Real News‎ > ‎2014‎ > ‎February 2014‎ > ‎

20th February 2014

Singapore Economy

Q4, full year GDP grew more than expected amid improving outlook

MTI maintains its forecast for growth in 2014 in a 2 to 4 per cent range

Source: Today Online / Singapore

Singapore’s economy grew by 5.5 per cent on-year in the fourth quarter, the latest official data shows, down slightly from third quarter’s 5.8 per cent but higher than the 5.3 per cent forecast by economists in a Reuters poll.

The better than expected expansion was helped by a healthy 7 per cent expansion in the manufacturing sector between October and December, which marks a further recovery from 5.3 per cent in the third quarter to reflect a more positive outlook for the Republic’s exports.

“Growth was supported by improvements in the electronics cluster and continued strong growth in the transport engineering cluster,” the Ministry of Trade and Finance said today (Feb 20) when announcing the gross domestic product figures.

In the same period, the finance and insurance sector also grew on-year by 9.7 per cent, while business services gained 4.6 per cent. Wholesale and retail trade similarly improved, to 7.3 per cent on-year.

The construction sector however grew at a slower pace due to moderation in private sector activities, from third quarter’s 6.6 per cent to 4.8 per cent in the fourth quarter.

Taking the fourth quarter into account, Singapore’s GDP for 2013 expanded by 4.1 per cent, outperforming the 3.5 to 4 per cent range estimated by MTI previously and more than doubling the 1.9 per cent growth in 2012.

The Ministry maintains its forecast for growth in 2014 in a 2 to 4 per cent range.

“The global economic outlook is expected to improve modestly, supported by a sustained but slow recovery in the US and Eurozone,” it said. “(For Singapore) Externally oriented sectors such as manufacturing and wholesale trade are likely to continue to recover and provide support to growth.”

International Enterprise Singapore reflected the same sentiment, projecting a 1 to 3 per cent growth for both total trade and non-oil domestic exports. NODX in 2013 shrank by 6 per cent after the 0.5 per cent rise in 2012, the agency’s data shows.

-By Wong Wei Han

Singapore Real Estate

S'pore prime office rents rise 19% in 2013

They are still less expensive compared to other major financial centres

Source: Business Times / Top Stories

[SINGAPORE] Despite rents in Singapore's central business district (CBD) surging 19.29 per cent last year, bucking the trend of largely flat rental growth across Asia, office space remains considerably more affordable compared to other major financial centres.

At 803 euros (S$1,389) per square metre (psm) per year, the Republic's occupancy cost was sharply lower than London's West End (2,122 euros); Hong Kong's Central district (1,432 euros); Tokyo's CBD (1,003 euros); and New York's Madison and 5th Avenue (993 euros).

Rental growth here was largely demand-driven, led by the professional services and technology sectors, most notably consumer Internet companies such as, said Cushman & Wakefield in its latest Office Space Across the World report.

But while rents have risen, the increases have been tempered by tenants' aggressive focus on reduced budgets and operational expenses discipline, said Toby Dodd, managing director at Cushman & Wakefield, Singapore.

It is worth noting that Singapore's rental growth of 19.29 per cent is from a lower base, after the market reached the bottom of the cycle in Q4 2012.

"Rents will remain competitive due to the Singapore government's strong urban planning, coupled with a healthy supply pipeline - for example, Marina One, DUO and CapitaGreen, with the latter due for completion this year. This should be considered 'good news' for Singapore, as affordability and supply are key to business expansion, job creation and economic prosperity," added Mr Dodd.

In terms of rental growth, Singapore posted the third-largest rental increase in Asia Pacific, behind Jakarta and Bangkok, where prime rents rose 20 per cent in both cities.

Singapore was the seventh most expensive location in Asia Pacific. Hong Kong kept its regional crown (1,432 euros psm per year), followed by Beijing (1,027 euros), and Tokyo (1,003 euros).

Comparing Singapore with Hong Kong, Sigrid Zialcita, managing director for Cushman & Wakefield's research team in Asia Pacific, noted that despite the rental growth here, the Republic's office market continues to be more affordable than Hong Kong's Central district.

"Rents in Central are holding steady at their high levels despite the lack of any strong demand catalyst, notably for prime and large spaces where vacancies are higher," said Ms Zialcita.

"Many tenants still remain loyal to the district. However, tenants in Central will continue to pay a premium especially if demand rises more meaningfully and vacancies remain at ultra-low levels. In Singapore, rents will remain at their competitive level especially with upcoming new supply."

According to the 2014 ranking, Singapore is the 11th most expensive location by country, versus its 14th position last year.

London was the most expensive office market for the second year in a row, followed by Hong Kong. The third position went to Moscow (1,092 euros psm per year) after the city climbed three spots from sixth position a year ago.

Global office rents rose 3 per cent last year, while rents in Asia Pacific went up 2 per cent.

Asia Pacific's performance in 2014 is expected to be similar to 2013, as slow and stable demand keeps rental levels largely unchanged, though incentives will become more competitive, said Cushman & Wakefield.

China, Japan, and South-east Asia are expected to drive the region forward, with demand for office space in these areas gaining momentum in the course of the year, it added.

-By Mindy Tan

Development in Moulmein up for collective sale

Source: Business Times / Property

[SINGAPORE] Notwithstanding expectations of a quiet en bloc market this year, residents of a freehold Moulmein Road development have put the site up for sale by public tender.

Their price: more than $40 million.

CBRE is marketing 165-165Q Moulmein Road, a walk-up development comprising 16 apartments.

The 16,936 sq ft site has a plot ratio of 1.4. The asking price works out to $1,687 per sq ft per plot ratio.

District 11 apartments up for collective sale

Source: Today Online / Business

SINGAPORE — An apartment development in the prime District 11 has been put up for collective sale, with its owners looking for offers in excess of S$40 million.

The 16-unit apartment on Moulmein Road sits on freehold land of around 17,000 sq ft, across the road from Novena MRT Station, and Velocity@Novena and Square 2 shopping centres.

The area is also served by the Central Expressway and Pan Island Expressway, and is close to several schools such as St Joseph’s Institution Junior, Anglo-Chinese Junior and Primary schools, as well as CHIJ Primary (Toa Payoh).

“The location will be extremely popular with owner-occupiers and tenants looking for transportation convenience, close proximity to amenities, medical facilities and highly reputable schools,” said Mr Alex Chow, Manager for Investment Properties at CBRE, the marketing agent for the tender.

With a potential gross floor area of around 26,000 sq ft, the developer can build a project with 32 apartments of an average size of 800 sq ft each. And the S$40 million that the owners are seeking works out to around S$1,598 per sq ft per plot ratio.

“Given the excellent Novena location of the site, its freehold tenure and bite-sized quantum, we anticipate strong interest from local and foreign developers as well as new entrants to the Singapore real estate market,” Mr Chow said.

The tender for the site closes on April 2.

Good Class Bungalow market starting to recover

At least 6 transactions in GCB Areas since start of year, totalling about $170m

Source: Business Times / Property

ACTIVITY in the Good Class Bungalow market is starting to pick up with a few deals done recently.

Along Margoliouth Road off Stevens Road, a two-storey, old bungalow has changed hands for $30.8 million. This works out to $1,696 per square foot on its land area of 18,161 sq ft.

Located at a cul de sac, the freehold property has a swimming pool, five bedrooms and a maid's room. It is likely to be redeveloped.

The property is being sold by a retiree couple. The buyer is understood to be Imelda Tanoto. The Singapore citizen owns an adjoining bungalow while her parents are said to own another bungalow nearby.

URA gives free access to building database

Source: Straits Times 

Finding out what a property here can be used for, or the renovations it went through, has been made simpler, and free. The streamlined Urban Redevelopment Authority (URA) Development Register will now allow the public to get the information through a click of a button or by simply typing an address.

URA to launch map-based application

Source: Business Times / Property

[SINGAPORE] The Urban Redevelopment Authority has tapped Geographic Information System (GIS) technology to launch a new map-based application that will help users search for information to buy or lease a property, said Khaw Boon Wan, Minister for National Development, in his Housing Matters blog.

Currently, members of the public and professionals can search for such information, including general planning decisions, via URA's online database. Last year, there were more than 20,000 searches. However, retrieving information via the database is manual and cumbersome, he wrote.

With the new app, users need only click on a building or type in an address. The site will show URA records about relevant decisions on any new building erection, addition and alteration of structures, change of use, and land or building sub-division.

The app will be made free to those who register online. In the past, a $30 processing fee applied for downloading the detailed records of decision notices for development applications.

Free retrieval of URA records with launch of new application

Source: Channel News Asia / Singapore

SINGAPORE: From Wednesday, users of the Urban Redevelopment Authority's (URA) online database will be able to retrieve records for free.

The URA has launched a new map-based application which allows anyone who wishes to buy or lease a property access to its records.

The new map-based application uses a technology called Geographic Information System.

Users only need to click on a building or type in an address to see decisions on any new building erection, or addition and alteration of structures, among others.

This was revealed by National Development Minister Khaw Boon Wan in a blog post on Wednesday.

Previously, anyone who wants to know more about a property -- for example, the approved use and storey height of the building -- will have to manually sieve through the database.

The process can be quite cumbersome, Mr Khaw said, adding that last year, there were more than 20,000 searches.

In the past, users also had to pay a S$30 processing fee to download records.

Mr Khaw added that the URA will continue to tap technology to make information more accessible to the public, and it intends to do the same for enquiries on Development Charge rates, soon.

- CNA/nd

Developer delays launch of condo

Source: Straits Times 

Buying interest in residential property has been hammered so badly that one major developer has delayed a planned condominium launch. Heavyweight CapitaLand yesterday said it has postponed the launch of its project in Marine Parade originally slated for late last year.

Singapore May Ease Curbs If Prices Drop 10%, CapitaLand Says

Source: Bloomberg / News

Singapore may start easing some of its property measures if home prices drop as much as 10 percent this year, according to the chief executive officer of the city-state’s biggest developer.

The government may remove some curbs that it had said were for the “short term,” such as stamp duties or taxes for homebuyers, said Lim Ming Yan, president and CEO at CapitaLand Ltd. (CAPL) in an interview in Singapore yesterday. It may also tweak rules for loan limits, which are very stringent, he said.

“If the market should moderate down by another 5 percent, 10 percent, perhaps they will have to unwind,” Lim said, adding that it’s his personal view that conditions were not yet in place for the measures to be loosened.

Singapore’s fourth-quarter home prices slid 0.9 percent, falling for the first time in almost two years as the government introduced more taxes and restrictions to widen a campaign begun in 2009 to curb speculation in Asia’s second-most expensive luxury housing market. The measures came as housing values rose in the past five years to a record amid low interest rates, raising concerns of a property bubble.

After introducing taxes on property sales, the government added them on homebuyers and imposed mortgage limits. In June, the central bank also capped loan payments at 60 percent of salaries. Singapore has the region’s priciest luxury homes after Hong Kong and is ranked sixth globally, according to a Knight Frank LLP report released last year.

Slow Start

Singapore’s January home sales marked the slowest start to the year since 2009 after falling to a four-year low in 2013, according to government data. Singapore’s developers posted the worst performance on the benchmark Straits Times Index last year after recording the biggest gains in 2012.

“The government objective is to have a sustainable and stable residential market,” Lim said in a Bloomberg Television interview with Haslinda Amin yesterday. “In the event that there will be some volatility in the market, I would expect certain measures to be adjusted.”

CapitaLand said fourth-quarter profit fell 46 percent after it recorded a loss on the sale of a stake in an Australian developer and lower revenue from Singapore home sales. The company sold 109 residential units in the city in the three months ended Dec. 31, a third of the 352 sold in the year-earlier period, according to its earnings statement yesterday.

The shares fell 1.7 percent to S$2.86, their biggest drop since Sept. 30, at the close of trading in Singapore.

Tweaking Measures

CapitaLand isn’t the only Singapore property company expecting an easing of housing curbs. Billionaire Kwek Leng Beng, chairman of City Developments Ltd. (CIT), the country’s second-biggest developer, said Feb. 7 the government should consider tweaking measures as the property market starts to cool.

Kwek also said last year that skyrocketing prices and restrictive rules made buying residential land in Singapore “suicidal.” Still, that hasn’t stopped international developers from rushing in.

Land prices in some parts of the island-state are climbing at three times the pace of apartment costs, with plot values rising by an average 30 percent per year since early 2011, according to property broker Chesterton Singapore Pte, which used government auction data.

“The increase in land prices has had a tremendous impact on developers’ profit margins,” said Donald Han, managing director of Chesterton’s Singapore unit. “Developers that used to enjoy margins in excess of 20 percent will now have to contend with narrower returns.”

Longest Stretch

While home prices fell in the fourth quarter, housing values climbed 1.1 percent in 2013, increasing for a fifth year. That’s the longest stretch of annual gains since the data was available two decades ago.

For the full year, CapitaLand sold 1,260 homes, almost twice the 681 a year earlier, it said in the statement. Revenue was boosted by developments such as Bedok Residences in an eastern suburb that will also include a retail mall, as well as Urban Resort next to the Orchard Road shopping belt.

“On the sidelines, there is a lot of liquidity just waiting for the opportunities,” Lim, 50, said.

Demand for Singapore homes is expected to “further moderate” in 2014 because of the borrowing limit set by the government and concerns that interest rates will rise, the company said in the earnings statement.

Loan Curbs

The government “won’t roll back the loan curbs,” said Alan Cheong, a Singapore-based director at Savills Plc. “They may reverse some measures this year as market sentiment is very weak,” he said, citing examples such as stamp duties and taxes for buyers.

Piyush Gupta, CEO of DBS Group Holdings Ltd. (DBS), Singapore’s biggest lender, said Feb. 14 there will probably be a 10 percent to 15 percent reduction in home prices in the city-state.

CapitaLand’s Singapore residential business accounts for 10 percent of its total assets, Lim said. The developer is well positioned to weather a decline in prices as its projects are well-located and reasonably priced, he said.

“A lot will also depend on the environment outside,” he said. “If there is another global crisis, the market will come down even more, in which case the government will be in a position to unwind some of the measures.”

-By Pooja Thakur

Property demand cooler now, but supply needs time: CapitaLand

South-east Asia’s largest developer stops short of asking Govt to relax cooling measures

Source: Today Online / Business

SINGAPORE — Real estate developer CapitaLand said the residential property market in Singapore will continue to face headwinds this year, with the total debt servicing ratio (TDSR) framework and concerns over interest rates hike set to further weigh on demand.

However, the largest developer in South-east Asia stopped short of joining the calls for the Government to relax the various measures that have cooled the market, as the Singapore residential segment constitutes less than 10 per cent of the company’s overall portfolio.

“If market conditions become more challenging, I suppose the Government will always take that into consideration in whether they want to remove some of the measures or not. For us, although we have a small exposure relative to many of our peers, should the Government remove some of the measures, many, including us, will stand to benefit from that,” said President and Group Chief Executive Lim Ming Yan.

Private residential sales and price growth have moderated considerably over the last year, prompting market participants and watchers, such as City Developments Executive Chairman Kwek Leng Beng, to urge the Government to tweak some of the cooling measures.

But while CapitaLand did not join that chorus, Chief Executive of CapitaLand Singapore Wen Khai Meng said the Government could extend the time frame that developers have to comply with to build and sell their residential units, given that the curbs have slowed down demand and the buying process.

“Now that the Government has managed the demand side quite well, if they can give us a longer time to supply according to market conditions, it’ll be good so the market can reach equilibrium without the risk of wild swings,” Mr Wen said.

Mr Wen was referring to the Qualifying Certificate conditions, one of which requires developers with any foreign ownership to sell all dwelling units in their projects within two years of the temporary occupation permit being issued. An extension may be granted for a fee.

Despite that, Mr Lim said housing demand remains healthy, especially for properties that are “well-located, reasonably-priced and well-designed”. This will continue to be the case in the long term as Singapore has a resilient economy as well as policies that support population and economic growth.

“We still believe in the long-term prospects of the Singapore market,” Mr Lim said. “We will continue to look (for opportunities) but we will be very cautious about how we want to participate in this market … it’s not the case that we will henceforth not touch the residential market because (of the challenging conditions)”.

These comments were made as CapitaLand nearly doubled its local residential sales last year after locking in another 109 units between October and December last year. This brought the company’s total sales last year to 1,260 units, or S$2.44 billion, from 681 units in a year ago.

However, better sales performance in Singapore was in contrast with a 45.6 per cent fall in CapitaLand’s fourth-quarter net profit to S$142.9 million, mainly due to one-off losses after divesting its 20 per cent stake in Australand, the repurchase of convertible bonds and higher impairments.

The company’s revenue also dipped 2.3 per cent to S$1.09 billion in the same period as a result of the Australand divestment. But the decline was partly mitigated by turnover growth in CapitaLand’s development projects in China and Vietnam, as well as higher rental income from its shopping malls.

Mr Lim said the more streamlined company is now in a better position to capture more business opportunities this year. “The strategic decisions we made in 2013 will position us well for the future. We will focus on … our core markets of Singapore and China to grow our business.”

Real Estate Companies' Brief

One-off losses hit CapitaLand's Q4

Group calls for govt easing of time frame for developers to sell their units

Source: Business Times / Companies

THE government should consider relaxing the time frame within which developers are required to sell their units, said Wen Khai Meng, chief executive officer of CapitaLand Singapore, at CapitaLand's results briefing yesterday, during which the group revealed that its fourth-quarter net profit fell 45.6 per cent - from $262.7 million to $142.9 million.

The fall was largely due to one-off losses and higher impairments. Excluding the one-off Australand divestment loss (CapitaLand divested a 20 per cent stake in Australand in November while retaining a 39.12 per cent stake), net profit would have inched up 0.4 per cent to $263.7 million.

Revenue for the three months ended December dipped 2.3 per cent, from $1.11 billion to $1.09 billion. This was due to the Australand divestment and lower revenue from Singapore development projects, mitigated by an increase in revenue from the group's development projects in China and Vietnam, as well as higher rental revenue from its shopping malls.

In Q4, revenue from CapitaLand China, which is recognised on a completion basis, more than doubled to $292.8 million, as more apartment units were delivered to homebuyers.

-By Mindy Tan

CapitaLand 4th-Quarter Profit Falls on Australand Stake Sale

Source: Bloomberg / Luxury

CapitaLand Ltd. (CAPL), Southeast Asia’s biggest developer, said fourth-quarter profit fell 46 percent after it recorded a loss on the sale of a stake in Australand Property Group (ALZ) and lower revenue from its Singapore home sales.

Net income declined to S$142.9 million ($113.3 million) in the three months ended Dec. 31, from S$262.7 million a year earlier, the Singapore-based developer said in a stock exchange statement today. Revenue slid 2.3 percent to S$1.09 billion. Full-year profit 31 dropped 8.7 percent to S$849.8 million while operating profit rose 43 percent to S$527.7 million, it said.

“Operating profit was below our expectations,” said Vikrant Pandey, an analyst at UOB Kay Hian Pte in Singapore. He estimated operating profit at S$596 million for the year.

CapitaLand said it booked currency losses after raising A$426.4 million ($385 million) by selling a third of its 59 percent stake in Australand in November. The number of homes sold in Singapore in the fourth quarter was a third of those in the year earlier period and the developer expects demand and prices to “further moderate” with the government’s loan curbs.

The company sold 109 residential units in the island state in the quarter, compared with 352 in the same period a year ago. For the full year, it sold 1,260 homes, almost twice the 681 a year earlier.

The shares fell 1 percent to S$2.91, the most since Jan. 30, at the close of trading in Singapore while the benchmark Straits Times Index gained 0.6 percent.

Singapore Home Demand

Singapore’s fourth-quarter home prices slid for the first time in almost two years, trimming annual gains to the smallest since 2008 as mortgage curbs cooled prices in the Southeast Asian city. Housing values gained 1.1 percent in 2013, the lowest annual increase since prices slid 4.7 percent in 2008.

Demand in Singapore homes are also expected to further moderate in 2014 because of concerns of interest rate increases, the company said in the statement.

The developer sold 611 home units in China in the quarter, the developer said today. Its two core markets of Singapore and China accounted for 88 percent of the group’s profit before interest and tax in 2013, it said.

CapitaLand bought a residential site in China’s Ningbo city for S$232 million and plans to build about 1,100 small and medium-sized units, the developer said on Jan. 23. The developer along with CapitaMalls Asia Ltd. and CapitaMall Trust sold Westgate Tower, a Singapore office building, for S$579 million, it said last month.

The company also wrote down the value of some investments in China, India, Australia and Abu Dhabi.

-By Pooja Thakur

Croesus Retail Trust

Croesus Retail Trust (CRT) reported Q2 2014 distribution income of 713 million yen (S$8.8 million), 6 per cent above forecast, translating into a distribution per unit (DPU) of 2.02 Singapore cents. This was achieved on a 1.2 per cent higher than projected revenue of 1.287 billion yen and lower-than-expected interest expense. NPI improved 2.4 per cent on better operating cost management. Maiden DPU of 5.24 Singapore cents for May 10, 2013, to June 30, 2014, is expected to be paid on March 31, 2014. Book closure date is Feb 26, 2014.

The spider-like nature of the property market

Source: Straits Times

At a recent lunch, the conversation turned to crabs. No, the popular dining crustacean wasn't on the menu. But that didn't stop my host, who is a developer, from comparing the state of the residential property market to a trussed- up crab that has had all its eight legs bound up. "Seven rounds of cooling measure and one TDSR. The property market is well and truly tied up. No matter where we turn, we can't move," he lamented.

Sing Holdings posts Q4 loss, looks abroad

Source: Business Times / Companies

SING Holdings plans to look for overseas opportunities amid challenging conditions in Singapore as the property developer fell into a fourth-quarter loss.

The company posted a net loss of $533,000, or 0.13 cents per share, for the three months ended Dec 31, with zero revenue recognised. In the corresponding quarter a year ago, net profit was $13.8 million on revenue of $103.4 million.

For the full year, net profit was 29.9 per cent lower at $28.9 million, or 7.19 cents per share, as revenue slid 21.9 per cent to $226.8 million.

Sing Holdings has proposed a total dividend of 1.5 cents per share, comprising a one-cent final dividend and a half-cent special payout.

-By Kenneth Lim

Global Economy & Global Real Estate

D-Day for foreigners eyeing Johor property

Source: Straits Times

Foreign buyers of residential property in Malaysia's Johor state have until April 30 if they want to dodge new property measures there such as higher levies. The cut-off date - April 30 - is contained in a Feb 10 circular from Johor's Land and Mineral Office obtained by The Straits Times.

Student debt may hurt US housing recovery

It discourages potential buyers from purchasing their first homes

Source: Business Times / Property

The growing student loan burden carried by millions of Americans threatens to undermine the housing recovery's momentum by discouraging, or even blocking, a generation of potential buyers from purchasing their first homes.

Recent improvements in the housing market have been fuelled largely by investors who snapped up homes in the past few years. But that demand is waning as prices climb and mortgage rates rise. An analysis by the Mortgage Bankers Association found that loan applications for home purchases have slipped nearly 20 per cent in the past four months compared with the same period a year earlier.

First-time buyers, the bedrock of the housing market, are not stepping up to fill the void. They have accounted for nearly a third of home purchases over the past year, well below the historical norm, industry figures show. The trend has alarmed some housing specialists, who suspect that student loan debt is partly to blame. That debt has tripled from a decade earlier, to more than US$1 trillion, while wages for young college graduates have dropped.

The fear is that many young adults can no longer save for a down payment or qualify for a mortgage, impeding the housing market and the overall economy, which relies heavily on the housing sector for growth, regulators and mortgage industry specialists said.

-From Washington, US

Wealthy community fights low-income housing plans

Bitter 3-year battle in Chappaqua to overturn project

Source: Business Times / Property

Few places on the planet are as enviable as this Westchester County hamlet. Stately houses are set on spacious, hilly lots shaded by old trees; its village centre has gourmet restaurants and bakeries; its schools are top notch, and its 9,400 residents have a median household income of US$163,201, ranking the area roughly 40th among America's wealthiest communities.

But the hamlet has been churned up by plans to build new housing for people of much lower incomes, including black and Hispanic newcomers.

A developer is offering to build 28 units of affordable rental housing with caps on family earnings, although with no income floor; families of four earning no more than roughly US$64,000 would qualify, as would poorer families, including those who receive federal vouchers.

The project would allow Chappaqua, where 91 per cent of the residents are white, to contribute to a desegregation settlement that Westchester County reached in 2009 that is being overseen by the federal Department of Housing and Urban Development. The agreement is a condition of Westchester continuing to receive federal housing dollars after it was accused of lying about its compliance with fair-housing mandates.

-From Chappaqua, New York, US

Institutional buyers snapping up US farmland

About US$10b in pursuit of such property, says think-tank report

Source: Business Times / Property

Institutional investors are buying up US farmland at a rapid rate, and their influence is starting to shift the types of crops grown and the way the land is managed.

There is an estimated US$10 billion in institutional capital looking to acquire US farmland, and over the next 20 years, as the current generation of farmers retires, an estimated 400 million acres (162 million hectares) will change hands, according to the report issued on Tuesday by The Oakland Institute, a Calfornia-based think-tank with a focus on agriculture.

"Driven by everything from rising food prices to growing demand for biofuel, the financial sector is taking an interest in farmland as never before," said the report, which analysed property records and other county and local property data, and other public records.

The report cited several "case studies" and says that the institutional investment influence in some situations alters decisions about which crops to plant, land management and labour practices.

-From Washington, US

Owners of flooded UK homes face decline in property values

About 5,800 homes are flooded in the wettest January since 1766

Source: Business Times / Property

Homeowners in some of Britain's wealthiest districts face a drop in property values and the prospect their homes may be uninsurable as record floods blight towns along the River Thames.

About 5,800 homes have been flooded in towns including Chertsey, Egham and Datchet after England endured its wettest January since 1766. Almost 55,000 homes with a combined value of about £21 billion (S$44.11 billion) are in areas that have been subject to severe flood warnings, according to real estate broker Savills plc.

"The repercussions for property asset values are absolutely huge," said Hugh Fell, managing partner at property broker George F White and a former member of the Royal Institute of Chartered Surveyors valuation board. Some homes will be "virtually unsellable".

While the floods haven't posed a serious threat to London's real estate market, where home prices have gained 40 per cent since April 2009, the hardest-hit areas have been commuter towns along the Thames that have benefited the most from the housing boom, a string of historic villages along the Thames in the counties of Berkshire, Hampshire and Surrey.

-From London, UK

Chinese ambitions for London's derelict docks

Xu Weiping plans to turn Royal Albert Dock into trading hub for Chinese firms

Source: Business Times / Property

Known for ambitious plans in China for business parks the size of cities, Xu Weiping has said that he cannot wait to start work on his first project abroad: turning an abandoned London shipyard into Europe's main hub for Chinese companies.

"I'm a man with a vision and the ability to turn my dream into reality," he said.

Last year, Mr Xu agreed to invest US$1.6 billion to turn London's derelict Royal Albert Dock back into a vibrant global trading hub. But instead of ships, he is betting on Chinese companies that are seeking a foothold in Europe.

Mr Xu said that more than 60 Chinese businesses, many already tenants of his empire in China, have signed up to take space in the development, about 14.5 km east of London's city centre. Construction on what is planned as 4.5 million square feet of office space, to be done in phases through 2022, could start as soon as this summer.

-From London, UK

Housing in U.S. Cools as Weather Adds to Burdens: Economy

Source: Bloomberg / Personal Finance

Housing starts in the U.S. slumped in January by the most in almost three years as unusually harsh winter weather added to the industry’s burdens.

Builders began work on 880,000 homes at an annualized rate last month, matching the lowest projection in a Bloomberg survey of economists and down 16 percent from December, according to data from the Commerce Department issued today in Washington. The decrease was the biggest since February 2011. Another report showed wholesale prices remained constrained.

The coldest January in two decades probably limited groundbreaking as construction in the Midwest dropped to a record low, indicating homebuilding will contribute less to economic growth at the start of 2014. The outlook for the rest of the year will hinge on whether hiring picks up enough to overcome declining affordability as mortgage rates and property values climb.

“We won’t know until probably April at the earliest whether there is some change in the fundamentals” of the market because of the weather impact, said Richard Moody, chief economist at Regions Financial Corp. in Birmingham, Alabama, whose projection of 894,000 starts was among the closest in the Bloomberg survey. If there is growth in job creation and incomes, “that will offset higher mortgage rates,” he said.

The continued bad weather this month means “we won’t know until probably April at the earliest whether there is some change in the fundamentals,” Moody said.

U.K. Unemployment

The jobs outlook will also play a role elsewhere. A report today showed U.K. unemployment unexpectedly rose in the fourth quarter, reinforcing the case for the Bank of England to keep its key interest rate at a record low.

For their part, Federal Reserve policy makers plan to soon change their guidance for the path of interest rates as unemployment declines toward a threshold for considering an increase in borrowing costs, minutes of their January meeting showed today.

“Several” Fed policy makers also said that in “the absence of an appreciable change in the economic outlook, there should be a clear presumption in favor of continuing to reduce the pace” of the Fed’s bond purchases $10 billion at each meeting.

Stocks fell as the Fed minutes indicated stimulus cuts will continue and as the International Monetary Fund said risks of prolonged market turmoil in emerging markets and deflation in the euro area are threatening the world’s economic prospects. The Standard & Poor’s 500 Index dropped 0.7 percent to 1,828.75 at the close in New York.

Survey Results

The median estimate of 84 economists surveyed by Bloomberg projected January housing starts in the U.S. would come in at a 950,000 pace. Estimates (NHSPSTOT) ranged from 880,000 to 1.04 million. The Commerce Department revised the December reading up to 1.05 million from a previously estimated 999,000 pace.

Another report today showed the producer-price index increased 0.2 percent in January, led by gains in goods such as food and pharmaceuticals. The advance followed a 0.1 percent rise the prior month, according to data from the Labor Department. Over the past 12 months, wholesale prices rose 1.2 percent.

The data marked the debut of the first major overhaul of the PPI since 1978, which more than doubled its reach of the economy by including prices received for goods, services, government purchases, exports, and construction. The lack of pressure at the earlier stages of production, one reason inflation is running below the Federal Reserve’s target, has given policy makers room to keep borrowing costs low.

Inflation Pressures

“Pipeline pressures remain muted,” said Russell Price, a Detroit-based senior economist at Ameriprise Financial Inc., who correctly projected the 0.2 percent gain in the PPI. “Overall, businesses have very weak pricing power.”

The Commerce Department’s housing report showed permits for future projects declined 5.4 percent to a 937,000 pace in January, less than the projected 975,000, according to the Bloomberg survey median.

The smaller decrease in applications shows the weather played a role in last month’s slump in starts, according to economists such as Joshua Shapiro.

“Normally when permits hold up in the face of a steep drop in starts, the starts have merely been delayed owing to weather conditions, and they will occur when conditions allow,” Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc., a New York-based forecasting firm, said in a research note.

For all of 2013, builders began work on 926,700 homes, the most since 2007’s 1.36 million.

Homebuilding Slumps

Work on single-family houses dropped 15.9 percent to a 573,000 rate in January, the fewest since August 2012, from 681,000 the prior month. Construction of multifamily projects such as condominiums and apartment buildings declined 16.3 percent to an annual rate of 307,000, a three-month low.

Three of four regions showed declines in groundbreaking last month, led by a record 67.7 percent plunge in the Midwest to a 50,000 annualized pace, the fewest in data going back to 1959. Starts dropped 12.5 percent in the South.

By contrast, in the Northeast, where the mercury also declined, starts surged 61.9 percent, the most since December 2012.

Weather probably played less of a role in the West, where starts dropped 17.4 percent last month, the biggest decrease since November 2012. Last month was the third-driest January on record in California, according to the National Oceanic and Atmospheric Administration. California, Arizona and Nevada all had January temperatures ranking among the 10 warmest on record, NOAA said.

Regional Breakdown

The drop in the West, following a 25.9 percent surge in December, still put starts in the region at their second-strongest level in almost six years.

Inclement weather has weighed on the economy so far this year, holding back builders and preventing customers from visiting car dealerships and retailers. Government offices in Washington closed Feb. 13 as a winter storm that paralyzed the South with snow and ice moved to the Northeast, canceling flights, snarling traffic and downing power lines.

Last month was the coldest January since 1994 in the contiguous U.S., based on gas-weighted heating-degree days, a measure of energy demand, according to Commodity Weather Group LLC in Bethesda, Maryland. The Northeast is also on track for the coldest winter since 1982, measured from December to February, the group said.

Confidence among U.S. homebuilders plunged in February by the most on record as the bad weather limited prospective buyer traffic and depressed sales.

Confidence Slumps

The National Association of Home Builders/Wells Fargo sentiment gauge slumped to 46 this month, weaker than the most pessimistic estimate in a Bloomberg survey, from 56 in January, figures from the Washington-based group showed yesterday. All four regions showed declines. Readings less than 50 mean more respondents reported poor market conditions than good.

Beyond weather, borrowing costs for homebuyers have climbed since mid-2013. The 30-year fixed mortgage rate averaged 4.28 percent in the week ended Feb. 13, up from 3.35 percent in early May last year, according to data from Freddie Mac in McLean, Virginia.

At the same time, some builders, such as Atlanta-based Beazer Homes USA Inc., remain upbeat about the outlook for demand.

“While housing isn’t the screaming bargain that it was a year ago, it is still highly affordable in relation to household incomes and to alternative rental payment,” Chief Executive Officer Allan Merrill said on a Jan. 31 earnings call. “Household formations are occurring, and they drive new construction.”

-By Michelle Jamrisko and Shobhana Chandra

Rents Used to Pay Blackstone Leased-Home Bonds Decline 7.6%

Source: Bloomberg / Luxury

Rents collected on the collateral for the first U.S. rental-home securities declined by 7.6 percent from October to January, according to Morningstar Inc.

Payments declined as expiring leases and early tenant departures left residences backing the bonds of Blackstone (BX) Group LP’s Invitation Homes vacant, Becky Cao and Brian Alan, analysts at Morningstar’s credit-ratings unit, said in a report. While 8.3 percent of the properties were vacant or occupied by delinquent renters in January, renewals on 78.5 percent of leases that expired the prior month exceeded the analysts’ expected rate of 66.7 percent.

The deal’s performance is being watched as Wall Street bankers and institutional property investors seek to follow Blackstone’s $479.1 million transaction in November with additional offerings. Initial lease expirations for the 3,207 homes are scheduled to peak from January through March, Morningstar said. To woo investors and rating firms in the new market, the transaction started with all of the units leased, unlike bonds backed by apartment-building loans.

“As the number of lease expirations decline throughout 2014, and the vacant properties are filled, we expect the vacancy rate to stabilize and to potentially decline,” the analysts wrote in the report sent by e-mail today.

200,000 Properties

One dealer was offering to sell top-rated notes from the Blackstone transaction for about face value today, according to Empirasign Strategies LLC, which tracks securitization-market trading. Some riskier slices were being offered by JPMorgan Chase & Co. for less than par last month, people with knowledge of trading said then.

Christine Anderson, a spokeswoman for New York-based Blackstone, declined to comment.

Institutional investors, led by companies such as Blackstone’s Invitation Homes and American Homes 4 Rent (AMH), have bought as many as 200,000 U.S. properties in the last two years, taking advantage of real estate prices that fell by as much as one-third from the 2006 peak, and rising demand for rentals among Americans who lost their houses in the foreclosure crisis.

Morningstar said it expects a stabilized vacancy rate of 8 percent for homes underlying the first deal after it granted AAA grades to $278.7 million of the notes. Wall Street ultimately may sell more than $20 billion a year of rental-home bonds as investors become comfortable with those tied to smaller landlords, according to Ryan Stark, a director at Deutsche Bank AG, which structured and helped underwrite the transaction.

Kroll Bond Rating Agency said in a report at the time the Blackstone deal closed that its forecasted rental revenues after estimated property expenses covered 1.68 times the obligations to bondholders. Kroll, which used a 10 percent vacancy rate in the calculations, also granted top grades to the biggest slice of the deal, according to the Nov. 19 report.

-By Jody Shenn

Marriott Earnings Match Estimates as Demand Increases

Source: Bloomberg / Personal Finance

Marriott International Inc. (MAR), the owner of such brands as the Ritz-Carlton and Renaissance, reported fourth-quarter earnings that matched analyst estimates as leisure and business-group demand rose in North America.

Net income was $151 million, or 49 cents a share, compared with $181 million, or 56 cents, a year earlier, the Bethesda, Maryland-based company said today in a statement. The average estimate of 10 analysts was 49 cents a share, according to data compiled by Bloomberg. A change in Marriott’s calendar cut the number of days in the fourth quarter from a year earlier.

Marriott, the second-largest U.S. hotel chain by stock-market value, was helped by rising demand from vacation travelers as well as individual and group business customers in most of its North American markets, said Patrick Scholes, an analyst at SunTrust Robinson Humphrey Inc. in New York.

“North America was solid with good demand from the leisure and corporate traveler,” Scholes said in a telephone interview before earnings were announced. “There was even a pickup in demand from group.”

Demand at Marriott’s properties in the Washington area, which number about 150, were hurt by last year’s government shutdown, he said.

The shares fell to $50.50 at 5:55 p.m. in after-hours trading after closing at $51.54.

Expenses Increase

“The fourth quarter was only so-so,” Nikhil Bhalla, an analyst at FBR & Co. in Arlington, Virginia, said after earnings were released. “I don’t think shareholders are happy about the fact that expenses went up so much. The quarter was just a bit disappointing.”

General, administrative and other expenses for the quarter totaled $200 million, according to the statement. That’s higher than the company’s October estimate of $170 million to $175 million.

Revenue per available room, an industry measure of occupancies and rates, climbed 4.1 percent from a year earlier worldwide, adjusted for currency fluctuations, according to today’s statement. In North America, revpar increased 4.7 percent. The company in October had forecast revpar to climb 4.5 percent to 5.5 percent on the continent.

Total revenue fell to $3.22 billion from $3.76 billion a year earlier.

The fourth quarter was 92 days long last year, compared with 112 days in 2012, as Marriott changed to calendar-year reporting. Marriott didn’t restate year-earlier earnings to account for the change.

-By Nadja Brandt

Battersea Developer Limits New Home Offering to Buyers in London

Source: Bloomberg / Luxury

More than 200 apartments at Battersea Power Station will be offered only to buyers in London as developers respond to criticism that too many new homes in the British capital are going to overseas investors.

Battersea Power Station Development Co., owned by Malaysian companies including SP Setia Bhd. (SPSB)and Sime Darby Bhd. (SIME), will start selling 254 homes on the site on May 1, according to a statement today. The unfinished apartments will be offered for as much as 30 million pounds ($50 million) each, the developer said in November.

Investors from Asia have been splurging on London homes following property curbs in their home countries, sparking a jump in luxury-apartment prices. Two-thirds of new homes in the U.K. capital sold before completion were purchased by southeast Asian buyers, Land Securities Group Plc said last year.

“This decision is part of a wider strategy to create a product well-suited for owner occupiers and people who will help us create a real and lasting community here in Battersea,” Rob Tincknell, the developer’s chief executive officer, said in the statement.

This will be the second group of homes to be sold after the Malaysian investors bought the property for 400 million pounds in 2012. In the first phase, about 45 percent of the residences went to U.K. buyers, according to the company.

British homebuilders including Barratt Developments Plc (BDEV), Taylor Wimpey Plc (TW/) and Telford Homes Plc (TEF) agreed on Dec. 18. to stop giving buyers living abroad the first chance to buy London homes sold before they’re built

“It is important that homes are not exclusively marketed abroad before the U.K.,” Mayor of London Boris Johnson said at the time.

The properties being put up for sale will range from studio apartments to five-bedroom penthouses, according to the statement. The penthouses will be built into the existing facades of the western and eastern sides of the derelict power station.

-By Patrick Gower

Flood-Soaked U.K. Homeowners Face Decline in Values: Mortgages

Source: Bloomberg / Sustainability

Homeowners in some of Britain’s wealthiest districts face a drop in property values and the prospect their homes may be uninsurable as record floods blight towns along the River Thames.

About 5,800 homes have been flooded in towns including Chertsey, Egham and Datchet after England endured its wettest January since 1766. Almost 55,000 homes with a combined value of about 21 billion pounds ($35 billion) are in areas that have been subject to severe flood warnings, according to real estate broker Savills Plc. (SVS)

“The repercussions for property asset values are absolutely huge,” said Hugh Fell, managing partner at property broker George F White LLP and a former member of the Royal Institute of Chartered Surveyors valuation board. Some homes have lost more than half of their value, making them “virtually unsellable,” he said.

While the floods haven’t posed a serious threat to London’s real estate market, where home prices have gained 40 percent since April 2009, the hardest-hit areas have been commuter towns along the Thames that have benefited the most from the housing boom, a string of historic villages along the Thames in the counties of Berkshire, Hampshire and Surrey.

Virginia Water, the first town outside London where the average house price exceeded 1 million pounds, according to website, has been under a severe flood warning. The town is home to the Wentworth Golf Club, set to host this year’s PGA Championship, as well as properties owned by musicians Cliff Richard and Elton John.

Olde Bell

In Hurley, a rural parish in Berkshire, the Olde Bell Inn that dates to 1135, has closed its doors until at least Feb. 24. Eton and Castle, home to the Eton College private school attended by Prime Minister David Cameron, has also been endangered. The 817 homes there are worth 690,000 pounds on average.

“If I’m asked to go and value a property for the bank, I’ll be asked to comment on its marketability,” Fell, whose agency is based in Durham County, said by phone. “If it’s flooded or at future risk, it’s going to be really difficult to sell. As soon as you say that, the mortgage company will say it’s not suitable for lending.”

A property that can’t be mortgaged loses 70 percent of its potential buyers, Fell said. A home that becomes uninsurable, and therefore only available to cash buyers, loses as much as 20 percent of its value, according to Richard Sexton, a director at property appraisal firm e.surv.

Lower Value

River levels on the Thames, though falling, remained high after more than two months of downpours, the U.K.Environment Agency said on its website. Water from rainfall on Feb. 14 and 15 is filtering down to areas already inundated after the earlier storms, according to the agency.

The Environment Agency downgraded 14 severe flood warnings for the River Thames on Feb. 17, leaving two in place on the Somerset Levels. A severe warning is an indication of a threat to life. A further 88 flood warnings and 132 flood alerts were in place as of 12:50 p.m. today in London.

Berkshire, Hampshire, Surrey, Sussex, Kent and parts of London remain at risk of groundwater flooding, the agency said.

A preliminary agreement signed in June by the government and the Association of British Insurers would change the current system where homeowners in low-risk areas subsidize those living where flood danger is high. A new plan set to start in 2015 would exclude any home built after 2009 or in the highest tax band. It also won’t include leasehold properties or council homes.

Insurance Deal

Homeowners in areas with a high flood risk have been able to buy insurance with no cap on its cost as part of the deal reached between insurers and the government in 2000. Flood RE, the new agreement being considered, would create a fund to provide payouts for properties insurers won’t cover.

“The whole issue of flooding has become immediate, as opposed to it being a problem once in every 100 years,” Clive Beer, head of rural professional services at Savills, said by phone. “So even if you can get insurance, the premium you need to pay is going to be a huge factor.”

Cabinet Office ministers Oliver Letwin and Jo Johnson were among those due to hold talks yesterday with the chief executive officers of Aviva Plc (AV/), Axa SA (CS), Lloyds Banking Group Plc (LLOY) and Ageas to discuss how to deal with the floods. Insurance costs may reach 1 billion pounds by April, Deloitte LLP said by e-mail.

Outlook Unsettled

“Ministers have requested an operational briefing on the immediate and longer-term practical recovery process to getting people back on their feet after the flooding, and the steps the industry is taking to ensure this process is as quick and simple as possible,” according to the statement from Cameron’s office.

The Met Office, the U.K. weather forecaster, has said the outlook for this week is “unsettled.” While it predicted less extreme downpours and winds, it maintains a yellow rain warning, the third-highest level, for southwest England, including Somerset. It said as much as 2.5 centimeters (1 inch) of rain may fall.

Cameron said money is “no object” in tackling the effects of the floods and on Feb. 17 announced a 10 million-pound support program for affected businesses. That’s on top of a Feb. 12 pledge to make 10 million pounds available for farmers to repair damage and install flood-prevention equipment.

The Environment Agency has ordered temporary defenses from Sweden and the Netherlands. It’s erecting barriers in Chertsey, after working on Feb. 13 to protect the southern cathedral city of Winchester from the rising River Itchen.

“Anybody that has suffered a flood event in a house will tell you how bloody miserable it is, shoveling out mud and sewage while all your possessions are damaged,” Fell said. “People are going to pay less money for a home that has flooded.”

-By Patrick Gower

Starwood, Expedia Win Dismissal of Room Price-Fixing Suit

Source: Bloomberg / Tech

Starwood Hotels & Resorts Worldwide Inc. (HOT) and Expedia Inc. (EXPE) among other hotel and Internet travel agencies won dismissal of an antitrust lawsuit after a judge found consumers hadn’t showed the companies conspired to fix room prices.

“The well-pled facts do not plausibly suggest that defendants entered into an industrywide conspiracy,” U.S. District Judge Jane J. Boyle in Dallas said yesterday in a ruling throwing out the case.

The plaintiffs, who bought hotel rooms across the U.S., claimed in more than two dozen consolidated cases that the companies agreed to prevent consumers from getting lower prices. The companies denied any attempt to fix prices.

The hotels and travel companies were accused in the lawsuit of entering agreements to prevent hotels from selling rooms for less than the participating travel agents charged, causing consumers to pay “artificially inflated prices,” according to a May 1 complaint.

“The defendants’ ‘best price’ or ‘best rate’ guarantees are nothing more than a cover for their conspiracy to fix prices,” according to the complaint.

Boyle said she would allow the consumers to re-file the complaint if they tell her within 30 days how their proposed revision would remedy the shortcomings in the one she threw out and she agrees with them.

Genuine Competition

In her ruling, Boyle rejected the plaintiffs’ three antitrust claims and a consumer protection claim. She found they didn’t adequately allege that a price-fixing conspiracy began in about 2003. The judge also said the consumers failed to adequately allege there were agreements that online travel agencies wouldn’t genuinely compete with one another and that individual hotel chains would publish the best-available room rates and that no online travel agency would be allowed to offer that room for less than any other or the chain itself.

Those business practices were the result of independent efforts by the online travel companies to protect their interests by adopting similar “vertical distribution agreements” with the hotel chains, according to the ruling. Boyle said she agreed with the companies’s explanation that the allegations amounted to “nothing more than parallel business activity.”

Single Suit

The lawsuits, dating back to 2012, were later combined in a multidistrict litigation in which the plaintiffs sought to turn the consolidated cases into a single lawsuit on behalf of all consumers who paid for hotel rooms reserved through the defendants’ websites from Jan. 1, 2003, to May 1, 2013.

The class of transactions wouldn’t include reservations made as a part of a package deal, or where the name of the hotel wasn’t disclosed until after the reservation was paid for.

The defendants said the consumers’ allegations didn’t meet the standards for lawsuits claiming antitrust violations.

“There is nothing anticompetitive, much less unlawful, about a hotel setting specific pricing terms for its distributors so that it competes effectively with other hotels,” they said in their July 1 motion to dismiss the lawsuit. “Plaintiffs assert the novel proposition that a hotel must compete against itself.”

The online travel site defendants included Expedia, LP, LP, BV, Inc. (PCLN) and Orbitz Worldwide Inc. (OWW) The hotel defendants included Starwood, Intercontinental, Marriott International (MAR) Inc., Trump International Hotels Management LLC and Hilton Worldwide (HLT) Inc.

‘Interbrand Competition’

“The hotels can control the price of the rooms they offer,” Thomas Barnett, an attorney for the travel sites, said at a Dec. 17 hearing. “As long as there is interbrand competition going on, consumers don’t have to worry,” he said, referring to competition among hotels within a city or area.

The agreements with online travel sites allowed hotels to advertise the same price for rooms across multiple outlets, said Jeffrey Cashdan, representing Intercontinental Hotels Group Resources Inc., whose affiliates include Holiday Inns and InterContinental Hotels. (IHG) “To call that price-fixing is absurd,” he said at the December hearing.

The case is In re On-Line Travel Company (OTC)/Hotel Booking Antitrust Litigation, 12-cv-3515-B, U.S. District Court, Northern District of Texas (Dallas).

-By Andrew Harris, Tom Korosec and Margaret Cronin Fisk