Flats near city cost up to 50% more by Jessica Cheam, The Straits Times, September 24 2008 Central, Bukit Merah and Queenstown among popular HDB estates IF YOU want to live in an HDB flat close to the city, be prepared to pay as much as 50 per cent more than if you choose to stay out in the sticks. Prices for resale flats in estates near the city such as Central, Bukit Merah and Queenstown have left the rest of the country behind in recent years, according to new HDB data obtained by The Straits Times. And what is particularly striking is how fast that price differential has widened. PropNex chief executive Mohamed Ismail pointed out that in 1996, the difference between inner city flats and the national average was only around 11 per cent. Now it is around 50 per cent. Take a four-room flat in Bukit Batok. In 1996, it sold for an average of $252 per sq ft (psf), while a similar one in Queenstown was sold for $280 psf. The HDB’s latest second-quarter data shows that the Bukit Batok flat would now sell for about $303 psf while the Queenstown flat commands $458 psf. The price gulf will only widen, say analysts, given the shortage of prized flats, and factors like increasing transport costs that make people more inclined to live closer to their place of work. In the long run, “unless there’s a successful decentralisation strategy, the gap is unlikely to narrow”, said Mr Colin Tan, head of research and consultancy at Chesterton International. About 52,000 HDB flats, or 6 per cent of total supply, are in inner city areas. The new HDB data puts in stark terms how prices can differ. January to July figures showed that resale prices of four- and five-room flats in estates near the Central Business District were about 48 to 52 per cent higher than the national average. Popular locations include Smith Street, Tanjong Pagar Plaza, Cantonment Close, Jalan Membina and Stirling Road. While a four-room flat commands an average price of $295 psf islandwide, this shoots up to $437 psf in city areas – a 48 per cent jump. Similarly for a five-roomer, the average price of $303 psf spikes 52 per cent to $461 psf nearer the city. The resale market is the obvious way in but homebuyers also have a chance via the HDB’s balloting exercises. These are wildly popular, as offered units are in highly coveted central locations surrounded by amenities – and are priced with the HDB’s market subsidy. In January, in the HDB’s latest ballot, 278 flats in Bedok, Clementi, Queenstown and Jurong West received a staggering 9,901 applications. The price range for four-room flats was $141,000 to $398,000, the five- room units cost $218,000 to $532,000 and the executive flats $333,000 to $470,000. Prices depended on location and features of the units. Some homebuyers, however, have baulked at the high cost of new flats. Auditor Ho Koon Woei, 31, said he noted the new flat prices increasing at least $100,000 on average in mature towns in the last two years. “Such a hike in prices in a short timeframe makes it more unaffordable for first-timers,” he said. The HDB has not held a ballot since January, but analysts expect prices of any upcoming new flats in central areas to match the market prices. While private home prices lost steam and inched up just 0.17 per cent in the last quarter, HDB resale prices rose 4.5 per cent. Some, such as Mr Tan, feel that the HDB “should be mindful that it does not add to the escalating price trend” in the resale market. The HDB’s new flat prices would effectively set a price floor – a level at which resale flats will not be sold below. And if resale flats are priced above new flats, and new flats are pegged to market rates, there is a danger of a price spiral, he added. “In the pricing of its flats, it should err more towards affordability rather than market pricing,” said Mr Tan. However, this does not mean that the HDB should offer such low prices that it affects market prices, say analysts. “If prices are excessively cheap, that will affect the existing prices of city properties,” said Mr Ismail. Ultimately, he feels demand for city properties will price flats accordingly. On a psf basis, HDB flats at premium prices are still far cheaper than private homes in the city, which are priced from $1,000psf upwards, he pointed out. “I wouldn’t be surprised if in the next 15 years, the premium of a city HDB flat achieves 100 per cent more than a flat in suburban areas.” SLA’s land sales double to $12 billion by Jessica Cheam, The Straits Times, September 24 2009 10-year high comes in year marked by mega deals, strong demand THE property market’s bull run might have stopped but not before sending land sale revenue at the Singapore Land Authority (SLA) to a 10-year high of $12.4 billion. Its bumper result for the 12 months ended March 31 [...] Bay window, planter box rule change to kick in later by Jessica Cheam, The Straits Times, September 23 2008 THE fate of the bay windows and planter boxes in private condominiums has been sealed, and homebuyers could see less of such features. The Urban Redevelopment Authority (URA) is standing by its decision to abolish the exemption of such features in gross floor area (GFA) calculation. But a recent [...] Lessons from HK’s rental housing system by Jessica Cheam in Hong Kong, The Straits Times, September 18 2008 BY JESSICA CHEAM IN HONG KONG HONG Kong’s public rental housing system has thrown some ideas out for the Housing Board to mull over. Senior Minister of State (National Development and Education) Grace Fu, who is leading a Singapore delegation to the territory, said about a third of Hong Kong’s population lives in 670,000 rental flats. These comprise a wide range of homes catering to different family sizes and circumstances. The Hong Kong Housing Authority (HKHA), which administers rental housing, provides flats at subsidised rates for as long as 10 years. It also has “interim” and “transit” housing for families waiting to move into rental flats or those rendered homeless temporarily. Ms Fu said Hong Kong’s “product offering is wider, and it provides good ideas for us”. Over the past two days, the Singapore delegation has been meeting officials from the HKHA and the Hong Kong Housing Society (HKHS) and visiting public and elderly housing projects. The delegation is on a three-day working visit that will end today. Ms Fu told reporters yesterday that Hong Kong has a different priority system for its rental flats. It has three queues – for the elderly, families with elderly members, and singles – with varying average waiting time. The family’s income levels and assets are used in the eligibility criteria, and rents are determined according to incomes and not pegged to market rates. These are ideas “worth considering as well”, Ms Fu said. The HDB is currently reviewing the eligibility criteria for rental flats, which have seen a surge in demand in the past year. The waiting time for a new flat has now stretched to nine to 18 months from just two to six months two years ago. Aljunied GRC MP Cynthia Phua, a member of the delegation, has suggested that perhaps it is time to review the percentage of rental flats in Singapore, which is now on the “low side”. One quirky initiative that MPs have suggested is a points-system for tenants that the HKHA uses, where tenants get penalised for anti-social behaviour like littering. If they accumulate a certain number of points, they lose their right to stay in their flats. Ms Fu stressed that while Singapore can take a leaf from Hong Kong’s rental policy book, the government’s role in each place is very different. Singapore’s focus is on home ownership, while Hong Kong’s is on providing comprehensive, low-cost rental housing, she said. Another area that the HDB is also studying is housing for the elderly. The HKHS, a non-governmental housing organisation, is piloting a new, mixed-use development that will integrate private homes with elderly housing, said its chairman, Mr Yueng Ka Sing. Under this experiment, the first 10 floors of a 34-storey block will be reserved for senior citizens, while younger families can live on the upper floors. The HKHS also recently rolled out two “retirement resorts” for the middle- to upper-income elderly, where those over 60 years old can pay an upfront sum as a lifetime lease to live in a condominium-like home, with health and medical care provided. RBS to use S’pore as base for aggressive regional growth by Jessica Cheam, The Straits Times, September 16 2008 THE blue and white colours of Britain’s Royal Bank of Scotland (RBS) are about to become a familiar sight in Singapore as the bank embarks on an aggressive expansion in Asia. They replace the familiar green and yellow of Singapore’s oldest existing bank – the 150-year-old ABN Amro [...] Green model helps carpet king stay on top by Jessica Cheam, The Straits Times, September 15 2008 Picture Caption: “The most resource-efficient firms will win,” says Mr Anderson, who stresses that his firm’s success was built on its sustainability journey. SOME 14 years ago – long before “sustainability” became a buzz-word in the corporate world – one entrepreneur had an epiphany which he described as a “spear in the chest”. He decided that his fossil fuel-intensive business will become the world’s greenest company. He was told by his peers then that he was “crazy and had “gone round the bend”. But today, Mr Ray Anderson’s firm Interface Inc has silenced its sceptics. The Atlanta-based company, one of the world’s largest carpet manufacturers, was listed as world No. 1 for corporate sustainability by polling firm GlobeScan in 2006. Interface also generates annual revenues of US$1 billion (S$1.4 billion), thanks to its green business model, said Mr Anderson. By pumping money into research and development, Interface pioneered technologies that enabled it to recycle material and manufacture carpets efficiently. In that period, it has avoided cumulative waste costs amounting to some US$353 million. And from 1996, its greenhouse gas emissions went down a staggering 82 per cent while total energy intensity fell 45 per cent. All the while, total global sales of Interface’s products jumped 49 per cent. For his drive and vision, Mr Anderson was voted as one of Time Magazine’s Heroes of the Environment last year. He shared his experience with local business leaders last Monday at an event by Singapore’s American Chamber of Commerce. The firm has had a Singapore office for 30 years, and its customers here include HSBC Bank and and Singapore Management University. “In the 21st century, the most resource-efficient firms will win,” he told a 190-strong audience. He sticks by the philosophy of “doing well by doing good” – Interface’s success was built on its sustainability journey, he said. The Nasdaq-listed firm has a target which he calls “Mission Zero” – to have a zero carbon footprint by 2020. He said Interface is “more than halfway there now”. Mr Anderson spoke of how his life changed when he was given a copy of US environmentalist and author’s Paul Hawken’s Ecology of Commerce. “Suddenly, I began realising what we were doing to the earth,” he said. The book talked about the “death of birth” – how species were becoming extinct, never to be born again. And that was when he decided to revolutionise his fossil fuel-reliant carpet business. Mr Anderson instructed his managers to find out what impact Interface’s business had on the environment. “What I saw made me want to throw up,” he said. And that was the beginning of his climb on “Mount Sustainability” as he calls it. Interface started revamping its operations by eliminating waste, enhancing energy efficiency and offsetting transport emissions. It also began tracking energy and water intake, waste streams, greenhouse gas emissions and raw materials streams, to evaluate its progress towards sustainability. Today, up to 25 per cent of raw materials used is recycled. Last year, Interface sold a record 22 million sq m of third-party verified “climate neutral” carpet. The carpet was made climate neutral through the purchase of 390,000 tonnes of verified carbon credits to offset the entire life cycle of the products sold. It also offsets its land and air transport costs by planting trees and using carbon credits. His advice to firms in Singapore: The first step is find out what impact your business has on the environment. “Then try to minimise this. You’ll find that costs of your business will go down.” He draws the line, however, at sharing his technology with competitors. “Our sustainability is our advantage... If we can do it, anybody can. And if anybody can, then everybody can.” Nature and waste Am currently writing up an interview I did with one of Time magazine's Heroes of the Environment 2007, Mr Ray Anderson, founder of Interface Inc, which was voted in 2006 by Globescan as No. 1 in the world for corporate sustainability. While researching my subject, I came across a nicely-written idea online: The concept is simple: For its first century, industrial capitalism has been obliviously, relentlessly linear: raw materials, energy, product, packaging, marketing, waste. In the century to come, Anderson wants business to evolve to the next level: cyclic capitalism. Companies would consume their own waste. Landfilllls, after a, are best seen as a yardstick of the failure of human ingenuity. In nature, there is no garbage; everyone's waste becomes someone else's food. Home prices have peaked ‘but won’t crash’ by Jessica Cheam, The Straits Times, 10 September 2008 HIGH-END home prices have dropped by about 15 per cent to 20 per cent and will “stabilise at this level”, Wing Tai Holdings deputy chairman Edmund Cheng said yesterday. The United States sub-prime crisis has affected Singapore’s property market, he said. Transactions here in the first half of the [...] From the grapevine I had to get up at stupid-o-clock to cover the Forbes CEO Global Conference today - which started at 8am! As you might know, journalists are not known as early risers since news usually happens later in the day. Some interesting observations from the annual affair, some amusing, some not - which helped get me through waking up that early: 1. Steve Forbes is very pro-Republican. He thinks McCain is 'better for free trade' in Asia. He has made some good points. However, I've also heard from many others, who are more democratic inclined because Obama is "better for climate change" and "more likely to follow through with his actions". To quote someone, "McCain, under pressure, will just build more oil rigs". - I couldn't agree more. 2. At last year's conference, Aussie actor Mel Gibson was invited and he turned up for one of the plenary sessions dressed in berms and crocs, Yes, crocs. Apparently, he was on a panel with Tulsi Tanti, chairman and managing director of Suzlon Energy, most famous for its business in wind power, and Gibson apparently flapped his arms like a chicken and cooed "wind energy!" - and you wonder why aren't details like that reported! 3. Some fellow journalists can be scary. I requested to borrow a USB key from one IHT reporter and her response was "Okay, you can have it, but I'd better have it back or your head will be on the chopping board." I mean, I was grateful, but do strangers talk to each like that these days? I wonder if the IHT trains their journos to intimidate info out of people this way. 4. The funniest quote of the day: "Oil is like dating. Gas is like getting married, requiring proper contracts, and long arrangements. Your mother-in-law (banker) moves in with you to make sure you behave properly." 5. And the quote I agree with most: "Solving the oil problem involves taxing people in the United States. If you don't tax yourself, the market will tax you." - an energy expert on the US's consumption of fuel for transport McCain ‘better for free trade in Asia’ by Jessica Cheam, The Straits Times, 9 September 2008 As US president, he is more likely to reduce trade barriers than Obama, says Forbes boss THE changing of the guard in the White House will have a direct impact on Asia, especially when it comes to the region’s lifeblood – global trade, said Mr Steve Forbes, the boss of Forbes. He made no secret of his support for Republican John McCain during a press conference in Singapore yesterday, and warned that a reversal or slowdown in trade liberalisation would affect regional economies. The chairman and chief executive of the magazine publishing group said Mr McCain was more likely to reduce trade barriers if he wins instead of his Democratic opponent, Senator Barack Obama. “Mr McCain is a committed free-trader, and is open and vociferous about it,” said Mr Forbes, who campaigned for the Republican nomination for the presidency in 1996 and 2000. He acknowledged that the Democrats have plenty of backing, but added: “The Democratic Party is now very protectionist and anti-trade... Even if MrObama wins and wants to pursue free trade, his party will be a major impediment. “Asia is very dependent on trade, not just intra-Asia trade but trade around the world, so trade (policies) is something really real.” Mr Forbes, who was speaking on the first day of the three-day Forbes Global CEO Conference, also tackled the weak greenback, maintaining that the United States must have an “open, stated policy of strengthening the dollar”. “Inflation you see in this region, particularly in China, is a direct result of the weak dollar, and this hurts everybody. The sooner the US strengthens the dollar, the better,” said Mr Forbes, who is also editor-in-chief of Forbes magazine. China’s economy is showing some signs of a slowdown, but this is happening everywhere, he said, adding that the US needs to stop “hectoring” the Chinese on its currency. “Stability between the two countries’ currencies is a good thing. Hopefully, this will come to pass with a new president.” China is also on its next phase of development, which will see it diversify its economic activities so it will not be dependent on a particular sector, he said. The rising nation is one of many of “today’s pressing global issues” being discussed at the conference, which has as its theme: The Winning Hand. This is about how leaders “play the hand” with “cards” being dealt by the global economy, he explained. Topics will include strategies for dealing with the global uncertainty and topical issues such as energy and commodities, real estate, India, entertainment, entrepreneurship and philanthropy. The event – now in its eighth year – gathers more than 450 business leaders with a combined net worth of more than US$160 billion (S$229 billion), said Mr Forbes. Hyflux group chief executive and president Olivia Lum and Wing Tai Holdings deputy chairman Edmund Cheng are among the local business leaders who will speak at the event at the Shangri-La Hotel. Renewable energy gets a Power boost by Jessica Cheam, The Straits Times, 6 September 2008 Pure Power’s Kiwi technology aims to change the face of the biofuel industry GREEN plastics might sound like an oxymoron – but they are exactly what a new player in town is trying to achieve. Plastics made from renewable sources, that is. The firm behind this idea is Pure Power [...] Asian firms not doing enough to groom leaders: Survey by Jessica Cheam, The Straits Times, 5 September 2008 CHIEF executives helming Asian firms might be willing to develop the next generation of leaders, but few are proactive in doing so. The absence of leadership development will make it harder for future leaders to successfully take on senior leadership roles. This was the picture that emerged from a [...] Chip Eng Seng unit bags HDB’s $156m Punggol deal by Jessica Cheam, The Straits Times, 3 September 2008 CHIP Eng Seng, a mainboard-listed construction firm, has clinched a $156 million design-and- build contract from the HDB. In a statement to the Singapore Exchange, the company said its unit Chip Eng Seng Contractors (1988) had won the award to design and build residential buildings with carpark and [...] Put the ‘eco’ back in ‘economics’ by Jessica Cheam [the original version] I RECENTLY came to a conclusion that ‘growth’ is overrated. Or at least, the conventional definitions of economic growth are no longer relevant today. To quote well-known Canadian environmental activist David Suzuki, I think it’s time we redefined what economics is, and put the ‘eco’ back into it. After all, both concepts are derived from the same root word “oikos” (eco) which literally means house, referring to the environment we live in. Ecology, as an extension, is the study of the house, or environment. While economics, is a combination of “oikos” and “nomos” (rules, management), meaning house management. Somewhere along the way, however, I think we forgot about the ‘eco’ in economics. What triggered these thoughts was the recent public exercise to gather ideas for a blueprint on Singapore’s green journey for the next 10 years. Since its debut on July 28, the ‘Sustainable Singapore’ website has received 700 suggestions and counting on issues ranging from solar energy and cycling, to the country’s energy efficiency. I noted with interest the quick assurances issued by the government that Singapore’s green steps will be taken “in a manner that will not upset economic development.” Finance Minister Tharman Shanmugaratnam added: “What will not be compromised is economic growth.” These are statements often heard in debates on greening economies, even on the international stage at United Nations (UN) meetings or at regional economic summits. On one hand, I fully understand why governments place utmost importance on economic growth, as it leads to increased wealth, job security, etc – perceived elements of a stable and happy country. As Prime Minister Lee Hsien Loong pointed out in his rally speech, growth gives us the resources to solve problems. Singapore, for example, has used its wealth to take steps in greening its economy, making investments into environment-related research and development. But on the other hand, economic growth is sometimes used too easily by many countries as a cop-out not to take drastic actions that are urgently required. When in town earlier this year, the UN Environment Programme’s executive director Achim Steiner said to me: “You can never expect a politician to say you're going to lose your job, or I'm going to make your life more miserable, for the sake of the environment.” But the sad fact is, he added, “many of those in charge of economies today permanently exxagerate the cost of moving towards greater sustainability and totally under-represent the returns of investment of such actions.” “This has led many countries to defer decisions about the future for far too long and the result is it gets much more expensive,” he said. The one common questions governments today grapple with: How to we balance the costs and benefits in greening any economy? How much gross domestic product (GDP) do we sacrifice? To answer this, we need to first question and redefine this endless pursuit of economic growth. Growth is only possible because we draw on earth’s natural resources and have built economies around it. The bigger consideration is whether our insatiable thirst for growth will tip the earth past a point where it can no longer support our global activities. The problem with conventional economics is that nature, or environment costs, are treated as externalities and unaccounted for. Take China’s growth story as an example. A recent Financial Times report highlighted the environment as the “devastating price” it paid for its rampant growth. While millions of its citizens were lifted out of poverty, its growth model “left large swathes of the country devastated and unable to support even basic ecologies”, it wrote. It’s an example of how GDP growth is a “narrow, artificial indicator” that captures economic activity but does not account for real costs, said Mr Steiner. The effect is the burden of growth has fallen disproportionately on the poor, who struggle with water scarcity, food shortage, water and air pollution. So what is China’s real growth? Some may ask. Some reports have put China’s economic losses from environmental degradation at some five to 10 per cent of gross GDP. A real indication would have been if China’s GDP growth calculated this environmental costs, said Mr Steiner. The good news is, more economists are starting to realize this. And in the near future, countries might have to change how they calculate growth. Mr Steiner reveals that the UN is working with leading universities and the World Bank to create a new wealth indicator for countries to account for the drawing down of “natural capital” – and the return of investment on conserving the environment. As we in Singapore start to plan our sustainable development policies this year, we should keep in mind the changing definitions of wealth and growth. While we try to perfect the art of “balancing costs and benefits” – we should ask what we are defining as the reasonable cost of greening. Are we willing to take the necessary steps, or will our ‘greenspeak’ become just lip service? And don’t get me wrong, I’m not saying we should stop growing. On the contrary, climate change has presented tremendous growth oportunities for us in the clean energy, water and environmental sectors etc. All I’m saying we can grow in a much greener way, which might cost more in the short-term but offer much longer- term return of investments. And we must dare to do it. Some suggestions offered by industry players range from giving subsidies to clean technology, to giving green tax rebates. The government has said it does not favour subsidies as it believes this will distort the market. But having a green tax structure seems like a viable option. As it is, hybrid and CNG cars already get rebates, and there are tax concessions on income from carbon trading. Nominated MP Edwin Khew, who is chief executive of waste recycling firm IUT Global and chairman of the Sustainable Energy Association of Singapore, feels more can be done – such as introducing tax incentives for efficient and pollution-reducing equipment for businesses. Others such as Singapore Environment Council executive director Howard Shaw thinks electricity prices, for example, can be made more expensive at higher consumption volumes. Perhaps even citizens can be given tax incentives for adopting big ticket, energy-saving items. Some countries such as Sweden and Norway are ahead of the curve, adopting bold environmental policies that others have avoided (like a direct carbon tax on emissions) and have proved that it works. One country Singapore could take a leaf from: Switzerland. There, residents have to pay for how much rubbish they throw. Here, we pay for someone to take our rubbish away, for the waste to be landfilled or incinerated. But we don’t pay for the damage or costs to the environment our rubbish causes. If, like Switzerland, we factored the cost of our rubbish into daily life, our actions will be a lot more different. People will start factoring the cost of their waste and recycing will become a natural progression. Such are ideas we can suggest and lobby for, from our policy-makers, in this nationwide call for ideas to make Singapore greener. Put the ‘eco’ back into economics, and chances are, we’ll get it right. also published in The Straits Times, 28 August 2008 New HDB flats for sale, rent in West by Jessica Cheam, August 27 2008 Coming up in Bukit Panjang: 474 homes for sale, 300 for rent HOMEBUYERS are being offered a further 474 new flats to choose from, with the launch of a new Housing Board project in Bukit Panjang yesterday. Also, 300 units in two new rental blocks will be built nearby, for the first [...] Lian Beng wins coveted Ritz-Carlton Residences job by Jessica Cheam, The Straits Times, August 26 208 HOME-GROWN contractor Lian Beng Group has clinched the contract to build Singapore’s most prestigious brand-name residences. The mainboard-listed firm yesterday announced it has won a $99.5 million award to build the Ritz-Carlton Residences – the five-star hotel brand’s only such project in Asia. The award marks Lian Beng’s entry [...] Public bursting with green ideas by Jessica Cheam, The Straits Times, August 25 2008 Sustainable Singapore site flooded with over 700 eco-friendly tips in feedback exercise IN JUST one month, the nationwide call for ideas on how to “green” Singapore has garnered more than 700 suggestions. Some specific concerns have emerged, indicating what Singaporeans feel passionately about: solar energy, cycling, recycling and energy [...] Fix bank-or-CPF charge problem by Jessica Cheam, The Straits Times, August 20 2008 [Review] EN BLOC BATTLES THE Strata Titles Board’s (STB’s) recent decision to throw out the sale of Tampines Court has put an end to a three-year en bloc saga. But the issues raised during the objectors’ hearings will no doubt resurface again in future en bloc sales. They deserve a closer look. Essentially, STB killed the application because it was not done “in good faith, taking into account the sale price and the method of distributing the proceeds of the sale”. Although there was no mention of financial loss, this was at the heart of the minority owners’ objections. A financial loss is deemed if an owner’s sale proceeds, after deductions allowed by STB, are less than the price he paid for his property. But the law does not specify what deductions are allowed. Based on precedents set by STB decisions, stamp duty and legal fees are allowed but interest and renovation costs are not. In the Tampines Court case, a fair number of owners faced the prospect of financial loss. They might have ended up with no cash in hand and a big hole in their CPF accounts if the sale had gone ahead. No wonder they fought it with such determination, scrutinising the deal for every possible flaw. This problem is not likely to go away, for estates can be sold en bloc once they are 10 years old. Many would have bought their apartments at, or near, the previous 1996 peak. Those facing financial losses will contest en bloc sales to the bitter end and STB may well be hearing many appeals. Which begs the question: Is there a win-win situation for all? I believe there is, but this would require a tweaking of the rules. Let me explain. The current procedures on how to deal with financial loss have been created by a combination of rules and rulings. Under the law, the STB can reject an en bloc sale application if an objecting owner can show that he will suffer financial loss. The sales committee and their lawyers usually make a provision for this by running a financial check on all owners to determine who might suffer losses and calculating the sums that would be needed to pay them. Usually this sum is deducted from the total sales proceeds, before they are distributed equally among owners. Some other brokers, however, set aside a specific sum obtained from developers, as in the case of Tampines Court. In most cases, the industry way of doing things works out fine. But the problem arises for individual owners when there is a financial loss and it is the bank, and not the CPF, that has first charge upon the sale of the property. If it is the CPF that has first charge of the property, then it is a straightforward case. Sellers will always have their CPF accounts fully reimbursed first and then the bank loan will be paid off with whatever money is left. If there are insufficient funds, the sales committee will compensate them from the total proceeds. Everyone is happy. But if the bank has first charge, then it is possible for an owner to lose from the sale. The proceeds of the sale go first to repaying the bank loan. After that, the money goes to top up the owner’s CPF account – but in some cases, the remaining sum is not enough. You would think that the law would require this CPF shortfall to be made good. But this is not the case, as shown in the Waterfront View ruling last year. In that case, a couple tried to stop the en bloc sale by claiming financial losses. They said the $660,000 payout for their home was not enough to pay off their bank loan and top up their CPF accounts. The CPF Board had said the couple did not have to top up this shortfall. As a result, the STB made a landmark ruling – upheld by the High Court – that since the CPF Board had not required them to top up their accounts they could not claim financial losses. This decision sparked an outcry. Deputy Prime Minister S. Jayakumar later explained in Parliament the principle behind the decision. In a property purchase, CPF funds can be used to pay for three components: the initial downpayment, the monthly repayment of the bank loan principal, and the monthly repayment of the interest on the bank loan. Professor Jayakumar explained that CPF funds that go into repaying bank loan interest are not taken into account. This is to distinguish between owners who take no loans at all or who take a small loan with little interest, and owners who take long-term mortgages with a high component of interest payments. This seems to make sense, but not for owners who have been forced to sell their home and take a hit in their CPF accounts – which affects their ability to buy a new home, as well as their retirement savings. If it is a forced sale, no owner should have to suffer financial losses just because he made a decision to take a big loan some years ago. There are many who might be caught in this situation. The CPF Board used to have the first charge on private properties, but in 2002, banks were given first charge. For former HUDC developments such as Waterfront View and Tampines Court, the change was made as early as 1996 to give banks first charge. There are two possible solutions to this problem. One is to reverse the policy and require all owners facing financial losses to top up their CPF accounts fully, regardless of whether CPF funds were used to pay loan principal or interest. A second less drastic solution would be to mandate that the CPF Board should have the first charge for all en bloc sale cases. The CPF Board would not object and neither would banks, since it would not affect them: The current custom of compensating owners who suffer financial losses would continue, ensuring bank loans would be repaid. To owners facing financial losses, however, this change would make a world of a difference. If they can be assured that they will not be worse off after a sale, they might drop their opposition. The other en bloc sellers will, of course, need to share the cost of compensating financial losses. But this is a relatively small price to pay, considering that most will reap a windfall. In the case of Tampines Court, there was a couple who claimed CPF losses of $69,000. Divided among the 560 units in the estate, this works out $123 per seller. Even in the unlikely situation of all 100 dissenting owners claiming this amount, it would have worked out to $12,300 per seller – still small compared with the overall profit, which might have amounted to $300,000 for some owners if the sale had gone through. It will serve the interests of all parties involved to address the bank-or-CPF charge problem. When a home owner is assured that he will not suffer a financial loss, a forced sale in the name of urban renewal might begin to make sense. Worrying tripling of demand for rental flats in one year by Jessica Cheam, The Straits Times, August 19 2008 THE sharp increase in the number of people seeking Housing Board (HDB) rental flats – it has tripled in just a year – has become a cause for concern, said Prime Minister Lee Hsien Loong. Calling it a “worrying trend”, he said such cases made up the bulk [...] Go green and make money: Part II I would just like to add to my piece on climate change investments published in The Sunday Times, August 17 2008. Due to a lack of space, some advice on investing in such funds weren't published. The point I'm trying to make is that investors have to be pretty clear on their own values and ethics before they investigate the various funds they would like to invest in. So here it is: So you have some money and you are looking to contribute to the climate change fight by parking your dollars in some worthy companies. What should you be looking out for? 1. Understanding the landscape Basically, the same investing principles apply. It’s important to know the different green industries you are investing in, and have an understanding of their historical performances, trends and outlooks. 2. Investigate green credentials With the rage on climate change themes, many funds may call themselves green but may not necessarily be. Funds will also differ in their investing strategy, with some more stringent than others in screening companies. Look at the specific companies in a fund’s portfolio to ensure these companies’ core activities are indeed tackling cliamte change. 3. Define your ethical boundaries Some funds will not just invest in green companies. At Schroders, for example, Toyota and Philips are part of the portfolio as they have parts of their businesses that will benefit from climate change, such as Toyota's Prius car. But some analysts have pointed out that the returns from such activities are dwarfed by Toyota's other businesses - like its conventional, polluting cars. Biofuels and nuclear energy are also examples of a controversial investments. Biofuels have been partly blamed for causing a global food crisis as farmers swtich to growing more lucrative biofuel crops. But many climate change funds have stakes in such companies. It is important to know exactly which biofuel firms are being funded and if their feedstock is harvested sustainably. Nuclear energy’s merits are not clear cut, either, but HSBC’s climate change fund, for example, invests in Alstom, a French energy firm with interests in nuclear energy. So it’s important to clearly define your own values and decide if you want to be investing in funds which have stakes in controversial firms or activities. Alternatively, investing directly in one stock which you are highly confident in is also another strategy. But generally, mutual funds are the better bet since they offer exposure in a whole range of stocks which lowers your risk. Go green and make money? by Jessica Cheam, The Sunday Times, August 17 2008 Climate change funds have made inroads into Asia. But how many of them have reached Singapore, and how attractive are they? These days, issues surrounding climate change make the newspapers almost every day. We hear about them, we know what is happening, and governments around the world are responding in varying degrees by making policy changes and advocating a greener way of life. In Singapore, an Inter-Ministerial Committee on Sustainable Development was formed recently to study the nation’s sustainable development journey and chart its future steps in going green. But fighting climate change is not a role that falls only on the public sector. Companies can also play a major role by creating solutions and products that help to increase energy efficiency, or reducing the daily greenhouse gas emissions that are largely blamed by scientists for global warming. At the individual level, people are equally important – whether in terms of practising a more sustainable way of life, or demanding goods and services that are environmentally responsible. And as investors, they can do even more. The good news is that people can help to save the earth while making money from it too. With the increased awareness of climate change issues globally, many banks and fund managers have put together climate change funds from the growing number of companies that are trying to tackle global warming. These funds give investors a chance to turn a threat into a buying opportunity. Some big-name companies that investors can buy into are Norwegian solar firm Renewable Energy Corp (REC), Danish wind turbine maker Vestas Wind Systems and United States-based Waste Management, just to name a few. Some of these companies have their futures closely tied to Singapore. REC, for example, has picked Tuas for its $6 billion giant manufacturing plant, with construction set to begin next month, and Vestas has announced it will build a $500 million research and development centre here. Leading US research house Clean Edge has reported that revenues in the clean energy industry hit US$55 billion in 2006, with a projection of US$226 billion (S$318 billion) by 2016. As a result, climate change has emerged as an investment theme that is growing in popularity and attractiveness. So what are climate change funds? $500k funding for carbon credit projects by Jessica Cheam, The Straits Times, August 15 2008 NEA grant to help lower risk and uncertainty for firms in such ventures A NEW bag of carrots provided by the Government will make it easier for local firms to take on carbon credit projects. The National Environment Agency (NEA) yesterday announced a $500,000 grant that will fund up [...] A view to thrill Hong Fok Corp's upcoming condo will offer views of Kallang River and the new Sports Hub. by Jessica Cheam, The Straits Times, August 13 2008 Buyers are willing to pay premiums of up to 10% for properties that come with good views WHAT do home buyers look for in their dream home? No doubt, it is a combination of an affordable price, the perfect location and other sought-after attributes. But if there is one factor that often makes or breaks a sale, it is the view. Property agents agree that all things being equal, a great vista helps to seal the deal for many home buyers. In fact, in the current softer property market, a captivating outlook might give a home that vital edge to ensure it sells, they add. Buyers are willing to fork out a premium of anything up to 10 per cent for a home with a great view. For well-heeled home seekers, price is no issue if the outlook is stunning, they say. As a rule of thumb, analysts say flat prices increase up to 1.5 per cent for each floor in high-rise properties – so a 15th- floor unit might be 15 per cent more expensive than a comparable fifth-storey unit. Securing that room with a view is particularly relevant for a built-up city such as Singapore. Recent developments such as The Sail @ Marina Bay – which has two towers, one of which is 70 storeys high – have increasingly catered to Singaporeans' growing appetite for high-rise apartments with stunning views. Depending on what type of view you get on the higher floors, another premium of 3 per cent can be added, said Mr Colin Tan, head of research and consultancy at Chesterton International. To pin down exactly how much a view is worth, a "hedonic regression model" can be used, said Mr Nicholas Mak, Knight Frank's director of research and consultancy. This method breaks down individual aspects of a home and estimates the value of each characteristic. "This is mostly used by academics who want precise values. Developers tend to decide on the value of a view based on experience, or from valuers," said Mr Mak. With the model, value is calculated based on past transactions, he added. A view can change a property's worth as much as 10 per cent, said Mr Mak. What is difficult, though, is guessing a buyer's preference. "One man's meat may be another man's poison. It's hard to isolate the price difference between, say, a city view and a greenery one," he said. A buyer's willingness to cough up money for a view depends on individual tastes. Home buyer Victoria Ho, 25, prefers a city view over a green one any day. "I'll pay up to 10 per cent more for a view, but not much more, because the location matters more than, say, if I were facing barren land or another block." But for 26-year-old Hoe Qing An, who is hunting for his dream home, greenery is of the utmost importance. "We already live in an urban jungle; a home needs to have that green element and I won't mind paying for it," he said. So where are the spectacular views in Singapore and how affordable are they?