Real News‎ > ‎2014‎ > ‎February 2014‎ > ‎

8th February 2014

Singapore Real Estate

Strong top bid of $382 psf ppr for Jurong EC site

Source: Business Times / Top Stories

Despite last month's rule changes affecting the executive condo market, an EC site in Jurong West has drawn strong interest with 12 bids and a high top bid of $381.81 per square foot per plot ratio (psf ppr) from a Koh Brothers-Heeton Homes partnership. This was near the top end of the range predicted by property consultants when the site was launched in late October.

Long House Food Centre sold for $45.2m

Source: Business Times / Companies

Long House Food Centre, a popular food centre along Upper Thomson Road, has a new owner, after being sold for $45.2 million. Long House Food Centre has been acquired by TEE Ventures, a subsidiary of the mainboard-listed TEE Land, in a deal brokered by Knight Frank. Long House, a family-held asset, sits on a 1,576 square metre freehold site that has been designated for commercial and residential use under the 2008 Master Plan.

Office rents, occupancy rates climb in 4th quarter

Source: Straits Times 

Higher occupancies and rents in the last quarter indicate that the office rental market could be picking up. The uptick was not just in the Central Business District (CBD), which typically has healthy demand, but in the suburban areas as well, industry experts noted. The average monthly gross rents of Grade A office space in the CBD climbed 2.1 per cent from the third quarter to $9.75 per sq ft (psf) as at end-December, according to consultancy CBRE yesterday. Grade A offices are those in top-quality buildings in Raffles Place, Marina Bay and Marina Centre.

Tweak cooling measures, urges Leng Beng

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

Source: Business Times / Top Stories

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

-By Felda Chay

CapLand to focus China growth efforts in five city-clusters

Source: Business Times / Top Stories

CAPITALAND, marking its 20th year in China, is looking to deepen its presence in five city-clusters spanning the country.

The five city-clusters are Beijing and Tianjin in the north; Shanghai, Hangzhou, Suzhou and Ningbo in the east; Guangzhou and Shenzhen in the south; Chengdu and Chongqing in the west; and Wuhan in central China.

The chief executive of the real estate company, Lim Ming Yan, said: "The growing market trend towards larger integrated developments in these markets is an opportunity for us to harness synergies across our competencies in developing homes, offices, shopping malls, serviced residences and fund management.

-By Lynette Khoo

Savills sees private property prices rising 2%, not falling as expected

Developers unlikely to lower prices below benchmarks just to clear their stock

Source: Business Times / Singapore

DESPITE expectations of more headwinds, developers are unlikely to lower prices, said Savills Singapore in a report yesterday.

In fact, the global real estate services provider has forecast that overall prices could creep up by 2 per cent this year, contrary to market expectations of price falls.

Alan Cheong, the senior director at Savills Research, Singapore, said: "Market expectations of sharp price declines are not supported by the facts."

He noted that many mass-market and mid-tier projects are in the hands of financially strong developers, who are unlikely to lower prices below comparable benchmarks just to clear their stock.

-By Mindy Tan

Home launches and sales in suburbs shrink dramatically

Source: Straits Times

Suburban projects saw a sharp slowdown in the second half of last year, a Straits Times analysis has found. Both unit launches and unit sales in the six-month period plunged to their lowest levels since the depths of the financial crisis in the second half of 2008, figures compiled by Jones Lang LaSalle show.

Jalan Besar likened to edgy Tiong Bahru

Source: Straits Times 

Jalan Besar estate, sandwiched between Little India and Lavender, was, for years, largely a mess of industrial properties, shophouses, hotels and a handful of condominiums. For that reason, the area has probably been off the radar of many property investors. 

Real Estate Companies' Brief

CapitaLand, KepLand win awards in Beijing

Source: Business Times / Companies

Capitaland was conferred a Top 10 Asean Enterprise Entering China award by the China-Asean Business Council in Beijing yesterday. This is the second straight year it has won this. CapitaLand president and group chief executive officer Lim Ming Yan was conferred the Outstanding Asean Entrepreneurs Entering China award.

Hiap Hoe unit to make offer in move to take SuperBowl private

Source: Business Times / Companies

Hiap Hoe - through wholly owned Hiap Hoe Strategic (HHS) - is proceeding with its planned acquisition of SuperBowl Holdings at 75 cents a share, with a view to taking it private.This follows the approval from Hiap Hoe shareholders at an extraordinary general meeting (EGM) on Monday.

OUE to start book building for Reit

Source: Business Times / Companies

Singapore-listed property group OUE Ltd will begin book-building for a commercial real estate investment trust (Reit) listing in the city-state on Jan 13 that may raise as much as US$355 million, the Thomson Reuters publication IFR reported yesterday. This will be the first major Singapore initial public offering (IPO) this year, which could be followed by US$1 billion IPO of South Korea's Lotte Shopping Co Ltd's Reit after the Chinese New Year holiday.

Ascendas Hospitality Trust

Ascendas Hospitality Trust (A-HTrust) reported higher revenues and net property income (NPI) of S$56.6 million and S$23.4 million, which were 10 per cent and 37 per cent higher y-o-y, respectively. The refurbishment and rebranding exercises at its Australian portfolio have been substantially completed, resulting in a robust uplift in RevPAR of about 6-18 per cent y-o-y (averaging +12 per cent y-o-y to S$147/night). Occupancies improved by 5 ppts to about 85 per cent in Q3-14.

Bukit Sembawang Q3 profit drops 20.8%

Firm warns of challenging conditions that will hurt sales

Source: Business Times / Companies

PROPERTY firm Bukit Sembawang Estates has warned that challenging conditions in the residential market are expected to "adversely affect" sales in the year ahead.

Its comments came yesterday in its financial statements in which it reported a 20.8 per cent fall in net profit for the fiscal third quarter on lower sales.

Net profit for the three months ended Dec 31, 2013, stood at $18.5 million, down from $23.3 million in the same period a year ago.

-By Jamie Lee

PCRT distributable income slips 2.5%

Source: Business Times / Companies

PERENNIAL China Retail Trust (PCRT), which owns and develops shopping malls in China, continued distributing income from earn-out funds while its malls are still under development.

It announced distributable income of $10.9 million for its fourth quarter ended Dec 31, 2013, down 2.5 per cent from $11.2 million a year ago. Gross revenue was $1.3 million, from none a year ago. Revenue came from Perennial Jihua Mall, Foshan, which began operations in the third quarter of 2013.

PCRT announced a half-year distribution per unit of 1.9 cents, which works out to an annualised yield of 7.2 per cent based on PCRT's last closing price of 53 cents. For the full year of 2013, amount available for distribution was $43.6 million, unchanged from a year ago. Revenue was $2.6 million, from none in 2012.

-By Cai Haoxiang

Centurion Corp

Source: Straits Times

Centurion, formally known as SM Summit, is the only listed dormitory operator in Singapore. By the 2016 financial year, its portfolio will expand 60 per cent to an estimated 54,000 beds. Last year's riot in Little India highlighted the shortage of dormitories and the dire need for more such purpose-built accommodation.

Views, Reviews & Forum

Quieter piling method used at worksite: BCA

Source: Straits Times

The piling method used in the Still Road South site mentioned by Mr Chia See Chun ("Ban 'drop hammer' piling in highly populated areas"; Forum Online, Dec 24) is not the conventional driven reinforced concrete piling method, which creates significant noise and vibration. Instead, an improved version with less noise and vibration, known as the driven small diameter steel pipe piling method, was used.

MOM tightens rules on reporting of workers injured in accidents

Source: Today Online / Singapore

Employers will now have to report all accidents that result in more than three days of medical leave for workers — even if these are not on consecutive days — as well as all work-related traffic accidents, the Ministry of Manpower (MOM) said.

The previous incident-reporting framework under the Workplace Safety and Health (WSH) Regulations required employers to report an accident only if their workers went on more than three consecutive days’ medical leave, which led some bosses to game the system by splitting up the medical leave.

MOM said yesterday such errant practices not only affected the injured employee’s recovery process, but also the integrity of the incident-reporting framework. “It is important that MOM’s reporting database reflects an accurate picture of the number of WSH incidents, so that we can appropriately calibrate our engagement and enforcement actions,” it said in a statement.

Under the new rules, which kicked in on Monday, an employer has 10 days from an injured worker’s fourth day of medical leave to report the accident.

For example, if a worker gets medical leave on Jan 6 and 7 and goes back to work, but the doctor subsequently gives him medical leave on Jan 9 and 10, the employer will have 10 days from Jan 10 to report the accident. This means the deadline is on Jan 19.

MOM added that requiring employers to report all work-related traffic accidents “would send a clear signal that employers need to better manage traffic safety”. It added that following a spate of high-profile work-related traffic accidents in March last year, it considered requiring such accidents to be reported. A public consultation on this change received a “consensus supporting” the move.

Those who fail to report the incidents are liable to be fined up to S$5,000 for the first time and fined up to S$10,000 and/or jailed up to six months subsequently.

Global Economy & Global Real Estate

GLP leases 106,000 sqm space to Brazil's fashion retailer

Source: Business Times / Companies

Listed Global Logistic Properties Limited (GLP) has leased 106,000 square metres of logistics space in Sao Paulo in its first deal with Brazil's largest fashion retail company. The deal with Riachuelo at the GLP Guarulhos logistics park is GLP's largest lease agreement in Brazil, said the company in a statement yesterday.

Sale of HK properties down by a third in 2013 to 17-yr low

Source: Business Times / China 

The number of properties sold in Hong Kong fell by more than a third last year to a 17-year low as a drastic increase in tax on home sales, introduced to tackle rising prices, easily outweighed discounts offered by the city's property developers.

HK property sales slump to 17-year low as stamp duty bites

Source: Today Online / Business

The number of properties sold in Hong Kong plunged by more than a third last year to a 17-year low as a surge in the stamp duty, designed to burst a housing bubble, turned off buyers in one of the world’s most expensive cities.

Despite steep discounts offered by property developers, the number of sale and purchase agreements concluded last year amounted to 70,503, down 39 per cent from 2012, said the Hong Kong Land Registry.

The value of deals dropped 30 per cent from a year ago to HK$456 billion (S$74.8 billion), the data showed.

Last February’s doubling of stamp duty on residential transactions to as much as 8.5 per cent of the sale value was designed to let the air out of the city’s growing property price bubble.

However, it has yet to stop home prices from creeping up: According to property-services firm Centaline Property, overall home prices edged up 3 per cent for the year and have jumped 120 per cent since 2008.

That could change soon. With local tycoons such as Mr Li Ka-shing warning of the impact of the tax on his property business, Deutsche Bank said last November that Hong Kong home prices could plummet as much as 50 per cent over the next 12 months.

Only last weekend, Mr Li’s Cheung Kong Holdings, the city’s second-largest developer, offered price discounts of up to 25 per cent at the launch of its new residential project. REUTERS

Principal Hires Koh, Mittag in Asia Real Estate Push

Source: Bloomberg / News

Principal Financial Group Inc. (PFG), the seller of life insurance and retirement products, hired two portfolio managers as part of a push into property bets in Asia.

Shern-Ling Koh and Julian Mittag will be based in Singapore, joining two members of the global real estate property securities team already there, Jaime Naig, a spokeswoman for the insurer, said in a telephone interview yesterday. There are also offices in Sydney, London and Chicago for the group, which expands to 13 with the additions.

“Given the growth and wide range of distinct markets in Asia, adding portfolio management depth allows our team to further evolve alongside the region,” Kelly Rush, chief investment officer of global real estate securities at Principal’s property unit, said in a statement.

Principal’s asset-management firm has boosted investments in real estate and commercial mortgages as property values rise and the economy recovers. Principal Real Estate Investors managed or subadvised $47.8 billion in commercial real estate assets as of Sept. 30, up from $44.8 billion in 2012, Naig said.

Koh most recently was chief executive officer of OSK International Asset Management. He was previously an investment analyst at Fidelity International Ltd. Mittag joins from SEB Asset Management, where he was an Asia real estate portfolio manager focusing on stocks.

Principal gained 0.1 percent to $49.04 in New York yesterday. The Des Moines, Iowa-based insurer advanced 73 percent last year, beating the 45 percent gain of the 21-company Standard & Poor’s 500 Insurance Index.

-By Alexandria Baca

Britons Get Right to Demand Sale of Government Land and Property

Source: Bloomberg / Luxury

The public in the U.K. will be able to apply for government land and property to be released for sale starting today, with profits going toward paying off the budget deficit.

Under a new “right to contest,” individuals and businesses can challenge the use of central-government land and property, both vacant and occupied, when previously only local-authority assets that were empty or under-used were eligible, the Treasury said in an e-mailed statement.

“We certainly should not act as some kind of compulsive hoarder of land and property that could be better used for things like housing and local economic growth,” Chief Secretary to the Treasury Danny Alexander said in the statement. Government sites that could be put to better economic use may be sold “back to the community and local businesses at a fair price.”

While the government and the Bank of England have introduced measures to make mortgages more widely available, a shortage of housing in the U.K. has helped drive up property prices, leaving many unable to afford to buy a home. Chancellor of the Exchequer George Osborne said earlier this week that while the U.K. economy is “on the rise,” the country still faces some “hard truths” and his commitment to reducing the deficit will continue.

The government owns more than 330 billion pounds ($540 billion) of land and property, the Treasury said.

Applications will go before a committee that will include ministers from the Treasury, Cabinet Office and the land-holding department. The Department for Communities and Local Government will still receive applications challenging local authorities’ use of land and property, according to the statement.

-By  Svenja O’Donnell

Burbank to Brookline Soar in Suburb Shift: Real Estate

Source: Bloomberg / Personal Finance

Clarion Partners LLC, a real estate owner overseeing almost $30 billion, made millions buying Manhattan office buildings and towers in Seattle and Houston after the U.S. property crash began six years ago. It’s now moving to the outskirts of big cities.

“Investors see high quality just outside major metros,” said Tim Wang, head of research at Clarion, which acquired buildings in Arlington,Virginia, and Brookline, Massachusetts, last year. “As the recovery broadens in 2014, you’ll see more capital flowing into secondary markets and select suburbs.”

Commercial properties from Brookline to Woodlands, Texas, and Burbank, California-- areas just beyond major markets -- are selling at premiums to real estate in cities such as Boston and Los Angeles. Sales in top suburbs surged to more than $25 billion last year, and the spread in capitalization rates, a measure of yield used by real estate investors, was the widest in 13 years relative to all U.S. transactions, according to Real Capital Analytics Inc.

“These are places where companies are hiring and the new economy is forming, centers of gravity that feed on themselves,” said Dan Fasulo, managing director of the property-research company, which compiled pricing data on more than 105 suburban ZIP codes for Bloomberg News.

Office-building prices in top suburbs rose 4.7 percent last year to $311 a square foot, just 7 percent below the 2007 peak and showing a rebound “in the fourth or fifth inning,” Fasulo said, referring to the midpoint of a baseball game. High-end retail values reached $489 a square foot, a record level that’s still a discount to new construction, said Bill Whalen of New York-based Cantor Commercial Real Estate.

Debt Available

“Fear seems to have gone away from the market,” said Whalen, head of the commercial mortgage-backed securities lender’s San Francisco office. “There’s plenty of debt and equity capital.”

Cap rates for transactions in top suburbs were 5.8 percent last year, compared with a U.S. average of 6.9 percent. The difference of 110 basis points was the biggest since 2000, and probably will grow as the economy improves, Fasulo estimates. A cap rate is calculated by dividing a property’s net operating income by its purchase price, so it moves down as values rise.

Deal volume jumped from $17.7 billion in 2011, when the cap-rate spread was 73 basis points, according to New York-based Real Capital. In the years after the financial crisis, primary U.S. markets were seen as less risky bets than suburbs and drew the bulk of investment until downtown yields became so unattractive that buyers began seeking opportunities further afield, Wang said.

Investor Migration

Sales figures were compiled from deals since 2000 that were priced higher than $10 million and $250 a square foot and located outside of core U.S. markets New York, Boston, Washington, Chicago, Los Angeles and San Francisco, along with Miami, Houston, Las Vegas, Phoenix, San Diego, Seattle and Austin, Texas -- cities “where the new economy is moving,” Fasulo said.

Investor migration from cities makes sense after a 32 percent jump in downtown office prices since 2010 pushed up costs for tenants as well as buyers, Fasulo said. Occupancy in U.S. suburbs overall gained 1 percent last year to outpace a 0.1 percent increase in central business districts, according to a separate study from Los Angeles-based brokerage CBRE Group Inc. (CBG)

‘Beaten Down’

Suburban offices were “beaten down” in the multi year focus on downtown assets and should gain favor in 2014 as the Federal Reserve raises interest rates and scales back its bond-buying program, known as tapering, New York-based analysts at BMO Capital Markets led by Richard Anderson wrote in a Jan. 2 note. Higher loan costs will erode returns and lead more buyers to seek opportunities away from cities, Wang said in the interview.

CMBS issuance may rise 33 percent to $120 billion this year as confidence improves, with the growth in volume fueled by rising values that allow the bundling of larger loans, Cantor Commercial Chief Executive Officer Anthony Orso said in an interview.

Added liquidity is “good for all, like a rising tide,” Fasulo said.

The best suburbs maintain their appeal as “incubation zones” for dynamic industries, according to Michael Phillips, chief operating officer for Jamestown, an Atlanta-based investor that paid $314 million in July for Lantana Media Campus in Santa Monica, California. The four buildings, with 462,000 square feet (42,900 square meters), are a hub for digital video and 97 percent leased, he said.


Consumer technology companies have long gravitated to Silicon Valley towns near San Francisco, defense-related firms to northern Virginia suburbs outside Washington, energy firms to the outskirts of Houston, and film, television and video production companies to areas outside downtown Los Angeles, Phillips said.

“You get clusters where like-minded people want to be and that become their own ecosystem, with all the amenities and services of a city,” he said.

Now the wider push has put Pasadena, California, where East West Bank and Downtown Properties bought Plaza Las Fuentes at a 5.7 percent cap rate in July, and Scottsdale, Arizona, where Oaktree Capital Management LP purchased the Republic Services Corp. headquarters at a 5.8 percent yield in June, on the level of such established areas as Princeton, New Jersey, and Greenwich, Connecticut, Real Capital data show.

Lower Yields

Jamestown’s Santa Monica purchase came with a 5.4 percent cap rate, Phillips said. A month earlier, Hudson Pacific Properties Inc. paid $130 million for the Pinnacle II offices in Burbank at a 5.9 percent cap rate. Both transactions were less than the 6.4 percent average yield in downtown Los Angeles, Real Capital said.

Cap rates for office deals fell to 5.06 percent in Manhattan and 5.12 in San Francisco at the end of last year, the lowest among the Moody’s/Real Capital core commercial index and less than a 6.37 percent average for U.S. central business districts.

Clarion last year bought a $66 million stake in a mixed-use Arlington complex and paid $121 million for offices in Brookline. Both properties are in areas with expanding regional economies that appeal to younger, “knowledge-based” workers, said Wang, the Clarion senior vice president. About 48 percent of the New York-based company’s office deals were in “select suburbs” in 2013, up from 18 percent a year earlier, he said.

Market Pivot

Clarion’s pivot from primary markets followed 2012 deals including the redevelopment of Manhattan’s 380 Madison Ave. and acquisitions of 475 Brannan St. in San Francisco and 1201 Third Ave. in Seattle, and the 2011 purchases of New York’s 636 Avenue of the Americas and Houston’s Wells Fargo Plaza, Wang said.

The investor’s 10 Brookline Place purchase in the Longwood Medical Area had a 5.9 percent cap rate, compared with 6.1 percent in central Boston, Real Capital data show. The stake in Carlyle Overlook in Arlington, with four office floors, street-level retail and a parking garage, was completed at a 6.2 percent yield, a bargain compared with 5.4 percent cap rates in the District of Columbia’s central business district, Wang said.

“That’s very accretive to total return,” he said.

Tishman Speyer Properties LP last month paid $102 million for California Plaza, an office complex with almost 379,000 square feet in Walnut Creek, California, according to a person with knowledge of the sale who asked not to be identified because the transaction details are private.

Submarket Migration

Walnut Creek, 25 miles (40 kilometers) east of San Francisco, is “beginning to capture a growing number of tenants migrating into the submarket” in search of lower rents, Holliday Fenoglio Fowler LP said in August marketing materials for the property. California Plaza was 89 percent leased and is near a major highway and transit station, according to the brokerage.

Suzanne Halpin, a spokeswoman for New York-based Tishman, declined to comment on the acquisition.

Suburban rents have been stable as occupancies gained, and kept pace with downtown rates since 2010 despite the perception of greater risk, said William Wheaton, a Massachusetts Institute of Technology professor and co-founder of CBRE’s Boston-based forecasting and econometrics group.

“Suburbs have been every bit as strong and less volatile,” Wheaton said in a telephone interview.

Occupancies Rise

In northern Virginia, occupancies last year grew 5.2 percent in Reston and 2.3 percent in Vienna, while rising 0.3 percent in the District of Columbia, according to CBRE. In The Woodlands, where Exxon Mobil Corp. (XOM)is building its new headquarters, growth was 20 percent, compared with a 0.1 percent decline in Houston.

As the hunt for yield picks up, it’s becoming harder to find top suburban assets, according to Don Wise, CEO of Metzler Real Estate. The Seattle-based firm, which invests in the U.S. for German institutions, paid $100 million in the third quarter for offices outside Austin at a cap rate “100 to 200 basis points higher” than a comparable core-market deal, its only purchase since 2012, he said, declining to give further details.

“It’s important to be disciplined on the hunt for places that haven’t turned into the hot spot,” Wise said in an interview. “We’re looking for solid job growth, typically in tech, energy or health-care markets with a research university, lifestyle appeal and good long-term liquidity prospects.”

Silicon Valley

The recent surge has occasionally compressed yields to less than cap rates in Manhattan, including a purchase at 4 percent in Palo Alto, south of San Francisco, and one at 3.9 percent in Beverly Hills, both among California’s most coveted office locations, according to Real Capital data.

CBRE last month brokered the sale of research-and-development buildings in Sunnyvale, in Silicon Valley, at a lower cap rate than office purchases in some primary markets, according to the brokerage. The 500,000-square-foot property is among numerous similar sites in the valley, Russell Ingrum, a CBRE vice chairman, said in an interview.

“Most of Silicon Valley R&D is not the most physically attractive real estate, but it’s sitting in Sunnyvale, and that’s what makes it valuable,” he said.

-By  Dan Levy

Marriott Opens Tallest Hotel in New York as Demand Rises

Source: Bloomberg / Luxury

Marriott International Inc. (MAR), the owner of brands including Ritz-Carlton and Renaissance Hotels, is opening the tallest U.S. hotel building in New York as tourism in the city reaches a record.

The 68-story tower at the corner of Broadway and 54th Street houses a 378-room Courtyard hotel and a 261-room Residence Inn. The property reaches almost 753 feet (230 meters), making it the tallest hotel without accompanying offices or residential space in the U.S., said Kathleen Duffy, a spokeswoman for Marriott’s hotels in New York City. The two-tower Time Warner Center at Columbus Circle, a mixed-use development with a Mandarin Oriental hotel, is 750 feet.

“I’m certain either one of them would have done fine on their own,” Marriott Chief Executive Officer Arne Sorenson said today at the opening of the two hotels. “But here you’ve got a great location, an A-plus location, with two distinct products that will appeal to two distinct kinds of stays.”

Marriott is opening the property as hotel demand in the city soars. New York had a record 54.3 million tourists last year, former Mayor Michael Bloomberg said on Dec. 10. The city is likely to have 55 million visitors in 2014, said Bloomberg, the founder and majority owner of Bloomberg News parent Bloomberg LP.

Marriott has about 100 hotels across the U.S. that offer as many as three Marriott brands within one property, and the company is looking for more opportunities to pursue such projects, Sorenson said.

Franchise Agreement

The New York hotel property, which began serving travelers on Dec. 29 and had its official opening today, cost $320 million to build. It’s operated under a franchise agreement between Marriott and builder Granite Broadway Development LLC, the property’s owner, and is managed by Arlington, Virginia-based Interstate Hotels & Resorts Inc.

Granite bought the land in 2001 for $32 million, when it had three “non-distinct buildings” with a restaurant, a pornography shop and a clothing store, CEO Harry Gross said at today’s event. New York-based Granite took several years to decide to build a hotel, after also considering a mixed-use project with a hotel at the bottom and residential condominiums in upper floors.

“But at the time, the condominium market went to pieces,” Gross said. “So therefore, seeing that, two hotels would make sense, especially if they catered to two different segments.”

Highest Occupancies

Hotel occupancies of 85 percent and average room rates of $254.32 last year through November in New York were the highest among the top 25 U.S. markets, according to data from Hendersonville, Tennessee-based STR. Occupancies were at a 13-year high in the city, according to the research company.

Occupancies at New York City hotels probably will decline slightly in the next two years as more hotels open, increasing competition, STR said. About 12,000 rooms will be added in 2014, bringing the city’s total to about 120,000 and causing occupancies to drop to 83 percent this year, the firm said.

Demand from events like the National Football League’s Super Bowl on Feb. 2 and an influx of business and leisure travelers throughout the year will help fill rooms, Duffy said.

“There is plenty of demand in this city for all of us,” she said.

Edition Sale

Marriott’s other properties in New York include an Edition hotel, part of a luxury boutique brand it’s been developing with hotelier Ian Schrager. The company in August announced the planned sale of the Manhattan development at Madison Square Park, expected to open in the first half of 2015, as well as an agreement to sell an Edition project in Miami Beach and a London location that opened in September. The company said today that it sold the London Edition, and the total purchase price for all three properties is expected to be about $815 million.

The Marriott property opening today will have a shared entrance and lobby on 54th Street for both its hotels. Courtyard rooms are on floors six through 33, and Residence Inn rooms are the 37th through 65th stories, with public areas on the levels in between the two hotels. The Courtyard hotel will target leisure and business travelers, while the Residence Inn rooms are geared toward longer-term customers, Duffy said.

-By Nadja Brandt and David M. Levitt

China Greenland to Invest $2 Billion in London Developments

Source: Bloomberg / Personal Finance

Greenland Holding Group Co., the builder of one of China’s tallest towers, will invest 1.2 billion pounds ($2 billion) on two property projects in London as Chinese developers branch out overseas.

The state-owned company, which is investing in the U.K. for the first time, will sign an agreement with Minerva Ltd. today to acquire the Ram Brewery site in Wandsworth in southwestern London, the two firms said in an e-mailed statement. The completed development will be valued at 600 million pounds, according to the statement. The purchase price wasn’t disclosed.

Greenland, which entered the U.S. and Australia last year, joins Chinese developers including China Vanke Co. that are venturing into real estate abroad as they seek opportunities to diversify outside their home market. Dalian Wanda Group said in June it will build a luxury hotel and apartment building on the South Bank of the River Thames.

“London is at the economic center of Europe, so investment here will have global influence,” Greenland Chairman Zhang Yuliang said at a press conference in London today. “We plan to invest further -- next in office, hotels and retail.”

Greenland will also build apartments on a 3,700-square-meter (39,800-square-foot) site in the city’s financial district of Canary Wharf, the Shanghai-based company said in a separate statement.

The builder was looking at three London developments, Zhang said in an October interview.

London Prices

The Wandsworth site, which Minerva bought in 2006, has preliminary permission for a 36-story tower containing 166 apartments and 9,500 square meters of shops, bars and restaurants, according to the statement.

Greenland is entering the London property market as home prices surge. Values gained 1.4 percent last month after rising a revised 0.7 percent in November, according to the U.K.’s Nationwide Building Society. Prices increased 8.4 percent in 2013, with London leading the gain, the Swindon, England-based lender said.

Greenland, set up in 1992 and owned by the Assets Supervision and Administration Commission of Shanghai Municipal Government, is also looking to enter Canada, France and Singapore this year, according to today’s statement.

The company reached an agreement with Forest City Ratner Cos. in October to co-develop the Atlantic Yards project in New York. The transaction was the biggest deal of its kind by a Chinese developer in the U.S., according to Greenland.

Greenland said in July it was investing $1 billion in a downtown Los Angeles project that will have hotels, offices, apartments and luxury homes.

Sales from overseas properties will reach 13 billion yuan ($2 billion) and exceed 30 billion yuan by 2015, Greenland said in today’s statement.

-By Bloomberg News

Genting Singapore in tie-up to build S Korea integrated resort

Source: Business Times / Companies

MAINBOARD-LISTED casino operator Genting Singapore has partnered a Chinese property developer, Landing International Development, to build and operate a US$2.2 billion integrated resort on Jeju island, South Korea.

The project, which is expected to open in stages starting 2017, will be Genting's flagship Korean casino venture and Jeju island's largest tourism resort to date. It will have luxury hotels, a shopping mall, a theme park, villas and apartments, casinos and other leisure and entertainment facilities.

The 2.3 million square metre property was acquired by Landing International's subsidiary, Landing Jeju Development Co, from Jeju Free International City Development Centre for about 136 billion Korean won (S$160 million) last October.

-By Grace Leong

Johor safe for investors, says KL minister

Source: Straits Times

Malaysian Home Affairs Minister Ahmad Zahid Hamidi has assured foreign investors that measures have been taken to ensure their safety, particularly in Johor state, which is home to the ambitious Iskandar investment hub. In an interview with the Bernama news agency yesterday, he noted that Singaporeans have expressed concerns about their safety in Johor due to frequent media reports about crimes committed there.

Malaysia is No. 2 choice for property investors here: Survey

Source: Straits Times

Malaysia is the most popular investment destination for property investors here after Singapore, a survey held at an STProperty seminar on foreign property showed. Out of 1,613 respondents, 34 per cent favoured Malaysia, with the economic corridor of Iskandar a firm favourite among buyers. A majority said they were likely to buy a property there in the next six to 12 months, and pointed to Medini Signature and Tropicana Danga Bay as their top choices.

London property draws the rich from crisis-hit countries

Source: Business Times / Top Stories

POLITICAL and financial upheaval in some of the world's largest emerging economies is driving a new wave of rich migrants to London's supercharged property market as a place to park their wealth, data from a leading real estate agency showed yesterday.

Knight Frank, a specialist in upmarket properties, said that it had seen online enquiries about British homes from crisis-hit countries such as Argentina, Ukraine and Turkey soar over the past year. "There is potentially a further wave of investment headed for the prime central London property market," Tom Bill, associate in the Knight Frank residential research team, told Reuters.

This is despite prices in London already having risen sharply after a rush of foreign buyers of London mansions, prompted by the euro zone debt crisis and the Arab spring, along with Britain's political stability and benign property taxes.

-From London, UK

JC Penney to develop area around its Texas HQ site

Retailer has raised US$3b through loans, stock offerings to fund 97 ha project

Source: Business Times / Wealth

JC PENNEY reached an agreement with three companies to develop 240 acres (97 hectares) surrounding its headquarters in Plano, Texas, as real estate demand climbs in the area.

The development, to be called Legacy West, will be built at the south-west corner of the Dallas North Tollway and State Highway 121, JC Penney said in a statement. The project will be managed by Karahan Cos, Columbus Realty and KDC, said the retailer, which has raised more than US$3 billion in the past year through borrowings and stock offerings to avoid a cash shortfall.

"That submarket has done really well and that's right where that JC Penney land is," Greg Biggs, a Dallas-based managing director at commercial real estate brokerage Jones Lang LaSalle, said in a telephone interview. "It's right in the heart of it."

-From Chicago, US

Danske considering sale of Irish rental homes

Source: Business Times / Wealth

DANSKE Bank S/A says it is "exploring options" to sell a portfolio of Irish investment residential properties as Denmark's biggest lender retreats from the country after a real estate crash.

The Copenhagen-based lender is looking to sell about 600 homes in one batch, according to a person familiar with the matter on Thursday, who requested anonymity because the portfolio hasn't been finalised. The original owners bought the properties as investments, or buy-to-let homes, before defaulting on their debts, the person said.

"The bank is considering all options for deleveraging the non-core portfolio," said Peter Hughes, head of Danske's non- core operations in Ireland, in an e-mailed statement. "Based on the high level of interest expressed by investors, we are exploring options to sell a portfolio of individual residential investment properties. No details are confirmed at this stage."

-From Dublin, Denmark

Financiers of overdeveloped Sochi face possible losses

Post-Games property glut renders Putin's ambition for the Winter Olympics host city a miscalculation

Source: Business Times / Wealth

THE US$50 billion makeover of Sochi is visible from space.

In 2007, soon after the Russian city won the bid to host the 2014 Winter Olympics, cosmonaut Fyodor Yurchikhin took a photo of it from the International Space Station: a snarl of streets and housing near the beach on the Black Sea giving way to undeveloped foothills and valleys.

Last year, before Mr Yurchikhin returned from space bearing the Olympic Torch, he took another shot of Sochi. The reborn city boasts thousands of new and rebuilt roads, squares, bridges, airport runways, hotels, apartment buildings and Olympic arenas for ice hockey and the opening ceremonies.

-From Moscow, Russia