Real News‎ > ‎2014‎ > ‎February 2014‎ > ‎

11th February 2014

Singapore Real Estate

Refinancing reprieve for homeowners who bought before last June 29

Leveraged homeowners mulling over refinancing of their mortgages have been given a breather from the strict debt rules governing mortgages. The Monetary Authority of Singapore (MAS) said yesterday that with immediate effect, refinancing of loans for owner-occupied homes bought before June 29, 2013 will be exempted from the total debt servicing ratio (TDSR) cap of 60 per cent - under which a borrower's monthly instalments for all debt servicing including mortgage payments cannot exceed 60 per cent of gross monthly income.

Tweak cooling measures, urges Leng Beng

He suggests taxing foreign buyers who offload properties within 3-4 years instead

Source: Business Times / Top Stories

IT is time for the government to tweak some of its property cooling measures such as the additional buyer's stamp duty (ABSD), given concerns over the global economy and signs that the property market here is slowing down, said Kwek Leng Beng, executive chairman of Hong Leong Group Singapore and property developer City Developments.

He suggested that the government consider lifting the hefty stamp duties imposed on foreigners when they buy property here, and replace it with a tax on sellers who offload their property three or four years after snapping it up.

"Everybody is attracting foreigners today to their countries. We should attract foreigners. But if . . . you penalise them by having to pay additional tax, then they (will) say you don't welcome me.

"So why don't you (the government) just say, if you sell within three years, four years, then I tax you. You come in (and buy property) I don't want to tax. I think this is one way," said Mr Kwek, who was speaking to reporters on the sidelines of the Real Estate Developers' Association of Singapore (Redas) Spring Festival lunch yesterday.

The government can also consider lifting ABSD for locals - who are subject to the additional tax when they purchase more than one home - and permanent residents, he said.

"I don't think there is a lot of speculation. The prices are high because developers have got no land stock . . . in the land bank. (At the same time) they have to survive, they cannot let business come to a standstill.

"So I think for some of these, we will (need to) have a dialogue with the government . . . I think the government has the bigger picture. We leave it to them. They are trying their best. They want a stabilised market. We will cooperate with them."

Mr Kwek's comments come amid signs that the housing market is slowing down. Statistics from the Urban Redevelopment Authority (URA) showed that for the last three months of 2013, private home prices fell 0.9 per cent - the first quarterly drop in about two years. For the full year, URA's overall private home price index ended 1.1 per cent higher - a smaller gain compared with the 2.8 per cent recorded in 2012.

Besides working closely with the government to build a healthy property market, developers will also work closely with the government on the next phase of nation-building and real estate development to achieve a "distinctive, high-quality living environment for all", said Chia Boon Kuah, president of Redas.

This means that construction activity will remain at high levels and continue unabated for several years, making it "ever more important to re-focus our collective attention on workplace safety and welfare of the some 30,000 migrant workers in our industry", he said.

"As developers, we should support our contractors in showing duty of care for the health, safety and welfare of these workers. This enhances productivity, which, in the long run, translates into benefits for all."

Last month, a worksite accident in Sentosa left one foreign worker dead and 10 others injured.

The death of the worker takes the number of fatalities at worksite accidents to nine in just over a month, prompting Acting Manpower Minister Tan Chuan-Jin to write on his blog that the recent spate of accidents was "not tenable".

Developers and contractors should, therefore, "up the ante on workplace safety training and communication" and "recognise the contributions these workers make to our country", said Mr Chia, who is also group president and chief executive of developer GuocoLand.

Redas would hold a forum to identify and discuss common causes behind construction workplace accidents, challenges to risk reduction and best practices, he said.

Yesterday, Redas presented Mr Kwek with its inaugural Redas Lifetime Achievement Award, which it established to honour a pioneering group of industry leaders.

The Redas citation said that Mr Kwek has helped to shape the property industry and guided Redas through several difficult periods, such as the property crash in the early 1980s.

Together with other developers, he also helped to reform the sector by introducing the Developers' Fund to protect buyers. This ensured that money collected for a specific project could not be used for other purposes.

Mr Kwek received his award from Education Minister Heng Swee Keat, who was guest-of-honour at the event.

-By Felda Chay

MAS eases TDSR rules for some home owners refinancing loans

Source: Channel News Asia / Business

The Monetary Authority of Singapore (MAS) has widened the existing exemptions from the Total Debt Servicing Ratio (TDSR) to cover the refinancing of loans for owner-occupied properties that were bought before the measure was introduced last year.

In a statement, the MAS said it had received feedback from borrowers who have faced challenges refinancing such loans.

Under the revised rules, a borrower who bought a residential property before the TDSR rules were introduced will be exempted from the TDSR threshold as long as the buyer occupies the home that is being refinanced.

The Mortgage Servicing Ratio (MSR) will also not apply to the refinancing of loans for HDB flats and Executive Condominiums that are owner-occupied and were purchased before the respective MSR implementation dates of Jan 12 2013 and Dec 10 2013.

A similar concession will apply to loan tenures. In such cases, borrowers whose loan tenures for their owner-occupied residential properties exceed the current limits will be allowed to maintain the current tenure when refinancing the loan.

MAS latest move was welcomed by the banking industry.

Koh Ching Ching, group head of corporate communications at Oversea-Chinese Banking Corp (OCBC), said: "Some borrowers with good reasons to refinance will now face less difficulties in doing so. The older home loans were not assessed with the new TDSR rules and hence the exemption for properties bought before the introduction of the stipulated TDSR rules is therefore fair."

Getty Goh, Director of Ascendant Assets, said: "Without this reprieve there are a lot of analysts forecasting prices coming down quite fast at quite a significant rate, purely because a large part of homeowners are not able to secure refinancing from banks.

"With this reprieve, this large group of homeowners are now able to secure refinancing and in turn they are able to hold for a longer period of time. It is not good for prices to drop fast and significantly, because definitely it's the government's intent to see prices stabilising.

"We've come across many instances before these, a lot of them were towards the end of the loan tenure and they were in a catch-22 situation. Because on one hand they cannot go to another bank and refinance their accommodations because of their TDSR. On the other hand, if they were to stick with the current loan provider, they'll be paying two per cent, three per cent, so I think this is really a good reprieve for this group of people." 

MAS relaxes TDSR loan curbs for some homeowners

Source: Today Online / Business

Borrowers with more than one property loan are now exempt from meeting the Total Debt Servicing Ratio (TDSR) threshold when refinancing the mortgage of the homes they live in, said the Monetary Authority of Singapore (MAS) yesterday, as part of a wider move to relax loan curbs under the framework.

The exemption applies only to properties bought before June 29 last year, when the TDSR framework was introduced. The move was taken to help “ease the debt-servicing burden of these borrowers”, the MAS said after receiving feedback from this group of homeowners.

“This is a concession compared to the (previous exemption), which requires that the borrower does not own any other property or have any other outstanding property loan,” said the central bank.

“The TDSR threshold of 60 per cent will continue to apply to the refinancing of all investment property loans … However, the MAS recognises that some borrowers may face challenges in right-sizing their debt obligations in the short term,” it added.

Therefore, these borrowers have been given until June 30, 2017 to refinance their remaining mortgages above the TDSR threshold if they commit to a debt-reduction plan and fulfil a credit assessment by the financial institution. These revisions also apply to properties bought before the TDSR introduction.

The MAS also announced that the Mortgage Servicing Ratio (MSR) will not be applied to the refinancing of loans for Housing and Development Board (HDB) flats and Executive Condominiums (ECs) that are occupied by their owners and purchased before its implementation. The MSR was implemented on Jan 12 last year for HDB flats and Dec 10 for ECs purchased directly from developers.

The revised rules take immediate effect.

Property analysts welcomed the revisions as they thought the original TDSR framework had “unfairly penalised” certain homeowners.

“In principle, the MAS wants everyone to live within their means,” said Mr Colin Tan, Suntec Real Estate Consultants Director of Research and Consultancy. “So, these changes allow people to refinance their property loans to a more favourable package; for example, from floating to fixed rates. But we don’t know how big the number of affected people is.”

Mr Ku Swee Yong, Chief Executive of property agency Century 21, said that while the TDSR was introduced with the intention of encouraging financial prudence, certain guidelines were too stringent, such as requiring financial institutions to use a minimum of 3.5 per cent instead of the prevailing interest rates in their stress tests before approving property loans.

“The MAS probably realised there were enough genuine non-speculative homeowners that were caught in the TDSR rules … (This revision) gives people flexibility to refinance if there are more attractive packages,” he said.

Both Mr Tan and Mr Ku said the impact on the housing market would probably be minimal, but Ms Christine Li, Head of Research and Consultancy at property firm OrangeTee, said the revisions may help to “prevent a sharp price correction in the event that more such homeowners choose to sell their properties due to their inability to refinance”.

“Under the old rules … they could be held hostage by the banks in having to accept whatever re-pricing interest rates they offer. They could be left with few options other than selling their properties, sometimes at a loss,” said Ms Li.

-By Lee Yen Nee

Resale of non-landed homes in Jan down 70%

But prices are up 2.3% from Dec, going by SRX flash estimates

Source: Business Times / Property

RESALE transactions of non-landed private residential homes tumbled 70.2 per cent to 310 in January, from 1,039 deals a year ago.

In the latest sign that buyers' sentiment remains dampened by recent cooling measures, flash estimates from the Singapore Real Estate Exchange (SRX) released over the weekend indicated that the number of resale deals last month was also 9.1 per cent lower than December's 341 transactions.

But it was not all gloom for developers last month: resale prices as measured by the SRX index rose 2.3 per cent from the December level.

Analysts said that the lower number of transactions in January might have made the overall price index more sensitive to deals that changed hands at a higher price last month.

-By Lynette Khoo

Private home resale prices up, but 'not a sign of market rise'

Resale prices of private homes edged up last month despite weaker buying sentiment resulting from loan curbs and other policies, new data has showed. But market watchers said the 2.3 per cent rise in resale prices last month from December should not be mistaken for a sign of a strengthening market.

Resale private home transactions plunge 70.2%

Source: Channel News Asia / Singapore

The number of resale transactions in the non-landed private home market plunged 70.2 per cent in January compared to a year ago.

Analysts attributed the decline to the effects of cooling measures and loan curbs introduced last year.

According to the latest data from the Singapore Real Estate Exchange (SRX), which compiles data from property agencies in Singapore, 310 private homes were resold in January this year compared with the 1,039 resale deals closed in January 2013.

Property agents said 310 is the lowest monthly figure in five years.

Compared to December 2013, the resale volume was down 9.1 per cent.

Though transaction volumes dropped, resale prices climbed 2.3 per cent in January.

Analysts said there were probably more higher priced units that were transacted in January. This pushed prices up slightly.

PropNex CEO Mohamed Ismail said: "It also demonstrates one thing, that the market has found its footing where the sellers are reluctant to sell any lower than before.

"And this is because the new launches are not going any cheaper either, (as) the land bid prices in recent months have been relatively strong. Therefore there isn't any motivation for sellers to lower prices any lower."

SRX said prices of suburban homes rose 2.4 per cent last month, followed by those in the city which rose 2.1 per cent.

However, resale prices of private homes in the city fringe fell 0.9 per cent.

Analysts said home prices are likely to remain fairly muted this year. PropNex expects overall prices to either decline by 2 per cent or rise marginally, with support from the mass-market homes segment.

Volume-wise, some agents believe this year's resale volume could come in lower than the 6,608 units transacted in 2013, which is significantly lower than the 13,214 units moved in 2012.

The resale market typically accounts for about one third of overall transactions and it's not expected to record strong numbers this year. For 2014, analysts still expect the demand to be driven by new home launches in the suburban areas.

Meanwhile, overall rental prices rebounded 1.1 per cent in January, after falling for six months.

All three regions saw rental price gains in January. Rentals in the city fringe area rose 3.6 per cent. This was followed by a 0.4 per cent increase in the city area. Rentals in the suburban areas saw a 0.2 per cent gain.

- CNA/ac/ir

Private home resale volume slumps to 2-year low: SRX

Source: Today Online / Business

The resale market for non-landed private homes continued to soften last month, with transactions tumbling to their lowest in two years as the Government’s cooling measures curbed demand.

An estimated 310 previously-owned private homes changed hands last month, a 9.1 per cent decline from the previous month and a 70 per cent fall from the same month last year, a flash report by the Singapore Real Estate Exchange (SRX) showed yesterday.

The report reinforces recent data pointing to a slowdown in the overall housing market. Last week, the SRX’s flash data on public housing showed that the median cash-over-valuation premium for Housing and Development Board resale flats fell to S$3,000 last month, the lowest since the global financial crisis five years ago. And Urban Redevelopment Authority data showed that new private home sales slumped 33 per cent to a four-year low last year, while price growth slowed to 1.1 per cent from 2.8 per cent in the previous year.

“The market is still reacting to the various curbs: The cooling measures, the Total Debt Servicing Ratio framework and the latest changes to the Executive Condominium scheme. That’s the sentiment in the entire real estate market. Buyers who don’t need to buy now will prefer to stay on the sidelines to watch the market, so it’s going to be stagnant for a while,” said Mr Jeffrey Hong, Chief Executive of property firm GPS Alliance.

Despite the fall in volume, overall resale prices of private homes inched up 2.3 per cent last month in what analysts said was probably a blip in the face of the weak sentiment across all segments in the market.

“It seems a little counter-intuitive, although I do hear that some agents have been closing relatively high-value deals. That’s one possible explanation for the lower volume but higher prices. Sellers are also in no hurry to sell and can hold out for better prices,” said Savills Senior Director of Research and Consultancy Alan Cheong.

“But we can’t say for sure that the market is showing signs of a rebound. We’ll need to wait for the next few months’ figures so that we can match that with what we see on the ground to assess whether the market has turned around,” he added.

The private home rental market enjoyed a rebound in both volume and prices, according to the SRX data. An estimated 2,348 units were rented last month, up from the previous month’s 2,172 units, while rents increased by 1.1 per cent. However, the rebound is not likely to be sustained, with a surge in supply of completed units later this year expected to pressure rents, analysts said.

“A lot of the units will be completed in the third and fourth quarter of this year, so there will be competition for tenants. On the demand side, the hiring of expatriates has been tightened and their accommodation budget has also been frozen or reduced,” said Mr Hong.

Mr Eugene Lim, Key Executive of ERA, said these new completed units would also keep resale prices in check. And with buyers increasingly drawn to new launches where developers continue to dangle discounts, the resale market will probably stay muted.

“Overall, we can expect private property prices to further moderate by 6 to 10 per cent in 2014,” he said.

-By Lee Yen Nee

Nol Building

Source: Straits Times

Fragrance Group, which bought the NOL Building in 2012, is now putting it up for lease.The property company has appointed agency Jones Lang LaSalle to lease the freehold property at 456 Alexandra Road. Fragrance plans to hold the building for long-term rental income, the agency said yesterday. It bought the 26-storey office tower from container shipping firm Neptune Orient Lines (NOL) in 2012.

KH Kea Properties seeking partner to develop building

Source: Straits Times 

The owner of the small building next to Bras Basah Complex and with McDonald's as tenant on the lower floors is seeking a joint-venture partner to tap on the highest and best use for the property. KH Kea Properties Pte Ltd, controlled by an Indonesian family with business interests across Asia, owns the nine-storey building at 333 North Bridge Road.

Black and whites at old Seletar airbase to get new lease of life

Source: Straits Times 

The black and white bungalows at the former Seletar airbase were built to house officers from Britain's Royal Air Force before the outbreak of World War II. Now they could house offices, schools, restaurants, spas and sports facilities under plans being drawn up by the Government, The Straits Times has learnt.

M&C buys hotel in New York for US$273.6m

Source: Business Times / Companies

MILLENNIUM & Copthorne Hotels, through its wholly-owned indirect subsidiary M&C New York (Times Square), is acquiring the freehold interest in Novotel New York Times Square for US$273.6 million.

The seller is 226 West Fifty-Second Street, a partnership led by a fund affiliated with Apollo Global Management and Chartres Lodging Group.

The purchase price is to be paid in cash, subject to standard purchase price adjustments.

The 34-storey building in the heart of the Manhattan theatre district contains the hotel, limited office and retail space and a penthouse apartment.

-By Mindy Tan

Millennium & Copthorne Agrees to Buy Novotel Hotel in New York

Source: Bloomberg / Luxury

Millennium & Copthorne Hotels Plc (MLC) agreed to buy the Novotel New York Times Square hotel for $273.6 million to expand in one of the world’s most popular tourist markets.

The hotel operator, based in Horley, England, will purchase the 34-story tower from funds affiliated with Apollo Global Management LLC and Chartres Lodging Group, Millennium & Copthorne said today in a statement. The deal is expected to be completed in the second quarter, it said.

New York’s popularity as a tourist destination is attracting hotel companies including Marriott International Inc. (MAR), which said in January that it would open a second hotel in the city under its luxury Edition brand. Millennium & Copthorne today said the metropolis was “one of our three key gateway cities.”

“The property is an important strategic investment for Millennium & Copthorne Hotels and will complement our existing Midtown and Downtown Manhattan hotels without adding significantly to central management costs,” Chairman Kwek Leng Beng said in the statement.

The hotel at 226 W. 52nd Street was built in 1981 and has 480 guest rooms as well as offices, shops and a penthouse apartment, the company said. A unit of Accor SA, Europe’s biggest hotel company, will continue to manage the property. The hotel’s refurbishment was completed in November.

-By Ross Larsen

Pan Pacific group to build 4 more hotels in 3 countries

Source: Business Times / Property

PAN Pacific Hotels Group said yesterday that it will be opening three Parkroyal hotels as well as one Pan Pacific hotel in Myanmar, Australia and China.

Parkroyal Nay Pyi Taw, the first of the four new hotels to be opened, is a business hotel located in Naypyidaw, the capital of Myanmar. It will open later this year, and is expected to host a slew of international events, starting with the 2014 Asean Summit in May.

In Australia, Parkroyal Melbourne, a waterfront development spanning the first 18 storeys of The Altus, a 37-storey hotel and apartment complex located in the Digital Harbour Precinct of Melbourne Docklands, will open in 2016. This is the group's fourth Parkroyal hotel in Australia and second in Melbourne.

Meanwhile in China, the group will be opening a Parkroyal hotel in Chengdu, Sichuan, which is also its first Parkroyal hotel in China. Slated to open in 2017, Parkroyal Chengdu will be part of a mixed-used development comprising high-end residential units, a hotel, offices and retail spaces.

-By Jacquelyn Cheok

Strong demand for CLSA-Roxy's HK retail floors

Tie-up sells 2 more floors at higher prices, in addition to an initial 10 floors

Source: Business Times / Companies

A JOINT VENTURE between Singapore's Roxy-Pacific Holdings and CLSA Capital Partners has found strong demand for strata retail floor sales in a building in Hong Kong's prime Causeway Bay area.

Initially the vendors had planned to release only 10 of the total 21 floors they own in the 999-year leasehold building, 8 Russell Street. The "vertical retail floors" are being sold with one strata title per floor - of 4,718 sq ft gross floor area.

Some 120 cheques were received when submissions of interest closed last Friday for the initial 10 floors, which are on Levels 10-20 (there is no 14th floor in the building as the number is considered inauspicious in Cantonese). Savills (Hong Kong) is the coordinating agent for the sale.

A lottery system was used to select the 10 buyers, who were notified over the weekend and signed the sales and purchase agreement yesterday. The prices achieved range from HK$28,100 - HK$31,000 (S$4,600 - S$5,080) per square foot after discount. The average price achieved for the initial 10 floors is slightly above HK$29,000 psf.

-By Kalpana Rashiwala

Real Estate Companies' Brief

Construction firms among best in paying up in Q4

They pay up in just 32 days; 4 years ago, they were among the tardiest

Source: Business Times / Top Stories

Construction firms are among the best in paying creditors here, taking just 32 days to settle a debt in the fourth quarter of 2013 - an improvement of 12 days compared to Q3.

Four years ago, they were among the slowest, taking an average of 55 days to pay a creditor, according to the Q4 2013 trade payment data released by DP SME Commercial Credit Bureau yesterday. The findings are based on payments made by more than 120,000 corporations and small and medium enterprises in Singapore each quarter.

Construction companies are now the second fastest payers in Singapore, it said. The fastest payers, chemical companies, have historically had payment cycles twice as fast as any other industry and currently take 16 days to pay a debt, three days more than it did in Q3.

Ong Siew Kim, senior general manager of DP Information Group, said that better payment behaviour by construction companies was a sign that the industry had enjoyed a strong period of growth.

-By Siow Li Sen

CMT launches second offering of retail bonds

Source: Business Times / Companies

CAPITAMALL Trust (CMT) is issuing up to $200 million worth of seven-year retail bonds which will pay a fixed interest of 3.08 per cent per annum, the second offering under its $2.5 billion retail bond programme unveiled in February 2011.

The retail bonds, which CMT chief executive officer Wilson Tan said "will cater to investors looking for fixed income returns", will pay out its fixed interest payments on Feb 20 and Aug 20 each year from 2014 to 2021, starting from Aug 20 this year.

Up to $150 million of the retail bonds will be offered to the public, while the remaining $50 million will be offered to institutional and other investors. Should the public offer and placement be oversubscribed, CapitaMall Trust Management Ltd, as manager of CMT, may increase the total issue size to up to $350 million and determine the final allocation between the public offer and placement, CMT said.

Subscriptions under the public offer will also be subject to balloting if the total subscriptions exceed the amount available.

-By Jacquelyn Cheok

Metro Q3 net surges 91% on 1-off gain

Source: Business Times / Companies

METRO Holdings' net profit soared 91.2 per cent to $29.3 million for the third quarter ended December, from $15.3 million a year ago, mainly due to a one-off gain of $19.1 million in negative goodwill on the acquisition of an additional interest in the jointly owned entities owning EC Mall in Beijing.

Revenue rose 7.7 per cent to $54.5 million from $50.6 million. This was largely due to higher rental income at the property division, the property development and investment group said yesterday.

Earnings per share rose to 3.5 cents from 1.8 cents a year earlier.

For the quarter under review, revenue for the group's property division grew 26.4 per cent, from $14 million to $17.7 million, as Metro City Shanghai reported higher rental on the completion of a significant part of its reconfiguration exercise, as well as the additional 18.4 per cent share in EC Mall. The average occupancy at the group's five investment properties as at end-December was 93.4 per cent.

-By Mindy Tan

Global Economy & Global Real Estate

Nigeria's housing shortage worsening

The real estate market is hobbled by a dearth of home loans, high interest rates, poverty and the African continent's second most expensive property prices

Source: Business Times / Property

ESTHER Macully used all of her 1.5-metre frame to face down a bulldozer and save her freezer from being destroyed as a wrecking crew guarded by armed security forces razed her home in Nigeria's Badia East slum.

While she salvaged the cooler, the 40-year-old is still waiting for the Lagos state government to fulfil a pledge to help replace the home she used as a store to sell beverages and food. The wooden shack was flattened last February along with the dwellings of thousands of others that authorities said were moved for a housing project that's yet to get off the ground.

"We can't be living in this kind of condition forever," Ms Macully said as she prepared to move back home about 161km east of Lagos. "We're citizens of Nigeria. Let them have mercy on us."

The demolition is making way for more than 1,000 one-to two-bedroom apartments that will be beyond the means of Nigerians like Ms Macully. Lagos, sub-Saharan Africa's most populated city, is trying to narrow a national housing shortage that the World Bank estimates at 17 million. While Nigeria is Africa's most populous nation with about 170 million residents, the real estate market is hobbled by a dearth of home loans, interest rates about six times those in the US, poverty and the continent's second most expensive property prices.

-From Lagos, Nigeria

Swedbank pledges more funding as govt plans controls

Source: Business Times / Property

Swedbank AB, Sweden's largest mortgage lender, promised to increase funding to construction to cool the property market as the government plans to impose even stricter capital standards.

The market "is completely exploding and there's no supply and that's due to structural problems on the housing market," chief executive officer Michael Wolf said in an interview in Stockholm last Thursday. "If we don't manage to boost supply there is a risk that house prices will rise because of a lack of supply and that will affect indebtedness."

Low rates over the past years and a lack of housing supply have fuelled a surge in home prices and driven debt levels to records in the US$550 billion economy. Nobel laureate Robert J Shiller warned as far back as January 2012 that Sweden's property market was in the grip of a bubble, while Paul Krugman, also a Nobel winner, last month said authorities should be worried about the risks.

The government is responding by imposing the strictest capital standards in Europe. Finance Minister Anders Borg last week said he would target even more onerous requirements, calling the largest banks irresponsible for paying out dividends equal to 66 per cent of profits, on average.

-From Stockholm, Scotland

NZ house price growth slows in Jan: govt valuer

Source: Business Times / Property

New Zealand house price growth slowed in January and appeared to be levelling out in the face of central bank lending restrictions and a looming rise in interest rates, the government property valuer said yesterday.

Quotable Value's (QV) residential property index rose 9.6 per cent in the year to Jan 31, compared with a 10 per cent annual rate in December. The index is now 12.8 per cent above the market's previous peak in late 2007.

QV said limits on how much banks can lend on low deposit-high value house loans, imposed by the Reserve Bank of New Zealand (RBNZ) in October, appeared to be having an effect. "These speed limits have reduced the number of first home buyers active in the market, but perhaps more importantly have led to increased caution amongst buyers," said QV research director Jonno Ingerson. Auckland region prices were up 14.5 per cent in the year to January from a 15.4 per cent rate the month before, while Christchurch slowed to a 12 per cent gain from 12.7 per cent.

Mr Ingerson said the prospect of higher home loan rates as the RBNZ tightens policy, most likely from next month, may already be affecting confidence, and when they come will slow prices further. The RBNZ said in its January statement that it expected to start raising rates from a record low 2.5 per cent "soon", which most economists interpret as March.

-From Wellington, New Zealand

Kite Realty to Buy Inland Diversified for $1.2 Billion

Source: Bloomberg / Personal Finance

Kite Realty Group Trust (KRG), an Indianapolis-based owner of U.S. shopping centers, agreed to acquire Inland Diversified Real Estate Trust Inc. for about $1.2 billion to expand its holdings and enter new markets.

The all-stock transaction values Inland Diversified at about $10.50 a share, Kite said in a statement today. Inland Diversified, based in Oak Brook, Illinois, is a real estate investment trust that isn’t traded on exchanges.

The deal will double Kite’s shopping-center holdings to about 20 million square feet (1.9 million square meters) owned, with 131 properties in 26 states. The REIT, which has a market value of about $836 million, will enter areas including Las Vegas, Salt Lake City and Westchester County, New York.

“Inland Diversified has assembled a very well-located, high-quality portfolio,” Kite Realty Chairman and Chief Executive Officer John A. Kite said in the statement. “The asset and tenant quality and strong demographic profile will be a great complement to our portfolio.”

Kite shares rose 3.4 percent to $6.36 today. They lost 3.2 percent this year, the second-worst performance in the Bloomberg REIT Shopping Center index.

Buyout Offers

Nontraded REITs have a finite life span and eventually have to merge with another company, list their shares, or liquidate portfolios to return money to shareholders. Inland Diversified had other buyout offers, Barry Lazarus, president and chief operating officer, said in a telephone interview. He declined to discuss how many or other specifics.

The company announced an agreement in December to sell $503 million of single-tenant properties to Realty Income Corp. (O) The transaction should be completed before the Kite deal closes. Kite also said it expects to sell three multifamily properties and Inland’s securities portfolio.

Inland Diversified decided against a share listing because REITs with smaller market values have difficulty gaining coverage by analysts, Lazarus said. Inland as a whole is about a $2 billion company, he said.

“We find that you start getting a lot more attention when you approach the $4 billion number,” Lazarus said. “We could list, but we’re still going to be $2 billion.”

The Kite merger is expected to be completed late in the second quarter or in the following three months. John Kite will serve as chairman and CEO of the combined company.

-By Prashant Gopal and Brian Louis

Senior Housing Properties Buys Boston Medical Offices

Source: Bloomberg / News

Senior Housing Properties Trust (SNH) agreed to buy two 15-story medical-office buildings in downtown Boston’s Seaport District for about $1.13 billion.

The buildings comprise biomedical research facilities, corporate office space, a parking garage and retail space covering a total of 1.65 million square feet (153,300 square meters), the Newton, Massachusetts-based real estate investment trust said today in a statement.

The properties are 96 percent occupied by Vertex Pharmaceuticals Inc., a Cambridge-based company with a market value of about $19.2 billion. Vertex has 15 years remaining on its lease and is consolidating employees from 10 other area buildings into a new headquarters in the Seaport District buildings, according to the statement.

Senior Housing Properties Trust received a term-loan commitment for $800 million, according to the statement.

The REIT, with a market value of about $4.14 billion, owns independent- and assisted-living communities, medical-office buildings, nursing homes and wellness centers in the U.S.

-By Craig Giammona

Brookfield Plans $200 Million Makeover of NYC 33rd Street Tower

Source: Bloomberg / News

Brookfield Office Properties Inc. (BPO) plans a $200 million makeover of its tower at 450 W. 33rd St. on Manhattan’s far west side, including a new glass skin for the building.

The property will be integrated with Brookfield’s Manhattan West project, the company said at a press briefing today. Brookfield plans to construct a deck over the Dyer Avenue Lincoln Tunnel entrance that would enable the tower to connect with the larger development.

-By David M. Levitt

Nigeria Housing Shortage Rising With Slum Demolition: Mortgages

Source: Bloomberg / Luxury

Esther Macully used all of her five-foot frame to face down a bulldozer and save her freezer from being destroyed as a wrecking crew guarded by armed security forces razed her home in Nigeria’s Badia East slum.

While she salvaged the cooler, the 40-year-old is still waiting for the Lagos state government to fulfill a pledge to help replace the home she used as a store to sell beverages and food. The wooden shack was flattened last February along with the dwellings of thousands of others that authorities said were moved for a housing project that’s yet to get off the ground.

“We can’t be living in this kind of condition forever,” Macully said as she prepared to move back home about 100 miles east of Lagos. “We’re citizens of Nigeria. Let them have mercy on us.”

The demolition is making way for more than 1,000 one-to two-bedroom apartments that will be beyond the means of Nigerians like Macully. Lagos, sub-Saharan Africa’s most populated city, is trying to narrow a national housing shortage that the World Bank estimates at 17 million. While Nigeria is Africa’s most populous nation with about 170 million residents, the real estate market is hobbled by a dearth of home loans, interest rates about six times those in the U.S., poverty, and the continent’s second-most expensive real estate market.

Property investors in Africa’s largest oil producing nation are aiming to lease the apartments to foreigners and the wealthy of Lagos. In the city of about 21 million people, landlords typically demand one to two years’ rent upfront due to the cost of land, the continent’s most expensive after Angola’s, according to Knight Frank LLP, a London-based property broker.

Lagos Oil

“The management of land resources is considered to be the oil of Lagos,” said Felix Morka, the executive director of the Social and Economic Rights Action Center, which provides legal assistance to evicted slum residents.

Lagos State Governor Babatunde Fashola, whose second term expires after elections next year, is attempting to create a workable city out of one that’s currently best known for crime, gridlocked traffic and daily power outages. Lagos is the smallest inland area, yet most densely packed of the West African nation’s 36 states. Seventy percent of Lagosians live in slums, according to Amnesty International. The state government says Lagos needs 4 million extra homes to close the gap.

Companies including Johannesburg-based FirstRand Ltd. (FSR), Africa’s second-largest bank, Resilient Property Income Fund (RES) and Actis LLP, a London-based private-equity firm, are funding construction of office blocks and shopping malls rather than rushing into residential mortgages, which are offered by some local lenders such as FBN Holdings Plc (FBNH) and Zenith Bank Plc.

Addressing Shortfall

The government last month started Nigeria Mortgage Refinance Co. to tackle the deficit. It will fund lenders to help encourage the building of 75,000 homes a year for low- to middle-income earners. The country doesn’t publish house-price data, according to Global Property Guide, and real estate transparency is the worst of 97 markets after Sudan, according to a 2012 index published by Jones Lang LaSalle Inc. (JLL)

The World Bank estimates there were 44,000 mortgages with an average size of 5 million naira ($31,472) each from 2004 to 2010. The ratio of home loans to gross domestic product of Africa’s second-largest economy was 0.6 percent at the end of 2011, even after the market surged fourfold from 2006. That compares with 31 percent in South Africa and a European average of 50 percent, according to the Washington-based lender.

While GDP per capita more than trebled to $1,725 in the decade through 2013, according to International Monetary Fund estimates, inequality has worsened with 68 percent of Nigerians living on less than $1.25 a day, compared with 63 percent in 2004, World Bank estimates show.

Buyers Beware

Nigeria’s oil wealth over the decades has come at the expense and mismanagement of other industries, resulting in a lack of formal jobs with crude revenues being siphoned off by corruption without benefiting the majority of the population. Property scams run rife with buildings often painted with warnings such as “This House is Not for Sale” to avoid conmen selling homes to unsuspecting buyers or “Beware of 419,” referring to the Nigerian fraud code. The nation ranks 144th among 177 countries in Transparency International’s Corruption Perceptions Index.

Even in Lagos’s most affluent districts of Victoria Island and Ikoyi, trash builds up on pavements and in open drainage gutters, while derelict and poorly maintained buildings decay in the tropical heat. Knight Frank estimates office rents in those areas can typically amount to about $1,000 per square meter each year, while residential rents can cost $10,000 a month.

‘Quickly Deteriorate’

“Buildings quickly deteriorate,” Peter Welborn, head of Africa at Knight Frank, said by phone. “After five, seven, maximum 10 years a building in Lagos will probably look like a building in Europe that’s 20 to 25 years old.”

Less than seven miles from Badia East, a local construction company is pumping sand out from the sea, reclaiming eroded coastline to turn the desolate stretch of land into a section that will resemble Nigeria’s equivalent of New York’s Fifth Avenue, said David Frame, the managing director of South Energyx Nigeria Ltd., which is leading the development.

The district, known as Eko Atlantic, probably will become home to 250,000 residents, while 150,000 will be commuting there every day, Frame said in a December interview. A 15-story commercial building is set to be the first completed development by March 2015 with the land reclamation and sea wall due in 2017.

Ocean View

Residential and office plots on the first phase of the marina overlooking the ocean will sell at $2,500 per square meter, while those away from the waterfront will go for $1,250 to $1,500, he said. Manhattan’s Fifth Avenue, home to retailers Saks Fifth Avenue and Tiffany & Co., had the world’s second-highest retail rent per square foot at $2,500, behind only Hong Kong’s Causeway Bay, according to a November report by global real estate services firm Cushman & Wakefield.

The location will have its own power, sewage, drainage and garbage disposal services, while developers have expressed interest in building a shopping mall and an international-standard hospital and school, Frame said. The appeal of reducing the often three- to four-hour gridlocked commute from Lagos’s mainland to the island’s business districts will be a big draw, he said.

The housing market can expand more than 10-fold in the short term, Finance Minister Ngozi Okonjo-Iweala said in a Bloomberg TV interview last month, while the creation of Nigeria Mortgage Refinance will help bring interest rates on mortgages to around 10 percent.

Ecosystem Broken

Interest charges on home loans run 18 percent to 25 percent, Michael Chu’di Ejekam, a director at London-based Actis, said in an interview in Lagos. The Central Bank of Nigeria has kept its benchmark rate at a record 12 percent to keep the naira stable and curb inflation before elections next year.

“The ecosystem for residential investment development still remains relatively broken,” said Ejekam. “The lack of affordable mortgages is a major challenge, a major deterrent, a major hindrance to the development of residential properties in this market.”

There’s little incentive or money for private developers to provide low-cost housing, Knight Frank’s Welborn said.

“The cost of the land, the cost of what an average individual expects to have in terms of square footage in a number of rooms, none of it makes commercial sense,” he said.

Plans by Lagos to develop 5,000 affordable homes is a “drop in the ocean” of what is needed and private investors are needed to help end the shortage, Bosun Jeje, the state’s housing commissioner, said in a Jan. 10 interview.

Poor Paying

The state is using a 284.4 million-naira loan to compensate 1,933 tenants and 319 landlords affected by the Badia East clean-up, Lagos State Attorney General Ade Ipaye said in an interview Jan. 14. Estimates by Amnesty International that the shanty homes of 9,000 people were destroyed are exaggerated, he said.

The government must ensure people erect legal structures so it can formalize housing and clamp down on crime to make the city more attractive, he said. “If we cannot relax because all of the parks are now market places or places where people have put up shanties, then we don’t have a city,” Ipaye said.

Lagos state’s efforts to clean up its act is of little help to Macully, who used to pay 15,000 naira a month for the two-bedroom shack she shared with her three children.

“They want to improve the city, but they don’t want to take the steps responsible governments are required to take to achieve that goal, steps that make sure the poor are not paying disproportionately,” the Social and Economic Rights Action Center’s Morka said.

Macully’s children are now scattered with various relatives as she seeks another means of surviving, willing to take what she can get from the government.

“Whatever they say they want to give us,” she said. “Let them give it to us, so we can cope.”

-By Chris Kay and Yinka Ibukun

West Ham Sells Stadium to Developer for 700 Homes and Shops

Source: Bloomberg / Luxury

West Ham United, the Premier League soccer club based in east London, agreed to sell its Boleyn Ground Football Stadium, also known as Upton Park, to developer Galliard Group as it prepares to move to the city’s Olympic Stadium.

Galliard plans to build a residential and retail village including as many as 700 homes on the site and will work on the project in consultation with the local government, the companies said in an e-mailed statement today. The purchase price wasn’t disclosed.

West Ham was chosen as the tenant of London’s Olympic Stadium in March 2013, ending three years of legal disputes over the 2012 games’ prime asset. The team will move to the stadium in 2016, according to the statement.

“We opted to reach an agreement with Galliard because they are a local London developer and employer with origins in east London,” West Ham Vice Chairman Karren Brady said in the statement. “We have been true to our word by securing the regeneration of two areas of east London through our move to the Olympic Stadium.”

West Ham will lease the 537 million-pound ($880 million) stadium, the centerpiece of the London 2012 Olympics and Paralympics, for 99 years. The deal gives the club year-round use of of the venue, the London Legacy Development Corporation, successor to the Olympic Park Committee, said in a statement in March 2013.

The village at Boleyn Ground will take about 30 months to build, and will be completed in late 2018, according to the statement.

London club Arsenal Holdings Plc converted its former Highbury stadium into 665 apartments. The residential development opened in September 2009.

-By Patrick Gower