He added: ‘Before we build a floating hotel, we have to spend six to eight months to study the weather and the climate.

‘For a region like Southeast Asia, we would have to do a total study for earthquakes, tsunamis and hurricanes.

‘These are the things we look at because the structure and strength of the hotel must be able to withstand them.’

He said they would then need about eight months to plan the project and 12 to 24 months to build the hotel.

The Maya is the company’s second floating hotel. Its first, a 120-roomer, will be delivered by the end of 2009 to Ireland.

When the 90,000 sq m Maya is completed, it will have restaurants, spas, a cinema, viewing gallery to see marine life, and 15 to 20 boutiques selling items ranging from clothes to jewellery.

If Singapore is planning to have floating hotels, Mr Nordell said: ‘We look forward to Singapore contacting us.’

For now, the closest floating hotel to home is the River Kwai Jungle Rafts in Kanchanaburi, Thailand, with 100 rooms on two wing rafts. It can be reached only by boat.

SAIGON FLOATING HOTEL, VIETNAM

186-room floating hotel was built in Singapore in 1980s

Was shipped to Great Barrier Reef in 1987 where it spent 2 years reportedly as world’s 1st floating hotel

Part of it (minus court and pool) was towed to Saigon in 1989 where it was popular with S’porean, Hong Kong and European businessmen

Closed down in 1996 after Vietnam didn’t renew its licence

KING PACIFIC LODGE, CANADA

Floating luxury lodge built of native pine, fir, cedar and stone on 100 x 60 sq ft barge

Boasts 17 rooms and suites with wrap-around deck offering spectacular views

Owned by Morita family of Japan’s Sony Corporation

Anchored along Barnard Harbour, Princess Royal Island (which has no permanent inhabitants or structures)

No roads to hotel, so guests arrive by boat or sea plane

Towed in from Prince Rupert from May to Sep

Built in 1996, was originally a humble floating fishing lodge

Actor Kevin Costner is apparently a fan of lodge

MAYA HOTEL MEXICO

The US$209m ($338m) Maya Hotel located south of Cancun, slated to open in 2010

Pyramid-shaped hotel built with new composite material six times lighter and 10 times stronger than steel
 
Source : New Paper – 20 Aug 2007

Signed and sealed with a handshake, yet no deal

Amid the hot property market, both in rental and sale, my search for a place to rent has exposed unethical behaviour on the part of both agents and landlords.

When I first moved to Singapore in 2002, looking for a place to rent was a hassle-free process.

Sure, often places I liked were out of my price range, but that was to be expected. At least a price was cited at the beginning and if you accepted it, you provided a letter of intent and a cheque. You shook hands and the deal was done.

Not so anymore. I have been looking for a new place to rent for the past couple of months after my landlord increased the rent 400 per cent. Not once, but three times, have I looked at a place, accepted the stated price, signed a letter of intent, shaken hands, and handed over a cheque, only to receive a phone call from the agent or landlord that the price had gone up.

My family has wasted a tremendous amount of time and energy running around the island, meeting agents and going back with our chequebooks, only to be told that they were negotiating with other people on the side the entire time.

I am upset by such unethical behaviour. An eye-to-eye agreement with a firm handshake is now meaningless.

It saddens me in particular that this is often done deliberately, with agents and landlords making deals with several people at the same time, demanding signatures and cheques from them, and then making a selection.

Hence, we are still homeless, even though we are willing to lower our standards significantly in terms of both size and style, move farther out of the city, and pay twice or triple what we currently pay in rent.

Perhaps at this rate we should just move out of Singapore as it is increasingly becoming a less attractive place to live in. If many expatriates do likewise, what will happen to real-estate values?

Laura Thornton-Olivry (Ms)

Source : Straits Times – 18 Aug 2007

Property frenzy: Watch your housing loan commitments

It is timely that the Government steps in to cool down the current property fever that has been gripping the country.

It is not unlike the 1995-96 property boom when people were all chasing after housing units. Prices bordered on the ridiculous and there were scenarios in which people queued up not to view the houses but just to give their downpayment cheques to the sellers.

I remember HDB executive flats were being sold for close to $700,000 in Bishan and Toa Payoh during that period. And as prices plummeted, buyers regret. They stand to lose around $200,000 if they sell at current property valuation.

Worse still, many lost all their hard-earned CPF monies when they disposed of their property when they could not finance mortgage loans, especially during the Asian economic crisis in 1997-98. Some property developers also went bust during that period. It was a nightmarish experience for many then.

I urge Singaporeans not to chase after property as, with equities, they do fall when the economy goes down. If possible, look for a property that is within your means and always have a mortgage repayment plan that does not exceed one quarter of your combined household salary. Anything more will be a burden if one is laid off or has to work with a reduced pay cheque.

I remember a friend of mine having to sell off his private property when both he and his wife were retrenched within a one-month period in 1997. They got into financial difficulties and later divorced. Both were professionals and their lesson was always etched in my memory as it was difficult to see a happy family fall apart due to a huge mortgage loan.

As Singapore goes into another economic upswing, let us be mindful of the way we commit to loans. Let us be prudent and always frugal as financial difficulties will affect the harmony of a family. Better to have a happy family with a simple roof than a big house that is laced with potential financial risks.

Gilbert Goh Keow Wah

Source : Straits Times – 10 Jul 2007

Growing business districts

Will the move to develop new business hubs in Jurong and Paya Lebar alleviate the pressure in the CBD? Are there other parts of Singapore that should be considered? More generally, what needs to be done to ensure the viability of the new business districts?

The government announcement to develop new business hubs is timely. Singapore over the past three years has witnessed tremendous expansion in its financial sector. This growth has been driven to a large degree by the decentralisation of global banking operations to regional hubs, supported by Singapore’s overall competitiveness in attracting banks to locate their regional businesses here and strong growth in the banking sector throughout Asia.

With banks doubling or even trebling the number of people employed in Singapore, there is now a need for them to have long-term, sustainable, real estate solutions. The Urban Redevelopment Authority’s move to offer decentralised office space at a cost-competitive level is in line with what the banks seek. This move will ease some of the rental pressure on the CBD and avoid overloading the existing infrastructure.

Major foreign banks have recently made commitments to decentralised offices such as Comtech in Alexandra and Changi Business Park. Existing planning guidelines in business parks should be flexible to allow non-core financial operations. This will help ensure the viability of these districts and maintain Singapore’s regional competitiveness.

- Chris Fossick Managing Director – South East Asia Jones Lang LaSalle

Easing pressure in CBD

I THINK MNCs should site their offices near their key customers, partners and other stakeholders – wherever these parties are located. Therefore, if a company is in the banking, financial or investment sector, operate from the CBD by all means. But if the company is in, say, the biotechnology or healthcare space, an office in the suburbs might make more sense.

For example, Baxter assists hospitals, healthcare professionals and patients with the treatment of end-stage renal disease, haemophilia and other medical conditions. We also supply intravenous solutions and other products for hospitals to deliver critical fluids and drugs to patients. In other words, we are constantly in touch with hospitals, healthcare professionals and patients – all located outside the CBD. Our office in Gateway West along Beach Road (where we have been since February this year) is fairly centrally located and allows our staff to travel to hospitals and homes across Singapore relatively quickly.

Generally, Singapore should continue to develop alternative sites as business hubs, given the current constraints of limited commercial space, high rentals and congested traffic in the CBD. Any potential site must also offer good-quality office space, numerous amenities and well-developed transportation links. The government should also continue with the current practice of demarcating suburban commercial and residential areas clearly, to minimise mutual disruptions in the day-to-day activities of workers and residents.

- Sanjay Prabhakaran Director, South East Asia Baxter Healthcare (Asia) Pte Ltd

THE development of new business hubs will help ease the problem of overcrowding in the CBD and the pressure on office rentals. Reduction in business costs allows companies to achieve better efficiency and Singapore will enjoy a bigger pull factor for foreign investments as a global business hub.

To further ensure viability of the new business districts, other crucial factors such as the availability of excellent infrastructure and information-communication facilities should also be taken into consideration, as it is important for companies to remain accessible and connected to their relevant stakeholders.

- Michael Lam Managing Director, Asia South Compuware Corporation

THE move to develop new business hubs in Jurong and Paya Lebar will certainly alleviate the pressure in the CBD.

Over the years, Singaporeans have accepted the idea of working in areas outside the CBD. This has been made possible by our excellent transport infrastructure and a congenial working environment with good amenities in these areas.

Unlike other cities, thanks to our government’s foresight and astute urban planning, our CBD has been spared overcrowding, traffic snarls and pollution. However, as Singapore takes the next step to become a global business centre, it is imperative that more outlying business hubs be developed to cater to the burgeoning new investments and the expansion of current business activities here.

Given the scarcity of land in the CBD and escalating rentals, it makes sense to let the CBD evolve into a location primarily for head office functions and customer interfacing activities, while backroom operations are located in outlying business hubs, much like the successful Tampines business park.

Apart from accessibility, costs should be kept low and attractive as a compelling reason for companies to locate some of their operations in the new business hubs. The hubs could also be developed into exciting areas with identities of their own – furnished with good shopping malls, eateries, fitness clubs and entertainment centres, not only to cater to office workers, but also to visitors throughout the day. As we take the next step in our industrial development, we should seize the opportunity to inject more vibrancy and buzz into the environment where we work.

- Lim Soon Hock Managing Director Plan-B Icag Pte Ltd

CURRENTLY, the overriding condition in the CBD is congestion. The development of new business should relieve the pressure in the CBD, but this would be a long-term venture, as shown by the example of Tampines, which took 10 years. The viability of these business districts can be ensured by the inclusion of recreational areas and F&B outlets. Lower costs in these areas will be beneficial to the companies, particularly when contrasted with the rising cost of office space.

However, the higher real estate costs are here to stay and could unfortunately lead to Singapore losing its edge, and its choice as a high value-added BPO destination. This will, instead, result in making Malaysia a stronger player, following the success of the Multimedia Super Corridor and the launch of the Iskandar Development Region. Nevertheless, alleviating the pressure in the CBD is a forward-thinking move, and should be well-received by people working in the overly congested district.

- Harish Nim CEO Emerio Corporation Pte Ltd

ALTERNATIVE hubs are definitely worth considering. In recent years, one has seen the evolution of Tampines Central from a pure residential zone into a residence, business and recreational destination with good infrastructure, commercial and retail outlets and satellite offices of prominent organisations from the financial services and media industries.

What has made the CBD so sought after is its location and critical mass of businesses, shopping and entertainment options. This will further intensify as premier Shenton Way real estate development and overhaul of existing facilities approach completion and the integrated resort gets ready.

While the new hubs might ease the congestion and soaring rentals, they will need to provide suitable alternative value propositions, similar to what the CBD does, to be considered as an alternative. The government’s initiative will need to take this into consideration and put in suitable plans to drive this successfully.

- Deb Dutta Vice-President of Asia Pacific/Japan Brocade

NEW business hubs like those proposed in Jurong and Paya Lebar are not new, as there are already regional hubs in Tampines and Jurong East. The new hubs will, of course, alleviate some pressure in the CBD especially for backroom office, administration and support functions. However, large multinationals and financial and legal businesses will still want to maintain their main offices in the CBD for prestige and convenience.

I feel that the new business districts will not be able to replace the CBD but will act as supplementary business districts. Hence, the smaller multinationals and local corporates might find it attractive to locate there instead of the CBD. To make these new districts viable, the accessibility to MRT and other transport modes must be close to that achieved in the CBD. Further, the rents in these new areas must be substantially lower than the CBD before businesses can be motivated to move.

- Wee Piew CEO HG Metal Manufacturing Ltd

Key ingredients for new hubs

FOR Jurong and Paya Lebar to take off as alternative business hubs, special efforts must be made by the government and key stakeholders. The fact that offices have not relocated to these areas in sufficiently large numbers thus far suggests that market forces alone – specifically, the lure of lower property prices and less traffic congestion – are not enough.

The government will have to work with property developers to support the building of iconic commercial properties in these zones, as well as business and hospitality service providers to support their tenants. Statutory boards and government-linked companies could act as anchor tenants to provide critical mass.

Positioning these zones as alternative hubs for specific industries, one for financial and business services and the other for data centres/IT services, for example, would help them achieve the brand image necessary to attract white-collar employment away from the CBD.

- Leon Perera Group Managing Director Spire Research & Consulting Group

THIS plan can only work if there is sufficient pull in the outlying areas. Businesses will relocate only if the advantages of working in the CBD – namely, a developed transport infrastructure and retail and recreation amenities – are not taken away. The Tampines Regional Centre is an example of this model. The advantage of the area is that it is served by three major expressways, has a huge residential base, and is located close to Changi airport.

However, there is also the factor of prestige – most businesses would rather have an office in the CBD as it is the centre of business activities. Even offices in Tampines are mostly branches, with their HQ situated in the CBD. This mindset will prove to be the biggest stumbling block, no matter how compelling the lure of cheaper rent and lesser congestion proves to be.

- Vincent Low Regional Director for Southeast Asia Netgear

THE development of new business hubs is good news, to alleviate the pressure on the CBD and to provide companies with an alternative for more affordable office locations.

For the business hubs to be viable options, however, there must be significant development in infrastructure, to keep the workforce happy.

Basic and practical services should include efficient transportation, banking, medical, postal and telecommunication as well as cheap and fast lunch options, and other run-of-the-mill amenities such as dry-cleaning, basic toiletries and groceries.

Secondly, lifestyle and entertainment facilities such as gyms, malls, salons and bars should also be considered. A good variety of food courts and restaurants will certainly attract businesses and residents as well.

- Charles Reed CEO interTouch

NEW business hubs in Jurong and Paya Lebar with amenities and recreation areas would help to provide cheaper office space, and retail outlets – an alternative to the overcrowded Central Business District. They could grow sales of certain popular and luxury brands profitably.

A new business district requires a dynamic business atmosphere and creative people. It requires landlords to spruce up facades, sidewalks to be tidied up, small-scale industrial and commercial enterprises to turn into luxury residences, developers to bet on the area’s appeal, a famous chef setting up a restaurant. There should be a park nearby and night life a short hop away. There should be schools and historical areas and police street patrols to crack down on crime, noise and litter.

- Tan Kok Leong Principal TKL Consulting

I THINK that Singapore has an advantage in that its small size means that any hub will be just as accessible as any other, regardless of geographical location. The key to making them successful depends on the surrounding infrastructure (access, public transport, shops and restaurants, etc) being available. Given that this would increase the number of potential sites available for development, I would really like to see that existing green areas or areas of historical interest are exempted as much as possible.

- Ross Wilson Managing Director, Consumer Products and Services, Apac Region Trend Micro (Singapore) Pte Ltd

ALL great universities, especially those founded on science and technology, spawn businesses and enterprises, often in close proximity to campuses. Jurong was the very first industrial park that set Singapore on the course to industrialisation. The Nanyang Technological University (NTU) is a global top 20 technology university located in Jurong. We welcome the initiatives to develop Jurong as a new business hub for Singapore.

Besides a coherent ecosystem of businesses, industry, university and residential areas, the presence of the thousands of entrepreneurial students graduating from NTU will inject youthful vitality and innovation into this new ecosystem.

- Su Guaning President Nanyang Technological University

Other hub possibilities

IT IS an absolute necessity to develop additional business centres in other parts of the country. The areas chosen are right. Jurong is near the Second Link and Paya Lebar is close to the airport terminals. We should have one more, that is Woodlands, next to the Causeway. Malaysia is developing the Iskandar Development Region (IDR), so Singapore should use the areas next to it as the new business centres.

Making the areas viable is simple: Allow development to comply with the needs of the businessmen in the areas chosen. There are many business centres in Los Angeles which have turned out to be even more popular than the downtown, LA’s original business centre.

- Ng Kong Yeam Group Executive Chairman Sino-America Tours Corporation Pte Ltd

WITH escalating office rentals in the heart of Singapore’s business district, smaller businesses are beginning to find it hard to stay viable and competitive. The development of alternative business hubs in the suburbs such as Jurong and Paya Lebar is definitely great news for companies with a tighter budget.

As a rule of thumb, a new business district must have a few key ingredients such as good functional office spaces, great transport infrastructure, food outlets and last but not least, a well-known anchor tenant to ensure its success. In view of the location of the two upcoming integrated resorts, an alternative business hub could be in the Tiong Bahru area. The presence of the MRT and the close proximity to the IRs as well as to the current CBD would make it a good spot for new investors planning to set up office in Singapore.

- Benjamin Low Managing Director, Southeast Asia and India Secure Computing

SINGAPORE has developed successful hubs like Shenton Way (finance), Buona Vista (science and technology), and Tuas and Kaki Bukit (heavy industries), just to name a few. Biopolis is often touted as a mini-city of scientists, like a community exclusively for them. Not only does this promote productivity, it makes it the obvious place for science and technological companies and agencies to reside.

The success of these areas is due to their focus, clarity and comprehensiveness. The same should be done for Jurong and Paya Lebar. The government should plan and construct the infrastructure of these areas with respect to specific industries so that the relocation of companies will be relevant and logical. More options will be opened up for them and various support industries, subsequently broadening Singapore’s spatial usage.

The CBD is the most sought-after district in Singapore because of its prime location, accessibility and the prestige attached to it. So if the CBD is so great, make it greater – size-wise. There are equally strategic locations like Outram and Lavender that can be developed to the scale and prominence of Raffles Place and City Hall.

- Annie Yap CEO The GMP Group

THE pressure in the CBD would definitely be lessened by the move to develop new business hubs. Besides the two areas mentioned, the areas adjoining Changi Airport could be considered as well.

In a globalised business world, we are moving into a state of advanced communications. Therefore, besides the cost and response advantage, the environment and ambience of these hubs must be business-friendly.

The idea of Singapore-style industrial parks has caught on internationally. So, too, the idea of East-West twinning of universities and institutes of higher learning. As such, these new business hubs could be twinned to similar business hubs in other countries.

The future is one where talent and specialised skills are instantly inter-changeable. In their architectural and engineering designs, the new business hubs could consider another type of inter-changeability – the harmonious interaction (side-by-side) of residence, office and business.

- R Theyvendran, PBM Chairman/Managing Director Stamford Media International Group

THE government’s announcement to ease the over-crowding in the CBD is timely, given the current supply crunch and high demand. This pro-active action will certainly attract business leaders from across the globe who may consider setting up office here.

With regard to the move to develop new business hubs outside the CBD, Tampines Town is a location to be considered as public amenities are mostly in place and this could ideally speed up development time.

- Sam Yap SG Executive Chairman Cherie Hearts Group

Hi-tech solutions

WITH the rising demand for business space, especially in the CBD, the new business hubs will definitely help to alleviate the pressure. However, we need to look at the bigger picture and develop a long-term solution to ease the congestion.

Companies can explore ways in which advancements in technology can play a role in empowering employees and increasing mobility without compromising on productivity. Video conferencing, for example, allows employees to conduct meetings with business partners, customers and suppliers – all within the comfort of their organisations or homes. In the long run, this will address the demand versus supply of office space in Singapore more effectively.

- Lars Ronning President, North & South East Asia, India, Australia & New Zealand Tandberg

IN THE current digital economy, most business contacts can be done online or through connectivity solutions such as VoIP calls or video conferencing.

Businesses need to understand that offices away from the CBD in Singapore can still easily be operationally competitive. In fact, Alcatel-Lucent’s office is located in TechnoPark@Chai Chee, and our newly announced Asia-Pacific IP Transformation Center is planned for Fusionopolis in Buona Vista.

Subsidies and low rent may initially help attract tenants to the new areas, but it will take a business-friendly infrastructure and a host of supporting industries to cement Paya Lebar and Jurong as choice spots for new business hubs.

- Oliver Foo Managing Director Alcatel-Lucent Singapore Pte Ltd

Source : Business Times – 9 Jul 2007

Beware property boom

Unmanageable mortgages can break up a family

Letter from Gilbert Goh Keow Wah

I refer to the article “Time to play it cool” (July 5). It is timely that the Government has stepped in to cool down the current property fever that is gripping the nation.

Today, the situation is not unlike what it was in 1995 and 1996, when people bought up residences and prices bordered on the ridiculous. People were queueing up, not to view the houses, but just to hand over cheques for the downpayment!

Then, Housing Board executive flats in the Bishan and Toa Payoh areas were sold for close to $700,000. Today, those home-buyers have seen prices plummet and they stand to lose about $200,000 if they were to sell their homes at current valuations.

Worse, during the Asian financial crisis of 1997 and 1998, many lost their hard-earned Central Provident Fund savings when they were forced to sell off properties because they could not meet the payments.

Some property developers also went bust during that time.

I urge Singaporeans to exercise caution. Like equities, property prices do fall when the economy takes a dip. If possible, look for a place that is within your means and always have a mortgage plan in which repayments do not exceed one quarter of your combined household salary. Anything more would be a burden if you were to be retrenched or have your monthly salary reduced for some reason.

A friend of mine had to sell off his private property when both he and his wife were retrenched within a month of each other. They got into financial difficulty and ended up getting divorced. Both were professionals and their situation has been etched in my memory. It was painful for me to see a happy family fall apart over the burden of a huge mortgage loan.

As Singapore goes into another economic upswing, let us be mindful of committing to loans.

Always be prudent and frugal, as financial difficulties can affect the harmony of a family.

It is better to have a happy family living under a simple roof, than one living in a big house laced with potential financial woes.

Source : Today – 6 Jul 2007

There’s upside yet in S’pore property

SINGAPORE’S property market is booming, with activity centred in districts 4, 9, 10, 11 and 15. And I believe there is a lot more upside yet. Why? For each key event listed below, I expect an above average movement of $200 per square foot for the districts mentioned in the years ahead:

Year 2008: Singapore will host the world’s first Formula One night racing. The world will be invited to Singapore, interact with and invest in Singapore.

Year 2009: The first integrated resort (IR) at Marina Bay will be completed with US$5 billion flowing into Singapore from the first wave of tourists. They will come from the business travel, meetings, conventions and dexhibitions segment.

Year 2010: The second IR on Sentosa will be completed with another US$5 billion flowing in from the second wave of tourists. These tourists will come from destinations beyond a nine-hour flight radius.

Year 2011: My guess is that there will be a general election in Singapore which could see some election year goodies.

Year 2015: Singapore celebrates her 50th birthday and hopefully fulfils Prime Minister Lee Hsien Loong’s vision of Singapore as the jewel of the region.

Can we really profit from investing in the property market?

While many wealth creation fads come and go, property investment has consistently created more permanent millionaires than any other investing strategy in history. Here are what some of the wealthiest Americans have said:

‘Real estate is the basis for all wealth.’ – Theodore Roosevelt

‘Eighty per cent of all millionaires made it through real estate.’ – Andrew Carnegie

‘Buying real estate is the best, safest way to become wealthy.’ – Marshall Fields

The truth is that property investment is not just for the rich. If done correctly, anyone who has the desire to succeed can create enough passive income or a lump sum of cash to become financially free.

According to an annual World Wealth Report compiled recently by Merrill Lynch and research firm Capgemini, Singapore has 66,660 millionaires (in US$ terms). They account for about 1.5 per cent of the population, that is, three out of every 200 people here are millionaires.

But the sad truth is that only three out of every 200 Singaporeans will be financially independent when they retire. The rest will either be dependent on family, friends or charity, or have to work indefinitely.

If you’re spending all the money you make and banking on your Central Provident Fund (CPF) for retirement, I want you to wake up from your sweet dreams! The CPF is designed as a supplement to your retirement plan. If CPF savings are all you’ve got, you are either going to have to continue working well past retirement age, or live a meagre lifestyle.

Most people think that the safest option is to park their money in fixed deposits. But they fail to take account of inflation. Today’s inflation rate is about one per cent a year. You need to earn one per cent on your money in fixed deposits just to break even. You’ll need to earn more if you want to create wealth. As such, you will definitely want to invest in instruments that will not only give you a good return but also appreciate in value over time. One good way is to invest in property.

There are two roles to consider. In the beginning, you enter the property market as a buyer and after some time, you exit as a seller. We call this: ‘Buy low, sell high, make money.’ I’ll use a real-life example of the process that made a buyer a cool profit of almost $1 million in a year.

Step 1: The buyer places a one per cent deposit for an option to purchase a property at $1.6 million. That comes to $16,000. The option gives the buyer the right, but not the obligation, to buy the property within two weeks. The owner of the property is not allowed to sell the property to someone else during this period.

Step 2: The buyer exercises the option two weeks later with an additional payment of 4 per cent or $64,000. Once this step is completed, the buyer will have about eight weeks to raise money for the outstanding amount.

Meanwhile, conveyancing work will have started to ensure both parties are legally approved by the authorities for this transaction.

Step 3: Eight weeks later, the buyer pays another 5 per cent – or $80,000 – to complete the purchase.

All in, the buyer has to fork out a cash amount of a $205,600. This comprises 10 per cent for the downpayment, $42,600 for the stamp duty and $3,000 for legal fees. (Stamp duty is taxed at 3 per cent of $1.6 million minus $5,400).

At this stage, the buyer would have invested 10 per cent of the value of the property in cash. The other 90 per cent is financed through bank borrowing. Once this process is completed, the seller hands over the house key to the buyer.

One year later, the owner sells the property for $2.7 million and reaps a profit of $970,715. That is calculated on the sale price of $2.7 million minus the purchase price of $1.6 million. On top of that are the other expenses: stamp duty of $42,600, legal fees of $3,000 X 2 (incurred on the buying and selling); bank redemption of $26,685 (the bank’s penalty as part of loan agreement); 2 per cent for agent’s fee of $54,000 (this is double the market rate to incentivise performance).

There is no secret formula to investing in the property market. All it takes is an understanding of the key terms, a commitment of time and most importantly, a ready lump sum of cash to initiate the purchase.

Where are the areas to invest?I highly recommend Sentosa Cove and District 10.

Sentosa Cove offers one of the most exciting propositions – a residential enclave that shares the island with an integrated resort. The wealthiest individuals in the world will be looking to buy your property which will be situated right next to their favourite entertainment spot.

In district 10, the Duchess area is the place where you can invest in your child’s future. Within a one-km radius, it offers several premier schools: the Nanyang and Raffles Girls’ primary schools, St Margaret’s Secondary School, Nanyang Girls’ High, Chinese High School, Hwa Chong Institution, National Junior College and Hwa Chong Junior College.

When do we invest in the property market? The answer is: Now! There is no better time to start investing for the future.

The writer is CEO, Freely Business School.

Source – Business Times – 4 Jul 2007

Minimum professional competence and standards must be maintained in real-estate industry

PLEASE refer to the report, ‘More sign on as property agents to cash in on boom’ (ST, June 1).

The report highlights the increased number of unqualified agents in recent months because of the rapidly rising property market. While we welcome the growth in the industry and improved earnings of agents, we need to maintain a minimum level of professional competence and standards in the real-estate industry. To this end, we strongly advocate agents and agencies to seek accreditation under the Singapore Accredited Estate Agencies (SAEA) scheme. The scheme has the participation of major industry players as well as government agencies involved in the real-estate industry. All our accredited agencies have been told that their agents will need to pass the Common Examination for House Agents (CEHA) by Dec 31, 2008 before they are accredited.

Discerning buyers and sellers will recognise that agents from SAEA-accredited agencies can provide better and more reliable service as they need to comply with the code of conduct and practice required under the accreditation scheme. We encourage consumers to engage the services of agents from accredited estate agencies for greater certainty.

More information is available on our website at www.saea.org.sg.

Manisah Jalil (Ms)
Secretariat
Singapore Accredited Estate Agencies

Source : Straits Times – 9 Jun 2007

Elsewhere, you can bank on fortnightly loan repayments

Being an Australian expatriate living and working in Singapore for the past 10 years, I have found myself in a position where the rental on my current condo unit will be increased from $1,900 a month to $3,500.

Most of us know that paying this much in rental is nothing short of pointless and a complete waste of hard-earned money. So, like almost all of my expatriate friends, I have decided to buy rather than rent. I decided to make appointments with all of the major banks in Singapore and get an idea of what kind of loans are available and see who offers the best rates and loan package in town.

Having purchased property in Australia, I was keen to find out how competitive banks were in Singapore and to arrange a similar loan to what I have there.

About 10 years ago, a housewife in Queensland, Australia, discovered that if you were to pay your home loan repayment fortnightly and not monthly, you could reduce the life of your loan from 20 years to 12 years (based on an average loan amount). The banks in Australia had been hiding this fact from the consumer for decades. Not a single one had any provision for fortnightly payments.

For example, you owe the bank a monthly repayment of $2,000. Instead of paying $2,000 at the end of the month, you pay $1,000 each fortnight, and so reduce the amount of interest calculated on at the end of each month. Over time, this adds up to a huge saving in interest payments over the life of the loan and will bring about the end of the loan years sooner.

So, why do banks in Singapore not offer this? Simple. They would lose hundreds of millions of our hard-earned dollars in interest payments. Hence, their profits will drop.

In Australia, when the news of the benefits to consumers of this repayment method hit the media, major banks scrambled to cut off the defection of hundreds of customers to smaller banks offering this service.

Today, every major bank in Australia offers the service and even sets up simulators to show how you can cut your loan in half with fortnightly repayments.

When I asked each of the loans officers in Singapore why they did not offer this service, I received a sheepish grin and a shrug. I am sure many home owners here will be very keen to know why fortnightly repayments — offered by most banks in the world today — are not available?

When can we expect this service to become available so that we can look forward to saving possibly hundreds of thousands of dollars in interest payments to banks that post huge annual profits partially due to our home loan repayments?

Letter from Bruce Harvey

Source : Today – 7 Jun 2007