The years 2007, 2009 and 2010 can be considered a golden era for property developers.

Laden with vast liquidity from large profits on sold-out projects, it is no surprise that developers look at development sites with great appetite.

The aggressive bidding for the latest state sale of a residential site located at the corner of Canberra Drive and Sembawang Road was the second public tender to prove that the ramping up of land supply in Singapore has no major effects.

One of the main reasons for the good participation rate and high bids during a tender is the fact that some developers still need to replenish their land banks.

However, it is interesting to know that there are developers who continue to participate in bidding though they have already succeeded in previous rounds.

Reflecting on greater risks going forward, more joint ventures can be expected, with some having strategic collaborations with contractors. As there will be many projects coming over the next few years, it will be more difficult to secure a contractor over time.

Even the most seasoned developers are continuously surprised by the market trends. Some developers face a dilemma when their projects sell out within days following an aggressive bidding for a residential site.

There can be a scenario where sites are acquired faster than they are offered. This will probably happen even if land prices begin to fall to more moderate levels.

If developers continue unloading their apartments, the risks will be gradually transferred to investors. A cut in prices cannot also be expected when developers secure a good position.

It can also be argued that it is in the interest of developers to continue participating in land bidding even when prices are falling. In this case, the most susceptible are those paying the highest prices for sites, and those who have lower land cost can manage to undercut their competitors.

Kandy Bong
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Lum Chang Holdings has announced that its wholly-owned subsidiary – Lum Chang Property Investments (LCPI) – is planning to purchase two properties in Singapore worth S$15.50 million.

Lum Chang said LCPI has exercised the options to acquire properties in Nos 12 and 14 Kung Chong Road for S$8 million and S$7.5 million, respectively. These properties have remaining leasehold tenures of about 43 years.

The acquisitions of the two properties, which have a combined land area of 32,000 sq ft, are expected to be completed by July and September this year. LCPI is planning to develop the properties for its own use.

The group said the cost of the acquisitions and redevelopment will be financed by bank borrowings and internal funds.

Kandy Bong
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A group of Singaporean investors is calling for better regulation of land banking, after failing to get back their dues from investment company Profitable Plots and left to fend for themselves.

Investors were unable to recover a sum worth more than $2 million, as they have not been able to seek help from any regulatory body since land banking is not regulated in the country.

The Monetary Authority of Singapore (MAS) said in an advisory that it does not regulate land banking, since it only involves investors purchasing direct interests in properties, rather than securities related to real estate.

Hence, the group is asking MAS to issue some form of regulation, as well as to investigate the practices of Profitable Plots.

“A nicely worded friendly petition ... for a plea to the authorities to take the case seriously” has been put together, said one of the investors.

Kok T L, an investor who invested over $30,000, said authorities should take necessary action and offer some form of regulation and support.

Tan Kin Lian, former chief executive of NTUC Income, who has extensively blogged on land banking, stressed that there should be regulation on any product sold as an investment, especially if it is advertised through the media.

Land investment firm Walton International Group Singapore noted that it is not necessary for the authorities to regulate property investment. But Ms. Lusi, COO of Walton Singapore, said it would respect any decision about the issue.

Dr. Tan Tee Khoon, CEO of Singapore Accredited Estate Agencies, said that “the regulation route is always an appealing one to take when something goes awry”. However, investors “may be the best persons to protect themselves”. They should carry out necessary checks before making any investment.

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Parkway Holdings shares surged on hopes that a bidding war for the hospital operator will emerge.

At one time, its share price reached $3.85, higher than the $3.78 per share bid made by Integrated Healthcare Holdings (IHH), a unit of Malaysian sovereign wealth fund, Khazanah.

Reports have emerged that India-based Fortis Healthcare, which now holds a 25 percent share in Parkway, is set to make a general bid for the hospital operator. This comes after Fortis planned to raise around $828 million through a sale of its own securities.

In May, IHH launched a $1.18 billion partial takeover bid to purchase shares of Parkway and raise its stake in the hospital operator to 51.5 percent. In addition, IHH also sent its formal offer documents to shareholders.

The document states that the closing date for shareholders in Parkway to lodge their votes is July 8.

The settlement date is within ten days of the closing date once the bid becomes successful.

The offer needs the approval of more than 50 percent of shareholders and valid acceptances for at least 313 million shares.

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Construction company EOC's unit Lewek Arunothai will resume operations after a 40-day suspension for scheduled upgrading and maintenance.

With this, the unit is expected to start generating income. EOC’s revenue for Q2 2010 was US$35.5 million, up 140 percent from US$14.8 million in the previous year. The increase was largely attributed to the US$20.1-million contribution from Arunothai, which began its operations in October 2009.

According to an EOC spokesman’s estimate, Arunothai has contributed 60 percent of the total net profit and nearly 50 percent of revenue during the first half of this year. Its temporary suspension affected EOC’s operation significantly, although EOC was not able to give more details.

EOC offers offshore floating production and construction services, and operates in Thailand, Indonesia, India, Malaysia, Australia, the Philippines and the Middle East.

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China's property prices increased at the second-fastest rate last month, indicating little sign that the government’s crackdown on speculation will work to stop an asset-price bubble.

The 12.4-percent gain compared with the recorded 12.8 percent increase in April 2009, according to the National Bureau of Statistics. The data series, which covers 70 cities, was started in 2005.

The figures, along with the data indicating a bigger jump in exports than the estimate in May, signalled dangers in maintaining stimulus measures adopted in the wake of the global downturn. Concerns that the central government will step up policy tightening, along with the dangers posed by the debt crisis in Europe, has sent the country’s benchmark stock index down 21 percent this year.

"Housing prices continue to grow apace, it appears the government measures so far have only affected the transaction volumes," said Liu Li-Gang, a Hong Kong-based economist of Australia and New Zealand Banking Group. "The government will have to work more to contain the strong demand" for real estate, he added, saying that higher interest rates would be very effective.

Sales in Shenzhen, Beijing and Shanghai dropped nearly 70 percent last month from the previous month, and land sales for residential projects in 70 major cities also dropped 14 percent, according to a report.

An index tracking 34 property companies has dropped almost 28 percent in 2010, the worst performer in five subgroups of the stock benchmark of Shanghai.

Sales by China Vanke, China’s biggest publicly traded real estate developer, slipped 20 percent last month from 2009, and the contracted sales of Guangzhou R&F Properties Co. in May also dropped 48 percent on-year, based on the developers' stock exchange filings.

The government may impose a trial property tax after tightening sales rules for property developers, restricting loans for multiple-home buyers and raising some down payment requirements, according to sources.

"The government's recent measures to cool the housing market focus on limiting investment and increasing the supply of public and low-cost housing," stated a report submitted by Barclays economists Peng Wensheng and Chang Jian. "This represents a regime shift in housing policy" and additional measures are likely to come, they added.

Property sales by area increased 22.5 percent during the first five months to 302 million sq m, according to the statistics bureau. The pace is compared with the 32.8-percent increase between January and April. The area under construction increased 72.4 percent from last year to 615 million sq m.

Property sales may drop 30 percent from 2009, said Jing Ulrich, JPMorgan Chase’s HK-based chairwoman of China equities and commodities.

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The President of the Agency for Real Estate Affairs in Thailand has cautioned against a possible bubble formation in the country’s property market.

Dr. Sopon Pornchokchai stressed that a bubble could form in 2011 and 2012 due to the rapid construction of low-priced housing, as property developers are rushing to participate in the nation’s Board of Investment homes project. "When there is more supply, it is likely that there would be more speculation," he said.

The Royal Thai Government must not support any "unnecessary" acquisitions of second homes that could lead to speculation in the sector, he added.

He also urged buyers to manage their finances well, and lenders should be very wise with their financing, most especially in the case of projects being built in poor areas.

The Agency forecasted that the value of new home units being released during this year will be worth THB158.4 billion (US$4.84 billion), which is a 15-percent drop on the value of homes launched last year.

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