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Thread: UOL raises concerns about rising land prices

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    Default UOL raises concerns about rising land prices

    UOL Group, which is involved in property and hospitality, has raised concerns about rising private residential land prices amid the strong appetite from developers and a scarcity of state land sales.

    Its deputy group chief executive Liam Wee Sin said: ". . .with the intense competition and lack of confirmed sites in the Government Land Sales (programme), our concern is that land prices will be driven to an unhealthy level."

    The group posted a 55 per cent year-on-year drop in second quarter net earnings to S$68.81 million - mainly on the back of fair value losses on investment properties due to softening Singapore office rents.

    "Most of our Singapore residential projects have achieved relatively good take-up rates due to our strong product attributes," Mr Liam said on Thursday evening, after the release of the group's results.

    Despite not launching any new projects in the first six months, the group sold about 320 private homes in Singapore over the period, gaining traction from existing projects on the market - including the 797-unit Botanique at Bartley, which was 91.7 per cent sold as at end-June; the figure has since risen to 97 per cent. UOL began selling the project in April last year.

    The 663-unit Principal Garden in Prince Charles Crescent, launched last October, was 33.5 per cent sold as at end-June; sales have now crossed the 40 per cent mark. Riverbank@Fernvale, a 555-unit condo, was 72.4 per cent sold as at end-June; the figure is now nearly 80 per cent.

    For the whole of last year, the group sold just over 900 private homes.

    The group plans to launch in the first quarter of next year a 505-unit condo along Clementi Avenue 1. The 40-storey project, to be built using prefabricated pre-finished volumetric construction (PPVC), a high-productivity construction method, is a joint venture with Singapore Land.

    UOL's attributable fair value losses and other losses totalled S$21.5 million for the second quarter ended June 30, against a S$53.8 million gain in the previous corresponding quarter.

    The pretax profit before fair value and other gains/losses fell 8 per cent to S$105.77 million.

    Gross profit margin fell to 34 per cent for Q2 FY2016 from 40 per cent in Q2 FY2015 - primarily due to higher revenue from property development, which has higher cost margins; higher property development margin in 2015 and lower dividend income received.

    Revenue rose 6 per cent to S$363.55 million in Q2 FY2016 from the previous year. The increase in revenue was due mainly to higher progressive revenue recognition from ongoing projects such as Riverbank@Fernvale, Seventy Saint Patrick's, Botanique at Bartley as well as Principal Garden.

    Property development revenue was up 14 per cent to S$185.48 million in Q2 FY2016.

    Gross revenue from hotel ownership and operations rose 3 per cent to S$101.11 million. Revenue from property investments inched up to S$55.14 million from S$54.88 million.

    Dividend income from available- for-sale financial assets contracted 23 per cent to S$16.77 million chiefly because of lower dividends received from the group's investment in United Overseas Bank.

    Earnings per share declined to 8.64 Singapore cents in Q2 FY2016 from 19.36 Singapore cents in the year-ago period. Net asset value per share eased to S$9.80 as at June 30, 2016, from S$9.91 as at Dec 31, 2015.

    The counter closed one Singapore cent lower on Thursday at S$5.84.

    The group's gearing ratio crept up to 0.29 time as at June 30, 2016, from 0.27 time as at Dec 31, 2015 - with new loans for the group's acquisition of 110 High Holborn, a mixed-use property in London, and advances to a joint venture company to fund its acquisition of the 99-year private residential site at Clementi Avenue 1.

    For the first half ended June 30, the group's net earnings retreated 36 per cent to S$145.88 million. The pretax profit before fair value and other gains/losses dipped 2 per cent to S$199.33 million. Revenue climbed 19 per cent to S$693.67 million.

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    Quote Originally Posted by Arcachon View Post
    UOL Group, which is involved in property and hospitality, has raised concerns about rising private residential land prices amid the strong appetite from developers and a scarcity of state land sales.

    Its deputy group chief executive Liam Wee Sin said: ". . .with the intense competition and lack of confirmed sites in the Government Land Sales (programme), our concern is that land prices will be driven to an unhealthy level."
    It is not true there is a lack of confirmed sites. Some of these sites have been sitting there for years waiting to be triggered. More like UOL got outbidded in recent tenders.

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    Those are reserve sites, not confirmed sites.

    More confirmed sites can only be released if there is take up for the units being sold.

    Quote Originally Posted by august View Post
    It is not true there is a lack of confirmed sites. Some of these sites have been sitting there for years waiting to be triggered. More like UOL got outbidded in recent tenders.
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

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    I like UOL project, they price to sell. Too bad miss the water bank else I would have two bank from UOL.

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    Quote Originally Posted by Arcachon View Post
    I like UOL project, they price to sell. Too bad miss the water bank else I would have two bank from UOL.
    still have Riverbank.
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

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    teddybear is offline Global recession is coming....
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    Reserve sites can always be triggered, it is always there to be available for trigger for sale..........

    Quote Originally Posted by Kelonguni View Post
    Those are reserve sites, not confirmed sites.

    More confirmed sites can only be released if there is take up for the units being sold.

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    Quote Originally Posted by teddybear View Post
    Reserve sites can always be triggered, it is always there to be available for trigger for sale..........
    The difference being this. Reserve sites are only triggered if they meet the minimum bid MND sets.

    Do you want to guess they set it higher as time passes or lower?
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

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    Lower

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    Double envelop bid could be the solution.
    The first envelop will contain the design features and selling price of the finished product,
    The second envelope will be the land bidding price (same as the current).

    Only those developers who have passed the first envelops will be entitled to have their second envelops opened.
    So if a developer's planned selling price is too high, he will not be selected. (No matter how unhealthyly high his second envelope biding price is).

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    Quote Originally Posted by Kelonguni View Post
    Those are reserve sites, not confirmed sites.

    More confirmed sites can only be released if there is take up for the units being sold.
    Reserve sites can be triggered, No one is stopping them to do so.

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    Quote Originally Posted by august View Post
    Reserve sites can be triggered, No one is stopping them to do so.
    Its probable that the reserve price is set at prohibitive levels. We can examine the last few triggered sites including the Marina white site to determine.

    Maybe that's why very few have been triggered. I am still waiting for my Holland V site to be triggered too.
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

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    Depend on how you read it.

    What I read is the developer Land Bank is low, inventory reducing and they need more land but not willing to pay more.

    There will be a point where they will pay more and the price will start to rise again.

    All Land sale proceed to go into the National reserve so they are not selling if it is not meeting the target price.

    http://www.clc.gov.sg/documents/uss/...ing_a_city.pdf

    http://news.asiaone.com/news/singapo...masek-revealed

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    Car dealers as a whole actually prefer more COE quota to lower COE price, increase sales.

    If quota is low, there will be little choice but to set higher profit premium per car or go bust.

    The worst is customer ask to pay less but per unit the developer pays more to secure.


    Quote Originally Posted by Arcachon View Post
    Depend on how you read it.

    What I read is the developer Land Bank is low, inventory reducing and they need more land but not willing to pay more.

    There will be a point where they will pay more and the price will start to rise again.

    All Land sale proceed to go into the National reserve so they are not selling if it is not meeting the target price.

    http://www.clc.gov.sg/documents/uss/...ing_a_city.pdf

    http://news.asiaone.com/news/singapo...masek-revealed
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

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