Singapore Economy 'It's not about replacing foreign with local workers' Chuan-Jin: Economic revamp means same or more output with less labour Source: Business Times / Top Stories [SINGAPORE] The labour market here is certain to remain tight, and will become tighter as previously announced measures come into effect. Firms must therefore continue to improve productivity, and society must change its mindset in viewing manpower as the only solution, said Acting Minister for Manpower Tan Chuan-Jin yesterday. "Economic restructuring is not about replacing lots of foreign workers with local workers. It is about producing the same or more value with fewer workers," said Mr Tan, who was addressing business leaders at the Singapore Business Awards (SBA) yesterday. A critical part of this is in changing individual and societal mindsets. Head honchos must engage and empower their people, and the society "must stop thinking of manpower as the sole solution", he said. Citing the example of automatic car washes which are common in other countries, he observed that in Singapore, with many car owners concerned with scratches on their cars' paintwork, car washes have been replaced by foreign workers. "Even if there is available technology to provide a 'swirl' free automatic car wash, we must still shift our mindsets in order for the technology to gain traction in Singapore." Mr Tan noted that the electronics sector has moved up the value chain from manufacturing semi-conductors to wafer fabrication of microchips over the past decades. "Inevitably, some businesses fell away at each step of the way - it was not easy at the time, nor indeed popular, but it has proved to be the right foundation." Mr Tan also called on bigger companies and multinationals to guide the way to higher productivity. "We hope that MNCs will draw on the innovations and practices from your operations overseas . . . and grow the productivity of your Singapore operations to the level of your most productive global units." At the awards ceremony at Resorts World Sentosa, Sam Goi, executive chairman of Tee Yih Jia Group, was named the Businessman of the Year for his far-sightedness and entrepreneurial spirit. His popiah skin manufacturing firm Tee Yih Jia has been a forerunner in automation, which helped to ramp up its production capacity. Compared to a stuffy and outmoded factory which produced 3,000 sheets a day by hand in 1977, some 35 million pieces run off its production lines now. The firm exports about 90 per cent of all its products. "I realised (when I acquired Tee Yih Jia in 1977) that Singapore's domestic market was limited, and only by exporting to the rest of the world, TYJ could then become a world-leading spring roll pastry manufacturer," said Mr Goi, who is also known as "Popiah King". The same ability to peer into the far horizons of the future similarly distinguished the other winners. ST Engineering CEO Tan Pheng Hock - who was given the Outstanding CEO of the Year accolade - saw an urgent need to diversify its geographical and customer base, as the business, like others, was hit by wave after wave of shock, from the dotcom bubble burst in 2000 to Sars in 2003. "These crises were real challenges to us, especially when we were moving from a Singapore-centric company into one with increasing global presence," he said. "But together, as a company, we have ridden out of the financial crises, and we have withstood the shocks to the global business environment." Two other awards - Outstanding Overseas CEO of the Year, which honours Singaporeans who have made a mark in other countries, and Enterprise of the Year, which recognises promising smaller local companies - were respectively given to McDonald's China CEO Kenneth Chan and Mencast Holdings. The SBA, jointly organised by The Business Times and DHL Express Singapore, is Singapore's oldest and most prestigious business award. Alvin Tay, BT editor and chairman of the SBA organising committee, said that the four winners have demonstrated leadership, vision and entrepreneurial qualities at their best. "We salute them and hope that they, together with SBA winners before them, will be like a shining beacon to all aspiring businessmen and entrepreneurs," he said.
Said DHL Express Singapore managing director Herbert Vongpusanachai of the winners: "A common denomination underlying their successes is constant innovation, which is the only way to compete in the vibrant global marketplace." -By Andrea Soh Cities face crisis in urban transport, study warns Hong Kong ranked No 1 for urban mobility, while Singapore trails behind in sixth place Source: Today Online / Singapore SINGAPORE — Urban transport systems around the world are far from perfect, with even oft-cited top cities such as Hong Kong and Copenhagen having significant potential for improvement, said a recently released report that ranked Singapore sixth out of 84 cities for urban mobility. Warning of a “looming crisis” as more of the world’s population move to cities and as travel habits change, the study found that on average, less than half the potential of urban mobility systems is unleashed today. Hong Kong emerged top in the index, with a score of only 58.2 out of a possible 100. Singapore scored 55.6, trailing behind Stockholm, Amsterdam, Copenhagen and Vienna. The index was developed by global management consultancy Arthur D Little, which also worked with the International Association of Public Transport to recommend strategies to improve the cities’ urban transport systems. The 19 indicators of the urban mobility index included the financial attractiveness of taking public transport, the proportion of trips made on public transport, density of the cycling path network, car- and bicycle- sharing performances, as well as traffic-related fatalities and transport-related carbon-dioxide emissions. Singapore’s public transport system is highly developed, said the report. It fared relatively well among the top 11 cities with an above-average score for proportion of trips made on public transport, the number of vehicles per capita and in smart-card penetration, but less so in traffic-related fatalities, bike- and car-sharing and transport-related emissions. Singapore’s traffic-related fatalities was, in fact, the highest among the top 11 cities with 32.5 deaths per million citizens, the index showed. Innovative solutions are already available, but operating environments are too fragmented and hostile to innovation, noted the report, which was released earlier this year. “Moreover, a lot of mature cities do not yet have a clear vision and strategy on how their mobility systems should look in the future,” the report said. “In all too many cases, urban mobility plans look like Christmas wish lists with no clear reflection of the synergies or incompatibilities between the initiatives.” For cities with mature urban mobility systems such as Singapore, Hong Kong and Seoul, the next step “must be to fully integrate the travel value chain to foster seamless, multi-modal mobility, while ensuring ‘one face to the customer’ and to increase the overall attractiveness of public transport by service extension”, it said. Transport experts here TODAY spoke to felt that Singapore’s challenge lies in getting more people to take public transport and that the Republic could innovate more in areas of car- and bicycle-sharing and encouraging greater adoption of “green” vehicles. Innovation can take the form of more radical shifts for some parts of the transport system — policies to promote bike- and car-sharing, for instance — and less dramatic changes that tap informatics to improve efficiency of the current system, said Nanyang Technological University’s Associate Professor Michael Li. “Can innovation help some people switch from private to public transport, and … can we provide innovative solutions for particular groups such as the elderly or people with mobility challenges?” asked Assoc Prof Li, who does transport economics and operations research. National University of Singapore’s Associate Professor Lee Der Horng said the frequency of bus and train arrivals could improve with the purchase of more trains and buses by public transport operators. But he disagreed with SMRT’s decision announced on Wednesday to buy double-decker buses, citing recent analysis of ez-link card data that showed double-decker buses contribute more to bus bunching during peak hours than single-deck buses. Together with his students, Assoc Prof Lee found that dwelling time, which is the time a bus takes to load or unload passengers at a bus stop, was longer for double-decker buses than single-deck buses, with a fixed number of people boarding and alighting. The transport researcher felt that Singapore’s approach to cycling as a mode of transportation has been conservative and that policies for low-emissions and electric vehicles are not attractive enough. The report said a successful urban mobility strategy needs to satisfy the needs of people and businesses, as well as increase the competitiveness of a country or region. It also needs to consider the interests of both public and private transport, passenger mobility and goods mobility, motorised and non-motorised transport and vehicles that are parked as well as those on the move. On Hong Kong, the report noted that it is one of the most crowded cities in the world. Nevertheless, its public transport network is also one of the most efficient, with nine in 10 trips by commuters made on foot or by public transport. “Hong Kong’s transport system is a multi-modal network based on rail transport supported by bus, minibus, tram, ferries and taxis,” the report said. “The network is well integrated and the Octopus smart card allows customers to use all modes of transport and to pay for parking, shops and leisure facilities.” A hypothetical best-in-class system would be as affordable as in Hong Kong and with as few vehicles, the report said. It would ensure air as pure as Stockholm’s, promote cycling like in Amsterdam, be as safe as Copenhagen, have the bike-sharing system of Brussels and Paris and have public transport services as frequent as the London Tube, among other characteristics. -By Neo Chai Chin http://www.todayonline.com/singapore/cities-face-crisis-urban-transport-study-warns?singlepage=true Singapore Real Estate Strong take-up in office leasing market for Q1 Gross average rents rise 3.9-4.5% on improved occupancy Source: Business Times / Singapore THE office leasing market recorded another quarter of strong take-up during Q1 this year, with average gross rental rates in the central business district (CBD) rising between 3.9 to 4.5 per cent quarter-on-quarter from higher occupancy rates, according to research by DTZ. Average monthly per square foot rents ranged between $8 in Shenton Way, Robinsons Road and Cecil Street, to around $11.50 in Marina Bay. Occupancy rates at these areas, at 97.9 per cent and 88.1 per cent respectively, were higher than the previous quarter. DTZ said it expects rents in the CBD to grow between 10 and 15 per cent this year - higher than its previous forecasts - with the momentum expected to continue until 2015 from limited supply.
"Robust demand amid an environment of high occupancy rates will reinforce landlords' bargaining power," the company said in a statement yesterday. -By Raphael Lim http://www.businesstimes.com.sg/premium/singapore/strong-take-office-leasing-market-q1-20140404
http://www.straitstimes.com/premium/money/story/office-occupancy-rates-still-rising-q1-20140404 Capitol Singapore making good progress Source: Business Times / Top Stories [SINGAPORE] Capitol Singapore, a luxury integrated project that sits on a landmark site, is making big strides towards completion since its ground-breaking two and a half years ago. Its iconic attraction, Capitol Theatre, will re-open its doors in April next year - marking Singapore's first dual purpose theatre that can screen movies and also host theatre performances. Other key components of Capitol Singapore, which include a four-level retail component and The Patina, Capitol Singapore hotel are also on track for completion by the end of this year.
Some 40 per cent of the retail space with total net lettable area of 133,000 sq ft have been committed, while 14 units of the 39 residential units at Eden Residences Capitol have been sold at an average $3,000 per square foot. -By Lynette Khoo Capitol Theatre to reopen in April 2015 Source: Channel News Asia / Singapore SINGAPORE: The historic Capitol Theatre will reopen in April 2015 with the staging of a musical that depicts the lives and struggles of Singaporeans, including former Prime Minister Lee Kuan Yew, as they built a new nation. When restored to its former glory, Capitol Theatre will feature cutting-edge audio and visual systems, as well as the nation's first computerised rotational floor system. The details were announced at a topping-out ceremony held earlier on Thursday. It has been 16 years since Capitol Theatre screened its last movie and come next April, the iconic theatre will play host once again to not just movie screenings, but also concerts, musical performances and even gala events. The art-deco architecture and sculptures that flanked the stage have been painstakingly conserved. Developer Capitol Investment Holdings says the theatre will have close to 1,000 seats and will pack high-tech features, including a rotational floor. Capitol Investment Holdings is a joint venture company comprising Perennial Real Estate Holdings, Pontiac Land Group and Osim's Mr Ron Sim. "The seats are tiered up, sloping. When we press a button, within eight minutes, these seats will all be hidden and it becomes a flat floor. So we can use it for other events,” said Pua Seck Guan, vice chairman and president of Perennial Real Estate Holdings. “Sometimes, you have musical shows that come with gala dinners, so that system allows us to either make it flat or make it tiered to put in a round table dinner setting." Observers say preserving the iconic theatre and its features provides an important link to the past. "It is stunning to a certain extent. Those should be kept, and remain there to remind Singaporeans of our past,” said Associate Professor Foo Tee Tuan, deputy director at UniSim Centre for Chinese Studies. “It was once one of the five old cinema theatres in Singapore and so I will say to a certain extent it should position itself as a premium place for screening local films. It should broaden itself to becoming the capital of not only Singapore cinema, but also Southeast Asian cinema." The opening act will be "Singapura - The Musical", produced by The 4th Wall Theatre Company. The musical will travel to London's West End and Broadway in New York following its Singapore debut. A private and invitation-only "listening preview", featuring a number of songs from the musical, will be held later this month. The musical depicts the lives and struggles of Singaporeans and of former minister mentor Lee Kuan Yew in their journey to build a nation. It is now in the final stages of the production process. The theatre is part of a S$1.1 billion integrated development called Capitol Singapore. The development includes a luxury 157-room hotel -- The Patina -- located at the former Capitol Building and Stamford House, as well as a four-storey upmarket retail mall and 39 high-end apartments. It will also house Singapore's first ever six-storey basement with direct access to City Hall MRT station. “The most challenging (problem) is actually going down to the basement,” said Mr Pua. "We have gone down to six basements and connected to the MRT, and we are only allowed to do night work, by closing the North Bridge Road. "That part of the work is very tedious. We open up at night, finish up to a certain stage and the next morning, must cover up the road. That is technically very challenging but we have so far overcome it.” The developer says the majority of the development, including the retail mall will be opened by the end of this year.
- CNA/xq/ec http://www.businesstimes.com.sg/premium/top-stories/capitol-singapore-making-good-progress-20140404
http://www.channelnewsasia.com/news/singapore/capitol-theatre-to-reopen/1057388.html Ascendas on track to beefing up presence in Japan Source: Straits Times Property firm Ascendas Hospitality Trust is a step closer to boosting its presence in Japan's fast recovering property market. The trust raised $50 million on Tuesday via a private placement of about 73.5 million stapled securities at 68 cents apiece to partly fund its acquisition of the Osaka Namba Washington Hotel Plaza.
http://www.straitstimes.com/premium/money/story/ascendas-track-beefing-presence-japan-20140404 HDB expands scheme to assist shops island-wide S$1.9m will be set aside to help 2,800 shops under the ROS scheme Source: Today Online / Singapore SINGAPORE — The Housing & Development Board (HDB) will set aside S$1.9 million to help 2,800 shops island wide as part of efforts to enhance business vibrancy and competitiveness under the sixth batch of the Revitalisation of Shops (ROS) scheme. The ROS scheme is part of the Government’s measures to assist HDB retailers and comprises of three components: co-funding for upgrading of common areas, co-funding for promotional events, as well as rent-free periods for tenants to renovate their shops. By co-funding the upgrades of common area, HDB said that it will “improve the overall shopping environment for residents”. The HDB also said that it will co-fund more than half of the expenditure for promotional events held by the merchants’ associations in hopes to “attract more customers”. HDB also announced that assistance will be provided to tenants who may experience revenue drop when carrying out upgrading works by granting rent-free period of up to one month when shops are undergoing renovation in conjunction with the ROS scheme. Since its inception in 2007, HDB has spent nearly S$8.4 million on the ROS scheme, benefitting 4,600 shops at 52 sites which cover more than half of HDB Town and Neighbourhood centres.
HDB shop owners and tenants can call the HDB Commercial Properties toll-free line at 1800-866-3073 for any queries. -By Naadiah Dabid http://www.todayonline.com/singapore/hdb-expands-scheme-assist-shops-island-wide Real Estate Companies' Brief SC Global is presenting sponsor for BNP WTA Championships Sponsorship to run for 5 years; company also giving $300k to 'tennis for every child' programme Source: Business Times / Singapore LUXURY property developer SC Global Developments has been named as the presenting sponsor of the upcoming BNP Paribas Women's Tennis Association (WTA) Championships in Singapore. The local company, which was delisted from Singapore Exchange last year, will be on board throughout the five years that the event will be held at the new $1.3 billion Singapore Sports Hub in Kallang starting this October. When pressed by reporters during a press conference yesterday, chairman and CEO Simon Cheong declined to reveal the cost of the sponsorship deal.
"The quantity is not important. What's important is that we play our part in supporting sports and corporate social responsibility. This is our way of giving back," he said. -By Lee U-wen Blackstone, Carlyle said to be eyeing Goodpack Source: Business Times / Companies [HONG KONG] Blackstone Group and Carlyle Group are considering a bid for Singapore's Goodpack Ltd, people familiar with the matter told Reuters, eyeing the container maker a few weeks after its takeover talks with Australian pallet maker Brambles ended. Blackstone and Carlyle had meetings this week with Goodpack, which makes containers used in the rubber, tyre and food industries, people familiar with the matter said. Goodpack's market value is S$1.23 billion. The people said that while the meetings showed the firms' interest in the company, there is no guarantee a deal will come as a result. Talks are at an early stage, the people said.
Goodpack said on March 19 that it had been in discussions with unnamed parties which might lead to a buyout of its shares, and had hired Rippledot Capital to advise on the process. -From Hong Kong, China
http://www.straitstimes.com/premium/money/story/company-briefs-20140404 Views, Reviews & Forum Buyers’ market? More like nobody’s market Source: Today Online / Business Newly-released government flash estimates for housing prices in the first three months of the year show that they have continued their downward trend. Private home prices fell a further 1.3 per cent from the previous quarter, while Housing and Development Board resale prices sank another 1.5 per cent. The downtrend was no surprise, as updates from other real estate bodies providing monthly data have been registering mostly declines across most market segments. While the latest data did not include sales volumes, other sources have shown that the number of transactions has been coming down. So how do we treat such price trends arising from vastly reduced sales volumes? Carefully, as they may not be representative of the actual market. There is no doubt that the underlying market sentiment is weak as successive rounds of cooling measures and policy moves continue to bite. The sentiment has been made worse after new United States Federal Reserve Chair Janet Yellen last month made more specific comments about the timing of an interest rate rise than she probably intended. In response to a question at her maiden post-policy meeting news conference, she suggested that a rate hike will take place around six months after the winding down of the bond-buying programme, earlier than investors had expected. With US rates leading the costs of funds across the world, markets were sold off. With the increased pressure, it is only logical that anyone who needs to sell a property now will have to give discounts to attract prospective buyers, however small. Without this, the current state of affairs — of small price drops and slow sales — is likely to persist far longer as the majority of buyers and sellers continue to stay on the sidelines. It is premature to describe the market as a buyers’ market. Yes, buyers have lots more choices and developers’ are courting them more actively through agents. Yet, if it is truly a buyers’ market, why aren’t they getting it all their way? Why aren’t more buyers benefiting from the so-called advantage by paying substantially lower prices? Only a small number seem to be doing so. In truth, the market is in a stalemate, notwithstanding declining prices. What is the impact of a 1.3 per cent decline on a million-dollar property? Only S$13,000. You can easily get a much lower price by selecting a lower-floor unit. Unless most of the sales were mortgagee sales forced upon owners by lenders, I would say the selling — for private housing, at least — is largely profit-taking by investors. Statistics from the Monetary Authority of Singapore show that there is a lot of cash sloshing about in the economy. On that basis alone, it is hard to see the current sales by owners as originating from weakness. For those who want to see a proxy struggle between buyers and sellers, they can find it in the leasing market. Older properties are losing tenancies quickly to newly-completed ones, but landlords of the older units are not panicking just yet. For the majority of these landlords who bought their properties many years ago and at much lower prices, it is simply a matter of lower rental income and weaker yields. The time to panic will come one day, the timing of which remains to be seen. The threat hanging over the housing market is that interest rates will rise and rise significantly in the near future. They have actually risen, but only marginally as lenders beef up their cash resources. How long has the market been waiting? It has been nine months now from the time the Fed first announced its decision to begin tapering its bond-buying programme. Most investors have taken their positions and nothing, it seems, has altered significantly since to make them change their minds.
In the meantime, the stalemate will continue. Let us brace ourselves for a truly boring property market. -By Colin Tan http://www.todayonline.com/business/property/buyers-market-more-nobodys-market?singlepage=true Green Minds with Green Hearts I have just co-chaired with my Chinese counterpart Jiang Weixin, Minister of Housing and Urban-Rural Development, the 6th Sino-Singapore Tianjin Eco-city Joint Working Committee Meeting in Beijing. We had a fruitful discussion on the future plans for the Eco-city.
https://mndsingapore.wordpress.com/ The 'art' in architecture Source: Business Times / Executive Lifestyle SHAUMYIKA Sharma is a full-time architect who has found time to not design buildings but to create art. Her latest exhibition titled Laksa In The Summer of My Childhood features three media: cyanotypes, photography and collage, all of which are vital to the life of an architect. "I wanted to do something that was familiar and which used the skills that I have," explains Sharma.
The exhibition revolves around three major themes - food culture in Singapore, memories and change - each paired with a type of media. -By Chew Hui-Yan http://www.businesstimes.com.sg/lifestyle/arts/art-architecture-20140404 Global Economy & Global Real Estate S'pore is China's urban growth 'mirror' Source: Straits Times Singapore serves as a "mirror" for China in its urbanisation push, just as it did in the Asian giant's previous stage of industrialisation, Chinese Vice-President Li Yuanchao told visiting National Development Minister Khaw Boon Wan yesterday.
http://www.straitstimes.com/premium/asia/story/spore-chinas-urban-growth-mirror-20140404 Delay seen in Vietnam housing recovery: CBRE Families struggling to access affordable loans; confidence in economy lagging Source: Business Times / Property [HANOI] Vietnam's property market rebound from a three-year slump may be delayed until 2015 as families struggle to access affordable loans and confidence lags, according to CBRE Group. Only 1,500 condominiums were sold in Hanoi in the first quarter, according to CBRE. While that's a fivefold increase from the 279 sold in the same period two years ago, it's still down from the peak in 2009, when more than 15,000 units were sold in the capital city.
In Ho Chi Minh City, first-quarter sales more than tripled to 2,263. That's compared to a peak of 13,000 condos sold in Ho Chi Minh City in 2010. -From Hanoi, Vietnam http://www.businesstimes.com.sg/specials/property/delay-seen-vietnam-housing-recovery-cbre-20140404 Indian developers struggle to service debt as market slumps Central bank cuts no slack with interest rates holding at 8% Source: Business Times / India [MUMBAI] Indian developers are struggling with the lowest ability to service debt in at least six years and the central bank isn't offering any solace. Reserve Bank of India Governor Raghuram Rajan's focus on curbing the fastest inflation among major economies in Asia- Pacific is weighing on home sales amid the worst slowdown in a decade. Consumers are deferring purchases, while finance companies are seeking possession of properties mortgaged by developers including Unitech Ltd, the nation's fifth-biggest, against defaults. The 13-company S&P BSE India Realty index has declined 19 per cent in the past year versus a 20 per cent gain in the benchmark S&P BSE Sensex as profit margins of developers almost halved from six years ago. Even a quick pick-up in economic growth is unlikely to reverse the slump immediately, said Venkatesh Gopalkrishnan, chief investment officer at a builder owned by the fourth-richest Indian.
"There will be more short-term pain," said Mr Gopalkrishnan, who is also the executive vice-president at Mumbai-based Shapoorji Pallonji & Co. "The sector has already been experiencing it for a while. Since real estate sales are a lag indicator for the economy, it will take time for benefits to filter down even if gross domestic product takes off." -From Mumbai, India Cleveland's theatre district attracting residents A model of synergy that links the arts, urban development, affordable homes Source: Business Times / Property [CLEVELAND] When a national tour of Joseph and the Amazing Technicolor Dreamcoat played here last month, Vincent Wil Hawley walked from his apartment at Residences at Hanna, a new 102-unit conversion in a renovated office building annex, and was in his seat five minutes later. "It's basically like you're living in the middle of Broadway," said Mr Hawley, 30. "It's fun to have so much culture outside your door." Residents of midtown Manhattan are accustomed to walking to the Theater District to see what's new on Broadway. But Mr Hawley's trip to and from Cleveland's gilded Palace Theatre was something much more significant. It was a sign, decades in the making, that this city's efforts to create a thriving residential real estate market in its downtown core were starting to look more like a box-office hit than a flop.
An estimated 12,000 people live in downtown Cleveland, double what the population was in 2000, according to the Downtown Cleveland Alliance, a nonprofit organisation that represents property owners. Rental occupancy is near a record high of 95 per cent. -From Cleverland, US Zillow to provide buyers access to US home data Website targeted at growing number of Chinese buyers Source: Business Times / Property [HONG KONG] United States real estate information service Zillow Inc plans to partner with a Beijing-based peer to tap growing interest from Chinese mainland clients, the second-largest foreign buyers of US homes last year. Seattle-based Zillow said in a statement yesterday it has signed an agreement with Beijing Yisheng Leju Information Services Co in a deal that will see a co-branded website translated into Chinese but operated by the US company. The site will operate from early summer this year, giving users of Leju, an affiliate of E-House (China) Holdings Ltd, access to home search data in the US.
Chinese retail and institutional investors have increasingly sought opportunities in overseas property markets as prices soared in major cities at home. A total of US$11.5 billion was invested in overseas property last year alone, according to real estate consultancy Savills. -From Hong Kong, China http://www.businesstimes.com.sg/specials/property/zillow-provide-buyers-access-us-home-data-20140404 Billionaire Sy to Accelerate Mall Expansion in China Source: Bloomberg / Luxury SM Investments Corp. (SM), Philippine billionaire Henry Sy’s holding company, will speed its expansion in China and build more shopping centers in the country. SM Prime Holdings Inc. (SMPH), the company’s mall unit based in Manila, plans to build two shopping centers every year beyond 2016, up from one project a year currently, SM Prime Chief Finance Officer Jeffrey Lim said yesterday. Two will be planned for 2016 and 2017 in Yangzhou and Changzhou city, eastern China’s Jiangsu province. “China will provide us the long-term growth path as we continue to focus on the Philippines,” Lim said in a media briefing in Hong Kong yesterday. “Once we have set up the organization, we could move into two malls every year.” An expansion in China, the world’s second-largest economy, will help reduce SM Prime’s reliance in the Philippines, where growth is forecast to slow to 6.5 percent this year, according to economist estimates surveyed by Bloomberg. The economy expanded 7.2 percent in 2013. SM Prime, which currently has five malls in China, will open a shopping center in Shandong’s Zibo city this year and its biggest in Tianjin in 2015. It operates 48 malls in the Philippines. Sy, 89, has a net worth of $11.3 billion, making him the richest man in the Philippines, according to the Bloomberg Billionaires Index. The company’s existing malls in China posted a profit of 958 million pesos ($21.3 million) last year, or about 6 percent of its 16.27 billion peso total net income, according to its annual earnings statement. -By Michelle Yun and Ian Sayson http://www.bloomberg.com/news/2014-04-03/billionaire-sy-to-accelerate-mall-expansion-in-china.html Microsoft Moving San Francisco Offices to Largest Tower Source: Bloomberg / Tech Microsoft Corp. (MSFT) 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 (VNO)’s 555 California St., San Francisco’s largest building by square footage and 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 “center of the U.S. new economy” after four years of sustained rent growth, according to property-research firm Green Street Advisors Inc. Office rents rose 6.8 percent in the first quarter from a year earlier to $57.21 a square foot on average, with vacancies little changed at 11.3 percent, brokerage Jones Lang LaSalle Inc. (JLL) said. Asking rents have climbed 70 percent since 2010, when rates bottomed at $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 today in a telephone interview. The 555 California building is “incredibly iconic both in San Francisco and the country.” Microsoft will occupy about 50,000 square feet (4,600 square meters) on the second and third floors, said a person with knowledge of the plans. Rent will be about $62 a square foot for the two floors, said the person, who asked not to be identified because the details are private. Street ViewGreenbaum declined to comment on financial terms. He said the tower’s second floor has 27-foot (8-meter) ceilings, allowing Microsoft to establish a unique presence visible from the street. Asking rates in San Francisco’s north financial district averaged $58 a square foot in the first quarter, up 7.8 percent from a year earlier, according to Jones Lang LaSalle. Microsoft’s Yammer Inc. unit, with 76,000 square feet in Twitter Inc.’s headquarters building in the Central Market area, won’t be affected by the parent company’s move, the person with knowledge of the matter said. The 52-story tower between Montgomery and Kearny streets has 1.5 million square feet of office space and 45,000 square feet of retail, according to Vornado’s website. At 779 feet, the building is surpassed in San Francisco only by the 853-foot Transamerica Pyramid, according to property website Emporis.com. The California Street high-rise, opened in 1969, is the main building in a complex that was known as Bank of America Center before the financial company moved to Charlotte, North Carolina. The skyscraper was featured in the 1974 disaster film “The Towering Inferno,” according to Emporis. Microsoft currently occupies space at Westfield Group (WDC)’s San Francisco Centre, the city’s biggest mall. The property, at Market and Fifth streets, is between the Union Square shopping district and the SOMA area, where companies including Google Inc. and Salesforce.com Inc. have offices. -By Dan Levy 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 CompetitionDevelopers 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 PreferredRob 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 InvestmentForeign 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 SoarIn 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 HelpPrograms 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 ComebackU.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 SubsidiesLandlords 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’ RightsLondon’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 |