Real News‎ > ‎2014‎ > ‎April 2014‎ > ‎

10th April 2014

Singapore Economy

PM Lee: Jurong East a 'very attractive' option

Govt is studying it as a possible site for the S'pore-KL High Speed Rail station

Source: Business Times / Top Stories

[SINGAPORE] Siting the terminal station of the planned High Speed Rail (HSR) linking Singapore and Kuala Lumpur in Jurong East is a "very attractive" option that the Singapore government is currently studying, said Prime Minister Lee Hsien Loong.

"I have told (Malaysian Prime Minister Najib Razak), in Singapore we have three sites possible, but Jurong East is one very attractive one which we are considering," said Mr Lee at the Istana during a roundtable discussion with a group of newspaper editors on Tuesday.

The full transcript of the closed-door session, organised by the Bangkok-based Asia News Network (ANN), was released by Mr Lee's office last night.

Earlier in the week after his annual retreat with Mr Najib in Putrajaya, Mr Lee had revealed that the three sites being considered in Singapore were Jurong East, Tuas West and the city centre.

-By Lee U-wen

Singapore Real Estate

Resale condos mark higher prices, volumes in March

But observers say it is too early to cheer as resale market remains soft

Source: Business Times / Property

RESALE prices of non-landed private homes inched up 0.2 per cent in March, led by an increase in transaction prices in the Rest of Central Region (RCR).

This marked a slight recovery from a 3.1 per cent decline in resale prices in February, flash estimates by the Singapore Real Estate Exchange (SRX) show.

Resale transactions increased significantly in March with 451 transactions registered - the highest resale volume since October. This is 82.6 per cent higher than a month ago but 22.5 per cent lower than in March last year.

Market watchers note that the improved numbers suggest pent-up demand in March after the festive months of January and February. But they say it is too early to cheer as the latest data merely reflects a stabilising market since the cooling measures late last year.

-By Lynette Khoo

Private resale market perks up

Source: Today Online / Business

SINGAPORE — The private property resale market showed signs of life last month with an 83 per cent increase in the number of non-landed units changing hands.

An estimated 451 resale transactions were registered in the month of March, which was the highest level since October last year, according to data released this morning (Wednesday) by the Singapore Real Estate Exchange (SRX). That was a sharp increase from the 247 resale units that were sold in February.

However, on an on-year basis, transactions in March fell 22.5 per cent, SRX said.

While transactions increased, prices of resale units remained flat, inching up by 0.2 per cent following a 3.1 per cent drop in February.

Private apartment rents hit 27-month low

Source: Straits Times

Rents for private apartments fell to a 27-month low last month as landlords competed for tenants amid a flood of new homes on the market. The fall came despite more leases being inked in March than in February, according to the Singapore Real Estate Exchange (SRX) yesterday. More private homes also changed hands in March than in February, sending resale prices slightly higher.

HDB resale rule one month on: Buyers cautious

Source: Straits Times

A month after the Housing Board's new resale process began, the need to agree a price before getting a valuation has not been popular, say property agents. Even though the market has adapted to looking at past transactions as a guide, buyers still dislike the uncertainty over their cash outlay, while sellers find it hard to bargain.

Flats with existing valuations favoured

Source: Straits Times

Buyers are favouring resale flats which already have official valuations, as such deals offer more certainty, say agents. Since March 10, the Housing Board has accepted valuation requests only from buyers who have been granted an Option to Purchase by the seller. But it will honour valuations which were granted earlier and have not expired.

14th floor of Samsung Hub sold for $3,030 psf

Arch Capital Mgt sells 13,110 sq ft space for $39.7m to Chinese party

Source: Business Times / Property

THE 14th floor of Samsung Hub along Church Street has been sold at slightly over $39.72 million or $3,030 per square foot based on its 13,110 sq ft strata area.

Word on the street is that Arch Capital Management, a Hong Kong-based private equity real estate firm with links to Ayala Group of the Philippines, is selling the whole office floor - comprising four strata units - to a mainland Chinese company. The floor is leased until year-end to a law firm.

This means Arch Capital will be exiting the 999-year leasehold office tower, having sold all its space on the 13th floor via four smaller strata units adding up to 13,110 sq ft between late 2012 and early 2013 at prices ranging from $2,920 psf to $3,150 psf.

Arch bought the two floors from Ho Bee for $2,550 psf in 2011.

-By Kalpana Rashiwala

Barclays S'pore to move more staff to CBD

Source: Business Times / Property

[SINGAPORE] Barclays, the UK's second-largest bank by assets, is moving more employees to an office in Singapore's central business district from the suburbs to cut costs, people familiar with the matter have said.

Barclays will terminate its lease on about 15,500 square feet of office space at a building in Tampines, an eastern suburb, and relocate the employees to Marina Bay Financial Centre 

(MBFC) by July, said one of the people, who asked not to be named because the information is private. About 300 people who work in back-office roles will be affected, the person said. 

Barclays declined to comment in an emailed response.

It follows a similar move by the bank earlier this year when it exited Changi Business Park, another suburban office in the island-state, and relocated about 200 employees to the downtown office. Antony Jenkins, who replaced Robert Diamond as the London-based bank's chief executive officer in 2012, is eliminating 12,000 jobs to curb costs and boost profitability.

"If you don't have the size or scale, it's better to be operating from one building," said Donald Han, managing director of Chesterton Singapore, a real estate consultancy. "The decision could be one of scale, one of efficiency and of being able to consolidate under one roof despite current rentals being higher at MBFC."

-From Singapore

Barclays Said to Move More Singapore Staff in Suburb to City

Source: Bloomberg / News

Barclays Plc (BARC), the U.K.’s second-largest bank by assets, is moving more employees to an office in Singapore’s central business district from the suburbs to cut costs, said people familiar with the matter.

Barclays will terminate its lease on about 15,500 square feet (1,440 square meters) of office space at a building in Tampines, an eastern suburb, and relocate the employees to Marina Bay Financial Centre by July, said one of the people, who asked not to be named because the information is private. About 300 people who work in back-office roles will be affected, the person said. Barclays declined to comment in an e-mailed response.

It follows a similar move by the bank earlier this year when it exited Changi Business Park, another suburban office in the island-state, and relocated about 200 employees to the downtown office. Antony Jenkins, who replaced Robert Diamond as the London-based bank’s chief executive officer in 2012, is eliminating 12,000 jobs to curb costs and boost profitability.

“If you don’t have the size or scale, it’s better to be operating from one building,” said Donald Han, managing director of Chesterton Singapore Pte, a real estate consultancy. “The decision could be one of scale, one of efficiency and of being able to consolidate under one roof despite current rentals being higher at MBFC.”

Higher Rents

Monthly rents at Marina Bay Financial Centre are now S$11 to S$12 a square foot, compared with around S$10 to S$11 per square foot when Barclays moved into the building in 2011, said Han. The bank may have gotten a “big discount,” considering the size of the space it leased, he said. That compares with as much as S$8 to S$9 per square foot monthly rent, including disaster recovery and data centers, at the building in Tampines, from which Barclays is vacating, he said.

Once the move from Tampines is completed, Barclays, which runs businesses including corporate banking and wealth management, will have a total of two offices in the island-state, including One Raffles Quay, also in the Marina Bay area.

It occupies about 290,000 square feet at Marina Bay Financial Centre, part of the 360-hectare (890-acre) Marina Bay development that Singapore started building in 2005 on reclaimed land located in the southern part of the country. It has another 96,000 square feet at One Raffles Quay, according to Barclays.

Barclays had 4,700 staff in Singapore, according to data provided by the bank in September 2012. In October 2013, it employed 3,500 full-time employees, according to a press release marking 40 years in Singapore.

Return on average equity at Barclays’s securities unit, a measure of profitability, fell to 8.2 percent last year from 13 percent in 2012, compared with Jenkins’s target of at least 11 percent in 2015. Compensation as a proportion of investment-banking revenue rose to 43.2 percent in 2013 from about 40 percent the previous year. That compares with the 35 percent target Jenkins set for 2015.

-By Sanat Vallikappen

Workplace deaths in construction sector rise 27% in 2013

Source: Channel News Asia / Singapore

SINGAPORE: The number of workplace deaths in the construction sector rose 27 per cent last year, according to the latest Workplace Safety and Health Statistics Report.

Thirty-three people died while working in the construction sector in 2013 -- more than half of all workplace deaths, totalling 59, for the whole year.

This year, the construction sector has already seen 12 deaths in the first three months alone.

Giving this update at a forum, Senior Parliamentary Secretary for Manpower Hawazi Daipi said many of the fatal accidents involved working at heights, cranes and formwork.

The authorities will be focusing on these three areas to raise safety standards and enforce safety rules.

Mr Hawazi said: "These are sobering times that require urgent and concerted action on everyone's part. I think we are here for the same purpose of ensuring safety for our workers and ourselves at our workplaces.

"We need to stem the increasing number of fatal accidents that have beset us. One life lost is one too many."

- CNA/ms

Views, Reviews & Forum

3-room BTO flats for singles - not now, but not never

Source: Straits Times

Once, single Singaporeans could not buy a Housing Board flat. Not a new, subsidised one. Not one on the resale market. Then, in 1991, the rules changed. Those aged at least 35 could buy three-room or smaller resale flats. In 2004, resale flats of any size were open to them.

How properties are valued

Source: Straits Times

Mr Patrick Tan Choon Hong alleged that property prices have risen in recent years due largely to banks matching their valuations for new launches to the developers' asking prices ("Review bank valuation process for new launches"; last Thursday). This is far from the truth. Professional valuers do not dictate the property market but take into consideration the prevailing supply and demand conditions in the market.

Banks expected to adopt sound valuation processes

Source: Straits Times

Mr Patrick Tan Choon Hong attributed the rise in property prices largely to the practice of banks matching their valuations for new property launches to the asking prices of developers ("Review bank valuation process for new launches"; last Thursday). Banks generally engage professional valuers to conduct valuations of properties.

Support from firms key to moving to greener economy

Source: Today Online / Voices

I refer to the commentary “Moving towards a green global economy” (March 28) and agree that more can be done to advocate the seriousness of climate change.

Support from companies and industries is key to moving to a greener economy, through changes that they make, such as recycling paper, using energy-efficient lighting and bigger projects.

Some companies have begun to tap solar panels to power their buildings or add rooftop gardens for a touch of greenery. I agree that a green-investment requirement of 0.5 per cent would facilitate more green measures among companies.

It is also crucial to have government support through legislation to take companies to task for illegal deforestation. This would deter other firms from speeding up the destruction of the environment.

Having a green framework would better allow the various government agencies to act against companies that flout the rules.

Such a framework should also be applied to ensure that both the public and private sectors adopt green practices progressively.

It is worth looking into educating the public, including companies, on going green. With the right framework and awareness, incentives for companies to support green practices would be feasible, to engage a larger pool of organisations.

Earth Hour was recently observed in Singapore and many parts of the world. Let it be a reminder that all of us have the choice to stop climate change and shift the mindset of others towards conserving the environment for future generations.

-By Darren Chan Keng Leong

Global Economy & Global Real Estate

GIC to buy Tokyo property for 134b yen

Source: Business Times / Property

[TOKYO] Singapore state investment firm GIC Pte Ltd will buy a Tokyo property from US investment fund Lone Star Funds for some 134 billion yen (S$1.6 billion), the highest price since Japan's real estate market recovery accelerated last year, three people with direct knowledge of the sale told Reuters.

Lone Star had put up the property, called Meguro Gajoen, for auction late last year for at least 96 billion yen. The property comprises a complex of office towers, with the Japanese unit of Inc its main tenant.

GIC was chosen from three final bidders, which included a consortium of New York-based real estate investment firm Aetos Capital Real Estate LP and China's sovereign fund China Investment Corp, two of the people said.

A GIC spokeswoman in Singapore declined to comment. Lone Star officials were also not immediately available to comment.

-From Tokyo, Japan

Parts of London 'becoming ghost towns'

Source: Straits Times

International buyers of London apartments who leave them vacant are hurting the city's economy by making it too expensive for people who go there to work, former City of London planning officer Peter Rees has said. "They're buying those apartments, furnishing them, locking the door and leaving them empty," said Mr Rees, 65, who left his post last week after 29 years.

Greece prepares 500m euros of assets for sale

They will include city buildings, homes, development land

Source: Business Times / Property

[MADRID] Greece is preparing a property portfolio valued at as much as 500 million euros (S$862.5 million) to offer to investors by the end of this year, according to the head of the Hellenic Republic Asset Development Fund.

The properties will be worth at least 350 million euros and will include leased city buildings, homes and development land, Andreas Taprantzis, executive director at the fund, said in an interview in Athens. UBS AG, Deutsche Bank AG and BNP Paribas SA are advising the fund on the portfolio, he said.

The fund, which completed almost five billion euros of deals including 1.8 billion euros of real estate over the past 14 months, is tapping into renewed investor demand for Greek assets. The nation is emerging from a six-year economic crisis that almost forced it to leave the euro.

"There has been a huge shift in sentiment and, after sniffing around for quite a while, investors are now anxious to dig up Greek opportunities," Mr Taprantzis said. "Look how stocks have performed."

-From Madrid, Spain

Vanke keen on investing in China SOEs' property units\

Developer says it will make some 'big moves' in M&A and equity investment

Source: Business Times / Property

[HONG KONG] China Vanke Co Ltd, the country's largest listed developer, is interested in investing in property units of state-owned enterprises (SOEs) as Beijing opens up state-dominated industries to private capital.

Many SOEs have expanded into property development in recent years, attracted by big profits, although tighter credit and a slowing economy in China have raised concerns over the outlook for the sector.

"We see opportunities from the reform and opening, SOEs selling their competitive business. We are willing to cooperate," Vanke president Yu Liang told a real estate forum in Hong Kong yesterday.

"We will make some big moves in M&A and equity investment," Mr Yu added.

-From Hong Kong, China

Architect's Pritzker prize puts new shine on his project

Shigeru Ban's Metal Shutter Houses in NY drawing interest

Source: Business Times / Property

[NEW YORK] When he won the Pritzker Prize on March 24, Japanese architect Shigeru Ban had a very busy day. As the 37th winner of architecture's biggest prize - the profession's Nobel - Mr Ban made all the major papers, had appearances on CNN and NPR, and even sat down with Charlie Rose.

The day after Mr Ban won the Pritzker, Douglas Elliman broker Holly Parker had a very busy day, too. "The phone started ringing, and it just hasn't stopped," said Ms Parker, who, thanks to Mr Ban, has won a prize of her own.

Since October 2012, she has been trying to sell a three-bedroom condominium inside the Metal Shutter Houses in Manhattan, Mr Ban's only completed project in New York. The US$7 million duplex had Mr Ban, one of the world's best known architects, behind it, even before he won the Pritzker. The honour is not only for his distinctive homes across Japan and a branch of the Pompidou in Metz, France, but also for disaster housing utilising unusual materials such as cardboard tubes and shipping containers.

Just like when an author wins a Pulitzer and suddenly a stack of books appears at the front of Barnes & Noble, bearing golden stickers, Ms Parker's listing was now on many buyers' minds.

-From New York, US

Limitless seeks debt delay, set to miss UAE boom

Source: Business Times / Property

[DUBAI] The United Arab Emirates (UAE) property boom may be passing Limitless LLC by, as the developer that split off from Dubai World in the fallout following the 2008 credit crunch seeks to delay a loan payment.

The company asked lenders if it can defer a US$400 million repayment due in December, the first instalment of a restructured US$1.2 billion Islamic loan, according to two people who asked not to be identified because the information is private. Limitless offered banks 200 million dirhams (S$68 million) in cash towards the payment, they said. The company wants to delay the repayment by a year.

Property prices in Dubai, one of seven sheikhdoms that make up the UAE, rose as much as 43 per cent last year, according to Cluttons LLC data on Bloomberg, amid a surge in trade and tourism.

The momentum cut the cost of borrowing for real estate companies including Emaar Properties PJSC and Nakheel PJSC, and prompted Damac Real Estate Development to sell US$650 million in a debut sukuk sale this month.

-From Dubai, UAE

Beijing office shortage fuels third-highest rents

Rising demand and limited supply have doubled office rents since 2008

Source: Business Times / Property

[BEIJING] John Wong, who leases offices in downtown Beijing's new, 61-storey Fortune Financial Center, has filled 60 per cent of the space in the tower completed in September. He said he's confident the rest will be snapped up.

Tenants at the tower include financial companies such as HSBC Holdings and DBS Group Holdings, according to Mr Wong, head of asset management at HKI China Land Ltd, which built the tower known as FFC.

"It's such a good time," Mr Wong said in an interview. "The companies in Beijing still have the urge to expand, the financial sector that we focus on remains healthy, and we face relatively small competition because supply is limited. We have the conditions to choose the clients we want."

Rising demand and limited supply have doubled office rents in the Chinese capital since 2008, making its Finance Street the world's third-most expensive behind Hong Kong's Central and London's West End, according to real estate broker CBRE Group Inc. The cost of renting offices in Beijing is set to rise further as only half the average annual supply over the past decade is projected to be added in the next three years. Office rents in the city will rise 3 per cent to 5 per cent in the next two years, CBRE's Frank Chen estimates.

-From Beijing, China

U.K. House-Price Growth Quickens as Home Shortage Boosts Values

Source: Bloomberg / Luxury

U.K. house-price growth accelerated in March and a shortage of homes for sale will put further upward pressure on values, according to the Royal Institution of Chartered Surveyors.

A gauge of prices rose to 57 from a revised 47 the previous month, RICS said in a statement in London today, citing a poll of property surveyors. All areas tracked by the trade body saw buyer enquiries increase, apart from Wales.

The report shows signs of strength in U.K. housing after mortgage approvals fell in February when heavy rainfall deterred house hunters. While activity is improving, with property sales at a six-year high in the first quarter, the overall market is being hampered by the lack of properties for sale, RICS said.

“It is a major concern that we are not seeing enough houses coming onto the market,” said Simon Rubinsohn, chief economist at RICS. “Until this happens we’re likely to see prices to continue to increase and it is going to be ever harder for many first-time buyers.”

The RICS index showed house prices have now been rising for the longest period since the 2008 financial crisis. The biggest increases last month were recorded in London and south east England. The group also said new instructions from sellers fell as the seasonal spring upturn failed to materialize.

“With no indication that the imbalance between buyer demand and homes on the market is going to change any time soon, surveyors expected prices to continue to increase,” RICS said.

The outlook for prices over the next three and 12 months were “broadly unchanged” from February, according to RICS. Surveyors see values rising about 6 percent a year over the next five years, it said.

A broadening economic recovery, government incentives and record-low interest rates have fueled property demand after the financial crisis caused banks to curtail lending. The pace has prompted Bank of England officials to say they’re monitoring for signs of overheating.

BOE policy makers will probably leave their benchmark rate at 0.5 percent today, according to a survey of economists.

-By Scott Hamilton

Forum Partners Seeks to Fund Chinese Developers Amid Rout

Source: Bloomberg / News

Forum Partners, a global real estate investment firm managing $6 billion of assets, is looking to invest in more developers in China as it bets on a recovery in the market within two years.

“I’d be surprised if we were sitting here in two years having the same conversation around why China is underloved by international investors,” Chief Executive Officer Russell Platt said in an interview yesterday in Hong Kong. There are more opportunities now as there’s less financing available to developers, he said.

Forum is shifting the focus of its Asia fund away from Japan to China, increasing the weighting of the latter to more than 60 percent this year, at a time when Chinese developers face a slowing housing market and a pullback in credit. China’s home-price growth slowed for a third month in March as the central government allowed cities to impose their own property curbs to target local market conditions.

Builders will probably face more challenges this year due to an oversupply of housing in the smaller third-tier cities, a Bloomberg News survey shows.

“In the last six months, we’ve found local developers far more interested to talk to someone like us,” Platt said. “Our capital may not be as cheap as the local banks or the high-yield market during the best times, but we’re offering money for a three to seven-year time period.”

Finding Partners

Forum, which is based in London and manages capital from Western pension funds and insurance companies, is closing an investment soon in a residential developer in a major coastal city, he said, declining to specify which one and identify the developer. It also invested in a developer of warehouses in the eastern Chinese cities of Shanghai, Suzhou and Wuxi earlier this year, and plans to sign at least one or two more deals, Platt said.

“We want to find some of those good, mid-sized developers and owners who want to partner with a firm like ours,” Platt said. The firm invests mainly by offering capital to private businesses in structured deals such as preferred equity or participating debt.

Home prices last month rose 10.04 percent from a year earlier, according to SouFun Holdings Ltd., China’s biggest real estate website. In the Bloomberg News survey, 38 percent of respondents said prices will rise 5 percent to 10 percent this year, while 35 percent said they expected little change.

Default last month by Zhejiang Xingrun Real Estate Co., a regional developer near Shanghai, spurred concerns that more local builders may face insolvency. China has almost 90,000 small developers nationwide, according to data from the National Bureau of Statistics.

Forum’s Platt sees a narrow window for making investments before China starts to relax its monetary policies.

“There’s no incentive to undermine commercial stability nor is the market we think at a Lehman-style tipping point,” he said. “Once policy makers begin to loosen restrictions on lending into property, once they start to pump more money in, developers won’t need us anymore.”

-By Michelle Yun

Liberal Democrats Revamp Tax Plan for Higher-Value Homes

Source: Bloomberg / Luxury

Chief Secretary to the Treasury Danny Alexander said his Liberal Democrat party wants to introduce additional tax bands for the most expensive U.K. homes in the next parliament.

The new bands would only affect properties valued at more than 2 million pounds ($3.3 million) and be simpler to implement than the party’s initially proposed mansion tax, which envisaged a flat-rate levy, Alexander said in a speech today at Bloomberg LP’s European headquarters in London. He also denied the tax would put an unfair burden on London and the southeast, where the average house price is more than double the national average.

England’s property-based council tax, which raises revenue for local authorities, stops at band H. This means that the same tax is paid on all houses valued at more than 320,000 pounds at 1991 prices, now worth just over 1 million pounds based on Nationwide Building Society house-price data. The Liberal Democrats argue it is unfair that an oligarch living in a multi million-pound mansion in central London pays the same council tax as the owner of a four-bedroom family home.

“It’s true that most of the properties affected are in London and the southeast but I don’t think it’s unreasonable given the current council-tax system,” Alexander said in an interview.

Southeast Burden

With 13 months to go before the general election, the Liberal Democrats are seeking to distance themselves from the accusation levied at their Conservative coalition partners that government policies have favored only the richest.

The Liberal Democrats originally proposed a 1 percent surcharge on the percentage of a property’s value above 2 million pounds, meaning the owner of a 3 million-pound home would pay 10,000 pounds more a year.

“Doing it in a banded way avoids the large-scale revaluations where the amount of tax you paid was based on the precise valuation of your property,” Alexander said in his speech. More details of the banding will be given closer to the election, he said.

Ninety-five percent of the income from a so-called mansion tax would be derived from homeowners in London and the southeast, according to property researcher

A report by Nationwide last week showed property values in the capital in the first quarter were 20 percent above their previous record, at an average of 362,699 pounds compared with 178,124 pounds for the U.K. as a whole. Alexander said his proposal would release some of the “steam” from the top end of the property market.

Tory Rejection

Limits on council taxes have left many lower- and middle-income renters and homeowners paying almost as much as the wealthy. Research carried out by Warwick University in 2012 found the poorest 20 percent of U.K. households pay 5.6 percent of their total income in council tax, three times the proportion the wealthiest 20 percent contribute.

Liberal Democrat demands for higher taxes on the most expensive properties have been rejected by Prime Minister David Cameron’s Conservatives. The opposition Labour Party has also pledged to introduce a levy on properties worth more than 2 million pounds.

Alexander said in an interview with Bloomberg Television that his party doesn’t support opposition calls to cut the top rate of income tax to 40 percent from the current 45 percent.

By cutting the top rate from 50 percent last year “we’ve got ourselves in the middle of the pack,” he said.

-By Svenja O’Donnell