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Citi opens new global hub

Posted on 22 Jul 2009 | Comments Off

CITIGROUP took the wraps off a new $100 million global operations and technology (O&T) hub here yesterday.

The 200,000 sq ft purpose-built facility at the Changi Business Park marks the completion of the first phase of a $220 million plan to centralise Citi’s global O&T units in Singapore.

Acting Minister for Information, Communications and the Arts Lui Tuck Yew, who officially opened the site, -said it allowed Citi to consolidate operations under one roof, resulting in greater synergy and propelling long-term business growth. ‘It is heartening to note that in the midst of the current economic situation, global companies like Citi remain committed to Singapore,’ he said.

The site – which also houses Citi’s 22nd and newest retail banking branch – is now home to 2,000 of its 8,000 staff in Singapore. Most are moving over from older O&T sites in nearby Tampines.

Industry watchers believe Citi’s latest investment in Singapore reaffirms the Republic’s position as a magnet for international financial institutions.

Citi Singapore country head Jonathan Larsen said the building represents a strategic investment in Singapore for Citi.

‘It reinforces Singapore’s role as Citi’s strategic hub for regional management, marketing, operations and technology globally,’ he said.

Mr Larsen’s comments comes a week after Citi surprised Wall Street with second-quarter profits of US$4.3 billion (S$6.25 billion). The bank – named Singapore’s best bank in the Euromoney Awards for Excellence 2009 last week – has been steadily increasing its presence in Singapore, especially in the retail banking space, since 2005.

Mr Larsen disclosed that the bank is working with local transport operator SMRT to expand its local network, especially into the heartland.

‘We plan to set up branches in the north of Singapore, in areas such as Yishun, Sembawang and Sengkang,’ he said.

The Changi hub acts as the new site for Citi’s major processing centres, including its regional service centre for securities and funds administration plus its regional cash processing management unit. It is also the bank’s global processing centre for its wealth management business and transaction services operations, and provides technology infrastructure support and data centre services for Citi’s worldwide operations.

Source : Straits Times – 21 Jul 2009

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Posted in General, Property Market / Real Estate

Tagged Global Hub, Singapore Property Market, Singapore Real Estate

Horizon brightens for property groups

Posted on 20 Jul 2009 | Comments Off

THE outlook is more sanguine, as listed property developers get ready to announce their financial results for the six months ended June 30. The strong pick-up in private home sales in the past five months – and a nascent recovery in prices – is providing cheer, contrasting with the gloom that lasted until the early part of 2009 after the financial meltdown.

JP Morgan analyst Christopher Gee is tracking ‘if developers’ own outlooks and strategies have changed as a result of the upturn in home sales and general economic prospects’.

Against a brighter horizon, some concerns prevalent among property analysts six months ago have lessened. The pressure on developers to write down the values of their Singapore residential sites has abated. So too has the risk of buyers who bought on deferred payment schemes (DPS) not completing their purchases.

‘The secondary market is getting more active, so it should be easier for DPS buyers to sell their properties before the projects receive Temporary Occupation Permit,’ says DMG & Partners Securities analyst Brandon Lee.

Macquarie Securities research head Soong Tuck Yin says an interesting development to watch out for is an amendment to Financial Reporting Standard FRS 40 requiring that investment properties under construction be valued, and the increase or decrease be taken to the income statement.

The change took effect at the start of this year, and with many major listed companies doing valuations at half-year and full-year, there could be bottomline implications for the likes of CapitaLand for its ION Orchard mall and Vista Xchange at one-north for instance; and Keppel Land for its Ocean Financial Centre and Marina Bay Financial Centre projects, Mr Soong suggests.

Before the rule change, these companies were required to state only their completed investment properties at fair value. KPMG Singapore’s head of real estate Yap Chee Meng explains: ‘In the past, investment properties under construction were carried at cost unless there was impairment. Financial Reporting Standards now require these to be fair-valued where the fair-value model is used for investment properties, and where the fair value can be reliably determined.

‘For Singapore, this was effective from Jan 1, 2009. I would expect property companies to start reflecting it in their income statements from this current reporting season (the quarter ended June 30), as property companies normally revalue their investment properties once or twice a year.’

Analysts say City Developments’ bottom line is unlikely to be affected by the change to FRS 40 as it currently accounts for all its investment properties using the cost model.

For other listed developers that use the fair-value model, there is also the issue of how aggressively they will write down valuations of completed investment properties, particularly office blocks. ‘Asset write-downs, especially for commercial assets, have not materialised in a meaningful way,’ says CIMB-GK analyst Donald Chua. ‘With rents and occupancies falling, it will be interesting to see if property groups devalue their assets more aggressively this reporting season.’

Mr Gee, however, notes that the policy of stating investment properties, completed or otherwise, at fair value affects a developer’s accounting bottomline – but does not have any real cashflow impact.

As for profit from residential projects, Mr Soong says that strong home sales by developers lately will translate into profits to be recognised, although for projects in the initial stage of construction, earnings may be booked only in the current second half or next year.

CIMB-GK’s Mr Chua expects developers’ latest report cards to show declines in gearing ratios. Some of the bigger boys have recapitalised through rights issues, he says. Smaller players should also be able to use proceeds from strong home sales recently to pare debt.

A key thing to monitor in H2 is whether residential sales momentum continues. Mr Chua is keeping tabs on ‘prices and take-up rates at the high end and the level of foreign demand, especially as we draw closer to the opening dates of the integrated resorts’. ‘It may be interesting to see if projects on Sentosa Cove are released closer to the end of the year.’

Home buyers defaulting on purchases or returning options issued on high-end projects sold in the past month will also be on his watch-list.

DMG’s Mr Lee expects developers to launch more mid and prime sector projects in H2 and to start buying residential sites again, ‘especially those with drying land banks’.

JP Morgan’s Mr Gee said stockmarket investors are looking out for sustained increases in physical property prices and upgrades in revalued net asset values for listed property groups.

Source : Business Times – 17 Jul 2009