Real News‎ > ‎2014‎ > ‎April 2014‎ > ‎

9th April 2014

Singapore Economy

Poor adaptability costs S'pore $280m in lost productivity

But study ranks Republic joint fourth with US in talent adaptability

Source: Business Times / Singapore

FOR the first time, value has been ascribed to the ability of people to train for new skills or switch industries, thus bringing benefits to employers and economies.

A study has estimated that poor talent adaptability is costing Singapore $280 million in lost productivity; globally, the figure is $163 billion.

Nevertheless, a study has ranked the Republic joint fourth with the US in a field of 11 countries; both had a "Talent Adaptability Score" of 57. Among the Asia-Pacific countries in the field, Singapore ranked highest.

The Netherlands topped the tables with a score of 85, while China, scoring 23, was last among the 11. Australia and India, the other Asia-Pacific countries on the list, came in at sixth and 10th respectively.

-By Kara Quek

Singapore Real Estate

Buying activity in private residential market remains tepid in Q1

Source: Channel News Asia / Business

SINGAPORE: Buying activity in Singapore's private residential market remained tepid in the first quarter of this year.

Property consultancy DTZ said in its latest report that only 906 private homes changed hands in the secondary market in the first quarter.

This was a 34 per cent quarter-on-quarter decline or 62 per cent decline year-on-year.

DTZ attributed the slower activity to buyers becoming more selective, with some holding back their purchases on expectation of further price declines.

It said this was especially so after the Finance Minister said during his budget speech that it was too early for the government to start relaxing property-cooling measures.

However, DTZ noted that transactions in the Good Class Bungalow (GCB) segment picked up in the first quarter as buyers with deep pockets returned to the market.

Eight GCBs have changed hands so far this year, for a total of S$225.8 million.

This was higher than the five GCB transactions amounting to S$134.6 million in the second half of 2013.

DTZ said the GCB buyers are mostly buying for their own occupation and they are less affected by property-cooling measures such as the total debt servicing ratio (TDSR) and Additional Buyer’s Stamp Duty (ABSD).

The property consultancy said the pullback in overall buying activity has caused resale prices of private non-landed residential homes to soften further in the first quarter.

It reported that resale prices of luxury condominiums declined by a further 2.0 per cent, following a 2.0 per cent quarter-on-quarter drop in the fourth quarter of 2013.

Meanwhile, resale prices of prime freehold condominiums fell another 1.5 per cent quarter-on-quarter and suburban leasehold condominiums declined 1.1 per cent on-quarter.

Within the landed segment, resale prices across all areas remained flat in the first quarter after a slower year-on-year growth in 2013.  

- CNA/ec

Far East-Sekisui JV tops bids for Woodlands office site

Strata office units set for launch towards year-end or early next year

Source: Business Times / Top Stories

[SINGAPORE] A joint venture between Far East Organization, its listed unit Far East Orchard and Sekisui House that topped a state tender for the first predominantly office site in Woodlands Regional Centre intends to build two 16-storey office towers featuring both large and small strata office units for sale as well as lease.

The project, located next to Causeway Point, will also have some retail space that the developers will probably retain for long-term investment. The top bid at yesterday's tender of nearly $634 million, or $906.29 per square foot of potential gross floor area, was just 2.1 per cent more than the next highest bid of $887.42 psf per plot ratio (psf ppr) from CapitaLand units Mahogany One and Mahogany Two.

However, the top bid was 17.6 per cent above the third highest bid of $770.49 psf ppr from a City Developments-Hong Leong Holdings tie-up and double the lowest bid of $440.28 psf ppr. The latter came from Sim Lian, which recently launched its Vision Exchange project in Jurong East where office units were recently sold at an average price of $2,150 psf.

Based on Far East-Sekisui's top bid, market watchers estimated its breakeven cost at about $1,800 psf.

Woodlands commercial site draws S$634m top bid

Source: Today Online / Business

SINGAPORE — A plot of land in Woodlands, the first commercial Government Land Sales (GLS) site in the district in nearly 20 years, attracted eight bids at the close of tender yesterday, with the top bid of S$634 million submitted by a consortium led by Far East Organization.

The 99-year leasehold site has an area of 199,873 sq ft, with a maximum allowable gross floor area of 699,557 sq ft. The top bid by Far East Civil Engineering, Tannery Holdings and Sekisui House translates to a unit price of S$906 per square feet per plot ratio and is only 2.1 per cent higher than the second-best bid, Urban Redevelopment Authority data showed.

Analysts said the keen competition was no surprise as it was the first commercial site in Woodlands launched under the GLS since the sale of the Causeway Point site in 1995.

“The site is expected to serve as the catalyst to kick-start the development of the Woodlands Regional Centre,” said Ms Chia Siew Chuin, Director of Research and Advisory at Colliers International.

KOP buys majority stake in Victory Hill Exhibitions

Source: Business Times / Companies

SINGAPORE'S KOP Group has acquired a majority stake in US-based exhibition production and distribution company Victory Hill Exhibitions.

Victory Hill's most notable upcoming project is an exhibition dubbed Marvel's The AVENGERS S.T.A.T.I.O.N.

The exhibition - to be launched in New York on May 23 - will be an audio-visual showcase blending education and entertainment, featuring original movie props, interactive demonstrations as well as science fiction narratives. It leverages on popular characters from the Marvel universe, such as Iron Man, Captain America and The Incredible Hulk.

Nicholas Cooper, Victory Hill's founder and chief creative officer, said: "With this exhibit we are seamlessly integrating story and science to create a truly immersive and educational environment set within Marvel's cinematic universe. While the exhibition will make its debut in New York City, we are exploring reaching out to our burgeoning fan base in Asia, eventually bringing the exhibition to this region."

-By Nisha Ramchandani

Real Estate Companies' Brief

SPH Reit's Q2 DPU of 1.39 cts beats forecast

Source: Straits Times

Bolstered by positive rental reversions and strong property income, SPH Reit achieved a distribution per unit (DPU) of 1.39 cents for the second quarter ended Feb 28, beating its forecast by 4.5 per cent. This translates to an annualised dividend yield of 5.78 per cent for the Reit based on the closing price of units on Feb 28.

Loss-making CCM to raise up to $143.5m

It plans 8-for-1 rights issue, bonus issue for working capital, investment

Source: Business Times / Companies

LOSS-MAKING CCM Group plans to issue up to 28.75 billion shares via an eight-for-one rights issue and another 28.75 billion bonus shares on the basis of one bonus share for every rights share subscribed.

At half a cent each, the rights shares are expected to raise a maximum of about $143.5 million in net proceeds (assuming full subscription) and a minimum of $3.3 million based on an undertaking.

Joseph Liew, CCM's executive chairman and CEO, said: "The proposed rights issue and issue of bonus shares are expected to raise the capital necessary to address two issues - funding for working capital for the Singapore construction business, and a sufficient war chest to build up our overseas property investments. The Australian and US property market cycles are each at an inflection point which offer opportunities for CCMP to invest in so as to enhance shareholder value."

As at April 1, 2014, CCM had raised $16 million from its FY2013 fund-raising, which enlarged its share capital base to 1.23 billion shares. Following a proposal to re-allocate $5.2 million of proceeds from the FY2013 fund-raising, CCM will have $10.8 million available for investments in property development.

FCT to acquire Changi City Point

Source: Business Times / Companies

MAINBOARD-LISTED Frasers Centrepoint Trust (FCT) has entered into a conditional sale-and-purchase agreement to acquire Changi City Point mall for a purchase consideration of $305 million.

The announcement came yesterday from Frasers Centrepoint Asset Management (FCAM), the manager of the trust.

The acquisition was negotiated on an arm's-length basis between FCAM, on behalf of the trustee of FCT, and the vendor, Ascendas Frasers.

Ascendas Frasers is a 50-50 joint-venture between FCT's sponsor, Frasers Centrepoint Limited, and Ascendas Development.

Frasers Centrepoint Trust to buy Changi City Point for S$305m

Source: Today Online / Business

SINGAPORE - Changi City Point at Changi Business Park looks set to become the next shopping mall to be acquired by a real estate investment trust.

Frasers Centrepoint Trust (FCT) said on Tuesday it has entered into a conditional sale and purchase agreement to buy Changi City Point from Ascendas Frasers for S$305 million.

Ascendas Frasers is a 50-50 joint venture between Ascendas Development and Frasers Centrepoint, which is FCT’s sponsor.

Changi City Point -- a three-storey mall with one basement level -- is known for its various factory outlets.

It is located near the Singapore Expo convention and exhibition centre and the Singapore Expo MRT station.

-From Channel NewsAsia

Views, Reviews & Forum

Retain more heritage buildings, key spaces

Source: Straits Times

American urban geographer Joel Kotkin identifies three great characteristics of cities: safe, busy and sacred ("Hotel Singapore or the Sacred Place?"; last Saturday). I would suggest that there is much more to being a great city. The notion of "sense of place" for a city is more than being linked to religion or being somehow sacred. In truth, most cities have a number of their parts that have sense of place.

Payment of commissions in rental transactions: Council replies

Source: Straits Times

We thank Ms Fong Hang Yin for her feedback ("Unfair rent practice"; March 21). Consumers may choose to handle rental property transactions on their own, or engage salespersons to assist them. The amount and payment of commission are contractual matters between the consumer and the appointed salesperson.

Global Economy & Global Real Estate

CCM completes deal for 5 Texas land parcels

Source: Business Times / Companies

CONSTRUCTION firm CCM Group has completed the acquisition of five out of seven parcels in a 55-hectare development in Texas, in the United States.

In a statement yesterday, the Catalist-listed company said that it was confident of securing the remaining two land parcels, which are the smallest of the seven.

Only then would CCM go ahead to seek bank financing for the entire project and begin an engineering study to sub-divide the land into 545 lots, which would need approval from the local authorities.

CCM also said it had received pre-sale letters of intent from developers in the US to buy 285 lots - worth US$28.5 million - out of the total 545 lots.

Pacific Century to Sell Property to Gaw Capital for $928 Million

Source: Bloomberg / Luxury

Pacific Century Premium Developments Ltd. (432), the real estate unit of billionaire Richard Li’s PCCW Ltd. (8), agreed to sell a Beijing commercial and residential complex to Gaw Capital Partners for $928 million. Pacific Century shares tumbled.

The sale of Pacific Century Place to the Hong Kong-based fund manager will generate HK$2.65 billion ($341 million) of consolidated pretax profit, which the company will use to pay debt and fund projects in Japan,Thailand and Indonesia, according to a filing to Hong Kong’s stock exchange yesterday.

The supply of office properties for sale in Beijing is limited. In the five years through 2012, only 61 sales of office buildings and business parks worth at least $5 million were recorded in China’s capital, compared with 107 deals in Shanghai, Jones Lang LaSalle said in an August report.

“This is a rare opportunity to be able to acquire such a large cash flow asset in a prime and irreplaceable area in Beijing,” Kenneth Gaw, Gaw Capital’s president and co-founder, said in an e-mailed statement yesterday. “We believe this type of asset will continue to outperform.”

Shares of Pacific Century are set for their biggest decline in more than five months in Hong Kong. They dropped 11 percent to HK$5.93 as of 11:42 a.m. local time.

Japan, Thailand

Gaw Capital said in November it bought the Waterside House in London for a group of South Korean investors, as interest in overseas property from Asia grows.

For Pacific Century, the sale lets the company realize its investment “at a reasonable price” to enhance its financial resources and let it explore investment opportunities worldwide, according to its statement.

Pacific Century will pay an $100 million breakup fee if the agreement is terminated.

The company is currently developing a resort project in Japan and luxury resort complexes in southern Thailand. It also plans to build a 40-story grade-A office building in Jakarta, according to the statement.

Pacific Century plans to use the proceeds from the sale to repay HK$1.5 billion of loans and redeem HK$2.42 billion of convertible notes that will mature in May.

PCCW unit PCCW-HKT Partners Ltd. holds the notes and may convert all or part of the debt into Pacific Century shares, according to the filing. PCCW may consider selling some of its Pacific Century shares to increase the company’s public float, while maintaining its majority stake, Pacific Century said.

-By Cathy Chan

Canada Cooler Housing Market Boosts Poloz’s Soft Landing

Source: Bloomberg / Luxury

Declines in housing starts and building permits data suggest Canada is headed for the soft landing in real estate that policy makers have forecast, damping concern that a rapid fall in home prices could hobble the world’s 11th-largest economy.

Home construction dropped 18 percent in March to the lowest annual pace since the 2009 recession, Canada Mortgage & Housing Corp. said from Ottawa today. Residential building permits also dropped 21 percent in February from January’s record high, Statistics Canada said in a separate report.

Bank of Canada Governor Stephen Poloz has said the housing market is heading for a “soft landing” with consumer debts as a share of income stabilizing around record highs. The International Monetary Fund said today that house prices and household finances remain a “key vulnerability” for Canada.

Real estate is “not crashing like some were expecting but sales demand is a bit more subdued,” said Robert Kavcic, a Bank of Montreal senior economist in Toronto. “I don’t know if it’s a bad thing; it’s what policy makers want to see.”

The drop in housing starts to an annual pace of 156,823 units in March will help bring construction to the 180,000 annual rate that is needed to fulfill demand from population growth, Kavcic said.

Today data showed sharp declines for multiple-unit housing, which has been the focus of policy-maker concern, particularly in Toronto and Vancouver. Construction starts on urban multiple-unit housing fell 26 percent in March, while the value of building permits fell 32 percent in February.

The Canadian dollar pared gains after today’s reports. The currency rose to 1.094 per U.S. dollar at 10:35 a.m. in Toronto, 0.3 percent stronger than late yesterday, after climbing as much as 0.5 percent. One Canadian dollar buys 91.37 U.S. cents.

Next Move

Poloz has said his next move in the central bank’s 1 percent overnight interest rate will depend on the evolution of economic data and the risks posed by consumer finances and weak exports. The Bank of Canada is counting on business spending to drive economic growth, making up for a moderation in housing.

The drop in starts “highlights the downside risks surrounding homebuilding after a decade-long run-up,” Toronto-Dominion Bank economist Connor McDonald wrote in a research note. “Weaker construction activity, along with general fatigue in domestic spending, will inevitably put more pressure on net exports to drive the next stage of Canada’s economic recovery.”

-By Greg Quinn

Zell Says Higher Rents Not Goal at Silicon Valley Complex

Source: Bloomberg / Personal Finance

Sam Zell, the billionaire chairman of apartment landlord Equity Residential (EQR), said the company bought a rent-controlled complex in California because it was a good investment and not with the goal of raising rents.

The 1,811-unit Woodland Park apartment complex in East Palo Alto was the subject of a Bloomberg News story yesterday examining the shrinking availability of affordable housing in California’s Silicon Valley. Each month, as many as 300 residents receive notices from Chicago-based Equity Residential giving them three days to pay back rent or vacate their homes, according to an employee’s sworn testimony in a lawsuit.

Equity Residential, founded by Zell, bought Woodland Park in 2011 and owns more than 70 percent of the regulated apartments in the only city between San Francisco and San Jose with a rent-control law. Zell, in response to a question about the story, said on CNBC today that the company is required to send out eviction notices to those who are behind on rent.

“It doesn’t mean anybody was evicted,” said Zell, 72. “But there’s this problem that says you have to pay your rent. If you don’t pay your rent, we will replace you with another affordable tenant who can pay their rent.”

Equity Residential has filed 236 unlawful detainer, or eviction, cases that have been unsealed in San Mateo County Superior Court since December 2011, according to the court website. At least 160 cases -- or 68 percent -- ended with a writ of possession of real property, giving the tenant 24 hours to move out.

Rent Regulated

Zell said the property would be worth five times its value if it didn’t have rent control. Equity Residential bought the complex knowing that the law was in place and accepted that it would remain regulated, he said.

East Palo Alto is a haven of low-rent housing in a region where companies such as Tesla Motors Inc., Facebook Inc. and Google Inc. have minted at least two dozen billionaires and thousands of millionaires. Woodland Park is where Silicon Valley’s cooks, janitors and housekeepers live, often working second jobs to hang on to their homes as rents soar and wages stagnate.

Affordable housing is becoming harder to find as communities like Woodland Park disappear from cities across the country. One in four renters now spend more than half of their income on housing, up from one in five a decade ago, according to a 2013 report from the Harvard University’s Joint Center for Housing Studies.

-By Brian Louis

La Quinta Said to Raise $650 Million in IPO of Blackstone Hotel

Source: Bloomberg / Personal Finance

La Quinta Holdings Inc., the mid-priced hotel chain backed by Blackstone Group LP (BX), climbed in its trading debut after the company raised a lower than expected $650 million in an initial public offering.

La Quinta, based in Irving, Texas, sold 38.25 million shares for $17 each after offering 37.2 million shares for $18 to $21 apiece. After falling as much as 4 percent earlier today, the stock closed at $17.12.

The lodging chain’s IPO follows a stock-market slump that knocked more than 7 percent off the Bloomberg U.S. Lodging Index in just three days this month. The lodging index, and broader Standard & Poor’s 500 Index, have regained some ground in the last two trading days.

“I believe we were impacted by the market in the last few days,” La Quinta Chief Executive Officer Wayne Goldberg said in a telephone interview. “We’re really not worried about the price any given day. We focus on our fundamentals every day. We own and operate hotels, we have great partners, and we will create value for our investors over the long term.”

At $17 a share, La Quinta has a market value of $2.1 billion, data compiled by Bloomberg show. That’s 47 times last year’s earnings of $44.5 million, and compares with an average price-to-earnings multiple of about 29 for seven U.S. lodging companies including Hyatt Hotels Corp. and Choice Hotels International Inc., data compiled by Bloomberg show.

Three Companies

Blackstone has taken public three lodging companies in the past six months including La Quinta, as real estate values rise and hotel shares climb. The firm’s Hilton Worldwide Holdings Inc. (HLT)and Extended Stay America Inc., co-owned with Centerbridge Partners LP and Paulson & Co., have both risen since their IPOs. New York-based Blackstone didn’t sell any shares in the La Quinta offering.

The decline in the U.S. jobless rate, growth in salaries and increase in business travel have helped fuel a hotel-industry recovery since the recession ended in late 2009, said Jan Freitag, senior vice president at STR Inc., a lodging-research firm based in Hendersonville, Tennessee.

“We sold more rooms than ever before in 2013,” Freitag said in a telephone interview. “We’re seeing demand holding up pretty well. Unemployment is coming down slowly, personal income is going up and debt-service ratios for private consumers are at an all-time low. A lot of people had to cut back and now might be the time for travel again.”

Room Nights

U.S. hotels sold a record 1.11 billion room nights last year, up from 1.08 billion in 2012 and 940.5 million in 2009, the recession low, according to STR. By 2011, room sales had surpassed the pre-crisis high of 1.03 billion nights, in 2007.

“We’re still relatively early in the industry cycle,” Goldberg said. “We’re seeing a continued imbalance in supply and demand. We keep seeing rates and occupancies rise and expect that will continue.”

La Quinta operates and franchises more than 800 hotels in the U.S., Canada and Mexico, according to its website. The company is looking to expand across the U.S. in such markets as the Midwest, Northeast and on the coasts as well as in Mexico and Canada, according to Goldberg. Proceeds from the IPO will be used to repay debt, the prospectus shows.

“Limited-scale, mid-price properties are probably in the sweet spot in attracting middle-income America from the leisure standpoint” and business travel, Freitag said.

Revpar Rises

Revenue per available room, an industry measure of room rates and occupancy, rose 6.6 percent in the U.S. in the two months ended February, after gaining 5.4 percent for all of last year, according to STR. Revpar for mid-price hotels such as La Quinta’s was up 6.5 percent this year through February, following a 4.1 percent increase last year, according to STR.

While occupancy growth drove gains in revpar coming out of the recession, higher room prices has also contributed in the past two years, Freitag said.

Blackstone acquired La Quinta in January 2006 for about $3 billion. The buyout firm explored a sale of the company before opting instead for an IPO, people with knowledge of the matter said in November.

La Quinta planned to sell 30 percent of its shares in the IPO, according to its prospectus. Blackstone will beneficially own about 67 percent of the common stock after the share sale, the March filing shows. Even at the lower offering price, Blackstone will roughly triple its investment in the company, according to a person familiar with the pricing details who asked not to be identified because the information is private.

Christine Anderson, a spokeswoman for Blackstone, declined to comment on La Quinta’s IPO yesterday.

JPMorgan Chase & Co. and Morgan Stanley managed the sale.

-By Hui-yong Yu, Leslie Picker and Nadja Brandt

Lower Manhattan Condos Rival Midtown’s Luxury Skyscrapers

Source: Bloomberg / Luxury

Manhattan developer Bill Rudin hadn’t planned to start selling apartments at his Greenwich Village project until the end of this year. He began rethinking that strategy after getting cornered at a cocktail party.

“People came up to me and said, ‘We want to buy, we want to buy. When can we buy?’” Rudin said in an interview.

He opened a sales office in October for the Greenwich Lane, a complex under construction at the site of the shuttered St. Vincent’s Hospital, after an online sign-up list of would-be buyers for the 200 condominiums drew 1,100 names. More than half of the units at the development, still largely a field of dirt and skeletal towers, have sold at prices averaging $3,500 a square foot, in line with other projects downtown and a new luxury benchmark for the area.

While Midtown skyscrapers fringing Central Park are setting sales records and attracting international investors, downtown Manhattan’s new condos are breaking their own price barriers with a focus on local buyers. From the cobblestone streets of Tribeca to the low-rise landmarks of Greenwich Village, builders are accelerating projects with features and costs that rival high-end offerings farther north.

Contracts signed at newly built properties between 34th Street and the Financial District almost doubled last year to 1,222, according to brokerage Corcoran Sunshine Marketing Group. Buyers agreed to pay an average of $5.7 million in the fourth quarter, up 49 percent from a year earlier and a new record. The price per square foot of those deals rose 20 percent to a high of $2,915.

‘New Class’

“It’s a new class of luxury product that’s being introduced,” said Kelly Kennedy Mack, president of Corcoran Sunshine. “We are seeing buyers who historically were attracted to Midtown come downtown. They’re getting the same high level of design and spectacular views.”

Downtown buildings accounted for 51 percent of Manhattan’s new-development sales last year, compared with 35 percent in 2012, according to the brokerage. Developers in the area have more than 4,000 units planned for construction or delivery within the next two years.

Projects such as Greenwich Lane, where the cheapest apartment is a one-bedroom for $2 million, and Magnum Real Estate Group’s planned conversion of a Verizon Communications Inc. office building in Tribeca are offering larger units, parking spaces and amenities designed to appeal to both New York City families and empty-nesters considering a move from the suburbs.

Landmarked Lobby

“We’re doing plenty of two, three, four and five-bedrooms,” Ben Shaoul, president of Magnum, said on a walk-through of the 32-story Verizon building at 140 West St., where 166 condos will be built on the top 22 floors.

Magnum, which plans to start sales in September, envisions units ranging from 1,200 to 3,500 square feet (111 to 325 square meters) that emphasize larger living rooms and common spaces. Apartments at the tower, across from the almost-completed 1 World Trade Center, are expected to start at $2 million, he said.

Plans call for a pool, fitness center and yoga room, as well as a lounge and wine bar in the building’s landmarked marble lobby, where murals on the domed ceiling depict the progress of human communication from carrier pigeons to the telephone. Duplex penthouses will span the 31st and 32nd floors, which until recently housed office suites for Verizon executives, Shaoul said.


A block away, the Witkoff Group and partner Fisher Brothers are proposing a condo tower at 101 Murray St., the site of a former St. John’s University campus, that would feature large apartments. The firms are considering plans that would make it easy for buyers to combine units to create an even bigger space, Steven Witkoff, president of Witkoff Group, said in an interview.

The idea came after some buyers at Witkoff’s 150 Charles, in the West Village sought more than one apartment, he said. The 91-unit development sold out in 12 weeks last year at prices averaging about $3,400 a square foot, with condos on the upper floors topping $6,000 a square foot. Ninety-five percent of the buyers were from New York, he said.

“There’s a lot of very well-heeled, entrenched people who are prepared to pay to be down there,” Witkoff said.

Larger Apartments

In the first quarter, purchases in new developments downtown were weighted toward larger units, with more than a third of deals for apartments with three or more bedrooms, according to a report by the Corcoran Group. The median price for those transactions was $3.84 million, up 9 percent from a year earlier.

The price record for downtown was set in January with the $50.9 million purchase of a 5,955-square-foot full-floor penthouse at the Walker Tower in Chelsea.

That still trails the most expensive deals in Midtown, where penthouses at Extell Development Co.’s One57 and Harry Macklowe and CIM Group’s 432 Park Ave. -- both skyscrapers with views of Central Park -- are under contract for more than $90 million. The developers of those projects have touted their sales to buyers from around the world, including South America, the Middle East, China and Russia.

Downtown Evolution

New condo buildings are the latest step in the evolution of lower Manhattan, which has benefited from government funding in the years after the Sept. 11, 2001, terrorist attacks at the World Trade Center, said Mitchell Moss, a professor of urban policy and planning at New York University. The development of Hudson River Park and Pier 25 in Tribeca, and improvements in local schools, have made downtown a favorite destination among families with means to stay in the city, he said.

“It used to be that wealth was concentrated on the Upper East Side and now it can be located in Soho, the East Village. It’s much more dispersed,” Moss said.

New housing increasingly is being built on sites sold by nonprofit groups seeking to capitalize on soaring real estate values, leading to alarm among some preservationists.

“There’s concern that so much of the new development has skewed toward the ultra-high end, especially in some of the cases where it’s been replacing social services that serviced a much broader range of people from the neighborhood,” said Andrew Berman, executive director of the Greenwich Village Society for Historic Preservation.

Neighborhood Fight

Neighborhood residents fought the closing of St. Vincent’s, the only hospital in southwest Manhattan, which treated survivors of the Titanic and the Sept. 11 attacks during its 160-year history. They argued that Rudin’s proposed residential project was out of character for the historic district and sought preservation of some of the original structures at St. Vincent’s, which shut down in 2010 after filing for bankruptcy.

As part of a deal with the city, Rudin Management Co. agreed to lower the height of its project and preserve some of the hospital facades. In addition, the developer donated $10 million and a building across the street from the Greenwich Lane site to North Shore-LIJ Health System, which will open an emergency-care facility there this year.

While construction goes on behind the hospital’s brick shell, buyers of Greenwich Lane condos are placing deposits in the off-site sales office, where an interactive computer screen magnifies floor plans and shows views from the planned apartments as captured by a drone-mounted camera.

Triplex Penthouse

A 4,442-square-foot penthouse that was listed for sale at $29 million is among the units under contract, according to real estate website Not on the market yet is a triplex penthouse of more than 5,000 square feet. Its price tag will be more than $30 million, according to Bill Rudin, chief executive officer of Rudin Management.

The project -- consisting of five condo towers and five single-family townhouses -- is expected to be completed by the end of 2015, he said.

In the southern part of Tribeca, once largely a warren of government office buildings, more than $1 billion of sales were completed in the past year at 56 Leonard after the developer, Alexico Group LLC, waited out the financial crisis.

The foundation for the planned 60-story tower was poured in mid-2008, just before the collapse of Lehman Brothers Holdings Inc. Alexico halted deals and construction for more than four years, said Izak Senbahar, the company’s president.

Now, of the 145 units in the building, designed to look like a stack of delicately balanced blocks, only eight remain. A 7,800-square-foot duplex penthouse sold for $47 million.

Doorman, Garage

The project “just hit a nerve where a lot of downtown people wanted to upgrade,” Senbahar said. “They needed a larger space, they wanted views, they needed a doorman and a garage.”

About 75 percent of the buyers were New Yorkers, said Senbahar, who initially assumed that much of the interest in the tower would come from overseas.

“Local people really grabbed it before we could do a marketing campaign overseas,” he said.

The surge in downtown demand is pushing up prices for all residences in the area. In Tribeca, the median asking price for new and previously owned homes jumped 25 percent in 2013 to $3.55 million, the highest in records dating to 2005, data from StreetEasy show.

Sellers in Greenwich Village sought a median of $3 million, up 20 percent from 2012 and also the highest on record, according to StreetEasy. The median asking price in Chelsea was $2.2 million, 20 percent more than a year earlier.


Numbers like those have emboldened developers including Kevin Maloney, principal at Property Markets Group, which is building a 16-story high-rise and townhouse project at 10 Sullivan St. in Soho.

“I’m not uncomfortable sitting in a project meeting saying, ‘Let’s underwrite at $3,000 a foot,’” said Maloney, whose firm co-developed the Walker Tower, along with JDS Development Group.

Units at the Soho project, which Maloney described as “family-oriented,” will start at 2,200 square feet. The four-story townhouses will have 6,000 square feet and may sell for as much as $20 million, he said.

The refurbished Hudson River Park along Tribeca’s waterfront, a soon-to-open subway hub on Fulton Street in the Financial District, and the opening two years ago of Avenues: The World School on the High Line in Chelsea are among changes that have helped lure families to downtown, said Leonard Steinberg, a luxury broker at Douglas Elliman Real Estate.

Crowd Mentality

This week, Steinberg will start marketing a 12-unit condo conversion at 7 Harrison St. in Tribeca, where apartments start at $5 million for a three-bedroom unit, the smallest available. A sign-up list of people interested in seeing an apartment in the building has more than 300 names, he said.

There’s a crowd mentality at play, according to Steinberg. As new projects draw record prices, they bring more buyers willing to pay them.

“People who spend at these prices want to feel comfortable that they aren’t the only ones buying at these prices downtown,” Steinberg said. “It’s become a market that’s completely open wide for people with the ability to buy at this price point.”

-By Oshrat Carmiel

Emirates REIT to Buy Properties After 6% Jump on Trading Debut

Source: Bloomberg / Personal Finance

Emirates REIT CEIC Ltd., the first real estate investment trust in the United Arab Emirates, surged 6 percent on its initial day of trading and said it will use cash raised in the initial public offering to buy properties.

The shares rose as high as $1.46 on Nasdaq Dubai and closed up 5.9 percent at $1.44 from its opening price of $1.36. More than 14.6 million shares changed hands. The Dubai-based company, which had a book value of $1.38 per share at the end of last year, raised $175 million in the IPO after boosting the issue size from an original $150 million on investor demand.

Real-estate prices in Dubai, which crashed during the global credit crisis, are recovering tourism and trade rebound and after the emirate won the right to host the World Expo in 2020. Home prices could jump as much as 40 percent this year, according to the emirate’s Land Department.

Emirates REIT will buy a “very significant number” of properties in 2014 after purchasing three last year, Sylvain Vieujot, executive deputy chairman, said today at a listing event in Dubai. Properties valued at over 100 million dirhams ($27 million) are “still very reasonably priced,” he said.

Emirates REIT owns 10 properties, mostly office buildings in Dubai, which provided total returns of 25 percent in 2013, according to its website. The company can still find buildings that provide a 10 percent net return today, which can be enhanced after making some improvements, Vieujot said.

Emirates REIT made a profit of $34.8 million in 2013 on net revenue of $46 million, according to the offer document.

A REIT distributes all its cash flow to shareholders, and will seek to raise more funds in the future, Vieujot said.

“We will spend what we have, continue the track record and then yes, a REIT goes back to the market for an offering,” he said.

-By Arif Sharif

Barclays Said to Move More Singapore Staff to City From Suburbs

Source: Bloomberg / News

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

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

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

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

Higher Rents

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

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

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

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

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

-By Sanat Vallikappen