key differentiating factors for commercial office properties

...this is a reply from dydx on the wallstraits forum on the commercial office property which I find it useful for evaluating commercial office property investment

I am no property expert, but I believe some of the key differentiating factors for commercial office properties are -

1. A good location - e.g. Raffles Place; close to a key MRT station; being part of an integrated development (e.g. like Suntec, where the shopping mall and convention centre elements make the offices there desirable, even though the MRT is quite a long walk away). This usually makes a property become "Prime" in the location sense.

2. A good architectural design, with big-enough floor plates, up-to-date techinical specifications, and high-quality furnishings, suited for large modern offices. All these make a property "Grade A" in additional to its location. In this aspect, new buildings are always one-up against the older buildings. That's why big some companies or banks have no qualms in moving their main offices every few years - especially when the economy is looking up and their businesses are expanding - going for the best and cheaper deals.

3. Property owners giving naming rights of the building to key tenants. Some big companies or banks like the idea of having their rented building carrying their names, and for that they are willing to sign a longer lease and perhaps pay a premium rent.

Notwithstanding the above, commercial office rental rates are ultimately governed by supply/demand forces, be it for Prime, Grade A, or other lower grades. On the demand side, the main driver is the state of the economy, and whether the foreign banks and other financial institutions, coporates, and related providers of support services, are expanding. At the end of the day, companies and banks hire more staff and spend or invest in new offices because of business requirements - i.e. there is business to be done, or at least a strong likelihood of it happening.

On the supply side, the main driver is the completion of new office buildings in particular locations. E.g. When the currently under-construction new Straits Trading Building and Keppel Towers are completed, total supply of Grade A office space at Raffles Place will increase significantly. Unless demand continues to grow in the short term to mob up the new supply - unlikely under the current scenario - office rental rates in Raffles Place will come under serious competitive pressure and will have to fall, so the the new supply of space can be absorbed within a reasonable period of time, giving the owners of the new buildings a chance to collect some rev.

Another point to note, when big companies do not make money, it is entirely possible that the management will downgrade their offices from Grade A at Prime locations, even into their factories/warehouses in Jurong! And we must not forget most of the large banks are moving their back-end operations to Tampines or other offside locations in order to cut rental expenses and place such units in more longer-term premises.

Singapore tycoon sues Citi over $684 mln losses-paper

SINGAPORE, May 19 (Reuters) - Singapore-based businessman Oei Hong Leong has sued Citigroup's private bank for negligence and misrepresentation after he lost S$1 billion ($684 million) on foreign exchange and bond trades last year, the Straits Times reported on Tuesday.

Oei's lawsuit said Citi, with which he has a 30-year relationship, repeatedly gave him an inaccurate picture of his trading exposure, which led him to take on more positions than he would have taken otherwise, the newspaper said, citing court documents. It said Oei declined to comment about the court case.

A spokesman from Citi told Reuters in an email: "We believe that the claim is without merit and we fully intend to defend our position vigorously." It declined to comment further on the matter.

There was no immediate comment available from Oei's office.

Oei was ranked Singapore's 29th richest person by Forbes last year with a net worth of $210 million. Forbes calculated Oei's wealth based on his stakes in publicly traded companies and in private company filings.

According to Straits Times, Oei claimed he felt compelled to close his positions at an extremely volatile time in October last year, taking huge losses, as he felt he had no choice after discovering the full extent of his exposure. Some angry Asian private banking clients have filed lawsuits after losing money on complex financial products battered in a global market meltdown last year, forcing the industry into damage control.

.....My thoughts :
1) Again my advice, Banks are never your friend ! Don't get mesmerized by being a so call priority or private client of a bank. It just throws a veil over you...make you important and happy.... so that they can sell you financial products.

I remembered being tried to sell a product, which gives you 7% interest annually, but is tied to the worst performnace of 3 global indices (S&P, Nikkei & Euro market) in October 2007. Once any market drop 30%, I will have to absorb the loss ! Investors sold on the 7% interest will have a nasty shock. My RM was telling me ...oh stock market correct 10-20% the most, so you have a high chance of getting 7% annually, just put a token sum inside. What rubbish. The signs of the housing market in the US and financial orgy were already cracking.

Be investment and financial savvy and treat the bank as a partner. Only you youself is accountable to your own well (wealth) being.

2) OHL case is just an example that you may be accumulating wealth for many years, but just need a single wrong step to set you back sevealy. It is very easy to go down, earning back is 10x harder.
Lesson learnt is that one must always be guarded, treat every single cent/ investment extra cautious.

Price cuts draw buyers to 3 condo relaunches

May 19, 2009
Price cuts draw buyers to 3 condo relaunches
By Joyce Teo

Three prime condominium projects that struggled to generate interest last year saw a surge of buyer activity over the weekend after developers cut their prices.

The freehold 19-storey Parc Centennial in Kampong Java Road - where all 51 units are served by private lifts - sold 32 units at $1,115 per square foot (psf) to $1,233 psf, or from $1.27 million to $1.93 million. This price level is about 20 per cent lower than last year's $1,450 psf, and the interest absorption scheme is included.

Developer EL Development sold only six units in April and May last year when the project was originally released for sale. And at a private preview in March this year, it sold a 2,486 sq ft penthouse unit for $1,005 psf.

It held a preview this past weekend and has now sold all the two-bedroom units, which start from 1,098 sq ft. The three-bedders increase in size to 1,572 sq ft.

Managing director Lim Yew Soon said he had raised the prices of the remaining 12 three-bedroom units at Parc Centennial by 2 per cent.

Over at the 302-unit Martin Place Residences in River Valley, a soft launch over the weekend saw sales of 80 units at $1,450 psf on average, out of a total of 100 units launched.

Developer Frasers Centrepoint Homes said the 'attractive pricing' drew buyers. It released units priced from $1,260 psf to $1,700 psf, compared with the initial 28 units sold at $1,700 psf to $2,000 psf last year.

Singaporeans made up 62 per cent of the buyers at Martin Place Residences, with the rest being permanent residents and foreigners.

Earlier, CapitaLand had reported strong weekend sales at its 173-unit The Wharf Residence. About 95 per cent of the buyers chose not to take up the stamp duty waiver and interest absorption, preferring a straight 8 per cent price cut, it said yesterday.

Prices started at just below $1,000 psf for units with private enclosed space and many of the weekend deals were done at less than $1,300 psf, industry sources said.

Attractive price cuts, coupled with the recent stock market rally and a fear of losing out, are some of the key factors spurring buyer interest, experts said.

Compared with the situation late last year, buyers are more confident and developers seem to be taking advantage of improving sentiment to relaunch projects at attractive prices, said PropNex chief executive Mohamed Ismail.

.............Coincidentally, I went over the weekend to enrol my son into Meyer Road Pat School House. It costs about above 700+ for a half day course. The other school I saw was Modern Montesorri which cost about 600+. PS has a ratio of 1:7 while MM a ratio of 1:12. Furthermore, PS has a classroom of muscial instruments.

This is my thoughts... I have colleague who place their kids into church school which costs around 200+, but this does not include school holidays. So effectively they have to find ways to take care of them, also they enrol them for Chinese+Music+Art class which will cost another additional 200-300+. In PS, you have everything in 1 roof, which will save time/effort too.

PS anyway has very good reviews and I think it is time for my little one to learn some independance and some skill sets which we as parents/grandparents may be hard to instill.

....Anyhow, after registering my son, we visited a new classy condominuium "View at Meyer". Its has a very classy architectural building with private lifts. It is sort of a boutique condo. But wow, the price was also classy. It range from 1250 psf (3th floor) to 1450-1500 (9th floor) and 1700 psf at 20+ floor. A 3-bdrm is 1600+ sqf and 4-bdrm 1790 sqf. Thus the price is ard 2.2- 2.9 million. Well according to the property agent there, this is considered a boutique condo, and this is the price to pay. Nearby condos like Esta/Seaview/One amber is ard 900 + psf, but there are easily few hundred units there. I suspect there might be traffic jam just trying to get back home.

I am thinking, at the end of the day, convenience is still my top prority. Getting food is a breeze to me, at my current place, I can get good food within 3 mins walk.

It is also next to a upcoming central MRT. If I were to stay in those Condo, I will have missed out on all these convenience. When my kids grow up, I need not fetch them up/down frequently. My Uncle who lives in Bukit Timah Coronation road, although is considered prime land, he has to be a full time chauffeur as it is so inaccessible.

At the VaM, I also saw Zhou Chu Ming. He seems to have bought a 1-bdroom trying to rent out at 3.5K. Well good luck.

Property seems to be picking up, due to pent up demand and sentiment. However the avalanche of TOP property next year and the wave of expatriate going back home only means that supply is still in abundant. I am not optimistic of property prices in the next 1-2 years, which had not corrected much.

2009 Arsenal EPL review

It has been another lously year for Arsenal, 4 years without a trophy, and is a tough pill to swallow for Arsenal fans.

This year without Arashavin, Arsenal may still be fighting for 4th place. I feel that this year Wenger has got many of his tactics and strategy wrong.
- not fielding Arashavin in the FA cup, the only realistic cup to win
- persisting with Diaby who is crap and even worse playing him out of position
- in the 1st championship match, Walcott was already in Evra pocket, with of little use, in the 2nd match Wenger still played him in that position....poor decision. I will have moved Bendtner there who played much better in the 1st leg after taking over from Walcott, and placed Walcott central striker instead of Van Persie. The space & penetration in the final third was lacking. Van persie is more technical, but had no speed and thus no space. Walcott would have been better as a second striker feeding of Edabayor.
- In the last match vs Man U, we see that they have improved vastly, maybe because Man U was also cautious.
So what next, I feel that Arsenal although has progressed, is still lacking as a top club. They lack speed which only maybe Walcott is providing. Nasri is a central midifielder and playing him wide is a bad choice as there is little speed. He is not like Pires who gets into very dangerous position in the final third and scores lots of goals. Nasri playing wide does not get into dangerous position in the final third, usually outside the box.
1) Maybe they should get a natural wide winger with speed like Ryan Babel, 2) a more tenacious midfielder and and 3) tall capable defender. 4) And definitely a speedy tall & techinical striker to replace Edabayor who has lost interest and ineffective.
Bendtner although tall, is not good technically. Look at simple 1st touch which he hopelessly miss. Will he get better as he is still young? Although his goal tally is good for his age, it has to improve. If not he should be let go sooner, it is a waste of time, and waste of future precious points.

Well it is time to look for next season, hoping the next experience players get recruited, and definitely will look forward towards Arashavin, an improved Walcott, Educardo and Rosicky fighting for next season.