Singapore Economy S'pore business confidence rebounds for Q2: study Improved outlook due to signs of growth in global economy: SCCB Source: Business Times / Top Stories [SINGAPORE] Business optimism for the upcoming quarter has taken a turn for the better, with more companies expecting increases in sales, profits, employment, new orders, inventories and selling prices. The cheerier outlook for the second quarter of 2014 is thanks to signs of healthy expansion in the global economy, said the Singapore Commercial Credit Bureau (SCCB) yesterday in its latest quarterly Business Optimism Index (BOI) study. The overall BOI score rebounded from +13.13 percentage points for the first quarter to +22.66 percentage points for Q2. For Q4 2013, the overall BOI score stood at +33.98 percentage points. Compared to a year ago, SCCB said that the overall BOI score for Q2 has "improved significantly" from +10.73 percentage points. The SCCB polled 200 companies in late March, asking them to make projections about their business prospects in the coming quarter. The index figures used in the survey represent the net percentage of respondents expecting higher business activity compared with the same quarter of the previous year. The indices are calculated by subtracting the percentage of respondents expecting decreases from the percentage expecting increases. All six business indicators remained in expansionary mode for Q2. As with the previous quarter, Singapore firms remain most optimistic about their volume of sales and net profits. Said SCCB's chief executive officer Audrey Chia: "As growth momentum in the local economy gathers pace, firms across most industries see brighter prospects this quarter. For the record, overall BOI has been expansionary for the past five consecutive quarters. These findings also correlate strongly with the uptrend we have seen in GDP growth since the first quarter of 2013." SCCB said that the overall BOI score hit the contractionary region in Q1 2013, when quarter-on-quarter GDP growth was 1.5 per cent and year-on-year GDP growth was merely 0.6 per cent. "The recent measures announced in Budget 2014 to improve productivity, drive innovation and skill development may have also contributed to the improved outlook. Firms would have recognised how important the enhancements made to the PIC (Productivity and Innovation Credit) and R&D (research & development) schemes are in helping them cope with rising business costs as well as ensuring sustainable growth in the long-term," added Ms Chia.
But whether the increased business confidence can be sustained remains to be seen, said SCCB. Ms Chia cited external challenges - such as China's weakening growth and the possibility of an interest rate hike in the second half of 2014 by the US Federal Reserve - as risks to look out for. -By kelly Tay Bank loan growth slows to 0.4% in February Source: Straits Times A key reason for the slowing growth in loans - it was the third straight month that the pace of expansion has moderated - was the quantum of loans to businesses. Business loans for February stood at $358.1 billion, up by 0.5 per cent in February from January. This was much lower than the 2.1 per cent growth logged in January from December. Loans to the building industry, general commerce operations and the transport, storage and communication sectors all fell in February. Bank lending in Feb grows at slower pace for the third month Construction loans contracted over the month for first time since Jan 2011 Source: Business Times / Top Stories [SINGAPORE] Bank lending in Singapore in February grew at a slower clip for the third straight month, with the loan business involving two key industries - construction and finance - registering particular weakness. Preliminary figures released by the Monetary Authority of Singapore yesterday showed that domestic banking unit (DBU) loans stood at $584 billion in February, up 0.4 per cent from January. This was weaker than the 1.4 per cent month-on-month growth posted in January. On a year-on-year basis, loan growth stood at 14.6 per cent, which is also poorer than the 16.5 per cent growth seen in January - and is the slowest gain since November 2010, data compiled by The Business Times showed. The DBU gains refer to net growth, that is, new loans which have been granted after deducting loans which have been paid off. The DBU figures refer to loans denominated in Singapore dollars. On a month-on-month basis, business loans in February grew 0.5 per cent to $358 billion. This is a much smaller expansion compared with the 2.1 per cent growth in January. Loans to the building and construction segment - which is the largest component of all business loans - contracted in February over the month for the first time since January 2011, BT data showed. The 0.2 per cent contraction to $92.4 billion in this segment is in contrast to the 1.4 per cent expansion in January. This also follows two months of expansion since December. Loans to financial institutions - the next largest loan segment after construction - gained 0.6 per cent to $80.9 billion in February over the month. This is a marked weakness from the 5.8 per cent growth over the month in January. There was, however, some strength seen in the manufacturing segment, on a loan-growth basis. Loans to manufacturers grew 2.4 per cent over the month to $32.6 billion, a significant lift from the 0.5 per cent growth posted in January. As for consumer loans, the month-on-month growth was 0.3 per cent to $226 billion. This is a touch lower than the 0.4 per cent growth in January. Growth in consumer loans is mainly driven by that in property loans, which grew 0.5 per cent to $168 billion. That is the same growth rate posted in January over the month. The share of housing loans of total bank loans has risen further to 28.8 per cent in February, said Selena Ling, head of treasury research & strategy at OCBC Bank. "Hence, it may be premature to expect any early unwinding of property curbs before we see further stabilisation." Growth in car loans, on a month-on-month basis, has been in negative territory since September 2012, and contraction in this segment has deepened, following car-loan curbs that were implemented in February last year. In February, car loans contracted further by 1.9 per cent over the month to $10.3 billion. This compares with a 1.8 per cent contraction in January.
Broadly, the loan to deposit ratio, at 108 per cent in February, "is still on the uptrend and the highest since May 1998", said Ms Ling. Still, this is some distance from the record high in October 1997 of 115.6 per cent, she added. -By Jamie Lee
Singapore Real Estate Developers crank up marketing machine Seminars at showflats, multiple agencies among tools used as launch sales dry up Source: Business Times / Top Stories [SINGAPORE] In yet another sign of tepid private residential sales, the proportion of projects that managed to move more than half of their units in the month of their launch has declined significantly last year. This has prompted developers and their marketing agencies to deploy more marketing tools to draw more potential buyers to their showflats. Some developers engage multiple marketing agencies for one project, offer higher commission to agencies for specific projects and discounts to buyers for a limited period. Property agencies have also turned to their favourite tool - holding seminars at show flats to draw in the crowds.
Data collated by OrangeTee Research shows that the proportion of projects with more than half of their total available units sold in the month of launch fell to 21 per cent in 2013, down from 31 per cent in 2012 and below the 27 per cent level seen in the 2009 recession year. -By Lynette Khoo http://www.businesstimes.com.sg/premium/top-stories/developers-crank-marketing-machine-20140401
Sales at The Santorini disappoint Only 80 of the 200 units released at the 597-unit condo's weekend launch sold SOurce: Business Times / Property OF the 200 units released at The Santorini's launch over the weekend, only 80, or 40 per cent, have been sold, leading analysts to suggest that the market is tiring of too much supply of similar mass-market projects, particularly ones with low-quantum compact units. The units sold at the "Mediterranean-inspired" Tampines condominium were mostly one and two-bedroom units, a spokesman for developer MCC Land (Singapore) Pte Ltd told BT. This was expected, since over half of the condominium's 597 units are one and two-bedders. Compact units have become the rage since the Total Debt Servicing Ratio (TDSR) framework rolled out last June lowered the loan-to-value limits for buyers who have an existing home mortgage and are still looking to buy more residential properties.
Buyers have therefore had to scale down their sights to lower-quantum investment property purchases. -By Lee Meixian http://www.businesstimes.com.sg/specials/property/sales-santorini-disappoint-20140401 Resort investment firms also following new timeshare rules Banyan Tree Hldgs and Castlewood Grp give 5-day cool-off and product info Source: Business Times / Property AS stricter timeshare regulations kick in from today, some companies marketing resort buy-and-leaseback investment schemes are choosing to abide by the new rules. Banyan Tree Holdings, which held exhibitions in Singapore's Four Seasons Hotel over the weekend to market its luxury suites at the Angsana Teluk Bahang beach resort in Penang, said it gave buyers a five-day cooling period prior to signing the contract, during which no monetary transaction can be collected and buyers can cancel without penalty. A "Product Information Notice" was also given to buyers to convey important features of the contracts, including the rights of the consumer, obligations of the seller, additional costs and cancellation rights - all clearly explained within a single document.
These are in compliance with the amended consumer protection regulations which apply to timeshare, timeshare-related and long-term holiday product contracts, announced by the Ministry of Trade and Industry in January, to give consumers time to review the product carefully before making a financial commitment. -By Lee Meixian Building in Kallang Industrial Estate put up for sale Source: Business Times / Property THE light industrial building at 12 Kallang Way is up for sale, with the current owner expecting offers exceeding $25 million. The five-storey development sits on a 51,264 sq ft leasehold site with 34 years remaining in its lease term. The asking price works out to approximately $213 per sq ft on the building's 116,940 sq ft gross floor area (GFA), which has not maximised its 2.5 plot ratio.
Factoring in the unutilised 11,220 sq ft of GFA, however, the asking price for the property works out to $195 per sq ft per plot ratio. -By Jaira Koh Fall in demand for BTO flats in latest exercise Source: Channel News Asia / Singapore SINGAPORE: The demand for the second batch of Build-to-Order (BTO) flats launched this year has dropped, compared to the previous batch. But analysts Channel NewsAsia spoke to said the housing needs of some groups are still not being met. The exercise will close at midnight on Tuesday. There were 4.1 applicants vying for each unit in January's BTO exercise. But for the exercise this month, the number is at 2.4, as at 5pm on Monday. Eugene Lim, key executive officer at ERA Realty Network, said: "Some buyers may have held back their applications this round, one reason being that there is an upcoming Sale of Balance Flats (exercise). "Some of those flats are almost completed and you can actually get them quite fast." Some 3,000 flats will be offered in a Sale of Balance Flats exercise in May. Analysts also said the lower application rate for this month's BTO exercise shows that supply has generally caught up with demand. But they added that housing needs of some groups are still not being met. Mr Lim said: "If you look at the overall figure, it does seem to give you the impression that housing needs are being met. “But if you look at the various sub groups, then you can actually pick up that for certain groups, their housing needs are still not met. "So for example, one that still stands out very strongly is the singles (group). The application rate for BTO flats is still very high among singles." As at 5pm on Monday, there were 27.6 singles applying for each two-room flat in Yishun. Over at Sembawang, there were nine single applicants for each two-room unit. Analysts said it is no surprise that the flats in Yishun are more popular among singles, compared to Sembawang. Analysts said the area is closer to mature estates such as Ang Mo Kio and Yio Chu Kang, while Sembawang is at the northernmost point of Singapore. This month's BTO exercise also saw the fourth batch of 3-Generation (3Gen) flats being launched. The popularity of such units continues to be higher among second-timers. As at 5pm on Monday, there were three first-time buyers applying for each 3Gen or five-room unit, compared to 13.2 second-time applicants. One analyst Channel NewsAsia spoke to said the Housing and Development Board could consider allocating more 3Gen flats to second-timers. Thomas Tan, executive director at Remax Singapore, said: “If I am a first-timer and I own a HDB flat, that is probably for myself, maybe my children. But as time goes by, the household size grows, together with the initiative where one wants to look after parents. "Generally, the (household) size grows -- that is probably why you see greater need (for 3Gen flats) from second-timers rather than first-timers." The next BTO exercise will be in May, and the HDB will offer 3,060 flats in Bukit Batok and Woodlands.
- CNA/xq http://www.channelnewsasia.com/news/singapore/fall-in-demand-for-bto/1054620.html TT Int'l to focus more on retail operations This is one of three pillars; it hopes to return to sustainable profitability Source: Business Times / Companies TT International (TTI), known for its consumer electronics and furniture brands such as Akira, Castilla and Barang Barang, will focus more on its retail operations going forward, following a strategic review in the wake of the 2008 global financial crisis that saw the group running into cash flow problems. The group had to slow down its previous core business of sourcing and distribution due to the longer cash conversion cycle required, executive director Julia Tong told reporters yesterday in a corporate and business update of the company. "We were very badly affected," Ms Tong said in reference to the crisis that saw TTI entering a Scheme of Arrangement sanctioned by the High Court in 2010 to restructure its financial liabilities.
The group had around $290 million in debt, including contingent liabilities. -By Raphael Lim
Real Estate Companies' Brief IE building bridges for infrastructure Unveils initiatives to turn Singapore into Asia hub Source: Business Times / Singapore SINGAPORE has the potential to become the infrastructure hub of the region, said International Enterprise (IE) Singapore yesterday, as it announced new initiatives in that direction. The first was aimed at developing a pool of local talent. "Access to talent is a critical issue that this industry needs to address collectively," said Chua Taik Him, deputy CEO of IE Singapore.
To groom local talent focused on infrastructure, IE Singapore announced an internship launched in collaboration with the National University of Singapore (NUS) as part of its tertiary-level Infrastructure Development Programme. The internship would expose students to the opportunities and challenges presented by the Asian infrastructure sector. -By Kara Quek http://www.businesstimes.com.sg/premium/singapore/ie-building-bridges-infrastructure-20140401 Teho banks on property as part of core business It plans to cast its net wide after acquisition of property firm Source: Business Times / Companies OFFSHORE & marine company Teho International's proposed move into the property business is more than just a diversification. The Catalist-listed company is hoping that this new business will become part of the group's core business. Teho recently announced its proposed acquisition of boutique property developer TIEC Holdings, a subsidiary of the Singapore-based ECG Group of Companies (ECG), for $12.3 million in a cash-cum-share deal. Looking to cash in on the growth in the property market, it said that it will be casting its net as wide as Australia, Japan, Thailand and the UK to enhance revenue streams through its newly established subsidiary, Teho Development.
The proposed expansion and acquisition are subject to shareholders' approval at an extraordinary general meeting (EGM) to be convened. -By Malminderjit Singh A-HTrust in placement to raise at least $50m Source: Business Times / Companies ASCENDAS Hospitality Trust (A-HTrust) will be offering 71.9 to 73.5 million new stapled securities in a private placement. The move will raise gross proceeds of at least $50 million to partially fund its acquisition of Osaka Namba Washington Hotel Plaza in Osaka city, Japan. A-HTrust is a stapled group comprising Ascendas Hospitality Real Estate Investment Trust (A-HReit) and Ascendas Hospitality Business Trust (A-HBT). A-HTrust's managers said last week that A-HBT had agreed to buy the Osaka hotel for 8.9 billion yen (S$110.8 million). Each new stapled security will be priced between 68 cents and 69.5 cents. The issue price range represents a 5.3 to 7.3 per cent discount to the volume weighted average price (VWAP) of 73.37 cents per stapled security for trades done last Friday and up to the time the placement agreement was signed yesterday.
About $45.8 million of the gross proceeds will be used to partially fund the proposed acquisition. Another $3.5 million will be used to pay fees and expenses incurred for the purpose of the acquisition and equity-fund raising. -By Sheena Tan http://www.businesstimes.com.sg/premium/companies/others/htrust-placement-raise-least-50m-20140401 UIC's offer for SingLand 'too low' Source: Straits Times The second-largest investor in mainboard-listed Singapore Land has thrown a spanner into United Industrial Corporation's (UIC) takeover bid for the firm. Investment fund Silchester International Investors, which holds 8.16 per cent of SingLand shares, said in a statement yesterday that UIC's offer was "too low".
http://www.straitstimes.com/premium/money/story/uics-offer-singland-too-low-20140401 CapitaLand boosting stake in AIM Japan Source: Business Times Capitaland Limited is acquiring a further 40 per cent stake in Ascott International Management (AIM) Japan - which manages serviced residences in the country - for 20 million yen (S$250,000) from Mitsubishi Estate Co. The deal, which makes AIM Japan a wholly owned subsidiary of CapitaLand, is part of the latter's strategy to further strengthen its presence in Japan.
http://www.businesstimes.com.sg/premium/companies/others/company-briefs-20140401 GLP Hiroshima now fully leased Source: Business Times Global Logistic Properties (GLP) has leased 21,000 square metres at GLP Hiroshima to third-party logistics provider Sagawa Global Logistics Co, in their first collaboration. With the agreement, GLP Hiroshima, located in Hiroshima Prefecture, Western Japan, is fully leased. Sagawa Global Logistics is consolidating operations from multiple existing warehouses to establish a regional distribution centre, said GLP in a statement yesterday.
http://www.businesstimes.com.sg/premium/companies/others/company-briefs-20140401 Board changes at Spring, EMA, Sentosa Devt Corp Changes announced by MTI are effective from today Source: Business Times / Singapore THE Ministry of Trade and Industry has announced board changes at Spring Singapore, Sentosa Development Corporation (SDC) and the Energy Market Authority (EMA) effective from today. Piyush Gupta, chief executive officer of DBS Group, has been appointed deputy chairman of Spring Singapore. Mr Gupta is also a council member at the Singapore Business Federation and the Association of Banks in Singapore. In addition to Mr Gupta, Spring will have four new board members - Stephen Lim, CEO of SQL View; Colonel Melvyn Ong, deputy chief executive of the Early Childhood Development Agency; chairman of Zicom Group Sim Giok Lak; and CEO of HSBC Thailand Tan Siew Meng.
Three Spring board members have been re-appointed. They are CEO of Strategic Moves Viswa Sadasivan, Singapore Polytechnic principal Tan Choon Shian and BG (NS) Tan Yih San, CEO of Intellectual Property Office of Singapore. -By Raphael Lim Views, Reviews & Forum Property still propels Singapore's rich lists Source: Straits Times Rich lists might generate envy among many, but they do provide a useful snapshot of a country's economy. One look at Singapore's league table of the wealthy and it is clear that this is a nation where creativity and innovation take a back seat to bricks and mortar.
Global Economy & Global Real Estate Turning nursing homes into investment targets Some Japanese firms plan to list stocks for their nursing home Reits Source: Business Times / Property [TOKYO] Nursing homes in Japan for elderly people and other related facilities will likely be added to the list of properties targeted by real estate investment trusts (Reits) as early as this autumn. Some corporations plan to list stocks for their nursing home Reits, known as healthcare Reits, aiming to meet growing demand for funding to build and improve care facilities for the elderly by attracting investment, corporate sources said. The plan is supported by the government and the Tokyo Stock Exchange.
Daiwa Securities Group said on Friday that an affiliate, Nippon Healthcare Investment Corp, had acquired eight privately run nursing homes nationwide for about nine billion yen (S$109.8 million). -From Tokyo, Japan http://www.businesstimes.com.sg/specials/property/turning-nursing-homes-investment-targets-20140401 Eurozone inflation drops to lowest since 2009 Surprise fall raises chance of ECB rate cut on Thursday Source: Business Times / World [BRUSSELS] Eurozone inflation hit its lowest level since November 2009 in March, a shock drop that raises expectations the European Central Bank (ECB) will take radical action to stop the threat of deflation in the currency bloc. Annual consumer inflation in the 18 countries sharing the euro was 0.5 per cent in March, with the pace of price rises cooling from February's 0.7 per cent reading, the European Union's statistics office Eurostat said yesterday. Economists polled by Reuters had predicted a 0.6 per cent reading - itself worrying for an economy that is barely pulling out of a record-long recession after a crisis that nearly broke up the currency area.
The eurozone is far from the deflation that Japan suffered from the early 1990s, when falling prices weakened demand, leading to wage cuts and even lower prices, but the bloc's low inflation rate is a clear sign of economic fragility. -From Brussels, Belgium http://www.businesstimes.com.sg/premium/world/eurozone-inflation-drops-lowest-2009-20140401 Fear of China trust loans defaults rattling property developers Source: Business Times / Property [SHANGHAI] The spectre of default in China's trust loans market is deepening the distress of property developers that also borrowed in dollars. Some 18 companies owing US$15.2 billion, from behemoth China Vanke to junk-rated Glorious Property Holdings, have "material exposure" in excess of 10 per cent to trust financing, a form of non-bank lending that's helped homebuilders proliferate in China, Moody's Investors Service said. This year alone, the number of Chinese junk developer bonds whose yields have increased to distressed levels has almost doubled to 19. Part of China's US$7.5 trillion shadow-banking system, trust financing has been key to fuelling the nation's 10 per cent annual growth rate in the past decade by providing easy credit to companies considered too risky by banks.
After trust loans to the property, solar, coal and other industries tripled in the past three years to 10.9 trillion yuan (S$2.21 trillion), bondholders are becoming increasingly alarmed as the government reins in lending, housing demand cools and the economy slows. -From Shanghai, China China Defaults Sow Property Cash Crunch Concern: Distressed Debt Source: Bloomberg / News The specter of default in China’s trust loans market is deepening the distress of property developers that also borrowed in dollars. Eighteen companies owing $15.2 billion, from behemoth China Vanke Co. (000002) to junk-rated Glorious Property Holdings Ltd. (845), have “material exposure” in excess of 10 percent to trust financing, a form of non-bank lending that’s helped homebuilders proliferate in China, Moody’s Investors Service said. This year alone, the number of Chinese junk developer bonds whose yields have increased to distressed levels has almost doubled to 19. Part of China’s $7.5 trillion shadow-banking system, trust financing has been key to fueling the nation’s 10 percent annual growth rate in the past decade by providing easy credit to companies considered too risky by banks. After trust loans to the property, solar, coal and other industries tripled in the past three years to 10.9 trillion yuan ($1.8 trillion), bondholders are becoming increasingly alarmed as the government reins in lending, housing demand cools and the economy slows. “There’s concern China’s hitting a rough patch and that a few core industries, especially those based on credit such as real estate, may have peaked,” David Tawil, co-founder of the New York-based hedge fund Maglan Capital LP, said in a telephone interview. “The real question is whether Beijing will try to mask the down cycle or allow it to play out publicly.” Defaults UnavoidableCracks are already starting to appear. Closely held Zhejiang Xingrun Real Estate Co. collapsed earlier this month, less than two weeks after Shanghai Chaori Solar Energy Science & Technology Co. defaulted on its debt. While China Credit Trust Co. was bailed out in January, Premier Li Keqiang has said some defaults may be unavoidable as the government shifts policy to tighten credit. Home prices have soared 60 percent since the government provided 4 trillion yuan of fiscal stimulus in 2008 to bolster the economy after the financial crisis, prompting companies to borrow heavily to speed construction. Now, as China abstains from providing further stimulus for the economy, thousands of apartment buildings across the country sit empty. “If onshore defaults increase, it’ll definitely tighten liquidity and raise funding costs,” said Singapore-based Leong Wai Hoong, a high-yield bond manager at Nikko Asset Management Co., which oversees some $161 billion. Funding AlternativeTrust financing involves the sale of high-yield investment plans to individuals, raising money for companies which may lack access to bank loans. According to Moody’s, it has become a key alternative of funding for land acquisitions by riskier real-estate companies during times they aren’t able to obtain reliable access to bank loans or the bond market. Hopson Development Holdings Ltd. (754) and Glorious Property, with a combined $1.3 billion of outstanding dollar-denominated bonds, are two which will face “inadequate liquidity” in the next 12 months if financing avenues seize up, Moody’s said. Hopson’s $300 million of notes due January 2018, which traded at about 100 cents on the dollar at the start of the year, were at 91.47 cents today, according to prices compiled by Bloomberg. That’s pushed yields on the bonds to 12.8 percent, or 11 percentage points above Treasuries, more than the 10 percentage point threshold at which debentures are considered distressed. Glorious’s $400 million of March 2018 securities fell to 72.08 cents on the dollar from 83.6 cents to yield 24.8 percent. Hopson LoansHopson has about 2 billion yuan of trust loans and remains prudent in its borrowing strategy, Chief Financial Officer Xie Bao Xin said at a media briefing in Hong Kong on March 27. It plans to fully repay the trust loans in 2014, Xie said. Glorious didn’t reply to an e-mail request for comment. Property developers account for 19 of the 22 junk-rated corporate bonds in China considered distressed as of March 28, according to a Bank of America Merrill Lynch index of high-yield notes from the country’s issuers. On average, investors demanded 7.98 percentage points of extra yield over similar-maturity Treasuries to hold the 105 securities included in the index. Chinese junk bonds have lost 0.9 percent this year, versus a 2.9 percent gain for U.S. speculative-grade debt. As a result of the building binge, the average debt ratio among the top 500 developers rose to a five-year high in 2013, the China Real Estate Association said in an e-mailed report March 20. The ratio of cash flow to short-term liabilities -- a measure of the ability to pay debt -- was minus 5.7 percent compared to 15 percent in 2012, according to the report. Front EndSuch leverage will put developers at the front end of the default cycle in a market shakeout, said Lisa Emsbo-Mattingly, the Boston-based director of asset allocation research at Fidelity Investments, which manages about $2 trillion. While borrowing costs for China’s property developers have surged in the dollar-bond market, it’s unlikely the biggest real-estate companies will default any time soon, Nikko Asset Management’s Leong said. “Dollar debt issuers are much larger and a lot of them have sold bonds to refinance their onshore loans,” he said. “Will those developers default? Not in the near term.” Slower new-home price growth is nevertheless adding to the pressure on builders. Prices in first-tier cities such as Beijing and Shanghai grew in February by the slowest since 2012. At least 10 cities have moved to cool the housing market since November, including raising the minimum down payment on purchases. In smaller cities, companies such as Agile Property Holdings Ltd. have cut prices by as much as 20 percent. Minsky MomentSome 634 billion yuan of trust loans to developers must be repaid this year, an amount about the same size as Puerto Rico’s economy, Li Ning, a Shanghai-based analyst at Haitong Securities Co., China’s second-largest brokerage, said by telephone on March 26. That’s a 50 percent increase from 2013. There’s a “high probability” some trust loans to property companies will default this year, according to David Cui, China strategist at Bank of America Corp. Developers in mainland China or Hong Kong have also accounted for 32 percent of the $68 billion of dollar bonds issued by all Chinese companies last year. Chinese companies have more than $120 billion of notes and dollar loans due this year and next, according to data compiled by Bloomberg. Since China’s credit crunch in June when money-market rates surged past 12 percent, both Societe Generale SA and Morgan Stanley have said a “Minsky moment” may be approaching, a reference to U.S. economist Hyman Minsky, who argued periods of rising asset values lead to speculative investments on borrowed money, only to end badly. Chaori Solar missed payment on part of a bond coupon on March 7 in China’s first onshore default. Zhejiang Xingrun’s collapse followed on March 17. China narrowly averted its biggest trust default in at least a decade in January, when China Credit Trust repaid investors in a 3 billion yuan high-yield product after a bailout offer by Industrial & Commercial Bank of China Ltd. “Many more defaults will definitely come,” said Bank of America’s Cui. -By Bloomberg News
UK home prices continue rising for the 14th month in March Source: Business Times / Property [LONDON] UK house prices increased for a 14th consecutive month in March, the longest run of gains in almost seven years, as momentum spread across the country. Values in England and Wales rose 0.6 per cent from February, with the south-west and East Anglia registering the largest increases, property researcher Hometrack Ltd said in a report published yesterday. Prices in London climbed 0.7 per cent, while 50 per cent of postcode districts reported gains. Record-low borrowing costs and a government-incentive plan have spurred concern that the UK housing market risks overheating.
Bank of England financial stability officials said last week there's increasing momentum in the market and pledged to take more action if needed. -From London, UK UK property prices continue to gain Source: Today Online / Business LONDON — Housing prices in the United Kingdom last month increased for a 14th consecutive month, the longest run of gains in almost seven years, as momentum spread across the country. Values in England and Wales rose 0.6 per cent from February, while prices in London continued their relentless gain, climbing 0.7 per cent. Record-low borrowing costs and a government incentive plan have spurred concern that the UK housing market risks overheating. Financial stability officials from the Bank of England (BoE) said last week there was increasing momentum in the market and pledged to take more action if needed. “Half of the country registered a price increase in March for a second month in a row,” said Mr Richard Donnell, Director of Research at Hometrack. “The real drivers of higher house prices are record-low mortgage rates and strong demand from first-time buyers and investors who have no property to sell.” Nationally, prices rose 5.7 per cent last month from a year earlier, and the annual rate of growth was positive across all regions for the first time since September 2007, Hometrack said. The proportion of sellers achieving their asking price was 96.2 per cent last month, the highest since 2004. In London, the proportion was 99.3 per cent. BoE officials adopted measures to restrain housing prices by ending mortgage incentives under its Funding for Lending Scheme in November.
While the Financial Policy Committee said this month it would “remain vigilant”, it also noted that a number of indicators remained below their long-run average levels. BLOOMBERG
http://www.todayonline.com/business/uk-property-prices-continue-gain Chinese Brooklyn-to-Los Angeles Plans Surge: Real Estate Source: Bloomberg / Luxury It took just one 15-minute phone call in July to persuade Ifei Chang to join Shanghai-based developer Greenland Holding Group Co. and lead a U.S. expansion. Within three months, she was running $6 billion of projects as part of a record push by Chinese investors into American property. Greenland reached a preliminary agreement in October to buy a 70 percent stake in the $5 billion Atlantic Yards development in Brooklyn, New York. That followed a July deal to acquire a $1 billion residential-and-entertainment project in downtown Los Angeles. Chang, who took charge of that site upon arriving in the U.S., is now on the hunt for more investments. “In China, you climb a ladder where everything is floating and moving so fast,” Chang, 49, said in an interview at her sparsely furnished 46th-floor L.A. office overlooking the empty lot where the Metropolis project will be built. “We come from a country of 1.4 billion people and a lot of economic growth. This kind of project and investment speed is very normal in China. That’s why we are so confident we will deliver this project.” Greenland, like other Chinese companies, is committing to a growing number of multibillion-dollar developments outside of its home market. Chinese investments in U.S. commercial properties jumped almost 10-fold last year from 2012, with Manhattan the biggest area for purchases, followed by other New York City boroughs and Los Angeles, according to research firm Real Capital Analytics Inc. Greenland ExpansionGreenland, the state-owned builder that’s also developing one of China’s tallest towers, has become one of its country’s biggest investors in U.S. real estate. The company’s Metropolis project, acquired from the California State Teachers’ Retirement System, is planned as a 275,450-square-foot (25,600-square-meter) development with hotels, apartments and luxury condominiums. Chang, president and chief executive officer of Greenland U.S. Holding Inc., expects completion within five years, with aspirations “to graduate early,” she said. “This billion-dollar investment not only will bolster downtown Los Angeles’s economy, creating hundreds of jobs and generating ongoing tax revenue, but it will bring the kind of world-class amenities that will enhance the appeal of our city center nationally and internationally,” Los Angeles Mayor Eric Garcetti said in an e-mail. Greenland agreed to buy most of Brooklyn’s Atlantic Yards from the site’s original developer, Forest City Ratner Cos., after a couple of phone calls, a dinner and a visit by the seller’s executive team to Greenland’s Shanghai headquarters. Definitive Contract“Three weeks later, we had an agreement,” Chang said. The memorandum of understanding signed in October became a definitive contract in December. Regulatory approval for Atlantic Yards LLC, the joint venture for the project, is expected by mid-year, Chang said. The 22-acre (8.9-hectare) development was initially approved in 2006 and delayed in part by the recession. Greenland’s investment will include 14 apartment buildings in Brooklyn, where rents are surging. “The process and the people have been intense,” MaryAnne Gilmartin, president and CEO of Forest City Ratner, said in an e-mail. “Ifei has proven to be a force of nature -- determined, insightful and highly capable.” Chang’s international background helped prepare her to implement Greenland’s ambitions. The Taiwanese-born developer is the third of five daughters. Her father was once an anti-communist soldier from mainland China, and her mother is a “tiger mom” who set expectations high for their children, Chang said. Childhood FascinationShe developed a fascination with architecture as a child, making mental notes of buildings and streetscapes. Her parents’ aspirations were met by her admission to Yale University after completing undergraduate studies in Taiwan. At Yale, she earned two master’s degrees, in architecture and environmental design. “I know the freedom of thinking from my studies in the States,” she said. “No boundaries. It’s that kind of cowboy spirit.” Chinese developers are on an expansive shopping spree in the U.S. Completed commercial real estate transactions by Chinese investors in the six biggest metropolitan areas totaled almost $3 billion in 2013, up from $335.3 million the previous year, according to New York-based Real Capital. Those figures exclude the total value of such developments as Metropolis and Atlantic Yards, where investments will span several years. China VankeIn San Francisco, China Vanke Co., the nation’s biggest publicly traded developer, teamed with New York-based Tishman Speyer Properties LP to develop the 655-unit Lumina high-rise towers in the South of Market area. Vanke, with investment partner Aby Rosen, broke ground in February on a luxury midtown Manhattan condominium tower for its first New York City project. Chinese builders are seeking the stability and predictable population growth offered by major U.S. cities, and are taking advantage of the Chinese government’s loosening of rules on direct investment overseas. “It’s a very good thing for China to grow and develop, and it’s a good thing for Chinese people to get rich,” Greenland Chairman Zhang Yuliang said at the Metropolis groundbreaking ceremony in February. “When they go abroad, they can be a driver of the economies of other countries.” Chang, at Greenland, has become one of those drivers. After her initial 15-minute call with Zhang in mid-July, when the two discussed Greenland’s vision for expansion in the U.S., Chang received a second call from Zhang on July 25, after he came back from a trip to the country. Chang was officially appointed to her new role the same day. ‘Fiercely Intelligent’Michael Sorkin, founder of Michael Sorkin Studio in New York City and a former Yale architecture professor, said Chang is the most prolific student he had in his 30 years teaching. “She’s fiercely intelligent and has more energy than any average 40 people on the planet,” Sorkin said. “When you look at her resume, you’d think she’s 70 years old with all the work she’s done.” As an architecture student, Chang had a penchant for “thinking outside of the box,” preparing her to become a large-scale developer, a role that often demands more attention to profits, timelines and regulatory obstacles than it does to creativity, said Eric Owen Moss, principal and lead designer at Culver City, California-based Eric Owen Moss Architects and another professor of Chang’s at Yale. “Some students want to make certain types of things or push a certain way to look at architecture,” Moss said. “Ifei was more willing to try a number of ideas with no particular allegiance, just the idea of being productive and energetic.” Japan, ShanghaiChang worked in Japan for architect Osamu Ishiyama for five years, then for Greenland from 2001 to 2006 as project manager for a Shanghai development. For her first interview at Greenland, she was the only woman at a long conference table crowded with the company’s general managers. Chang favors plain black slacks and a simple black Chinese button top, keeps her cropped hair short and doesn’t wear make-up -- deliberate choices as being a woman makes her a rarity in the world of commercial construction, she said. “It’s not about the make-up or perfume or the dress,” she said. “As long as you deliver the job, it’s not a problem.” Only 7.3 percent of U.S. construction-management jobs were held by women last year, according to the Bureau of Labor Statistics. Male-Dominated“The real estate and development industry has been dominated by men, but that’s changing,” Kathleen Carey, co-founder of the women’s leadership initiative at the Urban Land Institute, a development trade group, said in a telephone interview. “It doesn’t have anything to do with women not being suited for development. I think it’s really the history of the industry.” From 2007 to 2010, Chang worked in St. Petersburg, Russia, as design director for Shanghai Overseas United Investment Co., which was co-developing a $4 billion master-planned community called Baltic Pearl. She then spent a year in Hong Kong working for a European company before getting the call that led her to return to the U.S. Representatives of Chinese companies -- even those with extensive international experience -- often experience culture shock when first faced with the U.S. legal system, approval processes and paperwork, Chang said. “Everybody is afraid of getting sued,” she said. “In China we may step on somebody else’s feet, but so what? Sometimes somebody else will step on mine. It’s all good. I won’t sue them.” Culture ShockThe culture shock is sometimes mutual. Rob Jernigan, a managing principal at Gensler, the lead architect on the Metropolis project, was surprised to have Chang show up in his downtown Los Angeles office as many as 10 times a week and get calls from her on Sunday afternoons. “At first it’s a bit daunting, but once you get in sync and you understand she doesn’t have the expectation of any special treatment, you’re on board,” he said. “You realize she’s really part of the team.” Chang’s own architecture background also has affected the way she works with Gensler, Jernigan said. “Most clients won’t come into your office and start red-marking your drawings,” he said with a chuckle. Greenland isn’t interested in well-developed areas such as Manhattan. Rather, it focuses on neighborhoods undergoing transformation. Downtown Los Angeles and Brooklyn fit the bill because a “developer can be a big player on the chessboard,” she said. ‘Fast Transformation’“We want to be the early pioneer and to echo a city’s need,” Chang said. These projects “will be the prototype for Greenland to enter a city under very fast transformation with the potential still underestimated.” Chang said she plans to ultimately return to Asia to slow down the pace of her life and spend time with friends and her aging parents. Her father is 85 years old and her mother 72. If the Metropolis and Atlantic Yards projects are far enough along, Chang may be able to return home within two to three years, she said. Single and without children, Chang said she envies people who have enough time to take care of a dog. “Right now there is no time to think of parents, of old girlfriends, and no time to respond to personal e-mails, no time to visit friends,” Chang said. Chang does allow herself the occasional break to throw a small office party. At one such gathering on a March afternoon, her coworkers ate cupcakes while she translated her American colleagues’ names into Chinese. Mostly, though, she’s focused on Greenland’s U.S. projects and getting American cities to run at a Chinese pace. “We hope the city permit procedure will pick up the speed we want, pick up the speed that businesses want, pick up the speed investors want, pick up the speed the citizens really need,” Chang said. “We should all move very fast. We should catch the moment.” -By Nadja Brandt and John Gittelsohn Hutchison Whampoa Wins Approval for 3,500 London Homes Source: Bloomberg / Luxury Hutchison Whampoa Ltd. (13), controlled by Asia’s richest man Li Ka-shing, won preliminary approval to build as many as 3,500 homes less than two miles (3.2 kilometers) from London’s Canary Wharf financial district. The project known as Convoys Wharf, in the borough of Lewisham, was endorsed yesterday by London Mayor Boris Johnson. Hutchison Whampoa, a Hong Kong-based company with interests in the retail industry, ports and telecommunications, also plans to construct offices, stores, a hotel and restaurants at the 41.2-acre (16.7-hectare) site in Deptford. Record-low borrowing costs and demand from overseas buyers helped London home prices gain 13.8 percent to more than 414,000 pounds ($690,000) in the year through February, according to the Land Registry. Asian companies are seeking to benefit from the rising property values with the purchase of development land at sites including Battersea Power Station and Royal Wharf on the north bank of the River Thames. “We need to build thousands of new homes in the capital and proposals to do that at Convoys Wharf have stalled for far too long,” London Mayor Boris Johnson said in an e-mailed statement today. Hutchison Whampoa said in February that its hotels and property unit contributed to a 20 percent increase in full-year profit. Li’s companies have spent about $14.5 billion on acquisitions in Europe since July 2011, according to data compiled by Bloomberg. “We are delighted that the mayor has approved the masterplan for Convoys Wharf and that work can begin,” Edmond Ho, executive director and general manager of Hutchison Whampoa Properties, Europe, said in a statement today. The company rose 2.3 percent to HK$105.10 in Hong Kong trading. -By Neil Callanan and Patrick Gower http://www.bloomberg.com/news/2014-03-31/hutchison-whampoa-wins-approval-for-3-500-london-homes.html Hong Kong Property Tycoon Makes $533 Million Bet on Solar Source: Bloomberg / Sustainability A Hong Kong real-estate tycoon has spent the past year accumulating stakes in failing solar companies, piecing together what may become the biggest collection of photovoltaic factories in the world. Zheng Jianming, also known in Cantonese as Cheng Kin Ming, has spent or pledged about $533 million to buy assets that at their peak were worth almost $20 billion, according to regulatory filings in the U.S. and Hong Kong, where he has a home and office. The transactions, if completed, would transform Zheng, a newcomer to the solar industry, into one of its most powerful leaders. Another Zheng solar investment in 2012, a 30 percent stake in Shunfeng Photovoltaic International Ltd. (1165), has surged more than 2,900 percent and is now worth more than $745 million. “He’s a bit mysterious and not really well documented in the industry,” said Andrew Klump, managing director at the Shanghai-based consulting company Clean Energy Associates. “If he wanted to be more high-profile he would be. He’s probably going to continue to stay under the radar.” Zheng declined to comment when contacted at home and through companies he owns, Faithsmart Ltd. and Fulai Investments Ltd. He didn’t respond to questions left in writing at his office and home in Hong Kong. Apple Daily said in December that he’s 48, and his age couldn’t be verified in company records. Global OversupplyKlump has never met Zheng and says he knows little of the man. Though he’s identified on press releases announcing his solar acquisitions, almost a dozen solar-industry analysts on three continents said they knew nothing beyond the name when contacted by Bloomberg. Zheng’s deals would help China consolidate factories responsible for more than half the world’s panels. The solar industry is emerging from a two-year slump that was triggered in part by expanding production capacity among Chinese suppliers. The oversupply of panels ate into margins and eroded profits, and helped push some companies into bankruptcy. The recovery is driven mainly by increasing demand that’s soaking up the overcapacity. Installations in China alone reached 12 gigawatts last year as the country became the biggest solar market, and may exceed that in 2014. Global installations this year may increase 27 percent from 2013 to 49 gigawatts, according to Bloomberg New Energy Finance. Solar HoldingsThrough various holding companies, Zheng owns 21.6 percent of LDK Solar Co. (LDK), the second-biggest supplier of PV wafers in 2012. He also owns 30 percent of the Hong Kong-based panel maker Shunfeng, which is seeking to buy Wuxi Suntech. That’s the main unit of what was the world’s biggest panel producer until it was surpassed by Yingli Green Energy Holdings Co. (YGE) in 2012. Suntech shareholders are scheduled to meet April 7 to vote on the deal. Owning a stake in all that capacity may help Zheng control the amount of photovoltaic panels entering the market, said Dexter Gauntlett, senior research analyst for energy at Navigant Research. Merging Suntech with stakes in LDK and Shunfeng “represents one of the largest, if not the largest amount of solar module manufacturing capacity” controlled by an individual, said Gauntlett. “I don’t want to say it’s unprecedented, but it’s definitely not the norm to take such a wide holding in three different companies.” The three companies complement each other, providing wafers, panels and solar-farm development, Jack Lai, LDK’s chief financial officer, said in an interview today. While there are no plans to combine the companies, they are starting to cooperate, “almost like sister companies,” Lai said. Solar BillionaireThe transactions would push Zheng’s power over the industry past Shi Zhengrong, 51, the first solar billionaire and once China’s richest man. Shi was ousted as chairman of Suntech Power Holdings Co. in March 2013, days before the company defaulted on $541 million of U.S. bonds, triggering the bankruptcy filing for its main unit in China. “You could have one person become the king of solar again,” said Klump. Zheng served as a researcher with the Development Research Center at China’s State Council early in his career, according to the Beijing News newspaper. He shifted into real estate in Shanghai in 1993, and gained attention in media reports at the time by buying up property in Hong Kong in 2003 during the SARS health crisis as prices plummeted. He now owns commercial properties in some of Hong Kong’s most prestigious areas known for Michelin-starred restaurants and nightclub operators, according to company documents. Zheng’s home address in Hong Kong towers over Victoria Harbor, where nobody answered the door on three occasions. Solar AcquisitionsZheng’s move into solar began in November 2012, when his Faithsmart Ltd. holding company acquired another holding company, Peace Link Services Ltd., which came with a 29.7 percent stake in Shunfeng. The price of the deal wasn’t disclosed. Shunfeng is based in the I.M. Pei-designed Bank of China Tower, Hong Kong’s most iconic building, and it’s listed as the local address for other Zheng holdings in the city. He wasn’t available when a reporter visited the 30th floor office suite. Shares of Shunfeng have surged to more than HK$9 in recent trading, giving the company a market value of HK$19.3 billion ($2.49 billion), from 30 Hong Kong cents a share in November 2012, when Zheng took over. Shunfeng agreed in November to pay 3 billion yuan ($483 million) for Wuxi Suntech. The deal has been approved by the court acting as Wuxi Suntech’s bankruptcy administrator in China. It still needs clearance from shareholders. LDK DealsThrough Fulai Investments, Zheng paid $50.3 million to acquire his stake in LDK Solar in three transactions from January to July of last year. LDK had $2.78 billion in debt at the end of the third quarter and failed to repay 1.7 billion yuan ($273 million) in bonds that matured Feb. 28. The company is seeking to restructure the debt and to wind up its business in the Cayman Islands, where it’s incorporated and a hearing is scheduled tomorrow. LDK said operations in China won’t be affected. The New York Stock Exchange began proceedings to delist its American depositary receipts yesterday. Consolidation within the solar industry are signs “of an industry entering a maturation process,” Robert Petrina, managing director of Yingli’s Americas unit, said in an e-mail. “It is a process that will dramatically reshape the industry landscape.” ‘Fire-Sale Prices’Ryan Ulrich, a Wuxi-based spokesman for Suntech Power Holdings Co., declined to comment on Zheng. The instability in China’s solar industry helped Zheng negotiate fire-sale prices, said Angelo Zino, an analyst at S&P Capital IQ in New York. “A lot of these names, at least the China-based ones, were priced for bankruptcy,” Zino said. “If you’re a long-term believer in the prospect of solar, which Zheng must be, he’s looking to build up investments on the cheap.” With solar demand catching up with supply, Zino said panel prices are stabilizing this year. “If we see a massive solar recovery, over time these investments are going to reap great rewards for him,” Zino said. “I don’t know that much about him, but looking at his actions, that’s my guess on what he’s trying to do.” -By Ehren Goossens and Benjamin Haas Foreign Supremacy in London’s Luxury-Home Market Erodes Source: Bloomberg / Luxury The dominance of foreign homebuyers in central London lessened last year as high prices reduced demand and an improving global economy provided alternative safe investments, Hamptons International Ltd.said. U.K. buyers accounted for almost half of sales in the boroughs of Kensington & Chelsea and Westminster in 2013, up from 43 percent in 2012 and 37 percent the year before, the London-based broker said in an e-mailed statement today. U.K. investors bought 77 percent of properties sold across Hamptons’s 29 London offices, up from 65 percent in 2012. Prices in London’s luxury-home market have surged 68 percent since March 2009 as a weaker pound, the euro-region debt crisis and uprisings across north Africa and the Middle East attracted investors seeking to protect their wealth. Gains will slow by almost half in 2014, Knight Frank LLP said in December. “As the global economy recovers and other asset and investment classes become less risky, prime central London is beginning to look fully priced, cooling interest from international buyers,” Johnny Morris, head of research at Hamptons, said in the statement. “Coupled with the surge in domestic demand across the capital, the dominance of the international buyer in London is slowly but steadily being eroded.” The proportion of rentals by international tenants in London’s most desirable areas climbed to 55 percent from 50 percent in 2012, as an improving economy attracted more highly skilled migrant workers, Morris said. -By Patrick Gower Telecom Italia Sells Milan Headquarters for About $100 Million Source: Bloomberg / Tech Telecom Italia SpA (TIT), the phone company seeking to trim its debt pile of $37 billion, sold its headquarters near Milan’s stock exchange and Piazza del Duomo, home to the city’s famous Gothic cathedral. The six-story building located on via Negri 1 was sold to Fondo Inarcassa RE for 75 million euros ($103 million), Telecom Italia said yesterday. The carrier will remain a tenant of the building, which was renovated in 2007 and has gross floor space of 11,600 square meters (125,000 square feet). Marco Patuano, in his first six months as chief executive officer, sold an Argentine business, put assets including wireless towers in Italy and Brazil up for sale, and scrapped a dividend to help restore finances at Italy’s biggest phone company. Telecom Italia’s net loss last year reached 674 million euros, taking the accumulated deficit in the past three years to more than 7 billion euros. Telecom Italia joins a list of European technology and telecommunications companies that sold or tried to divest their headquarters. Nokia Oyj (NOK1V) agreed in 2012 to sell its head office, a glass building overlooking the Baltic Sea in Espoo, Finland, for 170 million euros. Shares of Telecom Italia fell 0.3 percent to 85.4 cents at 9:22 a.m. in Milan. They have jumped 20 percent this year, giving Telecom Italia a market value of 15.5 billion euros. Last year, Telefonica SA (TEF), the biggest shareholder in Telecom Italia, tried to look for a buyer for its Madrid headquarters, a complex known as Distrito Telefonica that opened at the height of Spain’s property boom in 2008, people familiar with the matter said at the time. The Milan building was earlier the headquarters of Stipel, the Piedmont and Lombardy phone carrier that started operations in 1925 and whose advisers included Giovanni Agnelli senior, principal shareholder in Fiat SpA. In 1964 Stipel joined SIP, Societa Italiana per l’Esercizio Telefonico, the former name of Telecom Italia. -By Daniele Lepido Greece Accepts Lamda Bid to Develop Europe’s Largest Urban Plot Source: Bloomberg / News Greece’s state asset sales fund accepted a revised offer from Lamda Development SA (LAMDA) to develop Europe’s largest urban plot at the site of the former Athens airport, as the government struggles to catch up with its international creditors’ requirements to maintain the flow of funding. The Hellenic Asset Development Fund accepted Lamda’s improved offer of 915 million euros ($1.2 billion) to develop the 6.2 million square-meter (620 hectare) former Athens airport site, an area almost twice the size of New York’s Central Park. Advisers Citigroup and Piraeus Bank “submitted two separate positive fairness opinions on the financial offer of 915 million euros submitted by Lamda Development SA and the investors supporting its bid,” the fund said today. Lamda submitted an improved offer on March 26, following the fund’s request for an increased bid, 25 percent more than its initial offer. “A huge piece of urban land, which was abandoned for more than 10 years will now become a source for growth for the city,” Ioannis Emiris, chief executive officer of the fund, said in a phone interview last week. As European finance ministers meet in Athens tomorrow to discuss the release of the country’s next tranche of its bailout loan, the country’s ambitious privatization program remains behind targets. Greece last year failed to secure any offers for gas monopoly Depa, after an anticipated bid from Russia’s OAO Gazprom (GAZP) was never submitted. Investment for SiteLamda Development estimates the total cost for exploitation of the site will reach 1.2 billion euros, bringing the company’s total investment on the land to 2.1 billion euros, Chief Executive Officer Odysseus Athanassiou told Bloomberg in an interview last week. Investment could reach 11 billion euros, 2.5 billion euros of which will be invested in the first five years, creating 50,000 jobs, Athanassiou said. The plan for the site development includes the creation of a park of at least 200 hectares, construction of schools, hotels and retail outlets, as well as infrastructure and utilities projects. Finance Minister Yannis Stournaras said in an interview with Bloomberg earlier today that he expects the country to raise 2 billion euros from state asset sales this year, after having raised a total of 3.8 billion euros in the three years to 2013. Forecasts call for Greece to emerge this year from its six-year recession, which has seen unemployment rise to 27.5 percent. -By Eleni Chrepa and Nikos Chrysoloras Florida Home Foreclosure Rate Falls to 6.2%, Triple U.S. Average Source: Bloomberg / Luxury The residential foreclosure rate in Florida, which has the highest percentage of delinquent mortgages in the U.S., declined to 6.2 percent in January, according to a report released today by CoreLogic Inc. (CLGX) That’s down from 10.1 percent from a year earlier. Florida’s rate was triple the national average of 2 percent, according to the report by Irvine, California-based CoreLogic Inc., a mortgage data and software company. Florida led the nation with 116,000 foreclosures completed in the 12 months through January, the company said in a separate report last month. The foreclosure data indicate a rebound in the state housing market, which has declined for five years through the fiscal year ended June 30, as measured by property-tax revenue. Bonds from Florida issuers have gained 3.4 percent this year, trailing the 3.6 percent gain in the broad $3.7 trillion municipal market, according to S&P Dow Jones Indices. -By Toluse Olorunnipa Evergrande Earnings Rise 66% as Developer Sells More Homes Source: Bloomberg / News Evergrande Real Estate Group Ltd. (3333), China’s third-biggest developer by area sold, said 2013 earnings rose 66 percent after it sold and completed more properties as the government didn’t add to nationwide curbs. Profit excluding valuation gains or losses rose to 10.31 billion yuan ($1.66 billion) from 6.2 billion yuan a year earlier, the company said in a statement to the Hong Kong stock exchange today. That compares with the 8.6 billion yuan average estimate of 18 analysts surveyed by Bloomberg. Revenue jumped 44 percent to 93.67 billion yuan. Evergrande’s earnings rose after it sold the third-most homes by area among Chinese developers, according to China Real Estate Information Corp., or CRIC, a property data and consulting firm. China’s Premier Li Keqianglast year refrained from adding new nationwide property curbs to rein in prices. “Evergrande targeted mid-end buyers, which helped turn around sales quickly,” Duan Feiqin, a Shenzhen-based property analyst at China Merchants Securities Co., who rated the stock buy, said before today’s release. “The company is also doing well on cost control.” Evergrande’s contracted sales rose 8.8 percent in 2013 to 100.4 billion yuan, representing a gross floor area of 14.89 million square meters (160.26 million square feet), it said. Sales Target“In 2014, although it is widely expected that the growth of transaction volumes and prices in the market may narrow and local regions may experience short-term market fluctuations, the policy and market environment generally remains stable, which provides a solid base for the group,” Chairman Hui Ka Yan said in the statement today. The developer reaffirmed its sales target of 110 billion yuan for the year, compared with 100 billion yuan in 2013. Evergrande shares rose 1.7 percent to HK$3.66 at the close in Hong Kong. They have gained 24 percent this year. The majority of Evergrande’s properties are in second- and -third cities, where China has experienced a construction boom. Sales from China’s four first-tier cities accounted for 1.4 percent of the company’s property revenue last year, while second-tier cities made up 43 percent and third tier 56 percent, Evergrande Chief Executive Officer Xia Haijun said at a press conference after the earnings today. Smaller CitiesAfter the annual meeting of the National People’s Congress in Beijing earlier this month, Li said the government will control the residential market “differently in different cities,” taking into account local conditions. He didn’t provide more details. “We entered big cities last year, but it doesn’t mean we are bearish on smaller cities,” Xia said. “Small cities will be the future of the property market on China’s urbanization.” While the nation’s top 10 to 20 developers had good sales in the January-February period, smaller ones are not doing so well, Xia said. Cases of individual cities with an oversupply of properties and developers cutting prices was normal because there are so many developers and more than 600 small cities in China, Hui said at the press conference. “It is wrong to be pessimistic about property in China’s third-tier cities,” Hui said. “Our sales in third-tier cities has proven that wrong. Only a few cities have an oversupply issue. Only one company went insolvent. Can you say China’s property industry overall will crash?” China has almost 90,000 developers nationwide, National Bureau of Statistics data show. Zhejiang Xingrun Real Estate Co. became insolvent this month with 3.5 billion yuan in debt, according to an official in the eastern Chinese city of Fenghua. Authorities detained founder Shen Caixing and his son for illegal fundraising, Xu Mengting, director of the government information office, said in a March 21 interview. Evergrande will pay a final dividend of 0.43 yuan per share. -By Bloomberg News |