Yishun condo site draws record bid of $213.5m

A YISHUN condominium site drew a higher-than-expected top bid when its tender closed yesterday, belying expectations of a property market slide.
Developer MCL Land offered $213.5 million for the 99-year leasehold plot, which works out to about $350 per sq ft per plot ratio (psf ppr) - believed to be a new benchmark for Yishun.
HIGH BID = HIGH HOME PRICES?
Property consultants said the higher-than-expected offer by MCL Land could translate into the finished project selling at record prices for Yishun, even as home buyers are now holding out for lower prices in a subdued market.
Property consultants said this could translate into the finished project selling at record prices for the area, even as home buyers are now holding out for lower prices in a subdued market.
Mr Nicholas Mak, director of research and consultancy at Knight Frank, estimated that the end units for the Yishun project could be priced from $830 psf up to almost $900 psf.
This would be almost double what the 99-year leasehold Orchid Park Condo down the road is fetching. Four units at the 14-year-old development have been sold there this year at an average price of $460 psf.
MCL Land's bid pipped four others and came in almost 70 per cent higher than the next bid, from Peak Green, at $127 million, or $208 psf ppr.
Frasers Centrepoint, Sim Lian and Hong Kong's Cheung Kong also tabled offers ranging from $57.7 million to $109.7 million, or $95 to $180 psf ppr - which some consultants said were 'unrealistically low' bids. They had predicted bids of between $200 and $300 psf ppr.
But Mr Li Hiaw Ho, executive director of CBRE Research, said the response was 'fairly robust' and signalled 'developers' confidence in the suburban segment despite the current lukewarm response to new projects'.
'Should the United States enter a mild recession and the sub-prime problems clear up, sentiment for suburban homes should improve after June, bringing demand and upward price momentum back to the market.'
Experts described MCL Land's offer as 'extremely bullish' and suggested that the developer may be short on land bank in the mass market segment.
MCL Land said in its latest financial results that it bought some sites last year, including Holland Hill Mansions and Dynasty Court Garden 1 in Sixth Avenue. Its land bank can now yield 780 units with a total gross floor area of 1.4 million sq ft.
The Yishun site is at the corner of Yishun Avenues 1 and 2, and is 10 minutes' walk from Khatib MRT Station. It is next to Yishun Stadium and overlooks Lower Seletar Reservoir.
'The site is good in that frontage to the reservoir is fantastic,' said Mr Ku Swee Yong, director of marketing and business development at Savills Singapore. 'I agree you should pay a premium for this site, but this seems to be a very significant premium.'
Separately, HDB yesterday put two more sites up for sale through its reserve list system.
One is a 182,986 sq ft plot at Jurong West Street 42 for executive condos, while the other is a 244,341 sq ft condo site at Chestnut Avenue in Bukit Panjang.

Fund tops Serangoon site tender with $801m bid Located above MRT station

Fund tops Serangoon site tender with $801m bid Located above MRT station, it will be used for a mall and new bus interchange. -->
Joyce Teo
Thu, Mar 27, 2008The Straits Times

THE sleepy Serangoon area received a huge vote of confidence yesterday when a fund bid a sky-high $800.9 million for a land site, which will be used for a mall and a new bus interchange.
Six hopefuls lined up for the 99-year leasehold plot above Serangoon MRT station with four bidding over $660 million - well above the figure some people in the property industry thought the plot would attract.
The $800.9 million bid came from Pramerica Real Estate Investors (Asia) but was submitted under the name Gold Ridge. It reflects a price of $850 per sq ft (psf) of gross floor area.
This was 10 per cent above the second bid of $727 million from Serangoon Community Developments. Another bid came in at $401 million and one was a distant $215 million.
The site - launched by the Land Transport Authority - is destined to be a hub with Serangoon MRT serving as a junction station for the new Circle Line. Any development must include a new bus interchange integrated with the enlarged North-East and Circle Line stations.
The strategic location also offers enormous retail opportunities, say property experts.
'Serangoon Central is not a heavy residential area but there are no major malls within a 3km to 5km radius,' said Mr Danny Yeo, Knight Frank's deputy managing director.
'A mall can be a regional centre. The only tricky situation is that there can only be slightly over 200 carpark lots.'
Pramerica intends to build a full retail centre. It manages the Asian Retail Mall Fund I and II, which own several malls here, including Liang Court in River Valley, White Sands in Pasir Ris and Century Square in Tampines.
The Serangoon mall could have a net lettable area of around 600,000 sq ft, said CBRE Research executive director Li Hiaw Ho.
That would make it of similar size to Parkway Parade in Marine Parade and IMM in Jurong.
The plot is designated a white site, meaning it can be used for different functions, such as residential or commercial, but a full retail mall would bring the highest profit margin, said Savills Residential director Ku Swee Yong - and the highest risk in terms of cash flow.
The site has a gross floor area of 87,527 sq m. Consultants said a mall could probably bring average gross rent of up to $14 psf.
Assuming rent of $12 psf to $13 psf, the developers could expect a net income yield of about 5.5 per cent on a stabilised basis, said Mr Li.
Those who placed the lower bids were probably looking at a residential component, which could eventually sell for $800 psf to $900 psf, consultants said.
While the residential space would help with cash flow, proceeds from apartment sales should not be used to fund the retail mall, said an industry expert.
This is to avoid paying heavy taxes when the developer eventually sells the mall.
Meanwhile, the Urban Redevelopment Authority made available two 99-year leasehold sites yesterday. Interested developers can apply to have these reserve list sites put up for tender.
One is a 0.55ha plot at the junction of Clemenceau Avenue and Havelock Road, which is designated for a hotel of up to six storeys.
Another is a 3.07ha residential plot in Upper Changi Road North.
Mr Nicholas Mak, Knight Frank's director of research and consultancy, said the first site could accommodate a three- to four-star hotel with up to 270 rooms. If it is put up for tender, its land price is estimated to be $75 million to $81 million, or $600 psf to $650 psf of gross floor area.
The second site could have up to 400 condo units and fetch between $83 million and $111 million, with new units commanding $650 psf to $720 psf.
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Higher housing grant for singles who live with parents

GOOD news for singles who want to buy a Housing Board flat to live with their parents.
They will get a higher CPF housing grant of $20,000 - from the current $11,000 - from April 1, the HDB announced on Thursday morning.
This higher-tier singles grant will also apply to eligible singles buying flats under the Design, Build and Sell Scheme (DBSS).
The catch is: the eligible single must commit to living together with his parents in the resale flat for at least five years.
Within the five years, the parents cannot buy or take over the ownership of another HDB flat, or invest in a private property, said the HDB.
Under the single Singapore citizen (SSC) scheme, single Singaporeans aged 35 years and above can get a CPF housing grant of $11,000 to buy a HDB resale flat if they satisfy the eligibility conditions.
Minister for Prime Minister's Office, Mr Lim Boon Heng, announced the higher singles grant in Parliament on March 8.
'It is a pro-family initiative to encourage children to look after their parents,' said the HDB.
The higher-tier singles grant will apply to resale applications or booking of DBSS flats from April 1.
All other prevailing policies such as the income ceiling, minimum occupation period for resale, will apply.
For enquiries, the public can call the toll free Sales/Resale Customer Service Line at 1800 8663 066.

China giving greater support to agriculture to cool inflation

China giving greater support to agriculture to cool inflation 2008-03-26 21:33:08 BEIJING, March 26 (Xinhua) -- China promised on Wednesday to increase financial support for agricultural production as part of a larger effort to cool an inflation surge blamed on food shortages. "Reinforcing agriculture has a pivotal role in maintaining sound and fast economic development, curbing inflation and safeguarding stability," the State Council, or the Cabinet, said in a statement. The Cabinet agreed in an executive meeting chaired by Premier Wen Jiabao that China would "immediately" increase the subsidies for farmers' purchase of production materials and seeds, and raise the government's purchasing prices of grain. The move was meant to "mobilize the initiative of farmers to plant crops and ensure an adequate supply of agricultural and sideline products," it said. The announcement added to a string of efforts to end shortages of pork, China's staple meat, and other basic commodities that pushed the inflation rate to a near 12-year high of 8.7 percent in February. Pork production fell dramatically last summer on breeders' dampened enthusiasm due to rising feed costs in addition to a massive pig cull after the outbreak of blue-ear disease in some regions. The unusually harsh winter weather also dealt a serious blow to vegetable and rapeseed crops in many areas and killed many pigs and chickens. The central government's budget earmarked for agriculture, farmers and rural areas reached 562.5 billion yuan (79.2 billion U.S. dollars) this year, 130.7 billion yuan more than in 2007, according to the government work report delivered by Wen earlier this month. The sum included a subsidy of 48.2 billion yuan for production materials purchase, 4 billion yuan for farm tools and 7.07 billion yuan for seed. Editor: Du Guodong

...more financial support for agricultural products.... at present there are already a subsidy abt $2 per straw for bull semen :).... although not mention I think there might be more subsidy :)
...The raw milk condition is worsen by the pig problem (B E disease)... with culling of some cows. (most prob low yielding or older cows)

Property Debt comfortable level

A good article on Wallstraits by Dennis on property loans advice

Below is what I shared at another forum, warning Forumers the dangers of over-borrowing and Never, Never, Never Over-borrow.

Cheers!Dennis Ng

If a person or household earns $5,000, keeping Debt-service ratio at 35% (or max Housing Loan instalment of S$1,750), and assuming a 25 years loan period, and an interest rate of 4% (it's better to assume a higher interest rate to be Prudent), the Maximum Housing Loan a person should take (assuming NO other debt) is about S$331,541.85.

Assuming this person takes a 80% Loan, max purchase price of Property is S$414,427. I read somewhere that the average Household income is over S$6,000 (not S$5,000). Using S$6,000 to calculate instead, max Purchase Price of Property is S$500,000. It does appear that current property prices are above what a person can comfortably afford, according to Prudent Personal Finance Principles. Note: banks are comfortable with 40% Debt-service ratio, if we use 40% instead, the max loan would work out to S$454,686 and max purchase price of properties would be S$568,357 instead.whether based on Median Income or Average Income, if we use Prudent Financial Principles as a guide, I agree that property prices are currently above the prices what a person can comfortably buy and comfortably borrow. I would advise a max loan financing of 80%.

If people NEED* to take 90% financing, they are buying/borrowing over their means. We should NEVER, NEVER, NEVER over-borrow. Over-borrowing can lead to a person's Financial Demise. *Note: this is different from a property investor who CHOOSES to take a 90% financing to minimise Cash Outlay but who have the Financial Means to make a 20% downpayment.

Another thing people should note is that current property prices are already much higher than say, 2 years ago, and as prices move higher, risks increase instead of reduce.And the economy is slowing down and there might be retrenchments in future due to economic uncertainties. Thus, anyone buying a property should standby Cash/CPF sufficient to pay for at least 12 months to 24 months of Housing Loan instalment as a "Safety Buffer". This will ensure he/she can continue to service the Housing Loan even if he/she lose his/her income. If they cannot afford to do what I advise, suggest that they NOT buy a property, they should continue to save some more money so that they can meet the guidelines I shared.

Cheers!Dennis Ng

Happy Good Friday

Went over to my sis-in-law for their house warming in Selangor (Bukit Jelutong).
I quite liked the spacious garden - brazilian trees/ palm trees, white and black big pebbles flooring at the porch and carpet grass. It is 7600 sq feet, very hugh. I also liked the high ceilings - giving it a cosy homely feeling. Also the AV hi-fi room was very professional. - with pre amp/ power amp, CDs and big speakers. The yellow lighting and carpet and sofa made the whole room very professional. I heard the house is about 1.4 Mio RM.

Visited Datuk's house in Bangsa - another high end residential district. What I liked was the curving / ovalish flooring. It has a fantastic view as well.
What did not look too good was that it did not have a spacious garden, and the ceilings was too short.

Another high end condominium popular with Singaporeans is Mont Kiara

CLSA: Sell The Milk And Milk Processors

CLSA: Sell The Milk And Milk Processors Positions must be cut entirely on pure Milk re-sellers like Anik, Modern, Heritage and Kwality Dairies, while exposure reduced to Britannia and Nestle.
China's Milk Dairies are sinking deep into the Red as Raw Milk prices rise, and the PRC Government imposes price controls on Milk and Milk products sold in Greater China region.
-Local Dairy Associations in Inner Mongolia, Heilongjiang and Shandong provinces have reported tight supplies of Raw Milk, with no signs of supply shortfalls easing in the near future.
-As price of Grain and Feed Stuff rises Breeding of Cows has been stopped in most Milk producing regions of China, with many farmers resorting to Culling the cows.
-As a pure statistic the number of Cows in the Shandong province have declined by 50 per cent in the period 2003-07.
-Very surprisingly new Milk processing plants have been set up in Shandong, Yili, Mengniu adding to the fierce competition that prevails in procuring Raw Milk.
-Raw Milk prices have consequently risen 67 per cent in the past 2 years, most of the price increases have not been passed on to consumers leading to a massive reduction in operating margins for Dairy producers.
-As a thumb rule, if Raw Milk prices rise by 5 per cent operating margins sink by 31 per cent.
A similar scenario could prevail in India as well, which is seeing the price of grain and raw feed prices going up in rural areas with direct and indirect price controls being imposed on Milk prices.
Positions must be cut entirely on pure Milk re-sellers like Anik, Modern, Heritage and Kwality Dairies, while exposure reduced to Britannia and Nestle.

With 150 tonnes of raw milk processing setting up in March by China Milk, look for further upside.
What about the bull sperm business ? It should be relatively unaffected as with the demand for raw milk, and limited land in China, there should be steady demand for high yielding bull sperms.