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30th December 2014

Singapore Real Estate

Housing priorities in 2015: Helping families and singles

National Development Minister Khaw Boon Wan outlined his ministry's key focus areas in 2015, and these include meeting the housing needs of singles and helping family members live closer to one another.

Source: Channel News Asia / Singapore

SINGAPORE: Property prices in the Republic have been moderating and National Development Minister Khaw Boon Wan expects this to continue into 2015.

He was speaking to reporters after witnessing the handover of a completed Build-To-Order (BTO) project at Punggol on Monday (Dec 29). The event also marked the completion of 28,000 new flats this year - a record in recent years.

The minister outlined his ministry's key focus areas in 2015, and these include meeting the housing needs of singles and helping family members live closer to one another.


The BTO system started in 2002. Up till 2010, fewer than 10,000 flats were launched each year. When Mr Khaw took office in 2011 as the National Development Minister, prices of resale HDB homes were soaring and there was a shortage of new flats.

To address this, his ministry began ramping up supply of new flats. From 2011 till 2013, more than 77,000 units were launched. The mortgage servicing ratio was also lowered to 30 per cent - from 35 per cent - in August 2013.

Resale HDB prices fell in the third quarter of 2013 - the first decline since 2009. Prices have been sliding since, falling by about 6 per cent year-on-year.

Mr Khaw said he expects the decline to continue into 2015: "Now the balance is shifting, and we expect next year to continue to shift, I don't think it has stabilised yet. But so long as prices are shifting like what happened this year, where prices are softening but not drastically.

"Drastic corrections are seldom good, because they are usually due to some external events, for example, the Asian crisis, SARS, Ebola, then there's a major market correction. Yes, you may get cheaper housing prices, but you may also find yourself losing your job because it means the underlying economy is very fragile and brittle. So if what we observe this year continues into next year, I would consider that a very good development."

Mr Khaw gave no indication of when the Government may ease cooling measures, but added that some of these are temporary. "Obviously when the temperature becomes warmer, then we have to adjust them," he said. "The question is when you do that and how you do that? So those are obviously issues of consideration next year."


Turning to other areas his ministry will be focusing on in 2015, Mr Khaw said a priority is to help families live closer to each other. Just last month, a proportion of the BTO flat supply was set aside for such buyers. Previously, they only received extra ballot chances.

Priority was also extended to parents living in mature estates who apply for a flat in non-mature estates near their married children.

Another group the Government will be focusing on in 2015 is singles. Mr Khaw said: "They email me or leave messages on my Facebook, saying that 'I applied seven times'. I said 'how could it be, we only started BTO exercises for singles just four, five times'.

"So it's an exaggeration, but I think it is also an expression of frustration. They say 'I am now 45 years old, 50 years old or even nearing 55 years old' and they are very worried the money gets locked up in the Retirement Account. So these are genuine personal issues which we have to take into account."

So while fewer flats will be launched next year - just 16,900 units, compared to about 22,400 this year - Mr Khaw said he will not be slowing the pace of construction of homes for singles. His ministry is also exploring policies to better meet the housing needs of this group.

- CNA/xy

Single-digit fall in HDB prices next year a good thing: Khaw

Lifting of some temporary cooling measures will be "issues for consideration" in 2015, but TDSR will stay

Source: Business Times / Real Estate

ANOTHER single-digit fall in public housing resale prices next year would still be manageable and "a very good development", Minister for National Development Khaw Boon Wan said on Monday.

It is a level people can accept and a balance between keeping homes affordable for homebuyers and preserving the asset values of home owners.

Mr Khaw said this to reporters at the handover of the fifth completed block at the new Waterway Woodcress build-to-order (BTO) project. This also marks the Housing & Development Board (HDB) meeting its target of 28,000 new flats for 2014 - a record in recent years.

HDB resale prices as at Q3 2014 have fallen 6.1 per cent year on year. Mr Khaw said he would be worried if prices fell double digits in 2015 - what he termed "drastic corrections" which historically only happened in response to major external shocks such as the Asian financial crisis, the Sars outbreak, or the global financial crisis in the recent decade. HDB resale prices are widely seen as providing the baseline for mass market private home prices.

Lee Nai Jia, associate director of research at DTZ, believes a double-digit decline is unlikely, given that the Ministry of National Development (MND) is cutting its launch of new flats to 16,900 next year, from the 22,400 it launched this year.

The scaling back was because "we can't carry on like this and there is no necessity to carry on like this", said Mr Khaw, referring to the huge supply resulting from the ramp-up in BTO building activity since 2011.

Dr Lee said: "Besides BTO supply, the government also has quite a few tools to moderate the fall in prices on the demand side, such as subsidies, increasing the income ceiling, and relaxing of restrictions on singles buying public housing."

Other analysts also see the reduction of BTO supply as a sign that the government is preparing to slow the decline in HDB resale prices, creating something like a "soft landing".

Mr Khaw also broached the possibility of lifting some of the temporary property cooling measures, which most analysts take to mean buyer's and seller's taxes. "When the temperature becomes warmer, we have to adjust. Question is: when do you do that and how do you do that? So those are obviously issues for consideration next year," he said.

Knight Frank Singapore executive chairman Tan Tiong Cheng said: "As much as I think cooling measures have served their purpose, sometimes you can't just pull the brakes and hope the thing will stop in time. So it's good to look at the intended or unintended effects of the measures, and review whether some of them should be moderated."

But Mr Khaw made it quite clear that the total debt servicing ratio (TDSR) framework, which caps borrowers' total monthly debt repayments at 60 per cent of their gross monthly income, will stay.

The Monetary Authority of Singapore had similarly indicated when it introduced the framework in June 2013 that the TDSR was "structural in nature and meant for the long term". That said, the loan-to-valuation limits for housing loans are not permanent and will be reviewed according to market conditions.

While recognising the TDSR as a healthy rule that encourages prudence, the market has also singled it out as the tool having the most impact on property buying sentiment.

"I think TDSR is not a wrong framework. In fact it's a good framework which now several other central banks are also taking note of and some have already implemented their own versions," Mr Khaw said.

Earlier this month, for instance, Australia's prudential regulator asked banks to limit growth in home loans to investors to 10 per cent a year, and said it will step up overseeing of mortgages amid surging house prices in Sydney and Melbourne.

But DTZ's Dr Lee believes that any review of loan-to-valuation limits in the short term is unlikely, even if interest rates increase next year because, at 72 per cent, Singapore's proportion of housing debt to GDP is still rather high.

Taking stock of his term, Mr Khaw said he had taken a very decisive step to shift the market's balance between buyers and sellers when he joined MND three years ago. "At that time, it was a little bit too predominantly a sellers' market. Now the balance is shifting (to a buyer's market) and we expect it to continue to shift next year. I don't think it has stabilised yet," he said. Greater stability may come next year.

Having cleared the first-timer backlog of demand for new flats, Mr Khaw said his focus in 2015 will be on singles and low-income families who cannot yet afford flats and are renting. The MND will also refine its policies to meet the housing needs of married couples hoping to live with or close to their parents, as well as seniors who want to monetise their large flats.

-By Lee Meixian

HDB to focus on helping families live close together

Needs of singles and low-income families also priorities for 2015: Khaw

Source: Straits Times / Top of The News

AS THE backlog of first-timer demand for new Housing Board flats has been cleared, next year's focus will be on helping families to live close together, as well as singles and low-income families who cannot yet afford a flat.

But there will be limits, National Development Minister Khaw Boon Wan cautioned yesterday as he set out his priorities for 2015.

"Everybody who wants to stay near their parents, and parents who want to stay near their children... I'll do my very best to meet their wishes," he said.

Still, it will not be possible all the time, particularly in mature estates as there is not enough land.

Efforts have already been made to meet such demand.

Last month's Build-to-Order launch was the first in which flats were set aside for those applying to live with or near their parents or married children.

Asked what else can be done, Mr Khaw replied: "We have to be creative."

R'ST Research director Ong Kah Seng suggested higher subsidies or housing grants. What counts as "nearby" could also be relooked, with benefits available for couples who stay in the same region as their parents, and not just the same estate, he said.

Mr Khaw's other focus next year will be "groups where the needs are still not completely met". These include singles and those who are unable to own a flat and hence rent instead.

The HDB's overall pace of construction will slow next year, but not when it comes to building units for these two groups.

"If policies can be tweaked to facilitate their needs being met, I will do so," he added.

He was speaking to reporters at the handover of a block in the Waterway Woodcress project, the first to be completed along My Waterway@Punggol.

Among its earliest residents are personal driver Kayom Abdul Samad, 36, his wife, their three children, and his mother.

Getting a four-room flat there was his wife's idea, said Mr Kayom: "She really loves the master bedroom with a balcony. It's something very unusual for an HDB flat. It's condo-style."

Yesterday's ceremony marked the completion of 28,000 flats this year, up from the 13,600 that were finished in 2013. The target for next year is to complete 26,000 new flats.

In a blog post last week, Mr Khaw said the HDB would work harder to address elderly residents' wishes to age in place.

Asked yesterday about reverse mortgages, which convert part of a home's value into cash, he replied that the Government's study of it was ongoing.

"But I'm not pinning too much hope on it," he said. The take-up rate in cities where reverse mortgages are established is very low.

The HDB also gave updates on how many people have benefited from policy tweaks this year.

As of the end of last month, almost 11,000 households had taken part in the Enhancement for Active Seniors scheme, which subsidises elderly-friendly fittings.

About 1,040 of them were able to do so after the age criterion was lowered in August.

In July, the HDB also allowed resale sellers to stay in their flats for up to three more months, if the buyer agrees. This was to help sellers who needed more time for the transition. As of Nov 30, there were 847 requests for this temporary extension.

-By Janice Heng

'Good' if resale price slide continues

Source: Straits Times / Top of The News

THIS year's slow slide in public resale flat prices is what National Development Minister Khaw Boon Wan hopes to see in 2015 too.

"If what we observe this year continues into next year, I would consider that a very good development," he told reporters yesterday morning.

Asked if a double-digit fall in Housing Board resale prices is expected, he replied: "I hope not."

Drastic price falls are "seldom good" and usually due to external events such as financial crises, he said. Single-digit changes are easier for people to accept.

Experts expect HDB resale prices to have fallen by under 8 per cent for the whole of this year.

Their predictions for 2015 range from stagnation to a further drop of 5 per cent to 8 per cent for the full year.

The subdued resale market is the result of a ramped-up supply of new flats from 2011 to 2013, as well as cooling measures such as loan curbs and stamp duties.

Asked if cooling measures will be relaxed, as developers have called for, Mr Khaw replied that some of the measures are temporary and will be adjusted when the market is cool enough.

"The question is, when do you do that and how do you do that. So those are obvious issues of consideration next year."

But measures related to financial prudence are permanent and should be preserved, he added.

These include the Total Debt Servicing Ratio (TDSR) framework, which puts a 60 per cent cap on the proportion of salary that goes towards servicing debts, and restrictions on loan tenure.

"Those are parameters that (the Monetary Authority of Singapore) sets, and those parameters you can calibrate as you go along. But the framework, I think, is the right framework," said Mr Khaw.

This stance is in line with the market's expectations that the TDSR is here to stay, said R'ST Research director Ong Kah Seng.

Chris International director Chris Koh noted that, if prices keep falling, next June will mark two years of decline.

"If the total decline is substantial, it would be timely to tweak some of the measures," he said.

-By Janice Heng

2015 should see greater stability in HDB prices: Khaw

Prices have been moderating and the market shifting from a seller's to a buyer's market, but the shift is not yet complete, said National Development Minister Khaw Boon Wan.

Source: Channel News Asia / Singapore

SINGAPORE: Prices for Housing and Development Board (HDB) flats have been moderating and the market shifting from a seller's to a buyer's market in 2014, but the shift is not yet complete, National Development Minister Khaw Boon Wan wrote on his blogpost on Monday (Dec 29).

Mr Khaw wrote: "The shift is not yet complete and 2015 should see greater stability. We are scaling down the pace of construction but remain proactive on refining our policies to meet diverse housing needs of flat buyers and home owners: Singles, married couples who wish to live together with or close to their parents, seniors who wish to monetise their large flats, etc."

He added that with the handover to HDB of a completed block at the Waterway Woodcress Build-To-Order (BTO) project, it marked the completion of 28,000 new flats in 2014. For 2015, he said 26,000 new flats will be completed and handed over to buyers, including SkyTerrace@Dawson, SkyVille@Dawson and Waterway Terraces. New projects scheduled to be launched in 2015 include the first BTO project in Bidadari.

The minister pointed out that HDB will be launching a lower number of new flats - 16,900 - but there will still be a diverse mix of flat types and locations, and he expects them to be "popular".

In conclusion, he wrote: "For HDB, 2014 is ending on a perfect note. If the global environment remains benign, I expect 2015 to also be spectacular for Singaporeans and HDB residents."


Mr Khaw also said that the quality of public housing has improved in recent years, and even caught up with private housing. 

For instance, residents at Waterway Woodcress get to enjoy waterfront living, with unblocked views of the waterway. Some even said that it feels as though they are living in a private estate. 

Said Mr Kayom Abdul Samad, a resident at Waterway Woodcress: "The environment here is really nice and it is unique to have an HDB flat which has a master bedroom with a balcony - it is like a condominium. This is something we can achieve even though it is not in actual fact a condominium, it is an HDB flat."

Another resident, Mr Eugene Yeo, said: "I think right now, most HDB flats looks almost like a condominium, and that is what draws a lot of young people."

Mr Khaw said that in recent years, public housing has caught up with private housing, and in some cases, he believes it has "exceeded private housing as well".

"Especially if you jog along the Waterway, you see HDB flats, you see executive condominiums (ECs), and further away you see some condominiums as well. And unless you have a trained eye, it is not easy to distinguish which is HDB, which is EC and which is a private condominium," Mr Khaw said.

- CNA/kk/dl

Gentle fall in HDB resale prices a good thing: Khaw

Source: Today Online / Singapore

SINGAPORE — A continued decline in the prices of Housing and Development Board (HDB) resale flats next year — albeit a gentle one — would be a positive development, said National Development Minister Khaw Boon Wan yesterday.

Speaking after the handover ceremony for a completed block at the Waterway Woodcress Build-to-Order project, Mr Khaw said: “If what we observe this year continues into next year, I would consider that a very good development.”

Based on data released by Singapore Real Estate Exchange earlier this month, HDB resale flat prices have fallen by 9.8 per cent since their peak in April last year. Last month, prices dipped 0.8 per cent from October to hit a 40-month low, the index showed.

Asked what would be a meaningful price correction before cooling measures could be rolled back, Mr Khaw said he was in favour of a single-digit decline, which would prevent “heartache” for buyers. “I buy something and my neighbour (gets) it two months later at S$200,000 less — you’ll feel very ‘sayang’ (a sense of loss),” he said.

In a blog post yesterday, Mr Khaw also noted that the housing market was shifting from a seller’s market to a buyer’s one. “The shift is not yet complete and 2015 should see greater stability,” he said.

While there was room to adjust the temporary cooling measures when the time is right, measures that encourage financial prudence — such as the Total Debt Servicing Ratio (TDSR) — are here to stay. “In other words, don’t overstretch yourself. Spend within your means,” he told reporters. The TDSR was introduced last year to limit the size of a home loan a person can get based on their outstanding debts.

As for private property developers — which have been urging the Government to relax property curbs — Mr Khaw, when asked about options for those whose Qualifying Certificate (QC) deadlines are approaching, said they should price their units properly. “I’m sure if they price it properly, there will be takers,” he said.

Under QC rules, developers are required to sell all units in a development within two years of its completion or pay a fee for an extension.

While the HDB is easing back on the number of new flats launched and flat completions next year — to 16,900 and 26,000 respectively — Mr Khaw assured that the needs of flat buyers such as singles and those unable to purchase flats of their own are not being ignored. “If policies can be tweaked to facilitate their needs to be met, I will do so,” he said. He also hopes to help HDB residents who want to live near their parents, and vice versa. “I’ll do my very best to build three-generation flats.”

Asked if the ongoing review of the Central Provident Fund (CPF) system would affect home ownership, Mr Khaw said the CPF is a major platform that helps Singaporeans buy their own homes. “A big part (of one’s CPF savings) will always go into housing, but ... it’s not necessary for an entire chunk of it to go into housing. So (the) important thing is … plan,” he said.

As for the government study on reverse mortgages — as a means for elderly Singaporeans to retire comfortably — Mr Khaw said he was “not pinning too much hope on it”. He said several cities where reverse mortgages are fairly well-established had been examined. “The assessment is not very good in the sense that ... the take-up rate is … extremely low.”

In 2006, NTUC Income offered reverse mortgages to elderly Singaporeans, but scrapped them because of poor demand.

-By Kenneth Cheng

Completed shoebox units lead price falls this year

NUS's Nov flash estimate for price index for completed small units is down 4.4% from Dec; mounting completions expected to put stress on rents, prices

Source: Business Times / Real Estate

So far this year, prices of small units have fared the worst of the four segments of completed non-landed private homes covered by the National University of Singapore's Singapore Residential Price Index (SRPI) series.

-By Kalpana Rashiwala

Resale apartment prices dip 0.3% in November

Price fluctuations this year make it hard to deduce trends: Experts

Source: Straits Times / Money

RESALE apartment prices slipped again last month after picking up in October, in yet another monthly fluctuation in price movements in a topsy-turvy year.

Prices of completed non-landed private homes fell 0.3 per cent last month compared with October, the National University of Singapore's residential price index showed yesterday.

This reversed a gain of 0.4 per cent in October from September, the revised numbers showed.

The index, which tracks a basket of completed homes, has ebbed and flowed in the past year, prompting experts to warn that it is impossible to deduce any trend from such monthly data.

In fact, October's 0.4 per cent uptick came on the heels of a mounting number of mortgagee sales and more non-performing loans at the local banks - a signal that the broad data might not be a reflection of the actual sluggish ground conditions.

The figures follow the Urban Redevelopment Authority's review to see if it needs to revamp its quarterly property price index, over concerns that it does not give an accurate market snapshot.

Mr Ong Teck Hui, national director of research and consultancy at JLL, noted that it might be difficult to deduce trends even from quarterly data, and that it would be even harder to draw meaningful conclusions from monthly figures alone.

Mr Alan Cheong, research head at Savills Singapore, said: "In a market where transactions are so low, it's equivalent to the tide falling and exposing the rocks on the river bed, and you can't row your boat across the river - the market just doesn't function as usual. You have to be more topical in explaining the sub-markets, and it would be too simplistic to use broad strokes to explain things."

November's index, for instance, was dragged down by shoebox units - measuring 506 sq ft or less - as prices fell 1.9 per cent. But Mr Cheong reckons it was not simply a case of shrinking demand for such homes.

Rather, more distressed owners saddled with multiple properties could have chosen to sell their shoebox units at a discount over larger and pricier units.

"Even if you apply a 50 per cent haircut to a shoebox unit's price, it will not be as much as a 20 per cent discount on a luxury unit's price because of the smaller quantum," he said.

Prices of city-centre homes fell 0.5 per cent while prices of those in the suburbs were unchanged last month.

The lower number of transactions means it is harder to predict price movements, said experts.

The real estate market is also "not homogeneous", noted Mr Cheong, so more data points are needed for clearer conclusions.

The Urban Redevelopment Authority will be releasing its flash estimates for the fourth quarter private property index on Friday.

-By Cheryl Ong

Resale prices of private homes down marginally in November: SRPI

The overall resale prices of private homes dropped 0.3 per cent on-month in November, with prices of small homes leading the dip, according to the Singapore Residential Price Index flash estimates.

Source: Channel News Asia / Business

SINGAPORE: Resale prices of private homes dipped slightly last month, according to Singapore Residential Price Index (SRPI) flash estimates, which were released on Monday (Dec 29).

The SRPI, compiled by the National University of Singapore's Institute of Real Estate Studies, showed overall prices decreased 0.3 per cent in November from the previous month. In October, overall prices rose 0.4 per cent from a month earlier - up 0.1 percentage point from that month's flash estimates.

Prices of homes in the central region, excluding small units, fell 0.5 per cent, and prices of homes in the non-central region, excluding small units, stayed level in November from October.

Prices of small units, which have a floor area of 506sqf or below, fell the most at 1.9 per cent on-month.

- CNA/av

Industrial site in Tuas up for sale

Source: Straits Times / Money

AN INDUSTRIAL site in Tuas South Street 7 was put up for sale yesterday under the Industrial Government Land Sales Programme for this half of 2014.

The 0.5 ha plot was initially on the JTC Corporation's reserve list and was made available for application on Oct 28.

It was put up for tender after a bidder committed to pay not less than $4.2 million for it.

Reserve list sites are released for sale only if an offer of a minimum price acceptable to the Government is received, or when there is enough market interest. Confirmed list sites are launched according to schedule regardless of demand.

The site is zoned for Business-2 developments - typically for heavy industrial use.

It was launched as part of efforts to offer industrialists more choice.

There is an option to subdivide the plot into strata-titled units so the winning firm could sell on smaller units or custom-build its own facilities.

It has a tenure of 20 years and four months and a maximum permissible plot ratio of 1.

Smaller plots are more palatable to many small and medium-sized industrial firms because they come cheaper, but supply has been limited.

A site nearby, for instance, was snapped up for $5.2 million - or $96 per sq ft (psf) per plot ratio (ppr) - in September, coming in at the higher end of analysts' expectations of $68 to $100 psf ppr.

It pipped the bids for other similar plots within the vicinity, which were sold for $65 to $70 psf ppr.

The new site is the third to be put up for sale in the area this year.

The tender will close on Feb 9.

-By Cheryl Ong

Residents surprised by columbarium plan

They say they were unaware facility would be next to upcoming BTO area

Source: Straits Times / Singapore

A NEW columbarium expected to come up in Sengkang West in 2016 to provide a resting place for the dead has already stirred up unease among the living.

Australian funeral services company Life Corporation won a tender called by the Housing Board in July to develop a Chinese temple integrated with a columbarium at a land parcel in Fernvale Link.

The proposed site sits squarely next to an upcoming Build-To- Order residential area, Fernvale Lea, which will have residents moving in early next year.

Life Corp, the parent company of Singapore Funeral Services, said the space will be used to run funeral services, columbarium space and associated services.

Life Corp CEO Simon Hoo said details of the project were still being finalised. "We are still working with the architect on the design for the look and feel of it. We expect it to be completed in 2016," he told The Straits Times earlier this month.

News of the integrated columbarium took some future residents by surprise. They said they were unaware that the site would include such a facility. They also claimed that the development booklet of the area they were issued with showed the site was reserved for a Chinese temple.

"If the plan was to have a columbarium there, then it should be written properly in the booklet," said human resources executive Josephine Soh, 28, who is moving into Fernvale Lea next year. "I know I should respect the dead, but I don't wish to live near a columbarium knowing that the dead are resting there," she said.

Others wondered how resale prices of their flats might be affected. Property executive Rite Jailani, 33, said: "The location is already not that good. It's not near the LRT or coffee shops. Now I'm scared the value of the flat will drop if people know it's near a columbarium."

In response to queries by The Straits Times, the HDB and the Urban Redevelopment Authority (URA) said the town map and site plan issued included notes which indicated that "places of worship may include columbarium as an ancillary use".

They added that the space occupied by the columbarium should be out of sight from surrounding buildings and not exceed 20 per cent of the total gross floor area of the building.

There are a few columbariums located near residential districts, such as Yishun Columbarium in Yishun Ring Road.

But some still feel that such facilities should not be near where people live. IT project manager Loh Hon Chun, 33, who has lived in Sengkang West for five years, said: "My understanding of a columbarium is that it's somewhere in a forested area, like Mount Vernon, not near somewhere with high resident density."

-By Lester Hio

Proposed disposal of Epic Land's subsidiary for S$16.7m

Source: Business Times / Companies & Markets

The proposed disposal of a wholly owned subsidiary of Epic Land - a real estate investment holding consortium between Lian Beng Group, KSH Holdings, KOP and private capital firm Centurion Global - was announced on Monday. For an aggregate consideration of S$16.7 million, the firms have executed a sale and purchase agreement to dispose the entire paid-up share capital of Epic Land (19-2) and the settlement of shareholders' loan to an unrelated third party.

-By Chan Yi Wen

Companies' Brief

Parkway Life Reit

Source: Business Times / Companies & Markets

Parkway Life Reit (PReit) announced its maiden divestment of seven Japanese nursing homes for a total consideration of S$88.3 million and an expected divestment gain of S$12.3 million. Divestment proceeds are likely to be used for further yield-accretive acquisitions as part of PReit's asset recycling initiative.

Viva Industrial Trust

Source: Business Times / Companies & Markets

Viva Industrial Trust is is trading at an attractive yield of 8.8 per cent, compared with a peer average of 7.9 per cent. However, the gearing is high at 45 per cent levels relative to peers' average of 33 per cent that would require equity fund raising for acquisitions.

Ascendas trust makes Indian tech zone deal

Source: Straits Times / Money

ASCENDAS India Trust (a-iTrust) is buying a special economic zone that will be focused on information technology (IT).

The price is not expected to exceed 6.4 billion rupees ($133 million), said trust manager Ascendas Property Fund Trustee.

This price will be based on rents, rental escalation and the leasing level of the BlueRidge Phase II zone at the time of sale.

BlueRidge Phase II is under construction in Hinjewadi in Pune, India's "Silicon Valley", and expected to be completed by the second half of next year. It will comprise three buildings with approximately 1.5 million square feet in total of built-up area.

The deal is a two-step process, the trust announced to the Singapore Exchange yesterday.

First, a-iTrust will subscribe for non-convertible debentures worth 2.6 billion rupees ($54 million) issued by the co-developer of BlueRidge Phase II. The timing of the subscription is tied to construction funding requirements.

The trust will then complete the deal on Dec 31, 2016, by buying 100 per cent of the shares in the co-developer if the minimum leasing threshold of 65 per cent is met. If the co-developer fails to meet that threshold, a-iTrust will have the right to call for repayment of the debentures.

Mr Sanjeev Dasgupta, chief executive of the trustee-manager, said: "The acquisition would mark a-iTrust's entry into Pune, an important market for its existing and potential clients."

a-iTrust's portfolio comprises five IT business parks in India with 7.5 million sq ft of operating space.

a-iTrust units closed a cent down at 79 cents yesterday.

-By Marissa Lee

OUE to buy stake in HK-listed real estate developer

Source: Straits Times / Money

REAL estate developer and operator OUE will pay HK$1.51 billion ($256.4 million) for a stake in a Hong Kong-listed real estate developer.

OUE Lippo, a unit of the company, has entered into a conditional subscription agreement with Gemdale Properties and Investment Corporation (GPI) to subscribe for 2.9 billion new ordinary shares at 52 HK cents a piece.

The HK$1.51 billion outlay will give it a 22.97 per cent stake in the developer.

The issue price is a discount of about 16.1 per cent to GPI's net tangible asset value of 62 HK cents per share as at June 30, OUE said.

But it added that it is paying a premium of about 18.7 per cent to the volume-weighted average price of about 43.82 HK cents, based on trades done on the Hong Kong Stock Exchange last Wednesday, the last trading day preceding the signing of the deal.

OUE shares closed a cent higher at $2.04 on thin trading volume of 205,000 units yesterday, but GPI stock added a cent to 44 HK cents on hefty turnover of 18.77 million units upon news of the capital injection.

OUE said the deal will help it gain "access and exposure" to China's property market while opening up opportunities for future collaborations and partnerships with GPI, an established developer.

GPI, formerly Frasers Property (China), invests, develops and manages residential, commercial and business park projects in Greater China.

It had a total land bank of about 4.07 million square metres in nine cities in Greater China as at June 30.

-By Marissa Lee

United Engineers selling 2 subsidiaries to Dymon

Source: Straits Times / Money

UNITED Engineers is selling two subsidiaries to Singapore-based Dymon Asia Private Equity, it announced yesterday.

Dymon will acquire 51 per cent of UE Managed Solutions (UEMS) and 100 per cent of UE ServiceCorp (Taiwan), which is also known as UESC Taiwan.

The purchases will be made by the private equity fund's investment holding company Asia Facility Solutions.

United Engineers noted in a statement that the UEMS sale will be $12.24 million, and $488,000 for UESC Taiwan.

UEMS is an investment holding company. It units provide facilities management services, aiding hospitals in Singapore, Taiwan, and Malaysia, while UESC Taiwan is a unit of United Engineers Developments.

The sale of both units is slated to to be completed on Jan 30.

UEMS chief executive Chan Cheow Hong said in a statement yesterday: "We are delighted with the investment by Dymon, and share the same vision of strengthening UEMS's market position as the leading facility management services provider in Singapore, Taiwan and Malaysia."

He added that this will be done through staff upgrading and technology with Dymon providing corporate and strategic expertise.

Mr Gerald Chiu, a founding partner of Dymon, noted that UEMS is a significant regional player with more than 4,000 employees and room for expansion.

He added that the firm can grow "by increasing its presence in estate management services in the public and private sectors".

Dymon plans to make major investments in UEMS' technology programme, he said.

Dymon, which has $300 million in committed capital, has been buying stakes in promising small- and medium-sized enterprises.

It acquired a majority of shares in vending machine company Atlas Vending in October - its fourth deal, but the first time it has taken a controlling stake in a firm.

-By Rachael Boon

Views, Reviews & Forum

Parkway Life Reit lost S$3.3m in property deal

Source: Straits Times / Opinion

I refer to the report "Parkway Life Reit sells Japan nursing homes" (BT, Dec 27). In its announcement, the Reit manager says Parkway Life Reit has divested seven nursing homes for 7.95 billion yen (S$88.3 million) and that the sale price of these nursing homes is 28.1 per cent higher than the original purchase price.

Global Economy & Global Real Estate

Plan to develop former Clark Air Base draws interest from local, Asian developers

Source: Business Times / Real Estate

Surge in Vancouver's housing prices deters young professionals

Low interest rates, foreign demand have pushed the price of a typical detached home up nearly 30% in five years

Source: Business Times / Real Estate

City fears home price rise as Google plans campus

Tech giant running into problems in Boulder, Colorado that would be quite familiar to people in San Francisco's Bay Area

Source: Business Times / Real Estate

India approves emergency orders to ease land acquisition rules

Projects worth US$300b held up by restrictive law passed by former Congress govt

Source: Business Times / Real Estate

Infratil, NZ fund buying RetireAustralia

Source: Business Times / Real Estate

New beginnings for Yale's iconic library, thanks to US$20m donation

Entrance hall is now a popular study lounge

Source: Business Times / Real Estate

Dubai Investments Sees $2.7 Billion of Property Projects

Source: Bloomberg / Luxury

Dubai Investments PJSC (DIC) plans 10 billion dirhams ($2.7 billion) of real estate projects in the next five years as it seeks to benefit from resurgent property demand.

Developments include Mirdif Hills, a 2.5 billion-dirham project in Dubai that will include 1,500 homes, a 230-room hotel, shops and 200,000 square feet (18,600 square meters) of office space, Chief Executive Officer Khalid Bin Kalban said in an interview. The company’s Dubai Investment Real Estate Co. unit will start tendering for the development in the next two months, he said.

Dubai Investments, whose largest shareholder is state-owned Investment Corporation of Dubai ICD, is seeking to profit from a market recovery in the emirate after the financial crisis in 2008 sparked one of the world’s worst property crashes. Local developers are reviving projects as measures such as mortgage limits and the doubling of transaction fees helped stabilize the market.

“We don’t think there will be need to borrow” for Mirdif Hills, Bin Kalban said in a Dec. 23 interview in Dubai. “We’ll be able to sell the project easily because of its size, location and components.”

Still, the company may need bank or debt-market funding for a 7 billion-dirham project planned in Dubai Investment Park. The 13 million square-foot village with homes, shops, offices and hotels may require the company to raise cash either through loans, Islamic bonds or by seeking investors to take a stake in the project, according to Bin Kalban.

Investor Talks

“We are talking to a major investor to come on board and help,” he said. “They will either pay us rental or take over the project within a certain number of years. We are discussing seriously the option of rent to own with them.”

Work started two weeks ago on a 800 million-dirham business park in Fujairah, one of the United Arab Emirates’ seven sheikhdoms , Bin Kalban said. The park will include a 220-room hotel, 200,000 square feet of offices, 150,000 square feet of retail space and some apartments. It’s set for completion within two-and-a-half years, he said.

Al Taif Investment, a 60 percent-owned unit of Dubai Investments and developer of the business park, secured a 300 million-dirham loan from Al-Hilal Bank PJSC for the project.

Dubai Investments is also in talks with owners of several unfinished buildings within Dubai Investment Park to take over and complete the stalled construction, he said, without being more specific.

The company is expected to report a profit increase for this year of almost 60 percent to more than 1.3 billion dirhams amid increasing returns from stakes in units, Bin Kalban said.

-By Zainab Fattah

Indian Land-Acquisition Rules Eased by Modi Executive Order

Source: Bloomberg / News

The Indian government issued an executive order to make it easier for companies to buy land and eventually replace a law that has hindered manufacturing and constrained economic growth.

Prime Minister Narendra Modi’s administration yesterday promulgated the ordinance to spur infrastructure development in rural areas. It exempts at least five categories of land acquisition, including for industrial corridors, from rules that require the consent of at least 70 percent of potential sellers. The order will need to be approved in the next session of parliament, which starts in February, if it is to come into force permanently, according to PRS Legislative Research.

“It will definitely bring more clarity for investors,” said Dharmakirti Joshi, chief economist at Crisil Ltd. in Mumbai. “One of the main pain points has been the fuzziness of the land acquisition act. For any business to succeed, they want more clarity. Nobody wants to take a regulatory risk.”

The measure is intended to boost growth in Asia’s third-largest economy from near the slowest pace in a decade and accelerate Modi’s plan to urbanize the nation. Not one large tract of land has been acquired for development since the nation’s previous government passed an act in January 2014 that was supposed to make the process more transparent.

Bedeviled Investors

More than 1 trillion rupees ($15.7 billion) of projects are stalled as a result, including 600 billion rupees of roads, 20 new coal mines by state-run Coal India Ltd. and steel mills for ArcelorMittal and Jindal Steel & Power Ltd.

India’s land laws have bedeviled development for decades as consecutive governments courted votes from the nation’s 800 million rural residents. Previous rules forced owners to sell land if it was considered to be in the public interest. The laws were abused, leading to clashes between farmers and officials that fueled Maoist rebellions in some mineral-rich states.

Each of India’s 29 states now will have to adjust its own laws to conform with the new federal policy, Finance Minister Arun Jaitley said at a briefing in new Delhi yesterday.

Besides industrial corridors, other categories exempt from existing land-acquisition rules include: housing for the poor, rural infrastructure and defense.

The move will bring only partial relief as manufacturers would probably still have to adhere to the existing law and some conditions such as rehabilitation and resettlement remain on all projects, according to Pulkit Patni and Mohit Soni, Mumbai-based analysts at Goldman Sachs Group Inc.

Insurance, Coal

Power Grid Corp., Container Corp of India and Larsen & Toubro Ltd., India’s largest engineering business, stand to benefit, they wrote in a report yesterday.

This is the third time in December that Modi’s government has resorted to issuing an executive order to accomplish an objective after parliament’s session ended on Dec. 23 without votes on several key bills. Modi also has issued orders to permit more foreign investment in insurance and to make coal mining more transparent.

Modi’s Bharatiya Janata Party, which controls 52 percent of seats in the lower house, holds only 18 percent of the 245-member upper house. Since it’s improbable Modi will be able to control the upper house before 2018, he needs to find alternative ways to bring legislation into force.

-By Vrishti Beniwal and Abhijit Roy Chowdhury

London Luxury-Home Price Increases Slow on Tax Concerns

Source: Bloomberg / Luxury

Home prices in London’s wealthiest neighborhoods rose at the slowest pace in five years during 2014 as the prospect of new property taxes after next year’s national election deterred buyers.

Values in the 13 districts that Knight Frank LLP defines as prime central London climbed 5.1 percent this year, the broker said in a report today. Prices fell 0.1 percent in December from the previous month, the second straight decline.

Chancellor of the Exchequer George Osborne on Dec. 3 announced changes to the stamp-duty transaction tax that made it more expensive to purchase homes costing more than 937,000 pounds ($1.5 million). There’s concern that more changes may be made after the May election, Knight Frank said.

“The composed initial reaction to the stamp-duty changes and the fact annual growth has been moderating for three years indicate the market has priced in some form of political intervention,” Tom Bill, head of London residential research at Knight Frank, said in an e-mailed statement.

The opposition Labour Party has pledged to introduce a “mansion tax” on homes costing more than 2 million pounds if it wins the election.

-By Patrick Gower

Additional Articles of Interests - Local & Overseas Real Estate