CapitaMalls Asia’s Q4 profit rose 17%

The shopping mall unit of property developer CapitaLand posted a 17.1 per cent jump in fourth quarter earnings on the back of better performance by its Singapore properties.

CapitaMalls Asia’s net profit for the three months ended December increased to S$216.4 million from S$184.8 million in the corresponding quarter the year before.

Revenue, however, slipped 8.7 per cent to S$103.7 million, mainly due to lower contributions from China as fewer malls opened last year compared to 2012. But the fall was mitigated by income from the opening of Bedok and Westgate malls in December, the mall developer said.

“Our key markets of Singapore, China and Malaysia continued their good performances last year, recording increases in net property income and tenants’ sales and strong shopper traffic,” said CapitaMalls Asia’s Chief Executive Lim Beng Chee.

Revenue and net profit from the Singapore segment grew 3.4 per cent and 63 per cent, respectively, helped mainly by the opening of Bedok Mall and Westgate, as well as better performance by the company’s affiliated real estate investment trust CapitaMall Trust.

In its other markets, Queensbay Mall lifted contribution from Malaysia while lower rental commission and project management fees in China saw both revenue and profit from this segment decline.

However, prospects for these markets remain bright as the economies of Singapore, Malaysia and China are expected to grow further this year, said Chairman of CapitaMalls Asia Ng Kee Choe.

“Growth in our key markets in Asia is expected to be underpinned by resilient domestic demand, and this bodes well for the performances of our shopping malls,” said Mr Ng.

Mr Lim added that the company is aiming to open four new malls in this year, two in the Chinese cities of Guangzhou and Chengdu, and another two in India’s Hyderabad and Mangalore. Last year, CapitaMalls Asia also opened four malls.

“We will continue to be on the lookout for strategic acquisitions to grow our portfolio further, to expand our base for recurring earnings in the future,” said Mr Lim.

Another major project that the developer has embarked on is Project Jewel, a joint venture with Changi Airport Group to build a mixed-use development that houses retail and leisure offerings.

-By Lee Yen Nee

http://www.businesstimes.com.sg/premium/companies/others/capitamalls-asia-q4-profit-171-20140214

http://www.straitstimes.com/premium/money/story/capitamalls-asias-q4-profit-171-2164-million-20140214

http://www.todayonline.com/business/capitamalls-asias-q4-profit-rose-17

LionGold reports $11.5m Q3 loss

Fall into the red due largely to slump in other income to just $2m from $21.9m

Source: Business Times / Companies

LIONGOLD slipped into the red in the third quarter of its 2014 financial year, as a plunge in other income affected its bottom line.

For the three months ended Dec 31, the firm made a net loss of $11.5 million, compared with a net profit of $7 million a year earlier.

Revenue dipped 2.6 per cent to $34.2 million.

While its gold mining division recorded higher revenue of $14.9 million, up from $12.7 million a year earlier due to an increase in the grade and quantity of gold sold, this was partially offset by its office equipment manufacturing operations in China which saw revenue fall $3.1 million.

-By Andrea Soh

http://www.businesstimes.com.sg/premium/companies/others/liongold-reports-115m-q3-loss-20140214

Parkson posts 2.8% rise in Q2 net

Source: Business Times / Companies

DEPARTMENT store operator Parkson Retail Asia has recorded a 2.8 per cent rise in second-quarter net profit despite a fall in revenue and other income, as a decline in expenses helped to prop up the bottom line.

The company said yesterday that net profit for the three months ended Dec 31, 2013, rose to $13.6 million from $13.2 million a year ago.

In earnings per share terms, the company made 2 cents per share, compared with 1.95 cents a year ago.

Revenue fell 3.4 per cent to $117.4 million from $121.5 million as merchandise sales and gross sale proceeds recorded falls for the group, which operates its stores in Malaysia, Vietnam and Indonesia.

-By Felda Chay

http://www.businesstimes.com.sg/premium/companies/others/parkson-posts-28-rise-q2-net-20140214

Ocean Sky crash: a lesson for SGX

Source: Business Times / Companies

IF anyone wanted an example of a stockmarket incident that perfectly highlights the deficiencies in existing surveillance arrangements and one that is crying out for greater official scrutiny all rolled into one, they need look no further than the crash in Ocean Sky International (OSI) shares on Wednesday.

Retail brokers and small investors are up in arms at the handling of this affair, and although these parties are not averse to occasional exaggeration, a close and objective examination of the sequence of events indicates their concerns this time are justified.

Offshore marine company Ezion Holdings had announced its intention to take over civil engineering/ property management firm OSI last September at 10.8 cents per share - an announcement that sent OSI's shares shooting up from around 20 cents the month before the announcement to a high of 45 cents shortly after.

There were several updates since then, the most recent of which was on Jan 30 to the effect that the parties were in the process of finalising the conditions necessary for the takeover, including preparation of a circular to shareholders.

-By R Sivanithy Sivan

http://www.businesstimes.com.sg/premium/companies/others/ocean-sky-crash-lesson-sgx-20140214

Cooling measures worth tweaking

Source: Today Online / Business

A common topic of discussion during home visits over the Chinese New Year holidays was whether the Government should relax some of its property cooling measures — to date, seven rounds of them.

Some are in favour of such a move, but more feel the Government should not budge an inch. No surprise over who is on which side: The views are based heavily on self-interest.

The issue was brought into even sharper focus after Mr Kwek Leng Beng, Executive Chairman of Singapore’s second-largest listed property developer, City Developments, said that now was the right time for the Government to tweak the cooling measures.

Speaking on the sidelines of the Real Estate Developers’ Association of Singapore’s Spring Festival lunch last week, he said a measure that could be tweaked would be the Additional Buyer’s Stamp Duty (ABSD)on foreigners. The high-end segment has been languishing for a long time and sales have been pitifully slow.

More people are joining the debate as they sense that, if they do not speak up now, they will have to live with the consequences if the views of the opposing group were to prevail.

I feel a review leading to some adjustments to the cooling measures would be good, simply because no policy is perfect.

There will always be some unintended negative consequences on the genuine homebuyer or upgrader: The policymaker may say this is unavoidable as you cannot please everyone. True, the impact may be small or even insignificant if we are talking about only a single round of measures but, to date, there have been seven rounds since September 2009.

Surely the consequences for each round will accumulate and build up and, over time, will become significant. Judging from the slow progress made by policymakers in the major economies to normalise the low-interest-rate environment, we can expect our cooling measures to be around for some time, if not for a long time. Meanwhile, a segment of households will continue to be unfairly penalised.

If that is the case, a review of the cooling measures should be done and adjustments made to limit such effects. Just this week, the Monetary Authority of Singapore relaxed some of the conditions of the Total Debt Servicing Ratio (TDSR) framework for owner-occupied properties. It recognised that some owners might find themselves trapped in situations not of their doing as a result of the TDSR,which is not officially considered a cooling measure.

In the resale market, one thing is clear: The seven rounds of cooling measures have cumulatively hit the transaction volume very hard. The resale volume of homes has long been on the downward trend, but it has now been cut to the bare bones after the cooling measures first shifted buying activity to new homes and later dampened any kind of such activity.

Many years ago, when I first started my career in the real-estate industry, two out of three private-home-sale transactions were resales, with the other a new sale. Today, fewer than one in two home-sale transactions is a resale.

In the public housing market, the volume of Housing and Development Board resale flat transactions has been roughly halved from a few years ago. The number of agents serving the HDB resale market has fallen sharply.

The very low overall resale volume suggests that not much upgrading is taking place. Under normal market conditions, the majority of resale transactions result from upgrading, as households relocate to bigger or better homes as their incomes rise. Genuine upgraders with no investment motives on their minds tend to move from completed property to completed property.

Today, it appears that such activity has declined drastically. This is because the ABSD of 7 per cent for citizen households is now immediately payable upon the purchase of a second home. If you are an upgrader, you can claim a refund upon the selling of your first property.

At today’s high price levels, 7 per cent is a lot of cash to the genuine upgrader. It is no wonder that many are opting to stay put. This may lead to frustration if they cannot fulfil their housing aspirations or if they need more space. It adds pressure on an already stressful environment for the average household.

For every year of low resale volumes, you can expect a build-up of pent-up upgrading demand. How will the frustration be manifested? Let me hazard a guess: More road bullies and road rage? Blocking everyone for hours at the car park entrance?

You may laugh at this, but prolonged frustration adds to stress and some of us may reach the tipping point earlier than others.

Colin Tan is Director, Research & Consultancy at Suntec Real Estate

http://www.todayonline.com/business/property/cooling-measures-worth-tweaking?singlepage=true

Build dual-key flats for pioneer parents to live with their children

Source: Today Online / Voices

With reference to the letter “Give one-off housing allocation benefit to pioneers too” (Feb 13), I propose an alternative.

The Housing and Development Board should build dual-key flats consisting of a two-room section (one bedroom, one hall) and a four-room section (three bedrooms, one hall) for pioneer parents to live with their children.

Such families would have to sell their existing flats and/or private property within six months of receiving their keys. This would allow children to look after their pioneer parents who could, in turn, help to care for their grandchildren while maintaining privacy between both families.

Such a scheme could even be self-financing, from the sale of the buyers’ existing flats, with a likely surplus the parents could use for better living and their medical expenses.

-By Yap Chian Heng

http://www.todayonline.com/voices/build-dual-key-flats-pioneer-parents-live-their-children

Healthier for economy in long run to retain ABSD

Source: Today Online / Voices

The report “Right time to tweak property cooling measures: CDL Chief” (Feb 8) stated that Mr Kwek Leng Beng had called for a removal of the Additional Buyer’s Stamp Duty (ABSD) for locals and foreigners. This would be a mistake.

Both foreigners and locals continue to buy properties despite the ABSD. In 2012, more than 8,200 transactions generated S$760 million in total ABSD. Several projects launched in recent months have found buyers for over 80 per cent of their units, proving that properties priced appropriately can still be sold.

Understandably, developers may be unwilling to reduce prices for fear of reducing their profit margins. The former may be painful in the short run, but is healthier for the economy and the real estate industry in the long run.

Since 2009, skyrocketing property prices have led to widespread perception that property investing and development in Singapore is a quick way to get rich. Many new players, local and foreign, have entered the industry.

Local entrants have come from a range of businesses as diverse as electronics, stockbroking, media, jewellery, stationery, food and beverage, entertainment and wellness. Foreign developers who have entered the market are among the most aggressive land bidders here.

While several companies have abandoned their core businesses to become developers, many individuals have switched careers to become property agents.

There are unseen economic costs when a portion of our limited resources is diverted from other productive industries to real estate.

As property prices have risen beyond the reach of many Singaporeans, a correction would be received warmly, in particular, by younger Singaporeans hoping to buy their first property.

As prices fall, developers’ profit margins would normalise to more sustainable levels. Fewer firms, local and foreign, would join the industry. Some developers, disenchanted by slower growth and thinner margins, may call it quits. All this would restore market sanity.

In recent years, I have heard various myths about property investing in Singapore. One of them is that buying property here is “pao chiak” (“a sure win” in Hokkien) because the Government has a vested interest to ensure that prices never fall.

Removing the property curbs prematurely would be a signal to the market that this myth is actually true. Prices would resume climbing rapidly, and the market could by then be resistant to further cooling measures.

-By Alex Lee Sao Wei

http://www.todayonline.com/voices/healthier-economy-long-run-retain-absd

More taxation certainty, please

Source: Business Times / Editorial & Opinion

SINGAPORE has a relatively straightforward and competitive tax regime. But can more be done to sharpen this edge?

Tax-friendly policies have played a crucial role in luring investors and anchoring businesses in Singapore. Tax is levied on income sourced in Singapore, regardless of whether the company is a tax resident or incorporated here. Foreign-sourced income is generally subject to tax only if it is received or deemed received in Singapore, and in certain circumstances may even qualify for tax exemption. Singapore also does not impose capital gains tax.

At the current 17 per cent, Singapore's corporate tax rate is one of the lowest in the world, having been steadily reduced from 26 per cent at the start of the millennium. Some companies may even enjoy considerably lower tax rates of 5-10 per cent, or may not even have to pay tax at all, thanks to generous tax incentive schemes.

Singapore's business-friendly tax regime is no accident - it is the result of continual fine-tuning, tweaking and adjustments by the authorities. Over the years, maintaining or even increasing Singapore's competitiveness has been a common thread in the Budget Statements.

-By Russell Aubrey and Aw Hwee Leng

http://www.businesstimes.com.sg/premium/editorial-opinion/opinion/more-taxation-certainty-please-20140214

Business boom for Japan's 'love hotels'

Source: Business Times / Property

From rooms kitted out like medical clinics where couples can play "doctors and nurses" to grottos where it is permanently Christmas, Japan's "love hotels" cater to almost every taste, offering a few hours of reasonably priced privacy in a crowded country.

And with the kind of occupancy rates that most hotels can only dream of, even during economic hard times, they are an almost recession-proof business, and a sector that is sure to see a bump over Valentine's Day today.

One weekday lunchtime at Two-Way, one of many "love hotels" in the lively Tokyo district of Shibuya, only two of the 34 rooms were vacant.

"At this time of day, it will be mostly couples having affairs," said Masakatsu Tsunoda, who has been in the business for 15 years and has owned the place for five. "In the evening, it will be mostly younger people."

-From Tokyo, Japan

http://www.businesstimes.com.sg/specials/property/business-boom-japans-love-hotels-20140214

Shortage seen boosting UK house price gains

Source: Business Times / Property

UK house price growth eased in January, according to an index by the Royal Institution of Chartered Surveyors (RICS), which said in a statement that a shortage of properties for sale will continue to support values.

A gauge declined to 53 from 56 the previous month, RICS said in a statement in London yesterday, citing a survey of property surveyors. The median estimate in a Bloomberg News survey of 20 economists was for an increase to 58. A measure of the number of properties for sale fell to the lowest since July 2012.

An improvement in credit conditions along with the lack of homes for sale has underpinned prices over the past year, raising concerns about the sustainability of the market. Bank of England (BOE) chief economist Spencer Dale said on BBC radio yesterday while he doesn't think the UK is heading towards a housing bubble, officials will watch developments "very carefully".

"With more people now in a position to buy a home than at any point over the past few years, there are simply not enough properties to satisfy demand," said Peter Bolton King, RICS global residential director, in the statement. "The upshot of this are increasing prices in many areas, and this looks set to continue for the foreseeable future."

-From London, UK

http://www.businesstimes.com.sg/specials/property/shortage-seen-boosting-uk-house-price-gains-20140214

Top Australian developer to double debt

Meriton wants to harness record low interest rates for land acquisitions

Source: Business Times / Property

Meriton Pty, Australia's biggest apartment developer, plans to double its debt this year from about A$300 million (S$340.8 million) to buy land amid record low interest rates and soaring demand for apartments.

"I've now a lot more empty land available, and the land goes up; it's a very good investment," Harry Triguboff, the billionaire founder and managing director of closely held Meriton, said in an interview in Sydney. "Land values are going up a lot in Sydney, but it's feasible to build because prices are going up too."

The billionaire forecasts that apartment prices will rise as much as 6 per cent this year in Australia's most populous city. They gained 11.5 per cent in December from a year earlier, the fastest annual growth since 2002, according to the RP Data-Rismark Home Value Index. Meriton, which had been debt free since 2000, took out a loan in early 2013 to fund new developments as it held on to more of the apartments it built to capitalise on rental demand.

Mr Triguboff, who turns 81 next month, is Australia's fourth-richest individual with a net worth of US$5.3 billion, according to the Bloomberg Billionaires Index.

-From Sydney, Australia

http://www.businesstimes.com.sg/specials/property/top-australian-developer-double-debt-20140214

SJM to spend HK$30b on Macau casino resort due to higher costs

Source: Business Times / Property

SJM Holdings Ltd, Asia's biggest casino operator, will spend HK$30 billion (S$4.9 billion) to build its first resort in Macau's Cotai area, HK$5 billion more than planned because of higher construction and labour costs.

SJM broke ground yesterday on Lisboa Palace, which will have as many as 700 gambling tables and 1,200 slot machines, according to a statement. Scheduled to open in 2017, it will have three hotels with more than 2,500 rooms, including a luxury hotel in partnership with Italian fashion house Gianni Versace SpA.

The company founded by Macau tycoon Stanley Ho is expanding in Cotai, Asia's version of the Las Vegas Strip, to catch up with companies including Sands China Ltd and Galaxy Entertainment Group Ltd that have resorts there. SJM, which runs 20 of Macau's 35 casinos, is the last of the Chinese city's six operators to get government approval to build on the isthmus of reclaimed land that links the islands of Coloane and Taipa.

"We made the HK$25 billion estimate about a year ago," Ambrose So, chief executive officer of SJM Holdings, said at the press conference in Macau. "Now that the costs of construction materials and labour have risen, we believe a HK$30 billion price tag is more realistic."

-From Hong Kong, China

http://www.businesstimes.com.sg/specials/property/sjm-spend-hk30b-macau-casino-resort-due-higher-costs-20140214

China property tycoon now eyes Norway

Source: Business Times / Property

Chinese property tycoon Huang Nubo, whose planned US$200 million resort and mountain park in Iceland has been blocked because of foreign investment laws, is turning his attention to Norway.

Mr Huang, who is chairman of Beijing Zhongkun Investment Group Co, said the company is in discussions to buy a hotel in Oslo and is looking for investments in other Norwegian cities as its planned project in Iceland hasn't made any progress. The company will invest as much as US$100 million in resorts and other tourism-related property in Norway, he announced.

"The tourism industry in Norway is probably more mature" than in Iceland, Mr Huang said in a phone interview from Beijing. "Our commitment in Nordic countries is not changed. We plan to enter one or two countries first and then expand to the rest of Northern Europe, while we don't mind waiting for Iceland."

Mr Huang first proposed the project in Iceland in 2011 as a launchpad for investments elsewhere in the Nordic region. The new Icelandic government, which was elected in April 2013, is reviewing investment laws that had blocked his previous bids. Mr Huang's company, one of the first Chinese developers investing abroad, said in 2011 it planned to develop the resort and mountain park on 300 square kilometres of land.

-From Shanghai, China

http://www.businesstimes.com.sg/specials/property/china-property-tycoon-now-eyes-norway-20140214

Investing in Brazilian social housing

Brazilian real estate firm EcoHouse has offered for sale to Singaporeans properties in Brazilian social housing projects. EcoHouse answers BT's questions about these projects

Source: Business Times / Editorial & Opinion

QUESTION: What is social housing in Brazil?

Answer: It is the Brazilian equivalent of Singapore's HDB (Housing and Development Board) housing. Basically, it is low-cost housing with some government support for buyers. The Brazilian government underwrites mortgages for lower-income families through the national banks. Mortgages are relatively new in Brazil. The banks will lend on very beneficial terms as long as the developer and its product satisfies certain criteria.

Q: Why is it claimed to be such a good investment?

A: Simply, demand significantly outweighs supply. There is a fast-emerging middle class in Brazil.

http://www.businesstimes.com.sg/premium/editorial-opinion/opinion/investing-brazilian-social-housing-20140214

M'sia cuts fiscal deficit to 3.9% of GDP

Source: Business Times / Malaysia

Malaysia trimmed its fiscal deficit to 3.9 per cent of gross domestic product last year, after cutting government spending and state subsidies to avert a credit-rating downgrade.

Prime Minister Najib Razak narrowed the shortfall from 4.5 per cent of GDP in 2012, beating the government's 4 per cent deficit target for last year. The central bank released the updated budget deficit estimate in a quarterly bulletin, citing preliminary government finance data. Malaysia wants to further reduce the budget gap to 3.5 per cent this year and to 3 per cent next year, before achieving a balanced budget by 2020.

Fitch Ratings lowered its outlook on Malaysia to negative from stable in July, citing public finances as the country's "key rating weakness". Mr Najib cut subsidies on essential items including fuel and sugar, trimmed ministers' entertainment budgets and froze proposals to renovate government offices.

"Achieving the government's goal of a 3 per cent deficit in 2015 still looks challenging without additional consolidation measures," Andrew Colquhoun, Fitch's head of Asia-Pacific sovereigns, said yesterday.

-From Kualu Lumpur, Malaysia

http://www.businesstimes.com.sg/premium/malaysia/msia-cuts-fiscal-deficit-39-gdp-20140214

Hong Kong-Singapore Builder Slump to Deepen: Chart of the Day

Source: Bloomberg / News

Property developers in Hong Kong and Singapore will extend the biggest declines among global peers as government curbs deter buyers in Asia’s most expensive housing markets, according to AMP Capital Investors.

The CHART OF THE DAY tracks Hong Kong’s Hang Seng Property Index, Singapore’s FTSE Strait Times Real Estate Index and the Standard & Poor’s 500 Real Estate Index. The two Asian gauges sank to their lowest levels in at least 17 months last week. Home prices have dropped 4.3 percent from their high in Hong Kong, according to Centaline Property Agency Ltd.’s index. They fell 0.9 percent in Singapore last quarter, official data shows.

The two cities have imposed extra taxes and raised minimum down payments to restrain a surge in home prices after mortgage rates followed those in the U.S and Europe to near-record lows. Neither city sets their own interest rates because of managed currencies and open economies. Developer shares from CapitaLand Ltd. (CAPL) to Sun Hung Kai Properties Ltd. (16) have fallen on concern slumping housing sales will spur price cuts and dent earnings.

“Authorities in both cities seemed to be quite determined to fight a housing bubble,” said Nader Naeimi, the Sydney-based head of dynamic asset allocation at AMP Capital, which manages $131 billion. “I wouldn’t buy developers at this stage as governments’ housing policies are working against them.” Naeimi predicted further stock declines of as much as 15 percent and said he prefers U.S. and German real estate companies.

Home builders in Hong Kong sold the fewest residential units in almost two decades in 2013, and sales in Singapore dropped to a four-year low. U.S. new-home purchases jumped 16 percent in the period, the most in five years, while the S&P/Case-Shiller index of property prices in 20 American cities climbed 14 percent in November from a year earlier.

Singapore and Hong Kong developers account for eight of the 10 worst performers in the 101-company MSCI World Real Estate Index during the past 12 months. CapitaLand, Southeast Asia’s largest builder, has tumbled 25 percent while Sun Hung Kai, Hong Kong’s second biggest, lost 22 percent. Property prices in Hong Kong may drop as much as 20 percent this year, S&P said last month, while Barclays Plc predicted Singapore prices will fall as much as 15 percent.

The Hang Seng Property Index declined 0.6 percent at 2:41 p.m. in the city. The FTSE Strait Times Real Estate Index added 0.3 percent.

-By Richard Frost and Jonathan Burgos

http://www.bloomberg.com/news/2014-02-12/hong-kong-singapore-builder-slump-to-deepen-chart-of-the-day.html

Blackstone’s Gray Sees Best Property Opportunities Abroad

Source: Bloomberg / Personal Finance

Jonathan Gray, the global head of real estate at Blackstone Group LP (BX), said the firm plans to spend more money on properties overseas, where bargains are more plentiful than in the U.S.

Developing countries “are beginning to look much more interesting” after the fall in Asian and South American markets amid fears of slowing economies and rising interest rates, Gray said yesterday at the Harbor Investment Conference in New York. In Europe, sluggish growth and a restructuring of the banking system are generating good investing opportunities, he said.

Gray, 44, oversees almost $80 billion in property investments for New York-based Blackstone, the world’s largest manager of alternative assets including private equity and hedge funds. The flight of capital from China, India, Brazil and other emerging markets has created a void that the firm is angling to fill, he said.

“Most people have said emerging markets have become too scary,” he said, referring to concerns about governments, a residential bubble in China or corruption in India.

The skittishness benefits investors in two ways, Gray said. The drop in capital inflows means “your capital gets treated better. You can buy things at a more favorable price because people need your capital more,” he said. In addition, it has triggered a falloff in construction in India and China that will curtail supply.

Construction Cranes

“The things you worry about most in our business is too much capital and too many cranes,” he said, referring to construction. “In emerging markets, it tends to be cranes that are the big problem.”

Construction in Bangalore and Beijing has tumbled more than 50 percent from past levels, he said.

While Europe’s economic crisis has eased, the shrinkage of loans and other assets that regulators are pressing banks to undertake will “be taking some oxygen” out of the region’s economies. Blackstone is forecasting “very slow growth,” Gray said.

For real estate investors, Gray expects forced sales by European banks to continue for several more years, fostering opportunity. Blackstone is seeking distressed warehouses, hotels and office buildings throughout the region, he said.

“When people are forced to sell, the pricing tends to be better,” he said. “In Europe, it’s not a growth story. It’s a distress story.”

In the U.S., an improving economy and rising property values have boosted the value of Blackstone’s existing real estate investments while making low-priced deals harder to find, Gray said.

U.S. Hotels

The U.S. economy is “not a rocket ship, but we are seeing good signs in the hotel business, in particular,” said Gray, who led Blackstone’s $26.5 billion leveraged buyout of Hilton Worldwide Holdings Inc. (HLT) in 2007. Hilton, which went public in December, is up 9.5 percent since the initial public offering.

Gray, whose group amassed 43,000 foreclosed houses in Atlanta, Chicago, Las Vegas and other cities, said there is “great strength” in the U.S. housing market.

He predicted that residential construction, which still lags behind pre-crisis levels, will continue to rise for the next two years.

“Right now, around the world, I’d say there’s the most interest in investing in real estate in the U.S.,” Gray said. “That makes it a little more challenging than other places today.”

-By David Carey

http://www.bloomberg.com/news/2014-02-13/blackstone-s-gray-sees-best-property-opportunities-abroad.html

Manhattan Trophy Home Sellers Test Buyer Limits on Price

Source: Bloomberg / Luxury

Broker Alon Chadad’s client purchased a $14.3 million apartment on Manhattan’s Central Park South, then spent nine months seeking approval for plans to overhaul it. In January, the buyer changed course, listing the unit for sale at more than double what he paid just a year ago.

“He filed all the documents for renovation and he was ready to go and he decided, ‘You know what? I see opportunity in the market,’” said Chadad, co-founder of Blu Realty Group and the agent for the 6,160-square-foot (572-square-meter) condominium, which has an asking price of $29.5 million.

Luxury-apartment owners in New York are listing a record amount of properties for sale, testing the upper limits of what buyers are willing to pay even as median prices remain off their peak set almost six years ago. Sellers have taken notice of a handful of record-shattering deals, triggered by an $88 million purchase at 15 Central Park West, and demand for trophy homes by international investors seeking havens for their cash.

There were 145 Manhattan residences listed for more than $20 million last year, the most in records dating to 2005, according to data from StreetEasy.com, a real estate website owned by Zillow Inc. (Z) The average asking price per square foot of those homes was $4,977, 18 percent more than the year before and also the highest on record. Two resellers are asking at least $100 million for their properties.

Below Peak

Such sky-high valuations may not fully reflect the market. While the number of apartment sales for more than $10 million -- about the top 1 percent -- more than doubled last year, the median price of those transactions was $13 million, or 7.9 percent less than such properties sold for in 2008, the year Manhattan residential prices peaked, data from appraiser Miller Samuel Inc. show.

“There’s definitely an argument to be made that some apartments are asking prices that make absolutely no sense whatsoever,” said Leonard Steinberg, a luxury broker with Douglas Elliman Real Estate in New York. “Everybody wants $100 million for their apartment these days. The good news is that $100 million is, what -- 60 million pounds? Only 73 million Euros? So on world standards, it’s still a pretty good buy.”

The $88 million sale, by former Citigroup Inc. Chairman Sanford Weill two years ago, was the “starting gun” for the current frenzy, according to Jonathan Miller, president of Miller Samuel. The 6,744-square-foot, four-bedroom condo -- featuring a wraparound terrace, two wood-burning fireplaces and a library -- was purchased for the daughter of Russian billionaire Dmitry Rybolovlev. The transaction is still Manhattan’s most expensive residential deal and it’s become a symbol of what wealthy buyers are willing to spend for a unique property, Miller said.

One57 Contracts

Since then, two contracts have been signed at more than $90 million each for condos at Extell Development Co.’s newly built One57 tower in Midtown. Bill Ackman, founder of New York hedge-fund firm Pershing Square Capital Management LP, is part of an investor group that agreed to purchase one of the apartments, a duplex spanning the 75th and 76th floors of the 90-story skyscraper.

A penthouse at nearby 432 Park Ave. found a buyer who agreed to pay $95 million. Buyers in the tower, set to be Manhattan’s tallest residential building when finished, have come from around the world, including South America, the Middle East, China and Russia, according to developers Harry Macklowe and CIM Group.

Walker Tower

A 5,955-square-foot, full-floor penthouse atop the Walker Tower in Chelsea sold last month for $50.9 million, a record for an apartment south of 34th Street. The unit went under contract in October, a month after it was listed with a $55 million asking price. The five-bedroom condo, on the 24th floor of a redeveloped former Verizon Communications Inc. building, has three fireplaces, 479 square feet of outdoor space and “360-degree unobstructed views,” according to the listing.

Such high-profile deals are anomalies, according to Miller.

“It’s escalated into this trophy phenomenon which was really just a handful of sales, but it’s these half-dozen sales that everybody points out,” he said. “It gives the impression that it’s commonplace. It washes over everything else, like a magic blanket that we lay over the market and everyone feels better.”

$100 Million

The first $100 million listing emerged in July 2012, when Steven Klar, a Long Island developer, decided to sell his triplex at Midtown’s CitySpire tower, listed as the highest terraced residence in the U.S. It’s still on the market at that price and is Manhattan’s most expensive resale listing after a gut-renovated, 19-room East Side townhouse whose owners are seeking $114 million. The townhouse was bought in 2005 for $20 million, according to StreetEasy.

Other resellers trying their luck in the market include designer Tommy Hilfiger, who in October listed his custom apartment at the Plaza for $80 million, a price that would shatter the previous record of $48 million paid for a unit at the building on Central Park South.

“Not everyone will dare to ask those kinds of prices” unless the properties are “very, very special,” said Charlie Attias, a Corcoran Group broker who has arranged deals in buildings such as the Plaza and represented shoppers from countries including France, Switzerland and Luxembourg. “Buyers are not stupid, they’re educated about the market,” he said.

Sellers of Manhattan homes priced at $10 million or more in 2013 had to whittle about 15 percent from their original asking prices to strike a deal, up from a 10 percent cut in 2008, Miller Samuel data show. Properties in that range spent an average of 347 days on the market, the most since 2007.

Price Cuts

For apartments priced at $20 million or more, the average price cut was 12 percent last year, compared with 15 percent in 2008, according to StreetEasy.

Steven A. Cohen, the billionaire founder of SAC Capital Advisors LP, is still seeking a buyer for his 9,000-square-foot penthouse at One Beacon Court, on the market since April. He initially sought $115 million for the duplex -- the only one in the 53-story tower, according to StreetEasy -- for which he paid $12.9 million in 2005.

In December, he knocked down the price to $98 million, or $10,888 a square foot, for the four-bedroom property, described in the listing as “a unique NYC treasure” with interiors designed by Charles Gwathmey. Two walls of windows in its double-height living room overlook Midtown and Central Park.

Cohen’s brokers, Deborah Grubman and David Dubin of Corcoran Group, declined to comment.

Pierre Hotel

A five-bedroom penthouse spanning the 41st through 43rd floors at the Pierre Hotel on Fifth Avenue is on the market for $95 million, down from April’s asking price of $125 million, according to StreetEasy. The triplex co-op has four adjoining terraces, five fireplaces and includes the hotel’s original ballroom.

To justify a stratospheric price, “you just best have a product -- an apartment, a house, a co-op -- that truly has unique features so that buyers can fall in love with it,” said Paula Del Nunzio, a luxury broker with Brown Harris Stevens, whose listings include a five-bedroom condo at 15 Central Park West.

The seller of that property, Leroy Schecter, chairman of metalworks firm Marino/Ware Industries Inc., initially sought $95 million. Eighteen months and at least two price cuts later, he changed brokers and now is asking $65 million.

Unobstructed Views

The 6,000-square-foot-unit, a combination of two apartments on the 35th floor in the westernmost “tower” portion of the dual-building limestone complex, has unobstructed views of Central Park and the Hudson River, Del Nunzio said.

It’s the largest available home at 15 Central Park West, where original buyers in 2007 and 2008 saw the value of their investments double on average in 2012, the year Weill and his wife sold their condo at twice their $43.7 million purchase price.

“This building is a micro-market all unto itself,” Del Nunzio said. “Other buildings are trying to compete, but this building is proven gold.”

Schecter’s asking price, at $10,833 per square foot, is less than the record-high $13,049 a square foot that Weill got for his apartment on a lower floor, according to Del Nunzio.

New York is No. 1 on a list of the world’s “cities that matter” to high-net-worth individuals, according to the 2013 “Wealth Report” by Knight Frank LLP, a London-based property consulting firm. The city’s real estate has come “to epitomize the so-called safe-haven market, with overseas buyers looking to escape currency, economic, political and security crises by putting equity into tangible assets.”

United Nations

Builders seeking to capitalize on that demand include Arthur and William Lie Zeckendorf, who are completing a 43-story condo tower across from the United Nations Secretariat headquarters in Midtown. Their firm, Zeckendorf Development Co., started marketing the units in October.

Prices range from $2.2 million for a 1,147-square foot one-bedroom unit to $100 million for a 15,597-square-foot triplex penthouse that includes an infinity pool, 14 bedrooms and a 10,000-pound stainless-steel staircase connecting each floor.

The Zeckendorfs, who also developed 15 Central Park West, decided to combine two units to create the penthouse after they gauged strong demand for larger properties.

‘Right Thing’

“With buyers from all over the world increasingly present in the New York market, many of whom live in residences that dwarf even the most luxurious Manhattan apartments, having the option to create a 15,000-square-foot apartment seemed like the right thing to do,” Arthur Zeckendorf said in an e-mail. “And the price just happened to be $100 million.”

The penthouse is also available as a duplex for $70 million.

Chadad’s client, who had planned to custom-build a pied-a-terre at his 5-bedroom apartment in the Trump Parc tower, saw there were few large units on the market that offered direct Central Park views, and none were listed for less than $30 million.

“If you look at everything that’s available, we’re still way below the average,” Chadad said of his $29.5 million listing, which works out to about $4,788 a square foot.

Klar set the $100 million price tag for his CitySpire penthouse based on what he said is the property’s most unique feature: wraparound balconies on all three levels, which span the tower’s 73rd to 75th floors.

“It’s the highest-terraced apartment in North America,” he said.

Bachelor Pad

The 8,000-square-foot apartment, which Klar bought as a bachelor pad in 1994 for about $4.5 million, has been on the market for about 18 months. The developer, now married and with a 6-year-old son and a primary home on Long Island, decided to sell after his wife suggested that such high terraces aren’t appropriate for a residence where small children play, Klar said. He plans to find another place in Manhattan without a balcony.

For now, he’s in no rush to find a buyer and is enjoying panoramic views that include ice skaters in Central Park. If he gets his asking price of $100 million, that would work out to about $12,500 a square foot, he said.

“Somebody’s going to break the $100 million mark,” Klar said. “I’m not sure it’s going to be me, but New York is primed and ready for the wealthy to put their dollars where it makes the most sense, where it’s safest, where it’s exciting, where it’s worth the money.”

-By Oshrat Carmiel

http://www.bloomberg.com/news/2014-02-13/starwood-hotels-quarterly-profit-declines-on-bal-harbour-revenue.html

Immofinanz to Buy $1.2 Billion Portfolio, Spin Off Unit

Source: Bloomberg / Luxury

Immofinanz AG (IIA) agreed to buy 18,000 German homes from a Deutsche Bank AG fund and Prelios SpA (PRS), allowing the Austrian developer to proceed with a plan to spin off its residential property unit.

Immofinanz will pay about 892 million euros ($1.2 billion) for the portfolio, the company said in a statement late yesterday. The homes will become part of Immofinanz’s Buwog unit, increasing its holdings to about 54,000 units. Buwog will be listed as a separate company in Frankfurt, Vienna and Warsaw, pending approval at a March 14 extraordinary shareholder meeting, Immofinanz said.

“This transaction paves the way for the spinoff of Buwog and the resulting separation of the residential properties in Germany and Austria from the commercial portfolio,” Chief Executive Officer Eduard Zehetner said in the statement. “Immofinanz still bundles these two different asset classes that cater to different types of investors.”

Immofinanz, which is trying to turn into a commercial-property landlord, halted plans to sell Buwog in an initial public offering last year after similar deals by Deutsche Annington Immobilien SE and Gagfah SA faltered. Immofinanz expects the listing to increase the valuation of the two companies.

Dividend

Immofinanz investors will receive one Buwog share for every 20 Immofinanz shares they own, according to accompany presentation. Vienna-based Immofinanz will retain a 49 percent stake in Buwog in the medium term, it said.

Buwog may buy more German homes after it becomes independent, Daniel Riedl, the company’s chief executive officer, said at a press conference in Vienna today. It plans to add about 3,000 to 4,000 units a year and may consider bigger opportunities, Riedl said.

Immofinanz owners won’t receive a cash dividend for this year, Zehetner said at the briefing.

“For the current fiscal year, Buwog is the dividend,” Zehetner said. “We are investing several hundred million euros in the acquisition of the DGAG portfolio. We are providing this money to Buwog, and we can spend this money only once.”

Immofinanz shares rose as much as 3.1 percent in Vienna and traded at 3.54 euros, up 0.5 percent, at 12:43 p.m.

-By Alexander Weber

http://www.bloomberg.com/news/2014-02-13/immofinanz-to-spin-off-unit-after-buying-1-2-billion-portfolio.html

Retail Sales in U.S. Unexpectedly Fell 0.4% in January

Source: Bloomberg / Personal Finance

Sales (RSTAMOM) at U.S. retailers declined in January by the most since June 2012 amid bad weather and uneven progress in the labor market, signaling the economy was off to a slow start in 2014.

The 0.4 percent decrease followed a revised 0.1 percent drop in December that was previously reported as an increase, according to Commerce Department figures released today in Washington. The median forecast in a Bloomberg survey of economists called for no change. Jobless claims unexpectedly climbed last week, other data showed.

Slower employment and wage growth the last two months, along with colder-than-normal temperatures, caused American shoppers to pull back after the strongest consumer spending pace in three years in the final quarter of 2013. Economists at Goldman Sachs Group Inc., Credit Suisse and Morgan Stanley were among those reducing tracking estimates for first-quarter growth.

“It’s not looking good for consumer spending,” said Guy Berger, a U.S. economist at RBS Securities Inc. in Stamford, Connecticut, and the top sales forecaster over the last two years, according to data compiled by Bloomberg. “Even if you have some modest improvement in the pace of employment growth, that’s not enough to generate a huge improvement in income.”

More Americans than forecast filed applications for unemployment benefits last week, Labor Department figures showed today. Jobless claims increased by 8,000 to 339,000 in the week ended Feb. 8. The median projection in a Bloomberg survey of economists called for 330,000 claims.

Extended Benefits

The expiration of emergency jobless benefits probably also played a role in holding back sales. Federal benefits for the long-term unemployed expired on Dec. 28, shutting off aid to more than a million people. Legislation to extend the program for three months, at a cost of $6.4 billion, is stalled in the Senate. More than 3.6 million people have been without work for 27 weeks or longer, according to the Labor Department.

After the drop in retail sales, Goldman Sachs cut its tracking estimate for first-quarter growth to 1.9 percent from 2.3 percent, Credit Suisse lowered to 1.6 percent from 2.6 percent, and Morgan Stanley reduced its projection to 0.9 percent from 1.9 percent.

Stocks rose as the decline in retail sales was overshadowed by better-than-forecast earnings and a $45.2 billion takeover of Time Warner Cable Inc. The Standard & Poor’s 500 Index increased 0.6 percent to 1,829.83 at the close in New York.

A rebound in stock prices last week helped brighten consumer spirits, another report showed. The Bloomberg Consumer Comfort Index increased to minus 30.7 in the week ended Feb. 9 from minus 33.1 the prior period. A measure of the state of the economy jumped to the highest level since September.

Estimates in the Bloomberg survey for retail sales ranged from a decline of 0.5 percent to a 0.4 percent gain after an initially reported 0.2 percent increase in December.

Chilly January

January was the coldest in three years, with snowfall almost four times above normal, according to weather-data provider Planalytics Inc. That followed the coldest December since 2009 with snowfall 21 percent above normal.

The drop in sales was broad-based, with nine of 13 major categories showing declines last month, led by auto dealers, sporting goods stores and apparel outlets, today’s retail report showed.

“We’re off to a disappointing start to the year,” said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, who projected a 0.3 percent decline in sales. “The weather clearly had some impact.” At the same time, “purchasing power is constrained. Consumers really aren’t borrowing, and wage growth is sluggish.”

Auto Sales

Sales slumped 2.1 percent at automobile dealers, the most since October 2012, after a 1.8 percent decrease the prior month.

Automakers said adverse weather depressed vehicle deliveries, which have been a bright spot for consumer spending in this expansion. Cars and light trucks sold at a 15.2 million annualized pace in January, slowing from a 15.3 million rate in December that had helped cap the best year for the industry since 2007, according to Ward’s Automotive Group.

Sales slid 12 percent for General Motors Co. and 7.5 percent for Ford Motor Co., the two largest U.S. automakers, while Toyota Motor Corp. and Honda Motor Co. also reported lower U.S. sales than analysts estimated.

“January got off to a pretty slow start with really inclement weather in the heartland of the country, all the way down into Texas,” John Felice, U.S. sales chief for Dearborn, Michigan-based Ford, said on a Feb. 3 conference call. “As things improved around the country mid-month, we saw a bounce-back in demand and sales, which was encouraging. Then, sadly, the last week of the month we saw again another arctic blast.”

Department Stores

Spending decreased 0.9 percent at clothing chains and 1.5 percent at department stores. Receipts fell 0.6 percent at furniture outlets and 1.4 percent at retailers of sporting goods, books and music.

Retailers showing an improvement in January sales included electronics stores, building materials outlets, gasoline stations and grocery chains.

Purchases excluding merchants such as food services, car dealers, hardware stores and service stations -- which are the figures used to calculate gross domestic product -- fell 0.3 percent after a revised 0.3 percent increase in the previous month that was smaller than initially reported.

Today’s report shows spending is cooling after a pickup in the final three months of 2013 as the labor market struggles to improve. Household purchases grew 3.3 percent in the fourth quarter, the biggest gain since the end of 2010, a Commerce Department data showed on Jan. 30. The economy expanded at a 3.2 percent annual rate.

Employment Growth

Payrolls increased 113,000 in January after climbing 75,000 a month earlier, the weakest back-to-back gain in three years, Labor Department figures showed Feb. 7. Average hourly earnings rose 1.9 percent in the year ended last month, matching December as the weakest since July 2013.

Among merchants reporting weaker sales is McDonald’s Corp. The world’s largest restaurant chain said sales at its established U.S. stores fell for the third straight month in January as severe weather and waning consumer confidence kept diners at home. The Oak Brook, Illinois-based company, which has recently struggled to attract Americans amid fierce restaurant competition, cited “broad-based challenges including severe winter weather” in the U.S., according to its Feb. 10 statement.

-By Shobhana Chandra

http://www.bloomberg.com/news/2014-02-13/retail-sales-in-u-s-decreased-0-4-in-january-commerce-says.html

http://www.todayonline.com/business/cold-weather-depresses-us-retail-sales-january