Singapore Economy Singapore is 37th most expensive of 150 cities, in survey on accommodation costs According to GoEuro.com's 2014 Accommodation Price Index, New York is the most expensive overall while Albania is the least expensive. Source: Channel News Asia / Singapore SINGAPORE: The Republic ranked as the 37th most expensive city out of 150 cities, in an international survey on accommodation costs conducted by a Berlin-based travel search website for Europe. According to GoEuro.com's 2014 Accommodation Price Index, New York is the most expensive overall while Albania is the least expensive. Asian cities Macau and Hong Kong ranked higher than Singapore at third and 15th place respectively, while Tokyo followed right after at 38th place. The price index study covered 150 cities and over 60,000 properties, to understand the effect of new trends in accommodation on the hotel industry, the website said in a media statement on Tuesday (Dec 9). It added that the increasing popularity of online community Airbnb and the continued growth of the hostel industry are now important factors for travellers considering where to spend the night. Singapore ranked 30th most expensive for an Airbnb property.
- CNA/hx http://www.channelnewsasia.com/news/singapore/singapore-is-37th-most/1520456.html Singapore Real Estate HDB gives its resale price index more oomph Source: Business Times / Real Estate IN a push to make property indices more reflective of market changes, the Housing & Development Board (HDB) -the first among official agencies here to change the way it computes its price index - has unveiled details on how its revised approach will be more comprehensive and robust. HDB said on Tuesday that it was expanding the coverage of its resale price index (RPI) to all towns and flat models, having excluded 12 towns in the past. It is also adopting a new method to compute the RPI called the "stratified hedonic regression" method, which it says is better able to screen out "noises" in measuring price changes. Other government agencies that track property prices, namely the Urban Redevelopment Authority (URA) and JTC, could soon be making changes to their respective property price indices too. A JTC spokeswoman told BT that it is working on a revised method to compute its industrial price and rental indices to "better reflect market trends" and will reveal more details next month. URA disclosed last week that it was reviewing the need to revise its private residential property price index (PPI). Some market watchers believe that URA is also reviewing price indices for commercial properties. HDB's move to change its computation of the quarterly RPI is itself a response to significant market changes that have taken place since the last revision in 2002. In recent years, a wider range of flats have been transacted, more resales took place in newer towns and there is now greater age variance across resale flats, Minister for National Development Khaw Boon Wan has flagged. Starting from the fourth quarter, HDB will include all towns and flat models in the RPI. It had previously excluded newer towns such as Sengkang, Punggol and Sembawang. Market watchers were, however, surprised yesterday that even popular towns such as Bishan, Queenstown, Marine Parade and Clementi were previously excluded in the RPI. "Obviously, including all the towns will provide a fairer and better representation of HDB resale market," said PropNex chief executive Mohamed Ismail. Mature estates such as Bishan, Queenstown and Marine Parade tend to have greater demand, fetching the highest cash-over-valuations in the past, he pointed out. A few HDB executive maisonettes were transacted at a record S$1 million in Bishan and Queenstown. According to HDB, the 12 excluded towns made up less than 30 per cent of all resale transactions in recent years; market watchers felt however that this is significant especially when market volumes come down. But a back-testing of the new approach by HDB found no deviation in the overall price trend compared to the previous method, though resale prices would have fallen more over the past three quarters based on the revised approach. In the third quarter, the revised RPI would have fallen 1.8 per cent, compared to 1.7 per cent using the older approach. Property consultants believe that this is due to newer towns being included, as they typically face weaker demand. Now, even the popular towns such as Bishan where flats are more pricey have been hit by the lending curb on home buyers, Mr Ismail said. To compute the index, HDB is switching to "stratified hedonic regression", which it says allows for quality control at the broader level compared to the current "stratification" method. As a general principle, housing units are heterogeneous; to measure actual price changes over time, their quality differences have to be controlled to make fair "apple- to-apple" comparisons. Previously, HDB sorted resale transactions by flat types, models and regions and derived the index by aggregating the average prices of the segments, each weighted based on a 12-quarter moving average of transaction volumes. But this means that within each segment, effects on price changes due to differences in flat attributes, such as age and floor level, were not stripped out. The new method sorts resale transactions by flat types (three-room, four-room etc) and computes their average price changes over time using regression analysis. These price changes are then aggregated using fixed weights (based on five quarters of transacted values) to get the overall index. This hedonic regression is able to control for the differences in housing attributes such as location, proximity to facilities or amenities, age or floor level. Even factors such as distance to MRT stations and primary schools are accounted for. To avoid user confusion, past values of the resale price index will not be re-calculated using the new method, HDB said. But the RPI's base period will be changed from Q4 1998 to Q1 2009, the index's most recent trough. ERA Realty key executive officer Eugene Lim noted that for the academics and analysts, this revised index will be a more accurate representation of the market, "just like water has been made more pure". "But to the layman, it does not really make a difference," he said. "They will look at the index for the general market direction. For pricing indication, most of them will be looking at the recent transaction information that HDB publishes on its website, which is more relevant when it comes to pricing a flat to be sold or making an offer on a flat to be purchased." Century 21 Singapore CEO Ku Swee Yong felt, however, that home buyers in towns such as Bishan and Marine Parade might have felt that they were making decisions on data that was not complete. "We need at least next five quarters to see if the revised index is good and reflecting market situation," he said. Some property consultants have hoped to see sub-indices for mature and non-mature HDB estates, similar to how URA slices sub-indices for different regions. HDB explained that for simplicity, it publishes one composite price index. "There are individual flat transactions publicised daily in the HDB InfoWEB to give a good sense of the current prices," it said. A team from HDB have worked on the index review over the past one year with a consultant from NUS Department of Real Estate, associate professor Lum Sau Kim. She had earlier led the launch of the NUS Singapore Residential Price Index that also uses hedonic regression. Globally, many private and official agencies have started reviewing their property price indices amid efforts by Eurostat, the statistical office of the European Union, to harmonise official house price indices across jurisdictions.
The hedonic regression method has increasingly been used to compute national level indices, with France, Finland and Japan among countries that have adopted this method. Official statistical agencies in Australia and the UK are also developing such indices. -By Lynette Khoo http://www.businesstimes.com.sg/real-estate/hdb-gives-its-resale-price-index-more-oomph New way to better reflect HDB resale market Source: Straits Times / Top of The News THE way the Housing Board's resale price index (RPI) is calculated will undergo a total revamp to give a better reading of the resale market. The new methodology takes into account more characteristics of the flats in the calculation of the market's general price movements. Details were released yesterday after National Development Minister Khaw Boon Wan announced last week that a review of the index had been completed. He noted then that the existing method "may not adequately reflect the resale market", which now sees more varied flats and more transactions in newer towns since it was last revised in 2002. "It is therefore timely to review the RPI methodology to better capture price changes over time, and control for the variations in attributes of the resale flats transacted," he said. Currently, the resale market is divided into segments by flat type and region, such as a three-room flat in the north or a four-room flat in the west. Average prices are calculated for each segment, and then aggregated to derive the overall index. The new method sorts the market by flat type, such as three- room, four-room and five-room. It uses a technical method called hedonic regression to strip out the effect of flat attributes on its price. Attributes such as where the flat is situated, whether it is near an MRT station, on the second or 24th floor, can significantly alter the price of the unit. When these are stripped out, "pure price changes" remain, which reflect the market more accurately, said Associate Professor Lum Sau Kim from the National University of Singapore's department of real estate, who was a consultant in the review. When the HDB tested the new method on 2014 data, it showed the same downward trend, though with slightly larger falls. PropNex Realty chief executive officer Mohamed Ismail also expects the new index to fall more in the coming quarters, compared with the current version, due to the inclusion of new estates such as Sengkang, where demand is weaker. Past values of the resale price index will not be re-calculated. But the index will adopt a new base period, which is the first quarter of 2009, instead of the existing fourth quarter of 1998. This does not affect any of the percentage changes over time. The new method will be used starting from the next release of quarterly figures on Jan 2. "For academics and analysts, this is, of course, a more accurate representation of market direction," said ERA Realty key executive officer Eugene Lim. But it will not make much difference to laymen, for whom specific recent transactions - which HDB publishes on its website - are more relevant, he added. -By Janice Heng Effects of new computation for HDB Resale Price Index to be seen next JanuaryThe new computation will include newer towns previously excluded and more flat attributes, according to the Housing and Development Board. Source: Channel News Asia / Singapore SINGAPORE: The Housing and Development Board (HDB) will calculate its Resale Price Index (RPI) using a new methodology on its flash estimates of the fourth quarter of 2014, which are expected to be released in January next year. The RPI provides the general price trend of resale HDB flats, and was last revised in 2002. Presently, the index is calculated using transactions which are grouped according to flat types, flat models and locations. The average prices for each group are worked out using 12-quarter moving average weights to derive the index. This may lead to an inaccurate reflection of price changes. For instance, flats on lower floors typically command a lower resale price, and if more of such flats are sold in a certain quarter, overall resale prices may appear to have fallen. With the revision, the RPI will be calculated using a methodology that captures price movements in all HDB towns, including newer towns which had previously been excluded from the computation, such as Punggol, Sengkang and Sembawang. There were no resale transactions in these three towns in 2001, prior to the previous revision of the index. Currently, the resale volume in these three towns constitutes about 10 per cent of all resale transactions, HDB said. MORE INCLUSIVE INDEX Additionally, only representative towns are covered in the current RPI, and it is calculated using transactions registered across flat types, flat models and region. With the new methodology, more flat attributes - like storey height, age of unit and proximity to amenities such as train stations and shopping centres - will be taken into account when computing the index. The revision aims to better reflect an "increasing variety of resale HDB flats with differing designs, new locations and greater variance in age profile", said the HDB, adding that price movements in the revised index are close to those in the current one. For instance, the current indices for 1Q2014, 2Q2014 and 3Q2014 are at -1.6 per cent, -1.4 per cent and -1.7 per cent respectively. Under the revised index, the figures will be at -1.9 per cent, -1.5 per cent and -1.8 per cent respectively. HDB stressed that while the back-testing showed a bigger drop in the revised RPI as compared to the current index, this "need not be so all the time". "The difference between the current and revised RPI is due to the change in methodology and the inclusion of resale transactions in more towns," it stated. "The difference could be positive or negative depending on the period considered." The revised RPI will continue to cover flat models of three-room, four-room, five-room and executive flats. It will not include one-room and two-room flat-types due to the low volume of resale transactions. HDB said countries which calculate price indices using the same methodology that HDB is switching to include Finland, France and Japan. Official statistical agencies in Australia and the UK are also developing such indices, it added.
REVISED INDEX WILL INCLUDE ALL TOWNS The HDB also revealed that 12 towns, have not been in the index since 2002. They comprise less than 30 per cent of the total resale transactions in recent years. These 12 towns include Bishan, Queenstown, Clementi, as well as Marine Parade, Serangoon, Jurong East and Bukit Panjang. Property observers Channel NewsAsia spoke to said these towns typically see fewer resale transactions, compared to larger towns such as Tampines, Jurong West or Woodlands. With the revised index covering all HDB towns, some observers said prices may show a greater dip in the coming quarters. Mr Mohamed Ismail, CEO of PropNex Realty, said: "What is interesting is this: For the last three quarters based on the new method, all three quarters record lower than the old method. I guess this is possibly a reflection of adding the newer estates to the pool. You must understand that the newer estates in a non-mature town tend to have weaker demand in the resale market, thus pulling down the price." Some added that the changes may also affect valuation. Mr Eugene Lim, Key Executive Officer of ERA Realty, said: “For example, if the index indicates that the market is trending downwards, that means the past transaction would probably be at a higher price than current price. So in that sense, even though I do a valuation, I may not valuate higher. “Maybe if the downtrend is very little, I would give a flat valuation, rather than a higher valuation. So that is how valuers use the index, in addition to analysing the resale transactions,” he added. Members of the public Channel NewsAsia spoke to said the price index is useful for giving a sense of the market direction, but they prefer to look at recent transactions. Finance Assistant Manager Lim Ming Hong, 28, said: "Because you are looking at the particular area where you are interested in, whereas the resale price index may be very general." Associate Professor Lum Sau Kim, from the National University of Singapore's Real Estate department, worked with HDB to revise the index. She believes that home-buyers, sellers and those who want to enter the market should "take more direction from the micro data that HDB provides over the website, because it tells them about the movement of house prices or flat prices that are close comparables to the units that they care about". Resale flat buyers and sellers can refer to the HDB's website for recently-transacted flat prices in estates. The list is updated daily.
- CNA/kk/dl http://www.channelnewsasia.com/news/singapore/effects-of-new/1518998.html HDB details new criteria for Resale Price IndexAge, proximity to amenities among factors to be used to calculate price changes Source: Today Online / Singapore SINGAPORE — Following a one-year review, the Housing and Development Board (HDB) will be taking into consideration more attributes — ranging from the age of the flat and which floor it is on, to its proximity to amenities such as schools and MRT stations — in its computation of price changes for resale flats. The HDB will implement the revised Resale Price Index (RPI) in flash estimates for the fourth quarter, which will be released next month, it said. It announced details of the improved RPI yesterday, less than a week after National Development Minister Khaw Boon Wan said in a blog post that the current index may not adequately reflect the HDB resale market, given the significant changes in it. Back-testing of the new methodology showed HDB resale prices fell by slightly more over the past three quarters. For example, the RPI would have fallen in the first quarter of this year by 1.9 per cent, compared with 1.6 per cent using the old approach. “While the back-testing shows a bigger drop in the revised RPI, as compared to the current RPI, this need not be so all the time. The difference could be positive or negative, depending on the period considered,” said the HDB. The new methodology was introduced due to an “increasing variety of resale flats with differing designs, new locations and greater variance in the age profile”. Besides introducing more attributes, the revised index will also capture price movements in all 26 HDB towns and estates, including those that had been left out of the representative basket used in the current model. The 12 towns, including Bishan, Bukit Panjang, Bukit Timah, Punggol, Sembawang and Sengkang, had been excluded during the previous tweak to the RPI in April 2002, as they had a low volume of resale transactions or were non-existent then. However, in recent years, transactions in these towns have grown to less than 30 per cent of total resale activity, said the HDB. The method of aggregating price changes will also be improved. Currently, the HDB uses a 12-quarter moving average of transactions. This will be replaced with five-quarter fixed weights. These fixed weights, which factor in the total value of transactions, will be updated every three years to reflect the prevailing market structure. Countries that use a similar methodology include Finland, France and Japan. Apart from these improvements, the RPI will be calculated using the first quarter of 2009 as the new base period, instead of the currently used fourth quarter of 1998. The new base period was chosen because it was the most recent trough in the HDB resale market price cycle, based on the HDB’s analysis. Mr Khaw had said the review of the RPI methodology — which the HDB had worked on with a consultant from the National University of Singapore’s Department of Real Estate — would better capture price changes over time and control for the variations in attributes of the resale flats transacted. Several property analysts agreed that the revised RPI gave a more accurate picture of price movements in the market. Mr Chris Koh, director of property firm Chris International, pointed to the limitations of the old methodology, which factored in transaction volume. “In the last quarter, there were many executive flats being sold. These are larger units with higher prices and that pushes the RPI up,” he said. “Moving forward, it would make sense to revise the RPI because we might not get an accurate picture of the resale market as certain flats get older and newer flats enter the resale market.” ERA Realty key executive officer Eugene Lim noted that the revised index will be useful for academics and analysts, to give them a more accurate representation of where the market is heading. But he added: “To the layman, it does not really make a difference ... For pricing indication, most of them will be looking at the recent transaction information that the HDB publishes on its website.” Citing the marginal change in price movements reflected in the back-testing, PropNex Realty chief executive officer Mohamed Ismail said he expects the revised RPI to show a greater dip in the coming quarters.
“This is mainly due to the fact that the newer properties in the non-mature estates have a weaker demand, and that, generally, will pull the prices overall down,” he said. -By Valerie Koh http://www.todayonline.com/singapore/hdb-details-new-criteria-resale-price-index Analysts expect two commercial sites to be triggered for tender in 2015 A mixed-use site at Woodlands Square and a white site at Marina View have been placed for sale on the Reserve List under the Government Land Sales Programme for first half of 2015. Source: Channel News Asia / Business A mixed-use site at Woodlands Square and a white site at Marina View have been placed for sale on the Reserve List under the Government Land Sales Programme for first half of 2015. SINGAPORE: With the Government cutting the supply of commercial space, analysts said they expect two commercial sites to be triggered for tender next year. They have been placed for sale on the Reserve List under the Government Land Sales (GLS) Programme for first half of 2015. The two sites comprise the mixed-use site at Woodlands Square and a white site located at Marina View/Union Street. Under the Reserve List system, a site will only be put up for tender if the minimum bid price submitted by the interested party is acceptable to the Government. There are no commercial sites on the Confirmed List for the first half of 2015 under the GLS. Sites included in the GLS for the first half of 2015 could potentially yield 265,130 square metres of commercial space - a cut of 25 per cent from the previous exercise. All four sites were placed on the Reserve List, suggesting that the Government is monitoring the supply pipeline. The supply of office space has been limited this year and will likely remain so next year. But analysts expect over three million square feet of office space to come on-stream between 2016 and 2018. The four sites with commercial component under the upcoming GLS are located at Holland Road, Beach Road, Woodlands Square and Marina View/Union Street. WOODLANDS SQUARE SITE COULD BE TRIGGERED FIRST Consultancy Colliers International said that of the four, the mixed-development site at Woodlands Square could be the first to be triggered for sale, and it could help spur the development of the Woodlands Regional Centre, which is relatively under-developed compared to other regional hubs like Tampines and Jurong East. According to the Urban Redevelopment Authority (URA), the plot could yield 285 residential units and 60,030 square metres of commercial space. Ms Chia Siew Chuin, director of research and advisory at Colliers International, said: "The site in Woodlands is likely to be triggered first, given the growth potential for the area and because it is more likely to be a straight forward open tender system should it be triggered.” “The Holland site is likely going to be more complicated because of the concept and price tender system, where the concept comes first, then the price. The development would have to be in line with the vision the Government has for the district as a whole,” she added. The mixed-development site at Holland Road was moved from the Confirmed List to the Reserve List for the upcoming GLS to give developers more time to study the site and tender evaluation criteria. MARINA BAY SITE EXPECTED TO ATTRACT INTEREST Meanwhile, market watchers CBRE and Barclays expect the site at Marina Bay to also attract interest. Mr Desmond Sim, head of research for Southeast Asia at CBRE Research, said: "This site is definitely on the wishlist or trigger list for quite a few developers, but I think the market is holding back. "There may be more confidence now because ... before the first half list came out, some of the market watchers were afraid that if they trigger it before the list came out, then there may be a better site in Marina Bay listed." In a report issued on Monday (Dec 8), Barclays added that the tight supply should be positive for CBD prime office Real Estate Investment Trusts. Given the supply situation, analysts said they expect office rentals to have risen by more than 10 per cent this year.
- CNA/dl http://www.channelnewsasia.com/news/business/singapore/analysts-expect-two/1520594.html Mall in Little India offered for sale at S$320-350 million Source: Business Times / Real Estate The Verge and Chill @ The Verge, a mall located in Little India, are being offered for sale with an indicative price of S$320 million to S$350 million. The Verge comprises a six-storey mall with two basement levels. Chill @ The Verge comprises an eight-storey building with two storeys of retail units on levels 1 and 2 and a 6-storey car park with 395 lots and four coach bays. -By Mindy Tan Verge mall, next-door complex for sale Source: Straits Times / Money THE Verge mall and neighbouring Chill @ The Verge commercial block in Little India are up for sale, with offers between $320 million and $350 million expected. The Verge, which was revamped in 2009, is a six-storey mall with two basement levels. Chill @ The Verge has two floors of retail units on levels one and two, and a six-storey carpark with 395 car spaces and four coach bays. The two properties are connected by link bridges at levels two, five and six. They have a combined 238,527 sq ft of retail gross floor area, anchored by supermarket chain Sheng Siong, and an overall occupancy rate of 80 per cent. The buildings are near Little India MRT station, and two Downtown Line stations will open nearby in the next few years - Rochor in 2016 and Jalan Besar in 2017. Mr Anthony Barr, regional director of investments at consultancy JLL, said in a statement yesterday: "The Verge is the only commercial value-add opportunity currently on the market for sale. "Timing is optimum for an asset refurbishment or re-positioning of The Verge, and any works will coincide with the completion of significant infrastructure in the surrounding area in the near future."
The project will be sold via expressions of interest. Submissions are due by 3pm on Jan 27. -By Rachael Boon http://www.straitstimes.com/premium/money/story/verge-mall-next-door-complex-sale-20141210 Little India shopping mall The Verge put up for saleThe 6-storey shopping mall The Verge and its connecting block
Chill @ The Verge are up for sale for between S$320 million and S$350 million,
says real estate company JLL. Source: Channel News Asia / Business SINGAPORE: Shopping mall The Verge and its connecting block Chill @ The Verge located at the junction of Serangoon Road and Sungei Road are going up for sale, and the owners are expecting between S$320 million and S$350 million, real estate company JLL said in a news release on Tuesday (Dec 9). The Verge comprises a 6-storey shopping mall with two basement levels while Chill @ The Verge is an 8-storey building made up of two levels of retail units and a 6-storey car park. The former is located on a "white" site, which means a variety of alternative uses can be considered. “The Verge is the only commercial value-add opportunity currently on the market for sale. Timing is optimum for an asset refurbishment or re-positioning of The Verge and any works will coincide with the completion of significant infrastructure in the surrounding area in the near future," said JLL Regional Director of Investments Anthony Barr. JLL also said the shopping mall is expected to draw on the large local catchment of tourists, residents and office crowd upon completion of two new MRT stations - Rochor and Jalan Besar - which form part of the Downtown Line. Submissions for the two properties are due on Jan 27, 2015, at 3pm, JLL said. - CNA/xk http://www.channelnewsasia.com/news/business/singapore/little-india-shopping/1519416.html Resales of apartments, condos up 6.6% in Nov Overall median Transaction Over X-value is S$0, the first time the figure is non-negative since October 2013, SRX Property's flash estimate shows Source: Business Times / Real Estate The latest flash estimates from SRX Property show that 388 non-landed private homes were transacted in the resale market in November, down 22.4 per cent from October but up 6.6 per cent year on year. SRX Property's November flash estimate for its non-landed private residential resale price index reflected declines of 1.1 per cent month on month and 3.4 per cent year on year. Since the recent peak in January 2014, the index has eased 6.3 per cent. http://www.businesstimes.com.sg/real-estate/resales-of-apartments-condos-up-66-in-nov November blues for private condo resales Impasse between sellers and buyers likely to continue in cautious market Source: Straits Times / Money RESALES of private condominium units slumped last month, dragging down prices in the process. Only 388 homes changed hands in November, down 22.4 per cent from October, according to flash estimates from the Singapore Real Estate Exchange (SRX) yesterday. While this was a better showing than the 364 condo units resold in the same month a year earlier, it still did not prevent prices slipping by 1.1 per cent in November from October. Analysts were not surprised, noting that tougher lending rules had shrunk the pool of buyers. There is also a continuing impasse between buyers and sellers, they added, with home seekers increasingly "cautious" amid expectations of further price falls. "There continues to be a mismatch of price expectations between sellers and buyers. "Sellers are under no pressure to cut prices while buyers tend to be conservative in the current market environment," said Mr Eugene Lim, key executive officer at ERA Realty. Government measures, including stricter lending regulations and additional taxes on foreign buyers and investors, have been instrumental in prices falling 3.9 per cent over four straight quarters - the longest period of declines since 2009. But buyers are also jittery, given the huge number of new homes that have flooded the market. They fear the higher supply will intensify leasing and resale competition, said R'ST Research director Ong Kah Seng. The Urban Redevelopment Authority's third-quarter statistics show 20,852 private condos and executive condos will be completed this year, significantly higher than the 13,150 units completed in 2013. November's price dip was a reversal of the revised 0.4 per cent increase in October over September. But Mr Ong pointed out that fluctuations in price indexes on a monthly basis can be "random". SRX chief executive Sam Baker acknowledged that the impact of individual transactions on the index is more pronounced in a market with just a handful of sales. Instead, an analysis of the data "at the street level" shows that the cooling measures have not had the same effect on buyers and sellers across the board. The SRX, which compiles its index from data from real estate agencies, noted that 50 per cent of November's buyers purchased their resale units at above the estimated market value of the property, which the firm labels as the "X-Value". This took place mainly in district nine, which comprises the Cairnhill, Killiney, Leonie Hill, Orchard and Oxley areas, where the median value of transactions above the X-Value was $80,000. Homes in Boon Lay, Jurong and Tuas - or district 22 - were next, transacting at $30,000 above the X-Value, followed by homes in Chancery, Bukit Timah, Dunearn Road and Newton - district 11 - at $15,000. However, there were buyers who paid as much as $40,000 below the property's market value in district 5, which spans Buona Vista, Dover, Pasir Panjang and West Coast. The SRX index has fallen 6.3 per cent since January but the decline for the full year is not expected to exceed 8 per cent, said Mr Lim. -By Cheryl Ong http://www.straitstimes.com/premium/money/story/november-blues-private-condo-resales-20141210 Private home resale prices down 1.1% on-month in November: SRXResale volume took a significant hit last month, shrinking 22.4 per cent from October, according to the Singapore Real Estate Exchange. Source: Channel News Asia / Singapore SINGAPORE: Resale prices for non-landed private residences slid 1.1 per cent on-month in November, pushing them below the support level established since July 2014, the Singapore Real Estate Exchange (SRX) stated on Tuesday (Dec 9). Based on year-on-year comparisons, the November prices dropped 3.4 per cent. Compared with the recent peak in January 2014, prices have declined 6.3 per cent, SRX said. Resale prices of private homes in the Rest of Central Region and Outside of Central Region led the decline, with prices dropping 1.3 per cent in both these areas, while prices in the Core Central Region dipped 0.1 per cent.
LOW RESALE VOLUME MAKES MACRO-ANALYSIS LESS RELEVANT The resale volume in November also dropped significantly by 22.4 per cent on-month. An estimated 388 units were resold last month, compared to the 500 transacted units in October, the report stated. Resale volume was 6.6 per cent higher year-on-year, but it was down 81.1 per cent compared to its peak of 2,050 units transacted in April 2010, it added. "When sales volume is this low, macro-analysis becomes less relevant and individual transactions are more pronounced," said SRX Property CEO Mr Sam Baker. "On the macro level, we can project, with reasonable certainty, that demand will continue to be anaemic and prices will be relatively stubborn until there is a significant change to cooling measures, interest rates, supply, an external shock or some combination of the above." "Until then, the action is at the street level and requires micro-analysis. Fifty per cent of buyers in November paid above the X-Value for their unit and 50 per cent paid below it. This means that not all buyers and sellers are being impacted by the cooling measures in the same way," Mr Baker said. He added that more agents and clients are using data to transact the right home at the right price in their particular project or street. Mr Chris Koh, director of Chris International, said that cooling measures have taken a toll on the property market. "We must also not forget that at the end of the year - in November and December - we have people going on holidays and so historically, you will find that the market is slower in November and December," he said. Ms Lynne Ong, senior manager of project marketing at Dennis Wee Realty, said: "Buyers now are on a wait-and-see attitude to see if the prices dip even further and sellers are holding back because they want to sell their house at higher prices, and this causes a dip in the prices." Analysts said that in the absence of tweaks to the current slew of measures and market shocks, the mismatch of price expectations between the buyers and sellers is likely to continue well into 2015. TOX REACHED NEUTRAL Meanwhile, the overall median Transaction Over X-value (TOX), which measures whether people are overpaying or underpaying the SRX Property X-Value estimated market value, reached a neutral value in November - the first time a non-negative TOX has been reported since October 2013. For districts with more than 10 transactions in November, district 9 posted the highest median TOX of S$80,000, followed by district 22 (S$30,000) and district 11 (S$15,000). Conversely, the lowest TOX was seen in district 5 with -S$40,000, followed by -S$20,000 in district 16 and -S$15,000 in district 19.
- CNA/kk/dl http://www.channelnewsasia.com/news/singapore/private-home-resale/1519252.html First-time buyers drawn to Lake Life Source: Straits Times / Money FIRST-TIME applicants made up almost half of the buyers at the Lake Life executive condominium (EC) in Jurong. About 45 per cent of the project's 534 buyers had never bought a home from the Housing Board (HDB) before, noted developer Evia Real Estate. This figure was "quite high" compared to the firm's projections, Mr Vincent Ong, managing partner at Evia Real Estate, told The Straits Times. "We didn't expect such a big group of first-timers," he said. "We found that Lake Life has a lot of them, and a lot are younger than the rest of Singapore." ECs are built by private developers but sold with requirements imposed by the HDB. Buyers must form a family nucleus, for example, and must not have a gross monthly income exceeding $12,000, among other rules. Lake Life sold 521 of its 546 units at its Nov 8 launch, a record for the most first-day sales for both ECs and private condominiums since mortgage rules were tightened in June last year. Evia also noted that first-timers were 34 years old on average - below the average age of 40 for all buyers at Lake Life. The combined monthly income of a unit's buyers was $9,042 on average, the firm's data shows. And just under two-thirds of all buyers did not get a housing grant - which varies from $5,000 to $30,000 - to finance their purchase. Lake Life is the first EC to be built in Jurong in 17 years. The area has been earmarked by the Government for a major uplift. That may be why some of the first-timers came from as far as Tampines. About 52 per cent of the buyers were living in Jurong, while 26 per cent were from western areas such as Bukit Panjang, Bukit Batok and Clementi. And 20 per cent did not mind moving to Jurong from other regions such as Bedok, Serangoon, Yishun, Punggol and Woodlands. A further 2 per cent were from Tampines. Mr Ong said buyers told him they liked Jurong for its array of shopping centres and facilities - all part of moves to develop the area into a self-contained regional commercial centre.
"Perhaps another hypothesis is that these people don't have the negative impression that Jurong is full of factories," he said. "In my time, Jurong was a swamp. (But) it has become hip and cool." -By Cheryl Ong Companies' Brief Mapletree Industrial Trust Source: Business Times / Companies & Markets We assume coverage of Mapletree Industrial Trust (MINT) with a "neutral" rating and a December 2015 PT (price target) of S$1.55 ("neutral" rating and December 2014 PT of S$1.45 prior to "not rated" designation). MINT's flatted factories should continue to exhibit resilience in terms of income and retention rates, though we expect rental growth will moderate. http://www.businesstimes.com.sg/companies-markets/brokers-take-28 Global Logistic Properties Source: Business Times / Companies & Markets Global Logistic Properties (GLP) announced that it will co-invest with GIC to acquire a US$8.1 billion US logistics portfolio from Blackstone. This investment into the US might be deemed negative on the onset as it represents a departure from the group's focus on its core markets of China, Japan and Brazil. http://www.businesstimes.com.sg/companies-markets/brokers-take-28 Global Economy & Global Real Estate Boom in real estate transactions expected in Asia for 2015: Colliers Pent-up demand from investors will be gradually satisfied by a growing volume of new supply anticipated in 2015, said Colliers International. Source: Channel News Asia / Business SINGAPORE: The number of real estate transactions in Asia will grow substantially next year, according to Collier International's Asia Property Outlook 2015. This is because pent-up demand from investors will be gradually satisfied by a growing volume of new supply anticipated in 2015, said Mr Dennis Yeo, Interim Chief Executive Officer (Asia) of Colliers International. Besides new stock, there will also be more willing sellers of institutional-grade real estate because "considerably more" real estate funds will expire in 2015, Colliers said in a news release on Tuesday (Dec 9). Globally, investors have also re-examined their allocations and are set to devote more capital to Asia, Colliers added. However, Colliers said conditions will be tougher for Asian investors to put their money to work. One challenge is the narrowing of the gap between yields in Asia and in overseas markets. OUTLOOK FOR SINGAPORE According to Collier's report, the capital, office and retail markets in Singapore are expected to grow and remain stable for the next year. The local industrial sector, however, is expected to slow down in 2015. Ms Chia Siew Chuin, Director of Research and Advisory of Colliers International, attributed this trend to new government measures and policies that continue to filter through the market. She raised the example of JTC's revised sub-letting policy and other earlier policy changes which are expected to slow down en bloc sale transactions of properties built on JTC land, as well as to increase the difficulty in executing Sale and Leaseback transactions. These "could hurt the rents and yields achievable by third-party facility providers in the medium term," said Ms Chia.
- CNA/hx http://www.channelnewsasia.com/news/business/singapore/boom-in-real-estate/1520340.html Beirut's "fairytale" villa comes back to life Rose House is being used as an art centre by a British painter until the end of this year Source: Business Times / Real Estate http://www.businesstimes.com.sg/real-estate/beiruts-fairytale-villa-comes-back-to-life ARCP REIT Fundraising Tumbles After Accounting Errors Source: Bloomberg / News Fundraising plummeted last month at Nicholas Schorsch’s nontraded real estate investment trusts following the disclosure of accounting mistakes at American Realty Capital Properties Inc. (ARCP), where he’s chairman. Equity raised from investors at American Realty Capital Properties’ Cole Capital unit fell to $19.7 million, down 81 percent from October, investment bank Robert A. Stanger & Co. said today. American Realty Capital Properties, or ARCP, a publicly traded REIT based in New York, disclosed on Oct. 29 that it had accounting errors that were intentionally concealed. The revelation has hurt companies led by Schorsch, whose closely held AR Capital LLC has become the largest sponsor of nontraded REITs. He’s also chairman and the biggest shareholder ofRCS Capital Corp. (RCAP), which raises money from investors for AR Capital’s nontraded REITs. AR Capital’s American Realty Capital-branded real estate products raised $154.3 million in November, down 58 percent from the previous month, said Robert A. Stanger, which focuses on nontraded REITs. “The broker-dealer community put out the yellow flag here -- let’s proceed with caution,” Kevin Gannon, president of Shrewsbury, New Jersey-based Robert A. Stanger, said in a telephone interview today. “We were expecting a big jolt, but we didn’t know how big it would be.” AR Capital also sponsors non-real estate investments. Sales of all its products, including real estate ones, totaled $187.1 million last month, down 56 percent from October, according to Robert A. Stanger. ‘Remain Confident’“As evidenced by the 1,000-plus current active selling agreements, we believe our selling group members, advisers and investors remain confident in the broad array of financial solutions we distribute,” Andrew Backman, managing director for investor relations at RCS, said in an e-mail today. ARCP declined to comment, Andy Merrill, a spokesman for the company, said in an e-mail. Fundraising for the nontraded-REIT industry as a whole has fallen this year, according to Robert A. Stanger. The industry raised $14 billion this year through November, down about 23 percent from a year earlier, the company said. RCS said yesterday that it raised more than $260 million last month, with sales volume “increasing steadily” throughout November in 31 investment programs and mutual funds. It said about a quarter of the total agreements that were suspended by brokers have been reinstated. Suspensions Lifted“The continued and steady reinstatement of selling agreements is reflective of not only the strength of the RCS Capital platform, but the confidence advisers and their clients have in the broad array of financial solutions we distribute,” Chief Executive Officer Michael Weil said in a statement. Two clearing and custodial firms, National Financial and Charles Schwab Corp. (SCHW), have also lifted suspensions on products sold by RCS, according to Backman. Sandlapper Securities LLC, an independent broker-dealer based in Greenville, South Carolina, reinstated its agreement with RCS about two weeks ago, CEO Trevor Gordon said in a phone interview. His company was satisfied with internal audits that showed the errors were limited to ARCP, Gordon said. Still, customers have been reluctant so far to invest in the AR Capital products, he said. “There’s still not a lot of money flowing to them,” Gordon said. “It takes a little bit of time for people to lick their wounds properly. The ARC brand got hit hard.” Deal CanceledThe accounting problem led RCS to cancel a deal of about $700 million to acquire the Cole Capital business. ARCP subsequently sued RCS, alleging it improperly reneged on the agreement. The New York-based companies last week agreed to settle the lawsuit, with RCS paying $60 million to resolve the litigation, ARCP said. RCS rose 4.9 percent to $11.65 today. The stock has fallen 41 percent since ARCP’s Oct. 29 disclosure. ARCP, the largest U.S. owner of single-tenant buildings, was little changed today at $9.23 and has lost 25 percent since Oct. 29. -By Brian Louis and Prashant Gopal http://www.bloomberg.com/news/2014-12-09/arcp-reit-fundraising-tumbles-after-accounting-errors.html Dubai Home Prices Seen Dropping in 2015 as Foreign Buyers Exit Source: Bloomberg / Luxury Home prices in Dubai are set to decline next year as buyers from Russia, Europe and Asia exit the market and fewer secondhand properties are sold, according to Arqaam Capital. House values dropped 4 percent in the third quarter compared with the previous three months and apartment prices fell by 1 percent, analysts Mohammad Kamal and Mohamad Haidar wrote in a report today. Rents dropped 2 percent and 3 percent respectively for apartments and villas during the quarter. Foreign buyers have become less dominant in the used-home market since the end of the first half, giving way to locals and expatriates living in Dubai who are more likely to resist rising prices, according to the report. Dubai home prices increased by 35 percent last year. “The relative price insensitivity of the marginal foreign buyer has contributed to the substantial rise in average agreed prices,” the analysts wrote. The number of used-home sales dropped 30 percent in the third quarter from a year earlier, according to the report. Developers are expected to see a “strong uptake” of mid-range homes, currently on offer for 1,000 dirhams to 1,500 dirhams ($272 to $408) a square foot, over the next five years. That’s 35 percent below peak prices, the analysts wrote. -By Zainab Fattah Al Habtoor Plans to Spend $545 Million on Dubai Projects Source: Bloomberg / Luxury The Dubai company controlled by billionaire Khalaf al Habtoor plans to build two hotels, 74 homes and a polo club in the city to capitalize on the booming property market. Al Habtoor Group LLC, which is already constructing three hotels with 1,600 rooms on Dubai’s main road, will spend 2 billion dirhams ($545 million) on the new projects, the company said at a press conference today. Al Habtoor has been increasing its hotel supply in a city where the 77.8 percent occupancy rate is among the highest in the world. The company, which is also a distributor of Bentley and Bugatti autos, has been considerig an initial public offering for at least a decade but no decision has been made, Chairman Khalaf al Habtoor said. The group is investing 15 billion dirhams in Dubai on projects to be completed by end of 2017. The polo resort and club will include 136 hotel rooms and 162 bungalows. The project, to be finished 2017, will also include a polo academy and a riding school with 500 horses. Another hotel, a 4-star Metropolitan with 334 rooms, will be built after the company demolished one it built in 1979, he said. Al Habtoor is working on a residential development in Jumeirah, where foreigners aren’t allowed to buy property. The 74 villas and townhouses will be leased out, the chairman said. The company’s other residential rental projects are almost fully occupied, he said. -By Zainab Fattah Carlyle Trips Chasing Blackstone in Diversification Push Source: Bloomberg / News Thirty miles south of London, residents of Tunbridge Wells are disgusted. Their ire is directed at Carlyle Group LP (CG), which with Bellhouse Joseph Ltd. bought a dilapidated movie theater in 2011 and then failed to develop the site. Ben Chapelard, a member of the local government, described it as the area’s greatest “grot spot,” and more than a fifth of the town demanded the theater be torn down. Two months after demolition, the lot sits empty, surrounded by blue construction boards. “It just looks awful,” Chapelard said in a telephone interview. “If you stand on the street asking people to pressure Carlyle to do something, you collect a signature every 20 seconds.” The Washington-based firm’s investors are also frustrated with Carlyle’s international real estate efforts. One European property fund started before the financial crisis has lost 80 percent in value after ill-timed deals in the U.K and Italy, and another is barely breaking even. Carlyle’s real estate operation, started in 1997, manages about $13 billion, a fraction of the $80 billion currently overseen by Blackstone Group LP. (BX) “I didn’t even know they were in the real estate business,” Tony James, Blackstone’s 63-year-old president, said on a July call with analysts after buying London office buildings from its competitor. Expansion StumblesCarlyle’s property stumbles reflect broader difficulties at the $203 billion firm in diversifying earnings beyond leveraged buyouts, an ambition of 65-year-old co-founder David Rubenstein since the 1990s. In October, Carlyle took another hit when hedge fund unit Claren Road Asset Management lost about 10 percent in its main fund. Assets fell more than $1.1 billion to $7.3 billion in weeks and investors have demanded it return about a quarter of the remaining capital. “Carlyle is not seeing some of the growth in assets that the other guys are, Blackstone most notably,” said Stephen Ellis, an analyst at Morningstar Inc. “Private equity is a highly cyclical business, and shareholders have put tremendous pressure on them and on the industry to diversify away from it in order to have a more stable, reliable income stream.” Blackstone is 40 percent bigger by assets than Carlyle, even though each managed less than $30 billion in 2003. Blackstone is also more diversified. Its credit arm, GSO Capital Partners, oversees $70 billion, compared with Carlyle’s $26 billion in credit-related assets. Blackstone GiantStephen Schwarzman, the 67-year-old billionaire head of Blackstone who expanded assets to $284 billion, isn’t the only one expanding his firm. Leon Black, 63, has spent the past decade growing the debt group at Apollo Global Management LLC (APO), Carlyle’s next biggest rival, to be twice the size of its private equity unit. And Henry Kravis, 70, is modeling KKR & Co. (KKR)after Warren Buffett’s Berkshire Hathaway Inc., plowing more of the firm’s own money into investments ranging from buyouts to lending. In the 12 months ended Sept. 30, 85 percent of Carlyle’s economic net income, a measure of profit that includes unrealized gains, came from private equity. That compared with 32 percent of economic income at New York-based Blackstone and 48 percent of earnings at Apollo. At KKR, 79 percent of profit was generated in private market investments, which include private equity, energy, infrastructure and real estate. Buyout SuccessThe firms have been rewarded by shareholders for diversifying. Blackstone has returned 194 percent including reinvested dividends from May 2, 2012, when Carlyle’s stock began trading, through yesterday. New York-based Apollo has generated 154 percent and KKR, also based in New York, has produced 99 percent. Carlyle returned 42 percent. The shares fell 1.3 percent to $27.65 at 1:32 p.m. in New York. Carlyle’s continued reliance on buyouts in part reflects its success in private equity. The business has produced 19 percent annual returns after fees since 1994, among the best in the industry. Blackstone’s private equity funds have returned 16 percent, and the industry average over 25 years is about 14 percent, according to research firm Cambridge Associates LLC. “Carlyle’s intellectual capital is housed in the private equity business, which is world-class,” said Chris Kotowski, an analyst at Oppenheimer & Co. “That said, Blackstone is legitimately more diversified. I’d say Blackstone got a jump on a strategy to innovate beyond buyouts.” Poor TimingThat didn’t have to be the case. About a decade after Rubenstein, Bill Conway and Dan D’Aniello founded Carlyle in 1987 with $5 million, they expanded into venture capital and U.S. real estate. A year later they created a high-yield group, opened an office in Asia and started a firm to invest in troubled companies. Blackstone, founded by Schwarzman and Peter G. Peterson in 1985 as a buyout and advisory firm with a $400,000 balance sheet, was first to diversify, with a unit allocating money to hedge funds in 1990 and a real estate group two years later. They didn’t start a debt investment operation until 1999. While Carlyle has grown to manage 129 funds and 141 fund-of-funds vehicles from 40 offices, it’s often shown poor timing or been unable to retain new hires. In 2001, the firm hired Afsaneh Beschloss, the World Bank’s chief investment officer, to build Carlyle Asset Management. Two years later, the 15-person group, which invested in hedge funds, left. In 2004, the head of Carlyle’s turnaround business, B. Edward Ewing, also departed with another 15 employees to start his own firm. Blue Wave“David Rubenstein’s mantra is find the opportunities and keep working them until you make them work,” spokesman Christopher Ullman said at the time. Rubenstein stuck to his guns. In 2007, just as the U.S. housing market was about to crack, Carlyle gave hedge funds another go with Blue Wave. Within 16 months, the group was a casualty of the unfolding turmoil and shut down. Carlyle Capital Corp., a publicly traded credit fund, also collapsed in 2008 after defaulting on $16.6 billion in debt. While many investment firms, including KKR’s asset-management unit, also had losses, the setbacks stunted Carlyle’s expansion. Carlyle’s biggest shortfall relative to Blackstone has been in real estate. Carlyle started its first property fund in 1997 with $470 million and an initial focus on North American investments. After the firm expanded to include a European vehicle in 2001 and an Asian pool in 2005, investments outside of the U.S. began to struggle. Europe WoesCarlyle Europe Real Estate Partners II, raised in 2005 with 763 million euros ($939 million), has lost 80 percent of its value. Its successor fund, a 2.2 billion-euro vehicle that invested in the ill-fated Tunbridge Wells site, has produced a negative 5 percent annual return after fees as of Sept. 30. The funds were mainly casualties of timing. Much of the money was invested in development projects in Western Europe, a person with knowledge of the deals said, with a thesis that the economy was bottoming. The recession persisted longer than Carlyle expected and the funds came under pressure because several holdings in countries such as Italy, Portugal and the U.K. were still under development and not producing revenue, said the person, who requested anonymity to discuss private investments. Potential AcquisitionWith holdings struggling, the European group’s co-heads, Robert Hodges and Eric Sasson, left in 2013 after 12 years. Carlyle turned to Adam Metz, a real estate veteran and adviser to TPG Capital, to revive investments abroad. Returns in the U.S. have been strong, where Carlyle’s sixth fund, led by Rob Stuckey, raised $2.3 billion in 2012 and was producing a 22 percent annualized return after fees as of Sept. 30. Carlyle has also discussed a potential acquisition of a European real estate team with at least two investment firms, said another person, who requested anonymity because the conversations are private. Randall Whitestone, a spokesman for Carlyle, declined to comment on the European property group. As Carlyle’s real estate fortunes soured, its biggest competitor set records. Blackstone began growing a property unit in the early 1990s, a time when an analyst named Jonathan Gray joined the firm from the University of Pennsylvania. Gray, 44, now leads the group, which is preparing to raise its eighth global real estate fund, following an industry-record $13.3 billion vehicle that closed in 2012. “They have a massive, massive advantage in real estate,” Morningstar’s Ellis said of Blackstone. “That makes it much easier for them to do truly different types of deals that smaller-bucket funds just can’t do.” New UrgencyCarlyle’s efforts to build its non-buyout businesses took on added urgency in the past five years, according to the people, as clients increasingly asked for more offerings. It’s also been driven by the firm’s 2012 IPO, as stockholders value a stable, diverse stream of fee-related earnings more than payouts produced by leveraged buyouts in unpredictable cycles. “Part of the new paradigm, especially over the last five years, is that clients are looking to do more with fewer relationships,” Glenn Youngkin, Carlyle’s co-president, said in an interview. “The largest firms, including ourselves, have extended our product lines and have been able to receive commitments across them.” Carlyle’s recent expansion has primarily centered on energy -- now its fastest-growing business -- as well as credit and funds-of-funds. Since 2010, the firm has added $95 billion in assets through new strategies, according to a presentation Youngkin gave last month in New York. Outside HiresExpansion comes with costs, and spending on fundraising and hiring has hurt Carlyle’s margins. This may persist longer than the initial expenses, according to Meghan Neenan, an analyst at Fitch Ratings. “Carlyle continues to report below-average margins given its higher operating expense base,” Neenan said. “It has more people, offices and funds than its peers.” Acquisitions since 2010 have included hedge fund firms Claren Road and Emerging Sovereign Group, commodities firm Vermillion Asset Management, two funds-of-funds groups and a stake in NGP Energy Capital Management, which became the nucleus of Carlyle’s energy platform after ending a partnership with Riverstone Holdings LLC in 2011. To set the strategy into motion, Carlyle relied on big hires from the outside, a contrast to Blackstone’s development of internal dealmakers to lead its largest business units. Youngkin, CavanaghIn 2010, Carlyle hired Morgan Stanley’s Mitch Petrick to expand the Global Market Strategies unit beyond its role as issuer of collateralized loan obligations. The firm last year organized its funds-of-funds under one roof and named Morgan Stanley’s Jacques Chappuis head of the business, called Solutions. “If you stand still, if you’re not thinking about new things to offer investors to give them an edge, then somebody else is going to do it,” said Youngkin, who joined Carlyle in 1995. “This is the competitive landscape we all live in. If you’re not running, you’re standing still.” The highest-profile addition came this year, when Carlyle’s founders asked Mike Cavanagh, a top lieutenant to JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon, to be co-president with Youngkin. Cavanagh, 48, has been tasked with developing new business alongside Youngkin, a 48-year-old father of four and former college basketball star. Higher Earnings“Cavanagh’s success will be measured based on the firm’s ability to grow in new directions,” said Brennan Hawken, an analyst at UBS Group AG. “Cavanagh’s experience and connections across the financial services waterfront should be a significant advantage.” The strategy has started propelling earnings higher, with Global Markets Strategies and Solutions now claiming $70 billion in assets producing recurring management fees, or half of the total. The firm is also experiencing some familiar hurdles. When Carlyle bought a 55 percent stake in Claren Road four years ago, the firm oversaw $4.5 billion. That grew to more than $8.5 billion this year as it delivered steady returns. Then, in the first half of October, investments in Fannie Mae (FNMA) and Freddie Mac securities, as well as investments in energy, plunged. Claren Road’s clients have asked to withdraw $1.9 billion, said two people familiar with the redemption requests, who requested anonymity because the information isn’t public. ‘Sluggish Performance’Vermillion has also struggled. Assets fell to $1.4 billion as of July from $2.2 billion in October 2012, when Carlyle bought a 55 percent stake, according to a copy of an investor letter obtained by Bloomberg News. Viridian, its main fund, slid 15 percent this year through September. “In the near term, we see moderating private equity exit activity and sluggish performance in the Global Market Strategies and Solutions businesses keeping us sidelined on Carlyle’s shares,” said Marc Irizarry, an analyst at Goldman Sachs Group Inc. Carlyle is also facing pressure in its growing energy business after oil prices tumbled to the lowest in five years, a result of slower growth in global demand and surging production in North America. Oil and gas producers in NGP’s portfolio, including Memorial Production Partners LP, Rice Energy Inc. (RICE) and RSP Permian Inc. (RSPP), have all declined since June, as have energy producers owned by Apollo and KKR. “We certainly anticipate on the upstream side of oil and gas -- equipment and oil services -- that there will be some softness,” Brian Bernasek, a Carlyle managing director who focuses on industrial and transportation investments, said on a webcast posted yesterday on the firm’s website. “There are implications all around the board.” Growth PhaseKotowski of Oppenheimer said he’s optimistic about Carlyle’s chances of moving into a new phase of growth because its partners are putting their own money into new funds and alternative-asset firms are increasingly replacing institutions such as banks in areas from lending to underwriting stocks and bonds. Carlyle has also positioned leaders to take over from the founders, Kotowski said. Rubenstein, who is writing a book about his life called “Sprinting to the Finish Line,” has said he doesn’t plan to retire. D’Aniello, 68, and Conway, 65, have said the same. In Tunbridge Wells, the residents have more immediate concerns. While Carlyle paid about 14 million pounds ($22 million) for the movie-theater site in the center of town, the city now estimates its value at half that amount, said Chapelard, the council member. The stalled development remains a work in progress for Carlyle, similar to its larger expansion efforts. “The walls are 8-feet-high and you can’t see anything past them,” Chapelard said of the site, which was close to attracting a supermarket before negotiations with Carlyle fell apart. “Would it be better if Carlyle were to get rid of it and move on? Maybe. Right now it’s a toxic asset.” -By Devin Banerjee French Home Prices to Decline as Much as 3% Next Year Source: Bloomberg / Luxury French home prices will probably fall by 2 percent to 3 percent next year as high unemployment and a stagnant economy deter buyers, according to an industry group. Residential property values will drop 1.7 percent in 2014, the National Federation of Property Brokers said at a press conference in Paris today. In the French capital, prices are expected to decline 3.6 percent, according to the organization known as FNAIM. “Investors need confidence, which is hard to find with rising unemployment and little growth,” FNAIM Chairman Jean-Francois Buet said at the briefing. “We’ll have a lot of geographical disparities again,” tied to local economic trends, he said. The French economy barely grew in the past three years. Jobless claims have risen during President Francois Hollande’s first 2 1/2 years in office as he has raised tax levels to a record to reduce the country’s budget deficit. The volume of sales of previously-owned houses and apartments may fall to about 700,000 in 2015, after rising 0.3 percent to 720,000 this year, FNAIM said. -By Francois de Beaupuy http://www.bloomberg.com/news/2014-12-09/french-home-prices-to-decline-as-much-as-3-next-year.html Dur Hospitality to Tap Bank Loans as Riyadh Developer Expands Source: Bloomberg / News Dur Hospitality Co. plans to tap financing from commercial banks as the Saudi property and hotel developer expands in the world’s largest oil supplier. “Our balance sheet is extremely strong and under leveraged right now,” Chief Executive Officer Badr Albadr said in an interview in Riyadh yesterday. “This expansion will be done partially by our own cash flow. A bigger component will be from commercial bank loans.” Across Riyadh and other Saudi cities, companies like Dur Hospitality are opening properties to meet rising demand as the Arab world’s biggest economy expands. Growth is forecast at 4.4 percent this year, the second-fastest pace along with the United Arab Emirates in the six-nation Gulf Cooperation Council after Qatar, according to data compiled by Bloomberg. Dur Hospitality, previously known as Saudi Hotels & Resorts Co., plans to spend 1.4 billion riyals ($373 million) during the next seven years to increase its portfolio of hotels and luxury residential complexes. The Riyadh-based company this week announced a 300 million-riyal investment to develop two Marriott hotels in the capital of Saudi Arabia. Adding to the 580 million-riyals facilities that Dur Hospitality already has, the new financing will be used to buy land and build hotels, Albadr said. Last year, the company obtained a 309 million-riyal Islamic facility from Riyad Bank to finance building a hotel in Riyadh. Spending BingeThere are “huge areas of growth” in terms of the number of travelers and the quality of services and types of rooms needed, Albadr said. “We have identified a clear gap that we can fulfill. We will expand into the three- to four-star segments for mainly the business traveler.” Demand for hotel services in the kingdom is being driven by higher consumer spending. Point of sales transactions more than doubled between 2009 and the end of 2013, according to data on the website of the Saudi central bank. The kingdom is also in the process of opening its stock market to foreign investors. Changing social habits in Saudi Arabia, a conservative Sunni-Muslim country, are opening up new business opportunities for companies, according to Albadr. “We are witnessing a transformation in people’s habits,” he said. “When you used to go back to your hometown, you stayed with your relatives. Not any more.” -By Glen Carey Additional Articles of Interest - Local & Overseas Real Estate |
