Real News‎ > ‎2014‎ > ‎April 2014‎ > ‎

3th April 2014

Singapore Economy

Strike the right balance to make Singapore a 'city in a country'

Source: Straits Times

Speaking in London last week, Prime Minister Lee Hsien Loong expressed confidence in the future as Singapore strives to remain a truly global city while maintaining national solidarity. He emphasised that Singapore "must get the balance just right". In the past few years, I have been one of several observers who have spoken about the need to better manage the tensions or contradictions between these two goals.

Singapore Real Estate

Ascott makes HK$545m acquisition

Serviced residence will be rebranded as Citadines Mercer HK

Source: Business Times / Companies

CAPITALAND's wholly owned serviced residence business unit, The Ascott Limited, has acquired an operating serviced residence in Hong Kong for HK$545 million (S$88.8 million).

The 55-unit property will be rebranded as Citadines Mercer Hong Kong in the third quarter of this year.

Located in Sheung Wan on Hong Kong Island, Citadines Mercer Hong Kong is next to the central business district, close to Soho and Lan Kwai Fong.

The serviced residence is a one-minute walk to Sheung Wan Mass Transit Railway, a five-minute walk to the Hong Kong-Macau Ferry Terminal and a 10-minute walk to the International Finance Centre where many multinational companies and financial institutions are based.

-By Vivien Shiao

Spring Grove gets owners' OK to go en bloc

Requisite 80% consensus reached after offer price raised to $2,600 psf

Source: Business Times / Property

SPRING Grove in the prime Grange Road area has arrived at the requisite 80 per cent consensus from owners to put the condominium up for en bloc sale.

According to a notice emailed to residents obtained by The Business Times, owners of 264 out of 325 units have signed the collective sale agreement as at March 23, 2014 - representing 

81 per cent of the condo's total share value and strata area.

A five-day cooling-off period, imposed after the approval was obtained, has since ended.

Unit owners will receive an average $2,600 per sq ft for their two- to four-bedroom apartments and penthouses, according to Ian Loh, director and head, investment & capital markets at Knight Frank, which is sales agent to the deal, as well as sales committee chairman Joseph Chia.

-By Lee Meixian

V on Shenton ties up with Aston Martin

Source: Business Times / Property

BUY a penthouse at V on Shenton and get a discount on an Aston Martin sports car?

To celebrate Aston Martin Singapore's 20th anniversary, the British luxury sports car manufacturer is partnering V on Shenton to offer new owners of a three-bedroom or penthouse unit discounts on selected car models.

Among the six models available for discounts are the V12 Vantage S launched in Singapore earlier this year and the Vanquish.

V on Shenton, developed by United Industrial Corporation (UIC), is a twin-tower development comprising a 23-storey office building and a 54-storey residential tower. The mixed development is due for completion in 2017.

-By Lee Meixian

MCL to price Jurong condo at $1,250-1,350 psf

Analysts expect strong demand from owner-occupiers; eye investment potential

Source: Business Times / Property

MCL Land's upcoming condominium project, Lakeville, located in the Jurong Lake District, will be launched with an average price of $1,250 to $1,350 per square foot (psf).

The group's chief executive officer, Koh Teck Chuan, told BT yesterday that this average pricing is an early-bird pricing on the balloting day to encourage potential buyers when the project is open for booking tomorrow.

The developer has not decided on the number of units in the 696-unit project that will be initially launched as that will depend on the demand, Mr Koh said. Huttons is the marketing agent for the project.

This development sits on a 240,654 sq ft plot with a 99-year lease. It was snapped up by MCL in January last year for $439 million, or $651 psf per plot ratio.

-By Lynette Khoo

Pan Pacific opens second Myanmar hotel

Source: Straits Times 

A singapore hotel group has opened its first hotel in Myanmar's capital Naypyidaw amid rising tourism and foreign business investment in the country. Pan Pacific Hotels Group, a wholly owned subsidiary of Singapore-listed UOL Group, opened the Parkroyal Nay Pyi Taw with 90 rooms on Tuesday.

Investor stymies UIC's SingLand takeover bid

Source: Straits Times

A KEY investor has sold a large tranche of its shares in Singapore Land yesterday in a strategic bid to hinder moves by United Industrial Corporation (UIC) to privatise the firm. Global equity investment fund Silchester International Investors offloaded 13.25 million of its clients' SingLand shares, it announced yesterday.

Review bank valuation process for new launches

Source: Straits Times

Property prices have risen rapidly since 2009, and it has very much to do with banks matching their valuations for new launches with the developers' asking prices. The industry's stand is that buyers' willingness to pay the prices set by developers is a true indication of market forces at work, and hence, it is right for banks to match the prices.

MCL Land sells 180 units at Lakeville

More city fringe projects expected to be launched in Q2, including Hong Leong's Commonwealth Towers in May

Source: Business Times / Wealth

MCL Land's Lakeville project at Lakeside managed to move 180 units yesterday at an average price of $1,300 psf on its first day of launch, after some 400 cheques were balloted.

"This was slightly better than we had expected," said MCL chief executive Koh Teck Chuan. The group had initially planned to release 150 units on the first day, before releasing another 50 units.

Most of the units sold at Lakeville were one to two-bedroom apartments, Mr Koh told The Business Times. Close to 90 per cent of the buyers are Singaporeans and most are HDB upgraders.

-By Lynette Khoo

Pasir Panjang set to get boost from Master Plan

Source: Straits Times

Pasir Panjang has long been associated with container ports and warehouses but that image is changing, consultants say. Private apartments, mostly low-rise and freehold, now line the western stretch of Pasir Panjang Road close to Clementi Road.

Latest property market offerings include the old and the new

Source: Straits Times

A range of properties has hit the market this month, from heritage shophouses to sleek new strata shops. Buyers with a taste for old- world elegance may be attracted to the adjoining two-storey conservation shophouses near the junction of East Coast and Joo Chiat roads. They were built in 1939 and have a combined gross floor area of 5,705 sq ft and a total land area of 3,791 sq ft.

Royal Group 'in talks to buy hotel in KL'

Source: Business Times / Wealth

ROYAL Group Holdings Pte, the closely held company that owns The Sentosa Resort & Spa in Singapore, is in talks to buy a hotel in Kuala Lumpur from BlackRock Inc, according to a person with knowledge of the matter. The transaction needs government approval, the person said, declining to be identified as the talks are private. BlackRock declined to comment in an emailed response to queries on the sale from Bloomberg News.

The 540-room DoubleTree by Hilton is located at The Intermark, an office and retail complex within a 10-minute walk from the Petronas Twin Towers and Kuala Lumpur Convention Center. Hotel investment volumes in the region reached a record high with 143 deals valued at US$13.4 billion last year, according to CBRE Group Inc.

BlackRock, the world's largest asset manager, sold its Westin hotel in Singapore's new central business district last year. The 305-room hotel in the Asia Square Tower 2 commercial development in the Marina Bay area was sold to Daisho Group, BlackRock said in December. Royal Group bought The Sentosa Resort & Spa in Singapore last year from Hong Kong-based HKR International Ltd for S$210.85 million, HKR said in a filing on Aug 15.

-From Singapore

Surbana sets up office in Myanmar

It will employ Myanmar staff; starts scholarship fund to develop local capabilities

Source: Business Times / Singapore

SURBANA International Consultants has set up a branch office in Yangon to meet growing demand for its township planning services in Myanmar.

Surbana's chief executive officer Pang Yee Ean said at the official launch at the Sedona Hotel in Yangon yesterday that the move is testament to the group's long-term commitment to do business in Myanmar.

"Our physical presence will be complemented by a deliberate effort to build local capabilities in the long run," he said. The group's office will house local full-time Myanmar professional and support staff, overseen by Surbana's deputy general manager for Myanmar operations, Gareth Wong.

Surbana's Singapore team has been supporting projects in Myanmar and this will continue, Mr Pang said. The company will also invest in talent in Myanmar, and build a strong local team to provide end-to-end building and engineering solutions.

-By Lee Meixian

Oxley may list overseas property business on Catalist

Source: Straits Times

Oxley Holdings is considering restructuring its overseas property business, which may include listing it separately on Catalist. The company disclosed this late last Friday in response to a Singapore Exchange query over the trading activity of its shares.

Oxley may restructure overseas business

Source: Business Times / Companies

OXLEY Holdings said it is exploring the possibility of restructuring the group's business, in particular its property development business outside Singapore (including its first London residential project Ro-yal Wharf). The study will include the feasibility of listing such an overseas property development business on Catalist. The firm said this in response to a query from SGX on unusual volume movements in its stock.

ANZ stands by view of UIC's offer for SingLand

Source: Straits Times

The independent financial adviser to SingLand's independent director has stood by its assessment of a general offer for the company made by its parent United Industrial Corp (UIC). UIC's offer of $9.40 per share for SingLand is still fair and reasonable from a financial point of view, ANZ said last Friday.

Real Estate Companies' Brief

GLP expands tie-up with Sinopharm

Source: Business Times / Companies

Global Logistic Properties (GLP) has signed two lease agreements, for space totalling 13,000 square metres, with China National Pharmaceutical Group (Sinopharm) in an expansion of their partnership. The leases, for 7,000 sq m in Shanghai and 6,000 sq m in Suzhou, are part of Sinopharm's plans to enhance distribution capability in eastern China.

Purchase options for Sim Lian management

Source: Business Times / Companies

A joint venture of developer Sim Lian Group has granted the group's management and their relatives purchase options in Vision Exchange, its integrated development at Jurong. The buyers - deputy chairman Kuik Thiam Huat and his wife, as well as his son; Group CEO Kuik Sin Pin and his wife; and KCM Invest-ments which is linked to Kuik chim Mui, a sister of executive chairman Kuik Ah Han - are not entitled to preferential prices or treatment.

Overseas retail Reits - risk or reward?

It could take a projected yield of 7% for these Reits to be attractive

Source: Business Times / Young Investor

RETAIL real estate investment trusts (Reits) are popular because they are regarded as defensive investments - after all, people will still shop, especially at suburban malls, no matter how badly the economy is doing. Moreover, their current yield of about 6 per cent per year is far higher than bank deposit rates.

On top of safety or defensiveness, overseas retail Reits present an additional interesting proposition - on the one hand, they are still "safe" in the sense that they include well-located malls that will mint money no matter the economic circumstances, but they also give investors exposure to growing spending power in two countries with the largest number of potential middle class consumers in the world, China and Indonesia.

However, there are potential downsides. Because earnings are in a foreign currency, and because the malls are located in a less certain political environment, the risks of investing in them might clash with investors' original intent to invest in "safe" assets.

For one thing, the malls they own are remote and can't be easily visited. Also, higher potential returns in the medium to long term come with currency depreciation risks in Indonesia, the risk of China slowing down, cooling retail rents in Hong Kong, and rising interest rates in general.

-By Cai Haoxiang

Fortune Reit - HK suburban malls

Source: Business Times / Young Investor

THE first foreign Reit listed in Singapore was Fortune Reit, sponsored by Hong Kong billionaire Li Ka-shing's Cheung Kong Holdings, a large property developer.

It was Singapore's third Reit and began in 2003 with five Hong Kong suburban malls located mostly in the New Territories, and then worth a total of HK$3.3 billion (S$537 million). At the time, two of them, The Metropolis and Ma On Shan Plaza, contributed about 75 per cent of the Reit's total revenue.

Since then, the Reit has diversified its asset base. In 2005, it raised equity and new debt and acquired another six malls, nearly doubling the value of its assets. It bought another three in 2009, two in 2012 and one last year. Today, it has a total of 17 properties valued at HK$29.3 billion.

The top contributor to revenue and net property income for 2013 is Fortune City One, the mall serving City One Shatin, a 52-block residential development in Hong Kong's New Territories by the Shing Mun River. City One contributes more than 22 per cent of Fortune Reit's total revenue - more than the Reit's lowest-contributing 10 properties combined.

MGCCT - a large HK retail asset

Source: Business Times / Young Investor

ONE of the larger counters to hit the market last year was Mapletree Greater China Commercial Trust (MGCCT), also known by its Bloomberg name MAGIC:SP. The Reit's initial public offering last year raised $1.7 billion. MGCCT's advantage lies in its low cost of debt. Parent Mapletree Investments is wholly owned by Government investment company Temasek Holdings. 

MGCCT is the only overseas retail Reit here to have a credit rating. It is rated Baa1 by Moody's - putting it on an investment grade level that should allow for cheaper fundraising and higher gearing.

MGCCT is not precisely a retail Reit, but more of a diversified counter that has exposure to both office and retail assets. The Reit has two assets worth a total of $4.4 billion: Festival Walk in Hong Kong and Gateway Plaza in Beijing. The retail component dominates for Festival Walk, and the office component dominates for Gateway Plaza.

Nevertheless, its main asset Festival Walk is essentially a giant shopping mall, contributing about three quarters of revenue and net property income. The property comprises seven storeys of retail and another four storeys of offices on top of the mall, with three floors of underground car parks. It has 580,000 sq ft of retail lettable area and 214,000 sq ft of office lettable area. 

Retail generates most of the rental income. It is by the Kowloon Tong MTR station, which is also an interchange for commuters to switch to a line to the New Territories and the China border.

Gateway Plaza is in Beijing's Chaoyang district, along the East Third Ring North Road, within what is known as the Lufthansa commercial and office area. It is an office building with a small retail component, with office rentals generating most of the income. A major tenant is automobile company BMW Group, which contributed 22 per cent of gross rental income, according to the Reit's prospectus. A CBRE report last April noted Beijing office space will see an undersupply situation in the next four years, in contrast to other cities.

CRCT - China shopping malls

Source: Business Times / Young Investor

TO INVEST in China shopping malls, investors should look at Singapore's first and only China shopping mall Reit, CapitaRetail China Trust (CRCT).

CRCT contains 10 malls worth $2 billion in total as at end-2013. Five are in Beijing, and the Reit has one mall each in the cities of Shanghai, Wuhan, Wuhu, Zhengzhou and Huhhot.

The biggest and most profitable mall is CapitaLand Xizhimen, located at a transportation hub in Beijing. About 35 million shoppers passed through it last year - about the same as those passing through Raffles City, for a comparison.

CRCT's second most profitable mall by net property income is CapitaLand Wangjing in Beijing's Chaoyang district. Just over 10 million shoppers passed through it last year, putting its traffic on par with Rivervale Mall in Sengkang.

Lippo Malls - Indonesian retail

Source: Business Times / Young Investor

INSTEAD of North Asian retail property, investors who prefer a different region can look at Lippo Malls Indonesia Retail Trust. The Reit offers exposure to suburban malls in Indonesia, another emerging giant.

DBS Group Research said in a February report that retail space in Jakarta, where many Lippo Reit malls are based, is becoming tighter. This means mall operators could have better bargaining power when negotiating rents, it said. The Jakarta government is also restricting new malls from being built due to traffic problems and to improve city planning efforts. Rents in Jakarta are also among the lowest in the region, DBS said.

Lippo Reit is sponsored by Indonesian conglomerate Lippo Group. The group was founded by Indonesian tycoon Mochtar Riady, who built a business empire spanning financial services, hotels, resorts, malls, natural resources, healthcare and residential properties.

Lippo's other listed companies in Singapore include real estate company Overseas Union Enterprise (OUE) which made an unsuccessful bid for Fraser & Neave in 2012, and Auric Pacific, maker of Sunshine bread, owner of Delifrance and Food Junction. Other than Lippo Malls, two other Reits are connected to Lippo: hospital owner First Reit, and OUE Commercial Reit which owns the OUE Bayfront office tower and Shanghai's Lippo Plaza. There is also stapled security OUE Hospitality Trust, which owns the Mandarin Orchard hotel and Mandarin Gallery mall.

From bohemian mall to mani-pedi hub

Source: Straits Times

The Holland Road Shopping Centre has become a pale shadow of its former self, with shops changing hands or staying empty, and an influx of nail bars that have turned it into a manicure-pedicure hub. The three-storey landmark in Holland Village used to draw crowds looking for souvenirs, curios, furniture, art and antiques, as well as festive decorations, clothes for big-sized people and shoes for those with large feet.

Views, Reviews & Forum

Traffic congestion affects commuting costs which impact on housing prices

Source: Straits Times

Yes, traffic congestion can impact a flat's price but whether the impact is positive or negative depends on how far the flat is from the central business district (CBD). It is well known, by economists and laymen alike, that housing located in city centres is generally more expensive than housing on the periphery.

Global Economy & Global Real Estate

HK developers gain on signs of easing of curbs

Hang Seng Property Index of nine stocks closes 3.7% higher

Source: Business Times / Property

[HONG KONG] Hong Kong developer stocks jumped the most in more than two years on speculation the government may ease curbs on home prices after the city's leader said the market is no longer overheated.

Sun Hung Kai Properties Ltd, the city's second-largest developer, surged 4.1 per cent and Wharf Holdings Ltd advanced 4.3 per cent. The Hang Seng Property Index of nine company stocks closed 3.7 per cent higher, the most since Jan 19, 2012, while the benchmark index was up 0.3 per cent.

Chief Executive Leung Chun-ying said on Tuesday that the government won't extend a pilot programme to reserve homes for local residents, part of a package of measures aimed at cooling prices in the world's most-expensive housing market. Prices fell 4.1 per cent in the past year, after more than doubling since 2009, as higher sales taxes and downpayment requirements were imposed.

"Although we do not view the chief executive's comment as a signal of actual easing, we believe the market will take a different view in light of the current cheap valuation of the Hong Kong property stocks," Barclays plc analysts led by Paul Louie said in a note yesterday. "It is fair to say that the housing market is no longer overheating."

-From Hong Kong

Key leader's familiarity 'a plus' for Tianjin Eco-City

Source: Straits Times

National Minister Khaw Boon Wan, who is currently in Beijing for the 6th Sino-Singapore Tianjin Eco-city Joint Working Committee (JWC) Meeting, has said developing "software" and "heartware" will now be priorities in the next phase of the Tianjin Eco-city's development.

Developing “software” & “heartware” priorities in next phase of Tianjin Eco-city’s devt

Source: Channel News Asia / Singapore

SINGAPORE: National Minister Khaw Boon Wan, who is currently in Beijing for the 6th Sino-Singapore Tianjin Eco-city Joint Working Committee (JWC) Meeting, has said developing "software" and "heartware" will now be priorities in the next phase of the Tianjin Eco-city's development.

In his latest Housing Matters blog titled "Green Minds with Green Hearts", Mr Khaw said he had a fruitful discussion on the future plans for the Eco-city.

He had co-chaired the meeting with his Chinese counterpart Jiang Weixin, Minister of Housing and Urban-Rural Development.

Their common goal is to build an Eco-city that is replicable in other parts of China.

Mr Khaw said during its recent National People's Congress, China had vowed to fight pollution with the same determination as it battled poverty.

Singapore hopes that the Eco-city can contribute towards China's green ambition.

Mr Khaw said much has been achieved in building the Eco-city's "hardware". He said in six years, “its skyline has changed much”, and more can be expected in the near future.

He said the far more challenging task ahead is to develop the Eco-city's "software", and "heartware".

And for this next lap, the officials running the Eco-city must embrace the right mindset to adopt suitable policies.

Mr Khaw added what is equally important is that the residents too need to be champions of green living, embracing recycling, environmental protection and other green habits.

Developing "software" and "heartware" will take longer than building "hardware", which he said "will now be our priorities in the next phase of the Sino-Singapore Tianjin Eco-city's development". 

- CNA/ms

Ultra-luxury unit sales drive records in Manhattan

Source: Business Times / Property

[NEW YORK] The Manhattan real estate market got off to a robust start in the first three months of the year, as signed contracts for ultra-luxury apartments in new developments began to close, many with multimillion-dollar price tags, according to reports released by major brokerages on Tuesday.

The flurry of activity at the top pushed the number of sales to a seven-year high for the quarter and sent the average price per square foot soaring to a record US$1,363, according to a report by the Douglas Elliman brokerage firm.

Low inventory, high demand and a shift towards larger units in new luxury developments contributed to higher prices.

The median price of a condominium jumped 13.4 per cent during the first quarter from the same period last year, setting a record at US$1.355 million, according to the Elliman report.

-From New York, US

Mori, LVMH in 83b yen Ginza building project

Source: Business Times / Property

[TOKYO] Mori Building Co, Japan's biggest closely held developer by sales, and LVMH Moet Hennessy Louis Vuitton SA, the world's largest luxury-goods maker, are part of a group that will develop a retail and office complex in Tokyo as they anticipate increasing consumer spending.

The two companies along with Sumitomo Corp and J Front Retailing Co will spend 83 billion yen (S$1 billion) on a 13-story building with six underground levels in Ginza, said Shingo Tsuji, president of Mori Building, at a press conference on Tuesday in Tokyo. Construction of the commercial facility, with about 147,600 square metres (1.6 million square feet) of floor area, will start this month and be completed by November 2016, the companies said in a statement.

Japanese developers are starting projects ahead of the 2020 Olympic Games as expectations of higher consumer spending and stronger demand for office space push up land prices in major cities. The price of land in the Ginza shopping district, where Japan's most expensive commercial property is found, rose 9.6 per cent in 2013 to 29.6 million yen per square metre, according to the land ministry.

"With the Olympic Games coming up, we must accelerate project development," Mori Building's Tsuji said, adding that the proportion of investment by the four companies hasn't been finalized.

-From Tokyo, Japan

Japan top developer discovers defects in its project

Source: Business Times / Property

[TOKYO] Mitsui Fudosan, Japan's largest property developer by sales, reported defects in a residential complex being built by Shimizu Corp and will start repairing those parts this month, Kawasaki City said in a statement.

Shimizu last month found cracks in the concrete of some columns on the fourth floor of the building that will be 47 storeys when completed next year in Kawasaki City, the city's urban development department said in the statement on its website on Monday.

Mitsui Fudosan is the latest company to report defects at a residential building after Mitsubishi Estate said that one of its complexes in central Tokyo, built by Kajima Corp, will be scrapped and rebuilt after construction flaws were found.

Sekisui House last month found some flaws in the foundation at a site in Tokyo where Taisei Corp is working on a 30-storey apartment building. Taisei will finish the repairs early this month and the quality of the property won't be affected, Sekisui said.

-From Tokyo, Japan

Australia home prices jump 2.3% in March

Source: Business Times / Property

[SYDNEY] Home prices across Australia's major cities jumped by 2.3 per cent in March while gains became more broad-based, a strong result that will fan concerns that speculative buying is running too hot for policymakers' comfort.

Figures from property consultant RP Data-Rismark showed that overall dwelling prices were up 10.6 per cent, compared to March last year, led by 15.6 per cent growth in Sydney.

The gains were also broader with every major city recording a monthly increase in March. Over the whole first quarter, Melbourne boasted an increase of 5.4 per cent, while Sydney added 4.4 per cent and Brisbane 1.5 per cent.

"Over the long term, I don't believe such a strong pace of growth can be sustained - we expect housing market conditions to cool down as the year progresses," said RP Data research director Tim Lawless.

-From Sydney, Australia

Chinese developers turning to onshore perpetual bonds

These hybrids allow them to side-step rules limiting their ability to take on billions of dollars of additional debt

Source: Business Times / Property

[HONG KONG] Chinese property companies are quietly turning to onshore perpetual bonds to side-step rules limiting their ability to take on billions of dollars of additional debt.

The unusual hybrids show that China's capital-hungry developers are driving innovation in the country's domestic markets as they widen their search for alternative funding. Critics, however, argue that the practice lacks transparency and could add to the risks for other investors at a time when slowing property sales and tightening credit conditions are adding to fears of defaults.

Evergrande Real Estate Group and Beijing Capital Land reported in recent annual results announcements that they had privately placed perpetual securities in China's domestic market last year.

Evergrande has issued 25 billion yuan (S$5.08 billion) of such securities, according to its annual results statement. Its first onshore perpetual came in May 2013, with help from China Minsheng Bank and an affiliated investment fund, raising six billion yuan. Beijing Capital Land raised more than two billion yuan in a placement to Minsheng Royal Asset Management, an investment fund, in December.

-From Hong Kong, China

China's March home price growth slows

Source: Business Times / Property

[BEIJING] Price rises for new homes in China slowed in March for the third straight month, an independent survey showed, as authorities say that they are looking to curb high housing costs.

The average price of a new home in 100 major cities rose 10.04 per cent year on year in March to 11,002 yuan (S$2,236) per square metre, according to the China Index Academy, which compiled the survey, released late Monday.

The increase compared with a rise of 10.79 per cent in February, according to the academy, the research unit of real estate website operator Soufun.

The number of cities where new home prices grew by more than one per cent decreased, the academy said in its release, which "indicates real estate prices in most cities are steadying further".

-From Beijing, China

Skyscraper provides shelter for Venezuela's poor

About 3,000 live in abandoned building in Caracas dubbed the 'Tower of David'

Source: Business Times / Property

[CARACAS] It boasts a helicopter landing pad, glorious views of the Avila mountain range, and large balconies for weekend barbecues.

Yet this 45-storey skyscraper in the centre of Venezuela's capital Caracas is no five-star hotel or swanky apartment block: it is a slum, probably the tallest in the world.

Dubbed the "Tower of David", it was intended to be a shining new financial centre but was abandoned around 1994 after the death of its developer - financier and horse-breeder David Brillembourg - and a massive run on Venezuela's banking sector.

Squatters seized the huge concrete skeleton in 2007, then-President Hugo Chavez's socialist government turned a blind eye, and now about 3,000 people call the tower their home.

-From Caracas, Venezuela

UK March home prices up for 15th straight month

Source: Business Times / Property

[LONDON] UK house prices rose for a 15th month in March as values in London climbed to more than double the national average, according to Nationwide Building Society.

The average price of a home gained 0.4 per cent from February to £180,264 (S$378,095), about 3 per cent below its 2007 peak, the Swindon, England-based lender said in an e-mailed report. Values in the capital at the end of the first quarter were 20 per cent above their previous record at an average of £362,699.

A property-market revival fuelled by strengthening economic growth, record-low borrowing costs and official incentive programmes prompted financial-stability officials to warn last month that they're ready to take action should signs of overheating emerge. London home prices have also been boosted by cash-rich foreign buyers seeking safe assets.

"The gap between house prices in London and the rest of the UK is the widest it's ever been, both in cash and percentage terms," Robert Gardner, Nationwide's chief economist, said in the report. "Record-low mortgage rates, improved availability of credit and the brighter economic outlook are all leading to increased demand for housing."

-From London, UK

US apartment rents rise 3.2% in Q1; vacancy rate down

Source: Business Times / Property

[SEATTLE] US apartment rents rose 3.2 per cent in the first quarter as occupancies climbed and newly constructed projects commanded higher leasing costs, softening the impact of an increasing supply. Effective rents, or what tenants paid after any landlord breaks such as a free month, averaged US$1,089 a month, up from US$1,055 a year earlier, Reis Inc said in a report. The vacancy rate fell to 4 per cent, down from 4.4 per cent and the lowest since the third quarter of 2001, when it was 3.9 per cent.

Rentals remain popular four years into a US apartment recovery fuelled by the foreclosure crisis, tighter mortgage standards and many people's preference for leasing. A wave of new construction in response to the demand sparked concern among landlords that rent gains would slow. Builders completed 131,450 new units in 2013, up 66 per cent from the previous year and more than triple the 42,491 apartments added in 2011, Reis said.

"Demand for apartments is seemingly insatiable," Ryan Severino, senior economist at the New York-based research firm, said. "Still-low vacancy, an improving economy and labour market, and lots of newly completed Class A properties coming online with rents higher than the market average will all conspire to push asking and effective rents up by roughly 3.3 per cent this year."

Seventy-one of the 79 largest US markets had effective-rent growth in the quarter, "indicating the pervasiveness of the recovery in the apartment market", in contrast to other major property types such as offices, where the rebound has been "far more limited", Mr Severino said.

-From Seattle, US

Zillow to Give Chinese Homebuyers Access to U.S. Listings

Source: Bloomberg / Luxury

Zillow Inc. (Z) agreed to make its U.S. property listings available to Chinese consumers through a partnership with a Beijing-based website.

E-House Holdings Ltd.’s Leju real estate site will carry Zillow listings that include homes for sale by agent and owner, units in projects under construction and foreclosures and short-sale properties, Seattle-based Zillow said today in a statement.

Chinese buyers spent more than $11 billion on U.S. real estate last year, with an average $425,000 purchase, Zillow said. The Leju-Zillow site, to be operated by the U.S. company, will be ready around midyear, according to the statement.

“Brokers and agents with listings on Zillow are now able to reach Chinese home shoppers who are ready to invest in the U.S. market, with no additional cost or effort,” Errol Samuelson, Zillow’s chief industry development officer, said in the statement.

Zillow is seeking to expand usage on mobile devices for, its New York City listings site, as more apartment hunters and homebuyers shop while on the go, Chief Executive Officer Spencer Rascoff said in an interview last week. The company plans to reintroduce StreetEasy for the iPhone and add mobile applications for Android and iPads, he said.

Rascoff said there’s growth potential for StreetEasy, which is accessed from mobile devices by one-third of its users, compared with two-thirds for Zillow’s namesake site.

Zillow shares climbed 74 percent in the 12 months through yesterday, and have more than quadrupled since their initial public offering in July 2011.

-By Dan Levy

Rental-Home Investors Demand Higher Yields in Colony Deal

Source: Bloomberg / Luxury

Investors in the second-ever sale of securities backed by U.S. rental homes demanded higher relative yields to buy the debt this time around, a person with knowledge of the transaction said.

Colony American Homes Inc., the third-largest single-family landlord in the U.S., sold $291 million of top-rated notes today at 120 basis points more than a benchmark rate, said the person, who asked not to be identified, citing lack of authorization to speak publicly. The transaction totaled $513.6 million.

Blackstone Group LP (BX)’s Invitation Homes, the largest competitor to the Colony Capital LLC business, sold similar debt in a $479.1 million offering in November at a 115 basis-point spread.

Most of the Colony securities were sold below par at spreads wider than those sought on Blackstone’s notes even as they offer more loss protection to investors. Bond buyers are weighing the risks and rewards of the new market, which American Residential Properties Inc. and American Homes 4 Rent (AMH) have said they will also seek to tap for financing. JPMorgan Chase & Co. and Credit Suisse Group AG managed Colony’s offering.

Institutional investors have spent more than $20 billion scooping up U.S. properties to lease out over the last few years. They’ve taken advantage of real-estate prices that fell by more than one-third from the 2006 peak, and rising demand for rentals among Americans who lost their houses in the foreclosure crisis. Their buying, funded mostly by equity and credit lines from banks, has helped spur a recovery in housing.

Floating Rates

Moody’s Investors Service, Kroll Bond Rating Agency and Morningstar Inc. plan to grant top ratings to portions of the Colony deal with loss protection known as credit enhancement of 43.3 percent, compared with 41.8 percent in the Blackstone deal. The protection is created by other slices that would incur losses first.

The notes in both deals carry floating rates, with those sold by Colony having an initial maturity of three years, compared with two years in the Blackstone transaction. Maturities of both sets of bonds can be extended to five years.

The $84.1 million portion of the Colony deal first in line for losses was sold at a margin of 350 basis points more than the one-month London interbank offered rate, down from 365 basis points, or 3.65 percentage points, on the junior-ranking notes in Blackstone’s offering, the person said.

Wiped Out

The relatively smaller size of the class in the Blackstone offering means that it can be wiped out faster by losses if the underlying homes need to be sold to repay investors’ principal.

Wall Street ultimately may sell more than $20 billion a year of rental-home bonds, according to Ryan Stark, a director at Deutsche Bank AG, which structured and helped sell the first transaction. Bank of America Corp. analysts forecasted $4 billion of issuance this year in a 2014 outlook, while Barclays Plc said sales “could easily be” $3 billion to $5 billion.

Caroline Luz, a spokeswoman for Colony with Owen Blicksilver Public Relations, said she had no comment on its offering earlier today. She didn’t immediately return a telephone message seeking comment after the deal priced.

-By Jody Shenn

Londoners Priced Out of Housing Blame Foreigners: Real Estate

Source: Bloomberg / Luxury

Cheryl Coyne shouted “No more homes for millionaires!” with protesters dressed as pirates outside London City Hall this week. Inside, Mayor Boris Johnson was approving a plan by Hong Kong’s Hutchison Whampoa Ltd. (13) to build as many as 3,500 homes close to where she lives.

“These are the kind of homes that local people will never be able to afford,” said Coyne, a 63-year-old semi-retired schoolteacher who wore a striped shirt and a skull and crossbones neck scarf. “There are thousands of people in the borough who need homes, and instead they’re building flats for multimillionaires.”

The U.K. capital’s status as a magnet for wealthy foreign home buyers is helping to drive prices in many areas beyond the reach of most Londoners. That’s putting pressure on politicians and developers to convince locals that they haven’t been forgotten in the rush to court overseas investors.

Foreign-born buyers made 69 percent of central London new-home purchases in the two years through June, with 28 percent living outside the U.K., broker Knight Frank LLP said in October. Average London house prices increased 18 percent in the first quarter from a year earlier, the most since 2003, Nationwide Building Society said on April 2.

“There is a head of steam building where people are seeing this situation, which is so blatantly unfair, and want firm action to be taken,” Darren Johnson, chairman of the London Assembly’s housing committee, said by phone. Speculation “does nothing for London whatsoever other than push prices up even further.”

More Competition

Developers have refocused their sales efforts on local buyers in response to criticism of their efforts to market some homes exclusively abroad. They have stopped short of closing the door on foreign investors.

Battersea Power Station, the derelict brick landmark on the south bank of the River Thames that featured on the cover of Pink Floyd’s “Animals” album, is one of London’s largest and most talked-about housing developments. When the project’s Malaysian owners sold the first 866 homes in just three days in January, more than half went to foreign buyers. The second phase of more than 200 apartments goes on sale only in London on May 1.

Residents Preferred

Rob Tincknell, chief executive officer of the Battersea Power Station Development Co., said in an interview that the company’s staff called all 13,000 people who registered to buy the project’s 3,500 homes and intends to give preference to those who said they intend to live in the homes they buy.

“The power station is a London building that people feel very passionate about and it would be totally wrong to have it sold off to people who are just storing cash in the U.K. and not living there,” he said. “On a more practical level, we have a lot of interest. We have buyers.”

Hutchison’s development, known as Convoys Wharf, is in a neighborhood founded by King Henry VIII as a dockyard in 1514. It includes 15 percent affordable housing, or about 525 homes, according to a filing with the Greater London Authority. That’s below the 50 percent target set by the local council.

In a report to the authority, Hutchison said it couldn’t provide more affordable homes and remain viable, according to the filing. Daniel Prior, a spokesman for Hutchison at Brunswick Group, declined to comment on the project.

Safe Investment

Foreign investment in London property took off after the financial crisis in 2008 as a weaker pound, economic instability from Europe to Asia and record-low returns on fixed-income investments prompted wealthy buyers to search for assets that would hold their value. Increasing numbers of Britons were left out of the market as banks restricted mortgage lending and unemployment increased.

Spending by non-British investors spread from luxury properties in neighborhoods such as Chelsea and Knightsbridge to new houses and apartments as builders used advance sales, many to buyers from Asia, to finance projects amid tight lending for development.

A main reason for the local backlash: two-thirds of foreign buyers are investors rather than owner-occupiers, broker Savills Plc (SVS) said in November. Home prices in the city, fueled by government mortgage-assistance plans such as Help to Buy, climbed to a record of 362,699 pounds ($604,000) in the first quarter, Nationwide said. That was more than double the national average of 178,124 pounds.

Prices Soar

In December, a group of 11 U.K. homebuilders, including Barratt Developments Plc (BDEV), Taylor Wimpey Plc (TW/) and Telford Homes Plc (TEF), agreed to stop giving overseas residents the first shot at buying London homes sold before they’re built. They agreed to offer properties at home and abroad at the same time.

“This really coincided with some of the negative press that was coming out about selling overseas and people leaving homes empty,” Telford Chief Executive Officer Jon Di-Stefano said in an interview at the time. “It’s actually quite expensive to market overseas and the reason people are doing it is because they need to make early sales in order to increase what they’re building.”

For Adam Haycroft, a 29-year-old copy writer living in Hornsey, north London, availability won’t make a difference if prices keep rising.

“We’ve cut things as hard as we can; we’re sharing a flat, we’re sharing a room,” he said in an interview. “Even with that, we save about 1,000 pounds a month and every time we reach what we think is a milestone, we look at the prices in London and realize we just can’t get close to buying anything.”

No Help

Programs such as Help to Buy “just fuel the fire by pushing prices up further,” Haycroft said. “They need to actively cool the market.” There has been a significant increases in mortgages available above 75 percent of the value of the home purchased, the Bank of England said in a report today.

Johnson, the London mayor, faces a balancing act as he courts foreign investment on travels to countries including China and Kuwait while trying to assure voters that he’s sensitive to their concerns.

In a statement released by the Homebuilders Federation, Johnson praised the decision to stop offering property abroad first. He also called foreign investment a “long-standing and necessary part of any global city’s housing market.”

It’s too early to tell whether changes in marketing will have a substantial effect on the proportion of foreign buyers in the capital. In some of the most expensive areas, the market is changing by itself.

British Comeback

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, as high prices reduced demand and an improving global economy provided more safe investments for foreign investors to choose from, broker Hamptons International Ltd. said on March 31.

Londoners complain that much of the new development in the city includes apartments that only foreign investors can afford. Luxury-home developers, which often sell 30 percent of apartments abroad to finance construction, plan to build more than 20,000 properties in the capital with a value of about 50 billion pounds in the next decade, Mark Farmer, head of residential property at EC Harris, said in a November report.

The U.K. government has taken steps to increase the tax burden for luxury homes and properties owned by foreign buyers through companies. The Treasury has to be “vigilant” as prices rise, Chancellor George Osborne said today.

Even with those measures, developers will focus on building skyscrapers packed with apartments for investors because the U.K.’s housing polices favor them, Danny Dorling, author of “All That is Solid: The Great Housing Disaster,” said in an interview.

Government Subsidies

Landlords benefit from tax breaks, among them the ability to offset mortgage-interest payments and the costs of maintaining the property against income tax paid on rent. Those subsidies are worth 13 billion pounds a year to investors, according to the advocacy group Intergenerational Foundation.

Owners of U.K. properties can increase rents in line with demand, unlike cities such as Berlin, where landlords must link rents to an index published by the government and also face limits on increases following an upgrade to the property. That helped push London rents up 11 percent between May 2005 and May 2013, according to the Office for National Statistics.

There are no restrictions on the type of property a foreign investor can buy in the U.K. In Australia, by contrast, non-residents are unable to buy existing homes and can only invest in property that adds to the housing stock. The council tax system also makes little distinction for the costliest homes. The owners of one 50-million-pound home in Westminster will pay just 1,354 pounds this year, with the top tax bracket starting with homes worth more than 320,000 pounds.

Tenants’ Rights

London’s housing boom started with luxury properties and spread to family homes, “pricing British people out of the market,” David Green, chief executive officer of research group Civitas, said in an interview.

“If you want to solve the London problem, you begin by improving tenants’ rights and make becoming a landlord less lucrative,” Dorling said. Introducing rent controls similar to Berlin’s and creating more council tax bands would “scare overseas buyers because they won’t get these huge profits.”

Coyne, the protester at City Hall, expressed her exasperation with politicians as they prepared to approve apartments that she says local people earning any less than 40,000 pounds a year would be unable to afford. The average full-time salary in Lewisham was 29,800 pounds, according to 2011 data from the council, the most recent available.

“Ships were built here that went all over the world and already a huge anchor at the top of the high street has vanished because of this process,” she said. “We need that number of homes, but we don’t need this kind of homes.”

-By Patrick Gower

Heart Home on Market for California High of $135 Million

Source: Bloomberg / Luxury

The Beverly House, once owned by publisher William Randolph Hearst, is back on the market for $135 million, the highest-priced residence for sale in California, according to its listing agency.

The Beverly Hills compound, which sits on about 6 acres (2.4 hectares) atop a private knoll three blocks from Sunset Boulevard, has been up for sale several times since 2007, when it was offered for $165 million. The five-building estate was last taken off the market nine months ago, when it was listed at $115 million, said Hilton & Hyland, an affiliate of Christie’s International Real Estate.

The owner, attorney Leonard Ross, decided to relist the 28-bedroom, 36-bath property after Fleur de Lys, a Holmby Hills mansion about 2.5 miles (4 kilometers) west of Beverly House, sold for $102 million in cash earlier this week, his brokerage said. Fleur de Lys had been on the market since 2007 and sold for less than the $125 million owner Suzanne Saperstein sought.

“With some of these recent mega sales, the glass ceiling has been broken and people are having more confidence that Los Angeles is arguably in the same league as such markets as the Hamptons and London,” Jeff Hyland, co-founder of Hilton & Hyland, said in an interview.

Mansions in U.S. markets such as New York and California are the equivalent of “safety deposit boxes” for wealthy global investors, according to Jonathan Miller, president of appraiser Miller Samuel Inc. They are being bought by Chinese families, foreign tycoons and U.S. celebrities as a hedge against currency and stock market disasters or the vicissitudes of politics.


“At least 60 percent of our very high-end buyers -- properties above $25 million -- are from abroad, whether that be from Asia, the Middle East, London or South America,” Hyland said. “And it’s people who could very well live in this type of house for eight weeks out of the year.”

Hilton & Hyland opened a London office in January after completing $1.9 billion in sales last year, 25 percent of which involved foreign investors.

A record number of California homes sold for $2 million or more last year, DataQuick reported in January. Prices in high-end Los Angeles County communities such as Beverly Hills, Malibu and Hollywood Hills rose 7 percent last year to an average of $825 a square foot for single-family homes, according to a report by the Agency, a Beverly Hills-based brokerage. The average is 3.6 percent below the 2008 peak.

Hearst Castle

The Beverly House was built by banking executive Milton Getz and bought by Marion Davies in 1946 for Hearst, who moved to the estate from Hearst Castle in San Simeon, California, and lived there until his death in 1951, Hilton & Hyland said.

The Beverly House, where John F. Kennedy and wife Jacqueline spent time during their honeymoon, has a 50-foot (15-meter) entry hall with loggia, a living room with 22-foot arched floor-to-ceiling windows and a lighted tennis court with an indoor bar and media center, Hilton & Hyland said.

Other features include an art-deco nightclub, an outdoor terrace with sit-down dining space for 400 people, two screening rooms, an eight-car garage and a billiard room with a carved stone fireplace from San Simeon, according to the brokerage. The Beverly House was featured in the movies “The Godfather” and “The Bodyguard.”

-By Nadja Brandt

Vacation-Home Sales Soar as Stock Gains Boost Buyers

Source: Bloomberg / Personal Finance

U.S. vacation-home sales jumped in 2013, making up the biggest market share in seven years, as the surging stock market gave affluent Americans a confidence boost.

Vacation properties accounted for 13 percent of all sales, the highest level since 2006, when the share was 14 percent, the National Association of Realtors reported today. The portion of investment sales, excluding purchases by institutional investors, fell to 20 percent from 24 percent in 2012 as prices rose and the supply of foreclosures dwindled.

“Growth in the equity markets has greatly benefited high-net-worth households, thereby providing the wherewithal and confidence to purchase recreational property,” Lawrence Yun, the Realtors group’s chief economist, said in a statement.

The Standard & Poor’s 500 index, which reached an all-time high yesterday, was up 179 percent from its 12-year low in March 2009. Vacation-home sales rose 30 percent last year to 717,000, while investment-home sales fell 8.5 percent to about 1.1 million transactions, the Realtors group said.

Sales of seasonal properties are down about a third from the 2006 peak of 1.07 million.

About 38 percent of vacation-home buyers paid with cash in 2013, compared with 46 percent of investment buyers, according to the report. Distressed homes, including foreclosures, accounted for 42 percent of purchases by recreational buyers and 47 percent by investors.

The typical vacation-home buyer was 43 years old with a household income of $85,600, and the property was a median distance of 180 miles (290 kilometers) from the primary residence, the Realtors group said. About 41 percent of seasonal properties purchased last year were in the South, followed by 28 percent in the West, 18 percent in the Northeast and 14 percent in the Midwest.

The U.S. has 8 million vacation homes and 43.7 million investment units, compared with 74.7 million owner-occupied units, according to an analysis of Census Bureau data by the Realtors group.

-By Prashant Gopal

Greek REIT Said to Seek $1.4 Billion as Investors Return

Source: Bloomberg / Personal Finance

Pangaea REIC, the real estate investment trust owned by Invel Real Estate Partners and the National Bank of Greece SA, aims to raise about 1 billion euros ($1.4 billion) to invest in Greece and Italy, three people with knowledge of the matter said.

Pangaea, based in Athens, plans to issue bonds by the summer and offer shares to the public for the first time as early as October, according to the people, who asked not to be identified because the information is private. They declined to say what proportion of the proceeds each will account for.

Foreign investors are returning to Greece after a crisis that nearly pushed the country out of the euro, and the European Commission predicts the economy will grow for the first time in seven years in 2014. Greece’s last IPO was done by MIG Real Estate REIC in 2009. Regulators set a deadline of October 2015 for Pangaea’s IPO.

“International investors are increasingly focusing on Europe, with a special emphasis on peripheral markets,” said Javier Martinez-Piqueras, co-head of equity capital markets cash for Europe at UBS AG. Buyers think real estate in countries like Greece and Spain has hit the bottom of the cycle, he said.

Ellie Sweeney, a spokeswoman for Invel at Powerscourt in London, declined to comment.

Investor Interest

Pacific Investment Management Co.’s Bill Gross, Quantum’s George Soros and billionaire John Paulson are among investors who bought Spain’s version of real estate investment trusts including Hispania Activos Inmobiliarios S.A. (HIS) this year, betting on a rebound after a six-year property slump.

The Athens Stock Exchange General Index has jumped 182 percent since reaching a 22-year low in June 2012. The Hellenic Republic’s bonds returned 23 percent in the first quarter, the best performance among 34 sovereign-debt markets tracked by Bloomberg World Bond Indexes.

Invel, a London-based real estate investment firm led by Christophoros Papachristophorou, bought a 66 percent stake in Pangaea in a December deal that valued the company at about 1 billion euros. Pangaea has since acquired real estate in Greece and Italy and currently has assets totaling 1.2 billion euros, the people said.

Papachristophorou is a former managing director at Deutsche Bank and global head of RREEF Opportunistic Investments.

IPOs in Europe have more than tripled by value in the first quarter from a year earlier to about $17 billion, data compiled by Bloomberg show.

-By Sharon Smyth and Ruth David

U.K. House Prices Rise a 15th Month as London Extends Lead

Source: Bloomberg / Luxury

U.K. house prices rose for a 15th month in March as values in London climbed to more than double the national average, according to Nationwide Building Society.

The average price of a home gained 0.4 percent from February to 180,264 pounds ($300,000), about 3 percent below its 2007 peak, the Swindon, England-based lender said in an e-mailed report today. 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.

A property-market revival fueled by strengthening economic growth, record-low borrowing costs and official incentive programs prompted financial-stability chiefs to warn last month that they’re ready to take action should signs of overheating emerge. London home prices have also been boosted by cash-rich buyers and foreign investors seeking safe assets.

“The gap between house prices in London and the rest of the U.K. is the widest it’s ever been, both in cash and percentage terms,” Robert Gardner, Nationwide’s chief economist, said in the report. “Record-low mortgage rates, improved availability of credit and the brighter economic outlook are all leading to increased demand for housing.”

The pound stayed higher against the dollar after construction data published by Markit Economics at 9:30 a.m. showed growth momentum continued in March. Sterling traded at $1.6654 as of 9:55 a.m. London time, up 0.1 percent from yesterday.

London Boom

London house prices increased 18 percent in the first quarter from a year earlier, the fastest pace since 2003, Nationwide said. National values were up an annual 9.5 percent in March.

Home prices in the capital rose 5.3 percent in the first quarter from the previous three months, double the U.K. average of 2.6 percent, the lender said.

The London borough of Brent saw the strongest annual growth in the city in the first quarter, with prices up 31 percent. Nearby Harrow was the weakest-performing, up 8 percent.

While house-price growth is showing “tentative signs of moderation,” demand is outpacing supply and there is evidence that the property upturn is gaining momentum across the country, Nationwide said.

Chancellor of the Exchequer George Osborne said last month the government will extend its Help-to-Buy program for new homes by four years to the end of 2020 to encourage building.

-By Scott Hamilton

Iskandar condo project opens for booking today

Source: Straits Times

Local developers Pacific Star and DB2 are launching the first phase of their luxury condo project in Malaysia's Iskandar today. More than 400 units at Puteri Cove Residences will be released to the public, priced from RM1,180 to RM1,580 (S$454 to S$608) per sq ft.

China's property bubble 'finally at bursting point'

Source: Straits Times

Businessman Allen Zhao has been waiting since the middle of last year for prices in the scenic southern city of Hangzhou to rise high enough this year to sell his two-bedroom apartment for about 2 million yuan (S$405,300). Last Monday, he was horrified to hear that his neighbour let her place go for just 1.7 million yuan.

Hong Kong private-home completions set to hit 10-year high

Source: Today Online / Business

HONG KONG — The number of private-home completions in Hong Kong this year will reach its highest since 2004, said the government yesterday, further pressuring developers after a series of cooling measures forced them to cut prices.

The number of flats forecast for completion this year is around 17,610 — a 113 per cent increase from a year earlier, said the Rating and Valuation Department.

The government said close to 61 per cent of completions would be in the New Territories district close to mainland China, where major developers such as Sun Hung Kai Properties and Cheung Kong Holdings are very active.

With the surge in new home supply, competition to lure buyers could trigger even steeper discounts and further eat into developers’ margins in one of the world’s most expensive housing markets, said analysts.

Hong Kong developers enjoyed gross profit margins as high as 40 per cent in 2009 and 2010, Ms Nicole Wong, CLSA’s regional head of property research, was quoted by the South China Morning Post as saying.

However, for projects on sites that developers bought in the past few years, margins have shrunk to between 20 per cent and 25 per cent, she added.

A UBS report in February also said profit margins for the city’s six major developers would fall from 36 per cent in 2012 to 20 per cent next year and 14 per cent in 2016.

Hong Kong private-home prices have more than doubled — rising nearly 120 per cent — since 2008.

Despite a series of steps to curb prices, such as higher stamp duties and mortgage restrictions since October 2009, prices for private properties rose 8.6 per cent last year, said the government.


China residential block collapses, trapping people

Source: Straits Times

Detroit property boom amid gloom

Source: Straits Times

Microsoft relocating San Francisco offices

Source: Business Times / Wealth

MICROSOFT Corp will move its San Francisco offices to the city's largest tower as it relocates to the heart of the financial district from the technology-heavy South of Market area.

The world's biggest software maker will move in December to Vornado Realty Trust's 555 California St, San Francisco's largest building by square footage and the second-tallest, said Peter Wootton, a spokesman for Redmond, Washington-based Microsoft. He wouldn't comment further on the relocation plans.

San Francisco is the "centre of the US new economy" after four years of sustained rent growth, according to property-research firm Green Street Advisors. Office rents rose 6.8 per cent in the first quarter from a year earlier to US$57.21 a square foot on average, with vacancies little changed at 11.3 per cent, brokerage Jones Lang LaSalle said. Asking rents have climbed 70 per cent since 2010, when rates bottomed at US$33.57 a square foot. "Microsoft had the ability to go anywhere in the city," David Greenbaum, president of Vornado's New York office division, said on Thursday. The 555 California building is "incredibly iconic both in San Francisco and the country".

-From San Francisco, US

Blackstone Leads $156 Million Loan to U.K. Residential Lender

Source: Bloomberg / News

Blackstone Group LP (BX) led a 94 million-pound ($156 million) equity financing for London-based residential developer lender Pluto Finance as a housing shortage in England drives up home prices.

Blackstone, based in New York, was part of a group of investors that also included Clearbell Capital LLP, Pluto Finance said in an e-mailed statement today. Pluto said it plans to lend 360 million pounds to residential developers in London and the south of England over the next four years.

“We clearly see the difficulty that homebuilders small and large alike are facing in getting full funding for quality schemes with planning consents,” Chad Pike, senior managing director at Blackstone, said in the statement. Pluto is able to “complete transactions quickly and to efficiently manage loan disbursements and construction oversight,” he said.

A shortfall across the U.K. helped house prices rise for a 15th straight month in March, Nationwide Building Society said April 2. Values in London climbed to more than double the national average. England needs 250,000 new houses and apartments a year to meet demand, according to Shelter, a charity for the homeless. Developers built about 108,000 homes in the year through November, according to the Office for National Statistics.

-By Patrick Gower

JPMorgan Said to Probably Join Morgan Stanley on Mall IPO

Source: Bloomberg / News

JPMorgan Chase & Co. (JPM) will probably join Morgan Stanley (MS) as global coordinator on the initial public offering of Emaar Properties PJSC’s (EMAAR) shopping malls and retail business, three people with knowledge of the matter said.

The banks were informally hired, though no documents have yet been signed, said the people, who asked not to be named because the information is private. Emaar is also appointing lead managers for the sale, the people said. An official at Emaar who didn’t want to be identified said no advisers have been appointed. Spokesmen for JPMorgan and Morgan Stanley declined to comment.

Emaar, developer of the world’s tallest tower in Dubai, hired Morgan Stanley to advise on what will be the largest share sale in the Middle East and Africa since 2008, Chairman Mohamed Alabbar said in a March 18 interview. The company plans to raise 8 billion dirhams ($2.2 billion) to 9 billion dirhams from the sale as a tourism boom adds to retail sales in Dubai.

Middle Eastern companies are taking advantage of rebounding stock markets and asset prices to raise funds through IPOs and secondary offerings. Emirates Reit, the United Arab Emirates’ first real-estate investment trust, said last week it increased its share sale to $175 million to accommodate investor demand for Dubai’s first IPO for at least five years.

The first portion of Emaar’s share sale will target U.S. investors and a second tranche for local investors may follow, depending on demand, one of the people said.

Nasdaq Dubai

Emaar is also considering appointing a local bank as adviser on the offering of a 25 percent stake in the unit, Alabbar said in the March 18 interview. The company is seeking to complete the deal by mid-June and plans to sell the shares on Nasdaq Dubai and in London, Alabbar said in a separate interview with Bloomberg Television on the same day.

Proceeds from the secondary public offering will be used mainly to pay a dividend to shareholders. Dubai’s government is Emaar’s largest shareholder with almost 30 percent, according to data compiled by Bloomberg.

The company’s malls and retail business had a 20 percent increase in 2013 revenue to 2.84 billion dirhams, while the Dubai Mall attracted 75 million visitors last year. The shares of Emaar, which will hold a stockholders meeting on April 23, have surged 32 percent this year after doubling in 2013.

-By Stefania Bianchi, Sarmad Khan and Arif Sharif

Irish Bad Bank to Buy RBS Loans to Largest Irish Mall

Source: Bloomberg / News

Ireland’s state-owned bad bank agreed to buy Royal Bank of Scotland Group Plc and KBC Groep NV (KBC) loans to Ireland’s largest shopping mall, its first purchase of debt that didn’t belong to the country’s bailed-out lenders, people familiar with the matter said.

The National Asset Management Agency’s purchase of RBS unit Ulster Bank and KBC’s combined 30 percent stake of a syndicated loan to the Dundrum Town Centre, a 150,000 square- meter (1.6 million square-foot) mall in south Dublin, gives it full control of the debt, said the people, who asked not to be identified because the talks are private.

“This appears to be a sensible move by NAMA as it gives the agency control of loans linked to what is the jewel in the crown of Irish retail,” said Philip O’Sullivan, an economist at Investec Plc in Dublin.

The agency, which owns the rest of the mall’s debt, is paying par value for the loans, one of the people said, declining to give a figure for the loans. NAMA’s move may pave the way for the sale of the mall, valued at as much as 1 billion euros ($1.4 billion), to help repay the project’s developer Castlethorn Construction’s loans to the agency, the people said. Officials from NAMA, RBS and KBC declined to comment.

NAMA was created by the nation’s previous government in 2009 to take on and sell toxic mortgages purged from domestic Irish banks, including loans extended to help finance the development of the mall by the former Anglo Irish Bank Corp. The purchase of the remaining Dundrum loans is the first time the agency has moved to take over debt from non-Irish banks.

Bad Bank

Ulster Bank is winding down 9 billion pounds ($14.9 billion) of mainly commercial real estate assets that the lender has placed in an internal bad bank.

Separately, NAMA said today it agreed to sell real estate loans with a face value of 4.5 billion pounds to affiliates of private-equity firm Cerberus Capital Management LP. The sale of the Project Eagle portfolio is NAMA’s biggest deal since it was created in 2009, the bad bank and New York-based Cerberus said in a statement today without disclosing the price.

-By Neil Callanan and Joe Brennan

NAMA to Sell $7.5 Billion of Real Estate Loans to Cerberus

Source: Bloomberg / News

Ireland’s National Asset Management Agency agreed to sell real estate loans with a face value of 4.5 billion pounds ($7.5 billion) to affiliates of private-equity firm Cerberus Capital Management LP.

The sale of the Project Eagle portfolio is NAMA’s biggest deal since it was created in 2009, the bad bank and New York-based Cerberus said in a statement today without disclosing the price. The loans are to Northern Ireland-based borrowers that are secured by assets in the U.K., Ireland and other European countries, according to Lazard Ltd., which advised NAMA.

“Investors are now pricing in a real possibility that, far from being a contingent liability on the sovereign, NAMA could return a profit in its lifetime, helping to reduce government debt,” Conall Mac Coille, chief economist at Davy, Ireland’s largest securities firm said by e-mail.

NAMA is seeking to recoup the 71.2 billion euros ($98 billion) of loans owed by developers that the agency bought from Irish banks at a 57 percent discount after the country’s property market collapsed. The liquidators of the former Anglo Irish Bank Corp., a real estate lender that was nationalized in 2009, said on April 1 that they have agreed to sell more than 90 percent of the lender’s 21.7 billion-euro loan book in the past five months amid growing demand for Irish assets.

NAMA’s largest completed transaction so far was the sale of a loan portfolio to a group led by Starwood Capital Group LLC for 195 million euros. NAMA kept a stake in a venture with Starwood.

The purchase “will be an important foundation for our overall European strategy,” Cerberus Chairman John W. Snow said in the statement.

-By Joe Brennan

Wall Street Engineers Awaken CDOs in Real Estate Deals

Source: Bloomberg / News

Wall Street’s financial engineers are getting creative again.

Commercial real-estate investor H/2 Capital Partners bundled a hodge podge of its holdings -- from bonds tied to skyscrapers and malls to junk-rated bank loans -- into about $400 million of securities. The deal, similar to the pre-crisis transactions known as collateralized debt obligations, included one portion that Moody’s Investors Service gave its highest rating of Aaa.

The investment firm is seizing on a revival of the types of transactions that fueled the property boom in 2006 and 2007, showing the lengths to which investors are going to bolster skimpy yields across credit markets. Such offerings are giving commercial-property investors a wider range of options to fund acquisitions, according to Richard Hill, a debt analyst at Morgan Stanley.

“Investors are willing to take on more risk in the hunt for yield,” the New York-based analyst said in an interview this week. Such deals “in the right hands can be a very powerful and productive tool, but in the wrong hands they can be destructive.”

Sales of CDOs tied to commercial real estate are accelerating after the market lay dormant for five years. While anticipation started building three years ago that they would reemerge, the first post-crisis offering wasn’t completed until September 2012, Morgan Stanley data show.

Market Peak

About $3 billion of securities in 15 deals have been sold since, with six of the offerings brought to market in the second half of 2013, Hill said. He’s predicting that other investment firms will offer similar deals this year.

Issuance surged to a record $50 billion in 2006, before coming to a halt the next year as credit markets started seizing up. H/2 Capital issued about $482 million of similar debt in August 2006, according to Moody’s, before the worst excesses of the property boom began to surface. The deal paid off without taking a loss last year.

“There is potential for supply to increase going forward,” JPMorgan Chase & Co. strategists led by Edward Reardon wrote in a March 28 report.

In H/2’s latest offering, about 20 percent of the total collateral that will be linked to the securities hasn’t yet been selected by the firm, Moody’s said in a March 21 statement. The ratings company didn’t disclose the yields paid by the privately issued debt.

More Yield

The most-senior AAA pieces of commercial real-estate CDOs issued last year were sold to yield an average of about 1.75 percentage points more than the one-month London interbank offered rate, the JPMorgan strategists said in their note last month. The borrowing benchmark, which is the rate at which banks say they lend to one another in dollars, was set at 0.153 percentage point yesterday.

That compares with an average of about 1.5 percentage point more than Libor on similarly rated deals tied to bank loans, according to Morgan Stanley data.

The H/2 deal, which was managed by Wells Fargo & Co., enables the firm to boost returns on its real estate holdings by issuing long-term debt against them. It’s different from other recent transactions in that it’s linked to loans as well as commercial-mortgage bonds, according to two people knowledge of the deal who asked not to be identified because the transaction was private.

Representatives of H/2, Wells Fargo and Moody’s declined to comment.

About 37 percent of the deal is backed by commercial-mortgage securities, including a speculative-grade slice of a $775 million deal linked to hotels and issued by Deutsche Bank AG last year, one of the people said.

Speculative-grade, or junk, debt is rated below Baa3 by Moody’s and less than BBB- by Standard & Poor’s.

-By Sarah Mulholland

ETF Bulls Bet Spring Will Thaw the U.S. Housing Market

Source: Bloomberg / Personal Finance

Build it and they will come, if it’s not too chilly.

Traders have turned bullish on a security that tracks home construction companies, appliance makers and furniture retailers as spring finally ends the harsh winter.

As the SPDR S&P Homebuilders ETF (XHB) heads for its first weekly gain since February, investors are buying options betting that the rebound will keep going. The cost of bullish contracts has risen to the highest versus bearish ones in 2 1/2 years. The ETF has gained 2.2 percent this week.

The exchange-traded fund of companies such as Ryland Group Inc., Whirlpool Corp. and Home Depot Inc. has rebounded 8 percent after reaching its lowest level this year on Feb. 3 as investors attribute weakness in the housing market to winter weather. Between December and February, snow covered 1.42 million square miles of the continental U.S., the 10th-largest snow cover in records going back to 1966, according to the National Climatic Data Center.

“Market participants are speculating that the weakness we saw in the U.S. economy and the U.S. housing market in the beginning of the year was temporary and linked to the bad winter weather,” Mark Andersen, who helps manage $1.7 trillion as head of asset allocation at UBS AG in Zurich, said in an interview yesterday. “We’re witnessing an ongoing recovery in the U.S. economy, with the housing market also supported by employment growth and low interest rates.”

Faster Activity

The data for March show signs that the economy is picking up steam. Surveys of activity in the manufacturing and services sectors both show more rapid expansion last month. Companies are hiring people at a faster pace, according to the ADP Research Institute. The Labor Department’s monthly jobs report due at 8:30 a.m. in Washington today will show that hiring increased in the overall economy with 200,000 jobs added in March, according to forecasts compiled by Bloomberg.

As the economic data improves, traders are increasing their bets on further gains. Calls with an exercise price 10 percent above the SPDR S&P Homebuilders ETF cost 1.7 points less than puts betting on a 10 percent drop as of April 2, the smallest spread since August 2011, according to data on three-month contracts compiled by Bloomberg. Bullish contracts on the fund cost 4.4 points less on average than puts in the last year, the data show.

Harsh Winter

Winter had suppressed activity in the housing market. Figures from the National Association of Realtors showed that sales of previously owned houses and apartments -- the majority of the market -- slowed to an annual rate of 4.6 million in February. That was the smallest number of contract closings on existing properties since July 2012. The Commerce Department’s index of sales of new homes also dropped in February to an annualized 440,000.

The reports are reason for concern about the housing market, according to John Plassard, vice president at Mirabaud Securities LLP in Geneva. He remains bearish on companies in the homebuilding industry.

“While macroeconomic reports out of the U.S. were affected by the weather at the beginning of the year, I fear it can’t fully explain the weakness in the housing market,” Plassard said in an interview on April 2. “The outlook for the market isn’t very glorious. Borrowing costs are higher, and so are property values; with that mix, I wouldn’t be so sure that we’ll see a clear recovery just yet.”

The 30-year fixed-rate mortgage averaged 4.41 percent in the week through April 3, up from 3.54 percent a year earlier, according to Freddie Mac. Mortgage applications fell for the third time in four weeks in the five days through March 28, data from the Mortgage Bankers Association show. The S&P/Case-Shiller index of house prices in 20 cities climbed 13.2 percent in the 12 months through January.

Implied Volatility

Implied volatility, used to gauge the cost of options, for three-month contracts with an exercise price 10 percent below the homebuilders ETF fell 23 percent to 20.96 since Feb. 3, when the ETF set its lowest price this year, data compiled by Bloomberg show. That compares with a 15 percent decline for the measure for calls 10 percent above.

Bullish options betting on a 9.3 percent increase to $36 by June are the most owned calls, the data show.

The Chicago Board Options Exchange Volatility Index, the gauge of Standard & Poor’s 500 Index options prices, gained 2.1 percent to 13.37 in New York yesterday. The VStoxx Index, which measures expected volatility on the Euro Stoxx 50 Index, fell 2.6 percent to 15.95 at 11:19 a.m. in London today.

“A lot of the weak data we’ve seen has been dismissed under the assumption that a lot of it had to do with the weather,” Kevin Caron, a Florham Park, New Jersey-based market strategist at Stifel Nicolaus & Co., which manages about $160 billion, said in a telephone interview yesterday. “A lot of the things that would ordinarily have been troubling are getting written off. In order for the rally to continue, we’ll need to see a greater willingness in borrowing.”

-By Corinne Gretler