SG Property Development Rules

New (and existing) rules applying to property developers (BT Fri 9th Dec, front page, Kalpana Rashiwala).

Old rules:

• Any developer buying a Government Land Sale (GLS) residential site had to complete development in 5 years (no time limit on sales).
• When buying a private sector residential site, foreign developers have to obtain a Qualifying Certificate, which requires 5 year limit for the TOP (development) and another 2 year limit on sales. Any developer with even a single foreign shareholder is considered 'foreign', hence CDL, Capitaland & Wheelock face these limits. Only local, privately owned developers (Far East, Hoi Hup) were except.

New rules:

• For any site bought after Dec 8th, must develop and sell all units within 5 years. Otherwise they must pay a 10% additional buyer's stamp duty (ABSD) at the end of the 5 year period (with interest).

My thoughts:

• Levels the playing field between private and publicly owned property developers.
• Forcing developers to sell during a downturn may exacerbate it. Every last unit must be sold within the timeframe. Would these measures be removed? Retroactively?
  
• I used to like Wheelock due to their astute market timing. As they have no undeveloped property in its landbank: they are now restricted to developing and selling any new land withing 5 years (previously it was 7).
• SC Global may benefit, as they have a large bank of prime freehold land bought before the restrictions came into force.
  

Sold Ho Bee, SC Global

Mon 5th Apr, sold:

• 11 lots Ho Bee @ $1.84
• 10 lots SC Global @ $1.86

Main reason for selling was that my cut loss level was too far down...was a mistake to buy. Secondly, they were not performing even in a bull market.

Made small loss on the brokerage.

Bought SC Global, CWT, CapMall Asia

Yesterday Wed 3rd Mar 10:

• Bought 20 lots CWT @ 91.5c. Cut loss at 87c (-5%)
  
• Bought 10 lots SG Global @ $1.82. Cut loss at 1.64 (-10%)
  

Today Thurs 4th Mar 10:

• Bought 8 lots CapMall Asia @ $2.28. Cut loss at 2.19 (-4%)

Aim was to buy stocks that are in an uptrend (or may be bottoming, for CapMallAsia), but are not to overbought, in case the market direction heads down again.

SC Global

Summary of article on SC Global (BT, Mon Oct 5th 09, Ven Sreenivasan). Future reference for next bear market, need to verify the figures below:

• 1$.42bn debt
• But asset base is 2.38bn - is developable land valued at cost.
• 900,000 sq ft landbank, target and higg end of market. 400 units unsold inventory in projects such as the Marq, Hilltops and Martin No 38.
• Landbank carried on bookas an avg cost of $1500 psf (is this cost price?)
• Company has sold 20% of its inventory, and is collecting payments progressively.