SingXpress to debut Singapore project

SINGAPORE-listed and Hong Kong-based developer SingXpress Land is set to roll out its maiden property project in Singapore in November.

 The company will launch its 21-unit Charlton Residences, a freehold cluster housing project on Charlton Road on the site of the former Foh Pin Mansion. SingXpress and partner ACT Holdings paid $21.2 million for the site in July 2010.

Prices for the units, which will all be larger than 5,000 sq ft apiece, have not been fixed yet. At nearby Charlton Villas, a 2,982 sq ft unit was sold for $838 per square foot in May 2011.

Next up for SingXpress is a site in Pasir Ris slated for development into Design, Build and Sell Scheme (DBSS) flats. SingXpress partnered Kay Lim Holdings to win the site in a state tender in May 2011. The developers will launch the project in Q1 2012.

SingXpress has one more site in its landbank - Waldorf Mansions at Balestier Road, which the company intends to redevelop into about 50 apartments.

SingXpress has leveraged on its parent company, Hong Kong-listed Xpress Group, to grow at a fast pace since it decided to venture into property development in 2009. Xpress Group owns about 63 per cent of SingXpress.

'From a very modest beginning, we were able to leverage our parent company's support to do a lot more than a small company should have been able to on its own,' said SingXpress director Tony Chan.

SingXpress

SingXpress' three sites have a total gross development value of more than $300 million, while the company has a market capitalisation of only $5.6 million.

SingXpress is on the lookout for even more sites, Mr Chan revealed. It will welcome partners willing to co-fund acquisitions as well as development associates - a strategy that the company terms 'investment banking for property development'.

'We very much believe in partners and co-investors; we are flexible,' Mr Chan said.

Right now, SingXpress is looking at both government land sale tenders - especially for executive condominium (EC) sites - as well as collective sale deals to grow its landbank.

SingXpress managing director Chan Heng Fai said that the company decided to buy the DBSS site in Pasir Ris as the DBSS and EC markets present opportunities with 'lower risk and lower volatility' for developers at the moment.

But for now, the group will focus on Charlton Residences, where it hopes to demonstrate its ability to execute projects in Singapore.

SingXpress shares ended at 1.5 cents on Oct 3, the last day the stock was traded.

As storm rages, Singapore studies its impact

AS flagged by the Monetary Authority of Singapore (MAS) last month, the official forecast of Singapore's 2011 growth has been revised down a notch to 5-6 per cent, the lower half of the earlier 5-7 per cent range.In his National Day message aired last night, Prime Minister Lee Hsien Loong said: 'Despite some risks on the horizon, we project steady growth of 5-6 per cent for 2011.'

But the message had been pre-recorded last week, and 'since then, global financial markets have been turbulent and nervous', with the downgrade of the US sovereign debt rating, and the outlook for the major economies has 'become more uncertain', the Prime Minister's Office (PMO) said in a statement yesterday. Still, 'it is premature to revise Singapore's growth forecast of 5-6 per cent for the year', it said. 'The economic agencies are carefully monitoring the situation.'

Economists yesterday said the new official forecast - which MAS had alluded to at a media conference last month when it warned of significant risks that could hit Singapore's growth - reflects the government's cautious approach to growth forecasts, given the highly fluid external environment.

In contrast, private sector forecasts of 2011 growth had already gone below 5 per cent in recent weeks, with Credit Suisse cutting its estimate by one percentage point to 5.5 per cent yesterday, warning that 'the risks of a recession in Singapore have increased significantly'.

Others, however, such as Citigroup's Kit Wei Zheng, prefer to 'resist the temptation to turn overly bearish' despite the increased risks and uncertainties. Mr Kit will finalise his 2011 forecast only after seeing the July industrial output figures.Notably, he pointed out, the PM's National Day message has an upside surprise: Mr Lee said the economy grew 4.9 per cent in the first half of 2011.

This suggests, according to Mr Kit, that the second-quarter flash estimate of 0.5 per cent growth may have been upgraded, as earlier estimates had put first-half growth at 4.7 per cent. In any case, the market had widely expected a Q2 growth downgrade.While the risk of a technical recession in Q3 'has clearly risen materially', if there is a Q4 recovery, 'full-year growth could still come within 5-6 per cent, or higher without technical recession', Mr Kit said.

It was only in mid-May that the official 2011 growth forecast had been raised by a full point to 5-7 per cent, from an early estimate of 4-6 per cent.In his National Day message, Mr Lee said that 'despite our best efforts, we could not shield Singaporeans fully from external shocks' in recent years, and that the government is doing its utmost to tackle policy shortcomings - in housing, transport, in the social safety nets, and in moderating the inflow of foreign workers and immigrants.

'The results will not arrive overnight, but we should see improvements over the next few years,' he said.But Singapore must be 'especially careful of one issue', he warned: 'While we will always put Singaporeans first, let us not turn negative on foreigners.'

Singapore has prospered because it has been 'open to the world and alive to economic competition and change', Mr Lee said.'We cannot afford to close in on ourselves, or attribute all our problems to foreigners. We must stay connected to the world, and continue to welcome talent and ideas, wherever they may come from.'

Singapore has 'comprehensive plans' to achieve its various socio-economic goals, Mr Lee said.'The next few years will bring more rapid changes and surprises. We must anticipate and respond to these external events as best as we can, and steer a course that maximises Singapore's chances of success.'

URA to launch tender for Woodlands industrial site

THE Urban Redevelopment Authority (URA) announced yesterday that it accepted an application from a developer to put up the industrial site at Woodlands Avenue 12 for sale via public tender.

The land parcel has a site area of 202,361 sq ft with a maximum gross plot ratio of 2.5 which equates to a maximum gross floor area of 505,904 sq ft. It has a maximum building height of 61m above mean sea level. The lease period is 60 years and it has been zoned for Business 1 development.

The developer has committed to bid at a price of not less than $56,150,000 in the tender for the land parcel. This reflects a minimum bid price of $111 per sq ft per plot ratio.

Situated in the same vicinity is Parcel 1, a 347 448 sq ft site with similar specifications was sold in April 2010 to Boon Keng Development Pte Ltd for $65,180,000 - reflecting a price of $75 psf ppr.

Parcel 2, a 221,682 sq ft site also with similar specifications, was sold in June 2011 for $84,243,821 to OKH Development Pte Ltd - reflecting a price of $152 psf ppr.

Parcel 1 and parcel 2 are situated next to each other and this reflects a bid price increase of more than double within the short time frame of April 2010 to June 2011.

The site was put up for sale through the reserve list system on 24 March 2011.

Challenging entry singapore’s DBS’ into Malaysia

One of the challenges facing DBS Group Holdings Ltd’s possible entry into Malaysia’s Alliance Financial Group Bhd (AFG)is the high price it may need to pay to buy out the Malaysian party in the holding company that controls 29% in AFG, according to banking sources familiar with the situation.

Singapore investment firm Tema-sek Holdings owns 49% in Vertical Theme Sdn Bhd, the holding company that owns 29% in AFG. The other 51% in Vertical Theme is held by local firm Langkah Bahagia Sdn Bhd, believed to be linked to former finan-ce minister Tun Daim Zainuddin.

It has already been speculated that Temasek may hive off its stake in AFG to DBS, Singapore’s biggest lender, to pave the way for the latter’s entry into the Malaysian market. Also, earlier this year reports indicated that Langkah Bahagia was looking to sell its interest in AFG.

Temasek declined comment on the issue while a DBS spokesman in his response to StarBiz queries said: “As always, strengthening our existing operations and growing our business organically remain our top priority. We don’t as a policy, comment on market speculation.”

“DBS’ entry into AFG is work in progress. Of course Temasek and Langkah Bahagia will have to agree on pricing, which is something that is never easy, as past banking M&As in Malaysia have highlighted,” said an investment banker.

Temasek or DBS would need the approval of Bank Negara to begin talks with Langkah Bahagia. Further-more, under the Banking and Financial Institutions Act, institutions have to obtain special approval from Bank Negara to own more than a 20% stake in a domestic financial institution.

Temasek first came into AFG as a shareholder in 2005 after it acquired a controlling stake, together with Langkah Bahagia.

Sources, however, said that neither Temasek nor DBS had sought Bank Negara’s nod for this, indicating that the deal is still in its early stages.

But another industry source said that Langkah Bahagia might not be too difficult to deal with. “Langkah Bahagia’s entry into AFG was at a low cost. I don’t think there would be too much of haggling on pricing on their part. There could be other challenges to DBS’ entry into Malaysia,” he said.

According to this source, one of those challenges included the possibility that Temasek and DBS themselves might not have come to an agreement on the matter.

The source cited the case of PT Bank Danamon Indonesia, where Temasek owns close to 68%. It had been speculated that Temasek might sell its stake in Danamon to DBS and Credit Suisse in a report had highlighted that Danamon was an ideal choice for DBS in terms of market and strategic fit. Incidentally, Temasek had recently divested two of China’s biggest banks Bank of China and China Construction Bankleading to speculation that it could exit Danamon and AFG. However, DBS’ top management had since shot down market talk that the bank was looking to buy Temasek’s stake in Danamon. It has been reported that market observers had it that although Temasek has a stake in DBS, the latter’s management was not willing to overpay for a bank purchase.

But industry insiders, however, point to the appointment of Peter Seah as chairman of DBS since last May. Seah was a member of Temasek’s advisory panel since 2005. Hence his presence in DBS is said to enable a better working relationship between Temasek and DBS. Temasek owns 27% in DBS.

AFG aside, banking insiders also do not rule out a possible DBS-RHB Capital Bhd deal.

It has been reported that there was an earlier proposal for DBS, RHB Cap and AFG to be involved in a two-phased merger. The proposal entailed RHB Cap first taking over AFG and, subsequent to that, DBS would end up buying up RHB. The deals will all be done mostly via share swaps, resulting in shareholders like the Employees Provident Fund ending up with stakes in regional giant DBS. However, that proposal had fallen through for a few undisclosed reasons. Speculation is that one of those reasons was that certain parties were uncomfortable with the entry of DBS into the Malaysian market, considering that two Singapore banks, namely OCBC and UOB, already dominate the foreign banking landscape in Malaysia. If that’s true, that’s yet another challenge facing DBS’ entry into AFG.

Obama hits the roof as debt ceiling talks stall

THE testy negotiations over raising the US debt ceiling hit a new low - prompting the normally cool President Barack Obama to storm out of a meeting with Republican Congressional leaders.

'Don't call my bluff,' he told them, adding that he was willing to stake his presidency on the issue.

Meanwhile, Moody's issued a warning of a possible cut to the US's credit rating, raising what appear to be the first serious concerns on Wall Street that the Aug 2 deadline for raising the debt ceiling might come and go without an agreement.

The ratings agency put the US's triple-A rating on review for a possible downgrade late Wednesday, saying that the government's inability to reach an agreement on raising its borrowing limit is raising the risk of default. The government has until Aug 2 to raise the debt ceiling, or it will default on some of its financial obligations

'These guys are really starting to push it, essentially playing chicken with the worldwide credibility of US debt at stake, and for the first time, it's not impossible to see this game of 'who blinks first' ending with a disastrous, full-one collision,' said Larry Adam, chief market strategist at Deutsche Bank Wealth Management.

The negotiations on trimming the US budget deficit and raising the debt ceiling by Aug 2 grew heated enough on Wednesday that President Obama and House Majority Leader Eric Cantor got into a dust-up that produced 'He-said, She-said' headlines. Mr Cantor said that Mr Obama 'abruptly' walked out, while one of the Democrats in the room said that Mr Obama 'lit up Eric Cantor like he's never been lit up'.

Matters came to a head when Mr Cantor pushed for a short-term deal anchored on spending cuts.

President Obama said he would veto such a stopgap measure, warned Mr Cantor 'don't call my bluff', and declared himself ready to take his case to US voters.

He left the meeting in a huff, leaving Mr Cantor speechless.

'I've reached my limit. This may bring my presidency down, but I will not yield on this,' according to a Republican aide.

'What's next,' asked Steven Bernstein, an equities portfolio manager attending an asset management conference in midtown Manhattan yesterday afternoon, 'A fist fight between Mr Cantor and President Obama in the Oval Office?'

That hyperbolic scenario is about as likely as the two sides failing to at least agree to extend the debt ceiling for another few months while the Republican-controlled House of Representatives and the Democrat-controlled Senate and President Obama jockey over how to go about trimming the ballooning budget deficit without harming major entitlement programmes for poor Americans.

Nevertheless, the dust-up at the White House, coupled with grim warnings from the two major US ratings agencies about the dire outcome of a failure to raise the US debt ceiling by the deadline, has put the already-nervous financial markets into a state of high alert.

S&P also told lawmakers that if the US misses any payments it too might cut the country's credit rating.

Federal Reserve chairman Ben Bernanke, speaking to lawmakers in the Senate yesterday, said the central bank isn't ready to take further action to bolster the economy yet. The Fed chief said on Wednesday that it would consider loosening monetary policy further, should the economy weaken.

During yesterday's session, he urged lawmakers to keep in mind that the US recovery is still at a delicate stage when they consider actions to cut the debt and deficit.

'In the very near term, the recovery is rather fragile,' Mr Bernanke said to the Senate Banking Committee, and 'sharp' cuts in the deficit could harm the recovery.

He added that a loss of investor confidence could complicate the rollover of the US government's debt.

'It is entirely possible that loss of confidence or political risk could raise interest rates and make it more difficult or expensive to roll over the debt.'

His comments closely reflect remarks delivered to a House of Representatives panel on Wednesday in which he said that 'failure to raise the debt ceiling could throw the financial system into disarray' and worsen the already bleak employment situation.

So far, investors haven't let the threat of a US default or downgrade spook them into a sell-off type of panic, but that may occur if the posturing by both sides shows no signs of abating in coming days. 'No one wants to consider the consequences because it would be an unprecedented and terrible event, but with every passing day the possibility seems to becoming more real,' Mr Adam said.

'I think we get the debt ceiling raised in plenty of time, but Washington should listen to the message from Wall Street before that message becomes a huge, screaming sell-off,' he said.

Singapore stocks likely increase on US Tiger Airways, Keppel in focus

Singapore shares are likely to open higher on Monday after US markets posted their best week in two years on easing debt and economic fears. Singapore’s benchmark Straits Times Index <.FTSTI> rose 0.6% on Friday to 3,139.01 points. Here are stocks and factors to watch:

Shares of budget carrier Tiger Airways (TAHL.SI) may be in focus after Australia’s airline safety regulator said it has grounded the airline’s Australian operations over “serious” safety concerns, disrupting thousands of passengers at the start of the school holiday season. Tiger said the halt of its Australia operations would cost an estimated $2 million a week.

 

Keppel Corp (KPLM.SI), the world’s largest oil rig builders, said on Sunday a unit of Singapore-listed Mermaid Maritime (MMPC.SI) has exercised the first of two options to build a jackup rig worth US$184 million ($225 million).

Mapletree Industrial Trust (MAPI.SI) said on Saturday it has bought a portfolio of flatted factories and amenity centres from JTC  Corporation for $400.3 million.

Hi-P International (HIPI.SI) said it expects to report lower revenue and net profit after tax for the second quarter compared to the preceding three months, due to the delay of projects from its customers, and higher labour and material costs.

Chinese snack and candy maker Hsu Fu Chi (HSFU.SI) suspended trading in its shares following media reports that  Nestle SA (NESN.VX) has been holding talks to buy the Singapore-listed firm.

Property price increase in Q2: HDB, private sectors

HDB flat prices in the second quarter of 2011 rose by 2.9 per cent to a record, according to initial estimates by the Housing Board.

The increase is the fastest since the third quarter of 2010. Resale flat prices in the first quarter had risen by 1.6 per cent from the fourth quarter of 2010.

Prices of private homes, on the other hand, increased at a slower pace in the second quarter. The Urban Redevelopment Authority's residential price index climbed by 1.9 per cent during the quarter - which are mostly based on transaction prices given in caveats lodged during the first 10 weeks of the quarter.

This is slower than the 2.2 per cent growth in the first quarter. It is also the seventh consecutive quarter in which the rate of increase has fallen since the fourth quarter of 2009.

Prices of non-landed private homes rose by 1.6 per cent each in the core central region and outside central region. In the rest of central region, prices were up just 1.2 per cent.

The HDB plans to launch 2,000 flats under a sale of balance flats exercise in August. Some of these flats will be in the mature estates. The board is also on track to offer 22,000 build-to-order (BTO) flats by September and another 3,000 BTO flats in the last quarter.