Singapore Real Estate New launches set to lift Feb-March home sales figures Developers hope post-CNY will see more movements of units than January Source: Business Times / Top Stories New property launches in the coming weeks are expected to give a fillip to developers' private housing sales this month and next, following a lacklustre January which saw 565 units being sold in the primary market. Although the January figure is more than double the 259 private homes developers moved in December, it is just 28 per cent of the 2,028 units they sold in January last year, despite the seventh round of property cooling measures announced in that month. In fact, last month's primary-market sales volume was the lowest recorded for the month of January since the 108 units in January 2009 during the market nadir after Lehman's collapse. Market watchers note that last month, developers chose to hold back launches amid the lull leading up to Chinese New Year festivities this year, on the back of generally weak sentiment ever since the Total Debt Servicing Ratio (TDSR) was introduced in late-June 2013. Urban Redevelopment Authority figures show that last month, developers launched 549 private homes, more than four times December's 118 units but a sliver of the 1,814 units released in January 2013. The top-selling project last month was The Hillford in Jalan Jurong Kechil in the Upper Bukit Timah area. Marketed as a retirement resort, the 281-unit development sold out because of its attractive pricing, made possible by a shorter-than-usual site tenure of 60 years. The median price achieved for the project was $1,105 psf, according to URA's statistics yesterday. The Hillford helped to push up the percentage of developer sales in the up to $1,500 psf band to 85.1 per cent - compared with 66.8 per cent in December, shows Colliers' analysis. Wheelock Properties (Singapore) achieved a $1,343 psf median price for the 58 units it sold in January at The Panorama in Ang Mo Kio Avenue 2. The 120 units the developer released in the 698-unit, 99-year leasehold condo are said to be on lower floors. As for this month, property consultants' forecasts of developer sales range from 600 to over 1,000 units. Already, UOL Group is said to have moved around 210 units at Riverbank@Fernvale, where sales began on Friday. The average price is said to be slightly above $1,000 psf. Next door, Frasers Centrepoint, Far East Orchard and Sekisui House are expected to begin sales this Friday at Rivertrees Residences. The average price is tipped to be around $1,050-1,060 psf for the project, which boasts a longer frontage of Sungei Punggol reservoir and is much closer to an LRT station. Both projects are on 99-year leasehold sites. Last month, developers sold 45 executive condominium (EC) units, down from 74 units in December and 256 units in January 2013. Including ECs, which are a public-private housing hybrid, developers moved 610 homes last month, up from 333 homes in December but much lower than the 2,284 units they sold in January 2013. For the whole of 2014, most property consultants predict developers could sell around 10,000-12,000 private homes excluding ECs. Last year's figure was 14,948 units, down from 2012's record of 22,197 units. Prior to TDSR, developers were enjoying "sure sales" when they launched projects, notes Jones Lang LaSalle national director Ong Teck Hui. "The biggest challenge right now is how to move sales." Knight Frank chairman Tan Tiong Cheng said right pricing is the most critical factor for new launches these days. Buyers have become more price-sensitive post-TDSR and, at the same time, are spoilt for choice. "In recent times, developers have paid high prices for land but end-unit prices have started to come off," he notes. A developer that hangs on too long to its price risks losing buyers to competitors willing to price their project more competitively. Frasers Centrepoint Homes CEO Cheang Kok Kheong, who is busy getting ready for this week's launch of Rivertrees Residences, says developers' biggest challenge currently is "to keep coming up with new products, layouts and designs to wow buyers".
"It is naive to think that we can keep minting the same unit-types and layouts. There are so many ECs coming up, so developers of entry-level private condos need to be more imaginative to capture the upgrader market." -By Kalpana Rashiwala
Singapore's new private home sales remain low in January Source: Channel News Asia / Singapore New private home sales in Singapore remained in the doldrums in January, as developers held back launches and lending restrictions depressed demand. According to data from the Urban Redevelopment Authority (URA), developers sold just 565 new private homes last month, up from December's four-year low of 259 units. Last month's figure was, however, well below the 2,028 units sold in January 2013. Singapore's residential property market has slowed since the middle of last year, following moves by authorities to cap the amount of money people can borrow. Investors are also concerned about the upcoming supply of new units, and property analysts say private home prices could fall by as much as 15 percent this year. In the final quarter of 2013, private home prices fell 0.9 per cent from the previous three months -- the first decline in nearly two years. Developers in Singapore sold around 15,000 new homes last year, some 30 per cent down from 2012. Looking ahead, property consultants say they expect the weak
sentiment to continue to weigh on sales in the near-term.
- CNA/xq/ch Demand for new private homes weak despite Jan sales riseSource: Today Online / Business New private property sales more than doubled last month after falling to a near-five-year low the previous month, but demand remained tepid as developers held back from launching new projects and buyers stayed on the sidelines as various measures that have cooled the market continued to have an impact. A total of 565 new private homes were sold last month, the Urban Redevelopment Authority (URA) said yesterday, an increase from the 259 sold in December. Compared with a year earlier, however, sales were still 72 per cent lower than the 2,028 units sold in January last year. Half of last month’s tally came from a project touted as Singapore’s first retirement resort, The Hillford. Despite the development’s shorter lease of 60 years, buyers young and old snapped up all its 281 apartments in Jurong on the first day. This was in stark contrast to the interest in two other launches in Ang Mo Kio last month: The Panorama condominium managed to sell only half of the units released, while the Floraview condominium sold only one unit. In all, 549 homes were launched last month, up from 118 in December but down from 1,814 a year earlier. Supply is traditionally lower during the Chinese New Year period, said analysts, with developers preferring to save their launches for after the festive season. “The Hillford demonstrates that if you push out a product which the market wants at the right price or quality, you can still do quite well,” said Mr Colin Tan, Suntec Real Estate Consultants’ Director of Research and Consultancy. “The buyers are out there and there is still a lot of money in the market, it is only a question of how to entice them.” He added that the price point of The Hillford, at a median of S$11,894 per sq m, was lower due to its shorter tenure, and was therefore able to attract more buyers. While The Panorama was also a good product, the median price of S$14,456 per sq m could have priced out HDB upgraders, said Mr Nicholas Mak, SLP Executive Director for Research and Consultancy. “With the cooling measures in place and HDB prices starting to weaken, it makes it harder for the HDB upgraders to afford a property in the region of S$1.2 million,” he said. Besides the seventh round of property cooling measures implemented last year, the Total Debt Servicing Ratio (TDSR) framework has also been effective in jamming the brakes on demand. The Monetary Authority of Singapore last week relaxed TDSR loan curbs for homebuyers who bought properties before the June rules were introduced, making it easier for those buyers to refinance mortgages. Looking ahead, analysts said they expect private home sales to improve further this month and through the rest of the year as developers resume launches, but stressed that sentiment would still be weakened by the cooling measures. February sales may come in under 1,000 units, Mr Mak estimated, with several new developments in the city fringe and suburban areas — including Rivertrees Residences and Riverbank@Fernvale — likely to cause some stir in the market. Overall, said Mr Mohamed Ismail, Chief Executive of PropNex Realty, 11,000 to 12,000 new homes may be released into the market by developers this year, citing healthy land sales for residential property last year. “Nevertheless, excessive growth is unlikely, due to the Government measures and fragile global economic recovery. Homebuyers and investors will continue to remain selective with projects, but those that are priced at the right quantum will see good demand,” he said. -By Tan Weizhen Singapore Home Sales Post Slowest Start to the Year Since 2009 Source: Bloomberg / Luxury Singapore’s home sales slid in January, marking the slowest start to the year since 2009, as developers sold fewer projects after property curbs crimped demand. Home sales declined 72 percent to 565 units last month compared with 2,028 in the same period a year ago, according to data from theUrban Redevelopment Authorityreleased today. The number of units sold was the lowest in the month of January since 2009, when 108 were sold in that month, the data showed. “There were very few projects marketed last month as developers with smaller projects stayed away from the market on weak buyer sentiment,” said Alan Cheong, a Singapore-based director at Savills Plc. Home sales in the quarter could be as low as 1,000 units, he said. The government introduced loan measures in June as it widened a campaign that started in 2009 to curb speculation in the Southeast Asian city. Singapore’s property market is stabilizing and the country isn’t facing a credit bubble that puts the island or its banking system at risk of a crisis, the central bank said on Jan. 15. The Monetary Authority of Singapore in a statement Feb. 10 broadened exemptions from borrowing limits for homebuyers who bought properties before the June rules were introduced, making it easier for those buyers to refinance mortgages. Singapore’s fourth-quarter home prices slid for the first time in almost two years, trimming annual gains to the smallest since 2008. Housing values gained 1.1 percent in 2013, the smallest annual increase since prices slid 4.7 percent in 2008. The private residential property price index fell 0.9 percent to 214.3 in the three months ended December, data from the authority showed on Jan. 24. -By Pooja Thakur http://www.channelnewsasia.com/news/singapore/singapore-s-new-private/1000568.html http://www.todayonline.com/business/demand-new-private-homes-weak-despite-jan-sales-rise
MOM to tighten safety enforcement Source: Channel News Asia / Singapore The Manpower Ministry (MOM) will review the Demerit Points System and tighten the lifting of a Stop Work Order to ensure companies adopt safe worksite practices. Senior Parliamentary Secretary for Manpower Hawazi Daipi, said this in Parliament on Monday in response to questions from West Coast GRC MP Foo Mee Har and Nominated Member of Parliament Associate Professor Eugene Tan on how MOM plans to strengthen safety measures at construction sites. There were nine workplace fatalities in January alone and eight of them occurred in the construction industry. Mr Hawazi said the recent spate of accidents could be due to companies rushing to complete projects on time as demand for construction activities rises. A tighter labour market could also have meant companies are over-stretching their workforce but Mr Hawazi said constraints should not mean a compromise in safety. He added MOM would apply for stronger penalties in cases where there are serious breaches of the law. For those who have blatantly disregarded the law, Mr Hawazi said MOM would also ask for custodial sentences and press for maximum sentencing allowed under the Workplace Safety and Health Act. Mr Hawazi said companies may need to fulfil new conditions for the Stop Work Order to be lifted and this could mean companies will have to undergo a refresher training course on key areas of weaknesses or a re-audit of their Workplace Safety and Health (WSH) management system. MOM will also expand the scope of the Business Under Surveillance (BUS) Programme to more companies that require assistance if they have serious weaknesses in their WSH management systems. The programme is an enforcement programme that targets poor performing companies and it puts them under MOM's close monitoring and supervision. Mr Hawazi said details on the changes to the Demerit Points System will be released by the middle of this year after the end of the review. The Demerit Points System, introduced in 2005, identifies contractors with poor work practices and restricts their access to foreign manpower if their safety records do not improve. He was also asked how MOM could get stakeholders to recognise that the safety of their workers is actually a key productivity driver. Mr Hawazi said: "We have seen some decline in performance and I think we can work with the industry to address them. Whether companies will take WSH record as a key productivity driver, I think it will take some time to sink in." He added: "Contractors know that safety performance and safety record are taken into consideration when they bid for government-linked projects and I think they know the cost of not maintaining a good safety environment for their workers."
- CNA/fa New rules on construction industry likely after rise in workplace deathsSource: Today Online / Singapore New conditions may be imposed on construction companies to ensure safety lapses are resolved before a stop-work order can be lifted, said Senior Parliamentary Secretary for Manpower Hawazi Daipi in Parliament yesterday. Also, firms may be required to conduct refresher training on key areas of weaknesses as well as a re-audit of their Workplace Safety and Health (WSH) management system, he added. The Manpower Ministry’s (MOM) Demerit Points System for the construction sector, which identifies contractors with poor work practices and restrict their access to foreign manpower if they fail to improve their safety records, will also be reviewed. Currently, access to work permit holders is limited for six months if a main contractor accumulates more than 18 demerit points within a year. The measures are part of a multi-prong approach that the ministry will adopt following a spike in workplace deaths in the past seven months. Injury and fatality rates in the construction industry have fallen in recent years, but the situation deteriorated around the second half of last year, with 22 workplace deaths reported. “This was twice as many fatalities compared to the first half of the year, and five more compared to the same period in 2012,” said Mr Hawazi in response to questions filed by Member of Parliament (West Coast GRC) Foo Mee Har and Nominated Member Eugene Tan. “This worrying trend continued into 2014, with eight out of every nine workplace fatalities in January coming from the construction industry alone.” According to industry feedback, the spike in such accidents was caused by companies rushing to meet project deadlines amid rising demand for construction activities, as well as the tighter labour market contributing to “overstretching their workers”, said Mr Hawazi. Associate Professor Tan asked if the current approach of promoting WSH is working as, in the face of tight deadlines and labour markets, “the methods don’t seem to work”. In response, Mr Hawazi said safety records in the past seven to eight years showed that the Republic has performed “quite well” in workplace safety. Recalcitrant violators, however, will have to be sent “a very strong signal” to ensure that workers will continue to work in safe environments, he added. http://www.straitstimes.com/premium/singapore/story/mom-tighten-safety-enforcement-20140218 http://www.channelnewsasia.com/news/singapore/mom-to-adopt-enforcement/1000822.html
Limited office space 'may boost rents this quarter' Source: Straits Times A limited supply of office space could boost rents this quarter and in turn spur investment and leasing activity, said consultancy CBRE yesterday. Research head Desmond Sim noted that there is already pressure on rents for Grade A space - some tenants may want to renew leases before prices escalate.
Fire damages Mapletree property Mapletree Logistics Trust Management said a fire last Saturday damaged one of the trust's China properties, Mapletree Xi'an Distribution Centre. No one was reported hurt, and investigations are underway. The property, which accounts for 0.4 per cent of Mapletree Logistics Trust's portfolio investment property value and gross revenue, is insured for physical damage and business income losses for 18 months.
http://www.businesstimes.com.sg/premium/companies/others/company-briefs-20140218 Real Estate Companies' Brief Clearer taxation guide for S-Reits needed Uncertainty over foreign income exemption, income support among areas to tackle Source: Business Times / Editorial & Opinion SINCE its inception in 2002, the Reit market in Singapore has achieved tremendous growth. Today, Singapore's Reit market has more than 30 listed Reits and a handful of other listed property business trusts. Its market capitalisation is in excess of US$65 billion. The success of the Reit market here has added depth and breadth to Singapore's capital markets. Jobs have also been created for Reit and property players, bankers, lawyers and other professionals in Singapore. In addition, the Reit market has helped distinguish the Singapore Exchange as the pre-eminent stock exchange in the region. It has also provided investors in Singapore with an alternative investment mode - one that promises a tax-efficient, stable, and regular return on their investment. Clearly, Singapore makes a compelling story for Reit listings in Asia, with its success prompting other countries in the region to follow suit.
The governments of Hong Kong and Malaysia, in particular, started their own Reit laws and regulations soon after Singapore's were conceived. India, China, Indonesia and Thailand are also looking at doing the same. Yet, these Reit markets have not grown in the same manner or to the same degree as that of Singapore's. -By Leonard Ong & Agnes Lo Global Logistic Properties China GDP grew by 7.7 per cent in 2013, with a projected forecast of 7.5 per cent GDP growth in 2014. Despite the forecast slowing GDP growth, we are still positive on the resilient demand of modern logistics properties in China, driven by: (1) improving exports by developed countries in anticipation of a recovering global economy; (2) robust domestic consumption and improving region-centric logistics activities from inland developments.
http://www.businesstimes.com.sg/premium/singapore-markets/others/brokers-take-20140218 Views, Reviews & Forum Tax rule on property traders lacks clarity Source: Straits Times I have been investing my savings in residential properties, earning rental income and making capital gains, thanks to a buoyant property market. Last year, I was shocked to find that the Inland Revenue Authority of Singapore (Iras) had taxed my capital gains from my property investments as far back as 2006. I was under the impression that capital gains from real estate investments in Singapore are tax-exempt.
Global Economy & Global Real Estate Hiap Hoe buys fourth property in Australia Source: Straits Times Hiap Hoe Limited has bagged its fourth acquisition in Australia - an A-grade commercial building in Perth - for A$90 million (S$102.3 million). With a net lettable area of 12,349 square metres (sq m), the seven-storey development - known as 130 Stirling Street - comprises 11,863 sq m of office and 486 sq m of retail lettable areas as well as four levels of car parking space with 239 lots. The site on which the building sits measures 5,033 square metres.
http://www.straitstimes.com/premium/money/story/hiap-hoe-buys-100m-property-perth-20140218 KL to set up website on home sales It also plans buyer database 'to identify the number of houses owned' Source: Business Times / Property HOME buyers will be given quicker access to project sales data under a Web exchange to be established by the housing ministry by early April, according to its minister, Abdul Rahman Dahlan. The initial information, however, is likely to be limited to the number of units sold in an ongoing development. "The ministry has all the information from the developers and I am sharing this information," the minister said, to enable purchasers to know at a glance which properties are still available and at what price range. Mr Abdul Rahman also spoke about introducing new rules to curb bulk purchasing which had contributed to significant price increases in recent years.
"My ministry will also enforce a new condition for selling houses in bulk or en bloc, whereby developers who intend to make bulk sales of more than four units must obtain prior approval from the controller of housing. This condition will be prescribed as a mandatory requirement in every advertisement and sale permit for housing development," he said at the launch of the Sime Darby Property Housing-Income Index study yesterday. -By Pualine Ng in Kuala Lumpur http://www.businesstimes.com.sg/specials/property/kl-set-website-home-sales-20140218 Red flags raised in Johor property market Source: Business Times / Property The property market in Johor, particularly Iskandar Malaysia, might be a case of too much too soon. According to The Star newspaper, red flags are showing in the state where launches of projects and high prices are commonplace but the pace of launches, which now includes "carpet building" by China developers, is flooding the market with more houses than what could be sustainable. "We welcome foreign developers including those from China, but flooding the market with massive supply of properties could create property overhang," Johor Real Estate and Housing Developers Association (Rehda) chairman Koh Moo Hing told the daily during the weekend. Latest data by the National Property Information Centre (Napic) indicate that the amount of new homes being built in the near future is equivalent to 42 per cent of the stock of 702,101 houses in the state. Almost 300,000 homes are being built or in the planning stage at a time when the market in Johor has hit a soft patch. Napic data show that at the third quarter of last year, construction for 116,859 homes had already started while the building of 162,579 homes have yet to start.
Meanwhile, 16,168 homes had been approved for construction in Johor in that quarter alone. Analysts say that the new supply does not include new launches by Iskandar Waterfront Holdings Bhd, which is expected to increase three-fold to more than 4,000 units and is expected to remain elevated up to 2017. -From Johor Bahru, Malaysia http://www.businesstimes.com.sg/specials/property/red-flags-raised-johor-property-market-20140218 Solution to India's housing shortage - print new ones! Source: Business Times / Editorial & Opinion I HAVE a solution to India's housing shortage - print new ones! The reader might think I am writing of a new accounting trick - a variant of Quantitative Easing where the government prints money. How can they print a house? Well, I am talking of the upsurge in the popularity and scope of 3-D printing. This technique has been around in the laboratory since the 1980s. But it has only been an increasingly viable process from the 2000s when new materials, ink jets and curing ovens have become available. Object printing is, in fact, a radically new idea given that the manufacturing processes that mankind has used for eons is subtractive - like finding a log, striping off wood to make a hull shape on the outside, and then hollowing out the inside to make a canoe. This applies across most traditional manufacturing modes, which rely on the removal of material by methods such as cutting or drilling (subtractive processes) as well as hammering to size.
The printing process is additive, with new layers of materials being squirted onto old layers to build up a shape. It is a very versatile method allowing hollow sections to be programmed using a weak material that is later dissolved or melted away. The printed shapes do not require much after-finishing: certainly not compared to the casting of metal, then whipping it into shape with massive hammers, and afterwards cutting and drilling. -By Frank-Jurgan Richter Struggling Korean builders face high funding costs Weaker firms locked out of domestic bond markets as investors stay away Source: Business Times / Property South Korea's troubled construction sector is under pressure to find alternative sources of funding after a flight to safety in the country's domestic debt market. Its builders have had to deal with lower real estate prices, a weak economy and slow momentum on overseas projects, and many are in desperate need of funding. The weaker construction companies have been locked out of Korea's domestic bond markets since the likes of Samsung Engineering and Daewoo Construction reported losses last year.
Seven out of 25 construction companies with domestic investment-grade ratings were downgraded last year, according to a Seoul-based credit analyst. -From Hong Kong, China TPG Capital to raise US$2b for new fund Source: Business Times / Property TPG Capital, the private-equity firm that formed a real estate division after the credit crisis, is trying to raise as much as US$2 billion for its first multi-investor property fund. The firm, whose real estate unit was founded by Kelvin Davis, a senior partner, has begun soliciting pledges for the new fund, according to investor presentation documents and two people with knowledge of the situation. They asked not to be identified because the fund-raising is private. TPG is among private-equity firms that have been chasing distressed real estate assets since the US housing collapse and Europe's economic crisis depressed commercial property values worldwide. The Fort Worth, Texas-based company is seeking to capitalise on investor appetite for real estate at a time of low rates on fixed-income assets.
TPG's property investments since late 2009 were ultimately bundled into an investment vehicle called TPG Real Estate I, and the new fund is known as TPGRE II, according to the 60-page presentation to prospective investors. -From Seattle, US http://www.businesstimes.com.sg/specials/property/tpg-capital-raise-us2b-new-fund-20140218 Asking prices for UK homes growing at fastest pace in six years Source: Business Times / Property Asking prices for homes in Britain rose at the sharpest rate in more than six years over the past 12 months despite a big rise in new listings coming onto the market recently, property website Rightmove said yesterday. Rightmove's February house price index showed the price of properties coming onto the market in the four weeks to Feb 8 was 6.9 per cent higher than a year earlier, the biggest increase since November 2007. January's index showed a 6.3 per cent rise. "New sellers are now asking over £16,000 (S$33,670) more than those who came to market a year ago, a rate of increase not seen since before the credit crunch took hold in 2008," Rightmove director Miles Shipside said.
Britain's economy has been growing faster than most of its industrialised peers, with the housing market standing out as it benefits from falling unemployment, record low interest rates and government mortgage schemes. -From London, UK RBA to sell Sydney mansion amid high home prices 920 sq m Eversley mansion is in Kirribilli suburb, where median house price is A$2.35m Source: Business Times / Property The Reserve Bank of Australia is seeking to sell a 920 square metre residential property in a harbourside suburb of Sydney amid the highest home prices the city has ever seen. The central bank has listed for sale the six-bedroom Eversley mansion near the northern end of the Sydney Harbour Bridge through broker Ray White Group, according to a listing on the realestate.com.au website. No price guide was given for the property in Kirribilli, a suburb four kilometres north of the city centre, where the median house price was A$2.35 million (S$2.68 million), according to the website. The RBA is putting the house up for sale after its record-low 2.5 per cent benchmark interest rate helped drive a 13.4 per cent gain in Sydney dwelling prices in the 12 months to Jan 31. While home prices are at a record, the country's jobless rate is at a decade-high 6 per cent, shrinking the likelihood of a rate increase that could arrest further price surges.
"It's a seller's market quite clearly: there are plenty of buyers out there, not many listings, and prices are rising, so it's not a bad time to sell," said Louis Christopher, managing director of Sydney-based real estate data provider SQM Research. "It's a little bit perplexing as to why the RBA was holding residential property." -from Sydney, Australia Truck driver turned builder is a billionaire Trade centre owner Hydoo's shares up 70% since Oct debut Source: Business Times / Property Wong Choihing, a former truck driver, has become a billionaire as shares of Hydoo International Holding Ltd, a Chinese trade centre developer he leads, soared more than 70 per cent since its debut in October. Shares held by Mr Wong's family, which includes that of his son Wong Kim, his siblings and their families, are worth more than US$1.1 billion, according to the Bloomberg Billionaires Index. They own about 60 per cent of the company, according to Hong Kong stock exchange filings. He has never appeared on any wealth rankings. Mr Wong, also known as Laowu, or the fifth child in a family, used to be a long-distance truck driver, according to Peter Fuhrman, who runs China First Capital and is Hydoo's investment banker.
Hydoo's chairman, one of 10 children in his family, became a developer in 1995 and built 19 trade centres in seven Chinese provinces by 2010, according to its prospectus. -From Shanghai, China Chinese Trade Center Builder Wong Becomes a Billionaire Source: Bloomberg / News Wong Choihing, a former long-haul truck driver, has become a billionaire as shares of Chinese trade center developer Hydoo International Holding Ltd. (1396) leaped more than 70 percent since its debut in October. Shares held by Wong and his family members are worth more than $1.1 billion, according to the Bloomberg Billionaires Index. They own about 60 percent of the company, according to Hong Kong stock-exchange filings. The 61-year-old chairman of Hydoo has never appeared on any wealth rankings. Wong, also known as Laowu to relatives and friends, or the fifth child in a family, used to be a truck driver before he became a commercial property developer in 1995. His family, which includes nine siblings, built 19 trade centers in seven Chinese provinces by 2010, according to Hydoo’s prospectus. “It couldn’t happen to a more deserving businessman,” said Peter Fuhrman, who runs Shenzhen-based China First Capital and was Wong’s investment banker in 2010. “He invented a powerful and innovative business model 20 years ago, stayed with it, kept reinvesting and adapting well to the huge changes in China’s economy during this time.” Two calls to Hydoo’s investor relations office in Shenzhen weren’t answered yesterday. Wong couldn’t be reached for comment. Trade centers are properties where wholesaling is the primary form of business and a wide range of products are traded, including hardware, electric tools, building materials, furniture and home furnishings, home electronics and apparel. Rapid UrbanizationThe company had been developing eight trade center projects in six provinces and autonomous regions in China as of July 31, 2013. Its projects are mostly in China’s less developed third-and fourth-tier cities, such as Ganzhou in Jiangxi province and Wuzhou in Guangxi Zhuang Autonomous Region. “Hydoo is one of the leading developers focusing on developing large-scale integrated trade centers in tier 3 and 4 cities and selected tier 2 cities in China,” Li Xingwen, a Hong Kong-based property analyst at ICBC International Holding Ltd., said in a research note on Jan. 14. “The company has unparalleled advantages in the sector it operates in,” said Li, who recommends buying Hydoo shares. City dwellers in the world’s second-largest economy exceeded the number of people living in rural areas for the first time in China’s history in 2011. The urban population has grown at a 3.6 percent compound annual rate since 2002, or 21 million people per year. Hydoo sold shares in Hong Kong on October 31. Hony Capital Ltd., backed by Lenovo Group Ltd.’s parent Legend Holdings Ltd, owns 14.9 percent of the company. Hydoo climbed 3 percent to close at HK$3.71 yesterday. -By Bloomberg News http://www.businesstimes.com.sg/specials/property/truck-driver-turned-builder-billionaire-20140218
China real estate firm unveils US$1b project in LA Source: Business Times / Property Shanghai-based Greenland Group unveiled new details of its US$1 billion Metropolis Los Angeles project at a ground-breaking ceremony on Friday. The 6.33-acre project, located on Francisco Street between 8th and 9th Streets, is the largest undeveloped site in Downtown Los Angeles's Central Business District. The project, one of the largest mixed-use developments on the West Coast, is expected to reshape the Downtown Los Angeles urban landscape. Phase I of Metropolis will include a four-star luxury hotel and a residential tower with units ranging from studio to two bedrooms, which are expected to be completed by 2016. "This US$1 billion investment by Metropolis is one of the largest investment that we have seen in recent year at downtown," Vice-Mayor Kelli Bernard said at the ceremony. -From Los Angeles, US London leads surge in UK home prices Source: Today Online / Business Home prices in London are continuing to surge, helping property values across the United Kingdom to post their best annual increase since before the financial crisis. Data by property website Rightmove showed that asking prices in the UK capital this month jumped 5.2 per cent from January to an average of £541,313 (S$1.14 million). On a year-on-year basis, they rose 11.2 per cent. Nationally, values rose 3.3 per cent from the previous month and 6.9 per cent on-year, the best annual performance since November 2007. “This month’s large rise is exacerbated by being a rebound from the festive-season lull,” said Mr Miles Shipside, Rightmove Director. “The spring moving season is traditionally the busiest time of the year, so that means agents are likely to advise new sellers to aim high, with the best selling months ahead of them and strong buyer demand in many areas.” London is leading the housing market as supply fails to keep up with demand and the capital’s economy powers UK expansion. Bank of England Chief Economist Spencer Dale said last week that while the market was not heading for a bubble, policy makers were watching it very carefully after ending mortgage aid through the Funding for Lending scheme last year. The increase in prices in London has been partially blamed on an influx of foreign capital as overseas investors look to make money in a market that has shown remarkable resilience in the face of the stuttering British economy. Rightmove is not the only report to show London leading the property market. A report from Acadata last week showed house prices in the UK rose to a record last month, with London values rising faster than any other region. It is likely that prices will continue to rise. The Rightmove report said that while new properties being listed for sale jumped 18 per cent in February compared with a year ago, supply is still failing to keep pace with demand. AGENCIES -From London, UK http://www.todayonline.com/business/london-leads-surge-uk-home-prices Brookfield Soars in Brazil on Plan to Take Builder Private Source: Bloomberg / Luxury Brookfield Incorporacoes SA (BISA3), Brazil’s worst-performing homebuilder in the past year, surged to the highest since October as its biggest shareholder offered to buy the stock it doesn’t own and delist the company. BRB Participacoes, a unit of Toronto-based Brookfield Asset Management Inc. (BAM/A) that owns 39 percent of the Brazilian builder, will offer as much as 1.60 reais each for all outstanding voting shares, according to a regulatory filing after the close of the market on Feb. 14. Brookfield jumped 19 percent to 1.47 reais at the close of trading in Sao Paulo, paring the loss over the past 12 months to 57 percent. It was the best performer on the benchmark Ibovespa gauge today, which dropped 1.3 percent. “The trend is for the stock to converge to that offer price,” Joao Pedro Brugger, who helps oversee 400 million reais at Leme Investimentos Ltda., said in a phone interview from Florianopolis, Brazil. “But it should trade at a slight discount until the minority shareholders accept the offer.” The controlling holder asked for a vote by investors on the tender offer at an extraordinary meeting, according to the filing. It said on Jan. 27 that it was “analyzing strategic alternatives” for Brookfield including a delisting. Brookfield did its initial public offering in October 2006, selling shares for 16 reais each. -By Julia Leite German Home Prices Rose Most in Decade on Cheap Finance Source: Bloomberg / Luxury German home prices rose by the most in at least 10 years in 2013 as low interest rates made it cheaper to finance purchases and prompted investors to switch from bond markets to real estate. The gains slowed in the fourth quarter. Prices for houses, apartments and residential buildings climbed 4 percent in 2013 from a year earlier, according to an index published today by the VDP Association of German Pfandbrief Banks. That’s the biggest gain since at least 2003, when VDP began compiling data. Prices rose 3.4 percent in the last three months of the year, the smallest increase in five quarters. Germany’s housing rally is being driven by low borrowing costs and a shortage in big cities such as Berlin and Frankfurt, where construction lags behind demand. The Bundesbank said today that home prices in cities are about 25 percent overvalued, and the German government has proposed new laws to curb price and rent increases in an already tightly regulated market. “Demand for residential properties remains high,” Jens Tolckmitt, VDP’s general manager, said in the statement. “Large cities and university towns continue to be at the center of attention.” Owner-occupied condominiums gained 4.9 percent and apartment buildings rose 4.7 percent in 2013, driven in part by a 4.2 percent rise in rents paid on new leases, according to the VDP data. Single family-homes had the slowest gain, at 2.6 percent. Slowing GainsGains in most residential segments were strongest in the first three quarters of the year, according to VDP. In the fourth quarter, prices for owner-occupied apartments and houses fell 0.4 percent from the previous three months, the first quarterly decline since the start of 2010. A slowdown in apartment building price gains may be the result of dropping rents for new leases in the fourth quarter, Tolckmitt said in the statement. “Residential prices rose faster than economic and demographic fundamentals would suggest” in 2013, the Bundesbank said in its monthly bulletin today. “This was particularly so for the urban property market, which was measured as being overvalued by between 10 percent and 20 percent. Prices in cities diverged upward by an estimated 25 percent.” VDP’s office-price index rose 5.9 percent, less than the year-earlier increase of 6.1 percent. Office prices are being pushed higher by institutions seeking a profitable investment amid low yields in fixed-income markets. VDP collects price data from mortgage contracts signed across Germany by its 38 member banks, which include Deutsche Bank AG, Commerzbank AG, Banco Santander SA (SAN) and ING Groep NV. (INGA) By contrast, most German real estate indexes focus on the country’s biggest cities. -By Dalia Fahmy http://www.bloomberg.com/news/2014-02-17/german-home-prices-rose-most-in-decade-on-cheap-finace.html Miles Says ‘Big Stick’ of Rate Hike Too Blunt for Housing Market Source: Bloomberg / Luxury Bank of England official David Miles said policy makers will only use interest rates as a last resort to cool Britain’s housing market if it begins to overheat. “We do have, as the last line of defense, the blunt instrument, the big stick of interest rates,” Miles said today in a Bloomberg Television interview with Guy Johnson in London. “If you did get into a situation where the tools that the Financial Policy Committee have seem not up to the job of stopping overheating in the housing market, we would then turn to the blunter instrument of using bank rate. We’re a long way from that.” U.K. house prices have surged in the past year, prompting concerns that the market may be heading toward another bubble. The FPC, created to ensure financial stability after the last crisis, has responded by removing a mortgage aid in its Funding for Lending Scheme. Miles, a member of the Monetary Policy Committee since 2009, doesn’t sit on the FPC. “The Financial Policy Committee is the first line of defense against the risk that the housing market generally starts to overheat,” Miles said. Its tools “are likely to be really powerful and likely to prove effective.” Miles said price gains in the broader U.K. housing market aren’t yet rising at a unsustainable pace and the market is being skewed by demand in London. Rightmove Plc (RMV) said today that asking prices in the capital jumped 5.2 percent to an average 541,313 pounds ($905,000) this month from January. That helped push national values up an annual 6.9 percent, the biggest increase since 2007. London Skew“In terms of a generalized overheating housing market, I don’t think that’s a good description of where we are,” Miles said. “We’re in a situation where the national figures for house prices are substantially influenced by the south east, London.” The EY Item Club said this month that London’s housing market is beginning to show “bubble-like conditions.” The Institute for Fiscal Studies says the government’s Help to Buy program to aid first-time purchasers get on the property ladder risks driving prices higher. “Net mortgage lending remains at extremely low levels, lower than you might expect in a well-functioning market,” Miles said. “At some point, it would be likely and indeed desirable that net mortgage lending moved up from current levels. I don’t have great confidence in my ability to say when that might happen.” Miles said he would become more concerned if expectations for house-price gains became entrenched and fueled rapid growth in mortgage lending. It’s “important that there is a clear recognition by borrowers and lenders that interest rates will not remain at this level for many years to come,” Miles said. “They need to think very carefully what’s going to happen when the cost of that mortgage moves up.” -By Emma Charlton and Jennifer Ryan Billionaire Ortega’s Occidental Hotels Said to Get Offers Source: Bloomberg / Luxury Occidental Hotels & Resorts, the hotelier owned by billionaire Amancio Ortega and Spain’s second-largest bank, has attracted interest from companies including AMResorts and Playa Hotels & Resorts, two people with knowledge of the matter said. The two U.S.-based hotel and leisure operators were among several first-round bidders, said the people, who asked not to be named because the process is private. Occidental, whose main shareholders are Ortega, owner of the Zara clothing-chain operator Inditex SA (ITX), and Banco Bilbao Vizcaya Argentaria SA (BBVA), may fetch as much as $700 million, they said. Closely held Occidental manages more than 6,700 rooms in 19 hotels across 8 countries in the Caribbean, Central America and Europe, according to its website. The company has more than 4,300 employees and 600,000 guests annually. Its earnings before interest, taxes, depreciation and amortization reached $54 million in 2012 compared with $29 million in 2010, according to a statement on its website. Investors are buying Latin American hotels as economic and infrastructure improvements boost demand from travelers. Investments in the Americas, which includes the U.S., jumped 30 percent in 2013 to $24 billion, according to Chicago-based broker Jones Lang LaSalle Inc. (JLL) Global hotel investments in 2013 rose 35 percent to $46.5 billion and are projected to rise as much as 10 percent in 2014, Jones Lang said in January. “Latin America will register disproportionate demand growth throughout the next decade, fueled by significant infrastructure investment, economic growth and transfer of technology and know-how,” Jones Lang said last year. Representatives for Occidental, Playa Hotels and AMResorts, which is backed by buyout firm Bain Capital LLC, couldn’t immediately comment when contacted by Bloomberg News. BBVA and Ortega, the world’s third-richest man according to data compiled by Bloomberg, bought about 77 percent of Occidental in 2007 for 434 million euros ($595 million), according to a statement at the time. In May 2013, Occidental said it reached an agreement with national and international banks to refinance its long-term debt. As part of the plan, Occidental said it would focus development activity in seven countries in the Caribbean and Central America, where it manages 17 hotels. Ortega has invested in a variety of properties as he seeks to diversify his wealth. The Spanish billionaire bought an office building in London’s West End for 410 million pounds ($686 million), a person with knowledge of the matter said in December. -By Manuel Baigorri, Nadja Brandt and Dalia Fahmy Hammerson Asset Value Rises in 2013 After Adding U.K. Properties Source: Bloomberg / News Hammerson Plc (HMSO), Britain’s third-largest real estate company by market capitalization, said the value of its properties climbed last year as it added assets in the U.K. and France. Adjusted net asset value rose 5.7 percent to 573 pence ($9.62) on Dec. 31 from 542 pence a year earlier, the London-based company said in a statement today. Adjusted earnings per share gained 10.5 percent to 23.1 pence. “The economic environment has become more benign, with a corresponding increase in investor demand for real estate,” Hammerson said in the statement. However, a possible return of instability in countries using the euro could affect real estate values, it said. Hammerson, a shopping mall developer and manager, is spending more on its leisure properties and luxury-outlet malls as it seeks to increase shareholder returns. The company is developing a cinema, catering and bingo stores in Glasgow and is bringing more restaurants into other malls. Its 61,000 square meter (657,000 square feet) Les Terrasses du Port mall in Marseille is set to open in May, the company said today. Full-year net income rose to 337.4 million pounds from 138.4 million pounds a year earlier. -By Dalia Fahmy China Record Credit Growth Boosts Outlook for Economy Source: Bloomberg / News Record new credit in China in January will help the economy maintain momentum while highlighting challenges for officials trying to limit the risk of financial turbulence from defaults and bad loans. Aggregate financing, the broadest measure of credit, was 2.58 trillion yuan ($425 billion), the People’s Bank of China said in a Feb. 15 statement. New local-currency lending was 1.32 trillion yuan, the highest level since 2010. Trust loans, under scrutiny because of default risks, were about half the level of a year earlier. The data add to better-than-forecast trade numbers, suggesting that China can limit the scale of any slowdown from last year’s 7.7 percent expansion in gross domestic product. At the same time, the figures contrast with a central bank call in mid-January for lenders to control surging loans and highlight diminishing economic returns from credit growth. “These numbers show that the firming up of the central bank’s monetary stance is going to be a gradual, balanced exercise, not an aggressive one,” said Louis Kuijs, chief China economist at Royal Bank of Scotland Plc in Hong Kong. “The authorities want to slow down the pace of credit growth and contain financial risks but they also want to ensure that sufficient credit continues to come online to support economic growth.” The benchmark Shanghai Composite Index (SHCOMP) rose 0.9 percent, extending gains after the biggest weekly increase since September. Annual MeetingAggregate financing exceeded the 1.9 trillion yuan median estimate in a Bloomberg News survey and the previous high of 2.54 trillion yuan in January 2013. Credit growth slowed for a 10th month to a 17-month low of 17.5 percent from a year earlier, according to Societe Generale SA. As China’s Communist Party leaders prepare for next month’s annual meeting of the legislature, the National People’s Congress, officials are grappling with swelling local-government debt, volatility in money markets and risks from shadow banking, highlighted by a bailout that last month averted the nation’s first trust default in at least a decade. A 10.6 percent jump in exports in January may help Premier Li Keqiang achieve annual economic growth of at least 7.2 percent, the level that he says is needed to protect jobs. The premier usually presents the government’s expansion target for the year in his annual work report to the NPC. The goal was 7.5 percent for 2013. GDP may increase 7.4 percent this year, according to the median estimate in a Bloomberg survey last month. That would be the weakest pace in 24 years. Credit Warning“Banks are still extending a lot of credit and this will somewhat cool down fears that China is slowing dramatically,” said Liu Li-Gang, head of Greater China economics at Australia & New Zealand Banking Group Ltd. in Hong Kong. “Liquidity is plentiful and able to support growth.” The jump in loans contrasts with the central bank’s January warning that bank credit was increasing rapidly and also its statement in November that the economy may face long-term deleveraging. Each $1 of credit added the equivalent of 17 cents in GDP in the first quarter of 2013, down from 29 cents the previous year and 83 cents in 2007, according to data compiled by Bloomberg. Economists’ estimates for aggregate financing, which includes bank lending, corporate bond issuance and shadow-banking products like entrusted loans, ranged from 1.5 trillion yuan to 2.39 trillion yuan. January’s figure compared with a previously reported 1.23 trillion yuan in December. Worries ExaggeratedNew local-currency loans compared with the median economist estimate for 1.1 trillion yuan and 1.07 trillion yuan a year earlier. New loans were 482.5 billion yuan in December. “Worries about policy being too tight or that rate increases are hurting credit and economic growth are exaggerated,” said Wang Tao, chief China economist at UBS AG in Hong Kong. The weighted average lending rate in China was 7.2 percent in December, up from 6.22 percent a year earlier, PBOC data released earlier this month show. In December, 63.4 percent of loans had interest rates above benchmarks, up from 59.7 percent a year earlier, according to the central bank. Money-market rates have also increased. The benchmark seven-day repurchase rate, a gauge of interbank funding availability, averaged 4.7 percent in January, up from 3.08 percent a year earlier. Bond Issuance“High interest rates prompted companies to reduce bond issuance and turn to bank loans,” Peng Wensheng and Zhao Yang, economists with China International Capital Corp. in Beijing, wrote in a note today. With financial risks rising, officials are unlikely to loosen monetary policy in the short term and “pressure to tighten regulation is increasing.” Bank lending usually surges in January as financial institutions receive new quotas and offer credit at the start of the year to earn more interest, according to economists at ANZ, Citigroup Inc. and Mizuho Securities Asia Ltd. Last month’s figure may also have been boosted as loans postponed from December were handed out. Banks may have pushed out credit even more aggressively in January than usual because of the timing of the Lunar New Year holiday, said RBS’s Kuijs. The week-long festival started on Jan. 31 this year and Feb. 9 last year. That could mean “substantially more modest credit numbers in February,” he said. Money SupplyM2, China’s broadest measure of money supply, rose 13.2 percent from a year earlier in January, the Beijing-based central bank said. That matched the median economist estimate and compared with 13.6 percent in December. The growth in outstanding local-currency loans slowed to 14.3 percent in January from 15.4 percent a year earlier. New trust loans issued in January were 106.8 billion yuan, the PBOC said, down from 210.8 billion yuan a year ago. “There could be a demand issue here,” said ANZ’s Liu. “Investors have been hearing scary stories about trust loans so maybe they are finally starting to realize the risks in this sector.” -By Bloomberg News RBA Lists Sydney Mansion Amid Home Price Surge, Lowest Rates Source: Bloomberg / Luxury The Reserve Bank of Australia is seeking to sell a 920-square-meter (9,902-square-foot) residential property in a harbor-side suburb of Sydney amid the highest home prices the city has ever seen. The central bank has listed for sale the six-bedroom Eversley mansion near the northern end of the Sydney Harbour Bridge through broker Ray White Group, according to a listing on the realestate.com.au website. No price guide was given for the property in Kirribilli, a suburb four kilometers (2.5 miles) north of the city center, where the median house price was A$2.35 million ($2.13 million), according to the website. The RBA is putting the house up for sale after its record-low 2.5 percent benchmark interest rate helped drive a 13.4 percent gain in Sydney dwelling prices in the 12 months to Jan. 31. While home prices are at a record, the country’s jobless rate is at a decade-high 6 percent, shrinking the likelihood of a rate increase that could arrest further price surges. “It’s a seller’s market quite clearly: there are plenty of buyers out there, not many listings, and prices are rising, so it’s not a bad time to sell,” said Louis Christopher, managing director of Sydney-based real estate data provider SQM Research Pty. “It’s a little bit perplexing as to why the RBA was holding residential property.” Prime LocationRachael Wright, marketing agent at Ray White, declined to comment on the listing, which shows the house, at 10 Carabella Street, has been split into two apartments. Colleague Kingsley Yates didn’t immediately respond to a voice-mail message seeking comment. The RBA declined to comment on the sale. State government filings show the RBA owns both apartments. Kirribilli, which is also the location of Sydney residences for the Prime Minister and the Governor General, is surrounded by water on three sides, with views of the city’s Opera House and Harbour Bridge. The RBA bought 8 and 10 Carabella Street in 1986, and combined them with a neighboring property that it already owned as part of a new staff training college, according to a city council document. The bank’s H.C. Coombs Centre for Financial Studies is still located at the adjoining property at 122A Kirribilli Avenue, according to its website. The value of the RBA’s property, plant and equipment assets was A$491 million as of June 30, up from A$448 million a year earlier, the bank’s financial statements for the 2013 fiscal year show. The tenants of one of the apartments at Eversley gave notice of their plans to vacate in mid-2013, according to documents released in December under a Freedom of Information request. -By Nichola Saminather and Michael Heath |