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30 January 2014

Top Stories

Firms must do more for work safety: Tan Chuan-Jin

Source: Busines Times / Singapore

MANPOWER Minister Tan Chuan-Jin has urged all companies to take ownership of workplace safety and health after a spate of fatal accidents this year.

"2014 has started on a sombre note," Mr Tan wrote in the Ministry of Manpower's official blog yesterday. "To date, eight workers have lost their lives to workplace accidents. This is not tenable. It is an employer's basic responsibility to ensure that every worker returns home safely at the end of a hard day's work. Employers must do everything they can to fulfil this responsibility."

Mr Tan said all of those fatalities could have been avoided, and the Occupational Safety and Health Division (OSHD) has been tasked to thoroughly investigate the accidents and recommend ways to prevent recurrences.

A number of the accidents involved formwork, including two that took place over the past week as OSHD stepped up formwork inspections, visiting 42 structures and issuing four stop-work orders.

- By Kenneth Lim

Take ownership of workplace safety, Tan Chuan-Jin tells companies

Recent spate of workplace accidents could have been avoided, he said

Source: Today Online / Singapore

Responding to the recent spate of workplace accidents, Acting Manpower Minister Tan Chuan-Jin today (Jan 29) urged companies to take ownership of workplace safety and health at their workplaces.

He also urged all stakeholders, including employees, to work towards a strong safety culture in Singapore.

Writing on his blog, Mr Tan said: “2014 has started on a sombre note. To date, eight workers have lost their lives to workplace accidents. This is not tenable.

“It is an employer’s basic responsibility to ensure that every worker returns home safely at the end of a hard day’s work. Employers must do everything they can to fulfil this responsibility”.

He said that from his discussions with his ministry’s Occupational Safety and Health Division, he has found that the accident in each of the cases could have been avoided.

Mr Tan has asked the division to carry out thorough investigations to identify the circumstances that led to the accidents, and recommend ways to prevent their recurrence.

“We will not hesitate to take action against parties responsible for the lapses,” he added.

He also said that in addition to fines and Stop-Work Orders, the Ministry of Manpower (MOM) has in place programmes that help companies assess and improve their workplace safety and health systems.

The ministry also works with the industry to draw on their experiences and suggestions for better and safer ways to work.

Mr Tan said he understands that contractors are often under pressure to meet deadlines for their projects, and that might have led to unsafe work procedures while speeding things up.

He said: “I want to make it clear that, tight timelines or otherwise, there is no excuse for cutting corners or sacrificing workers’ safety or their lives.”

Noting that accidents can happen in different sectors, and that every workplace has its hazards, he urged all workers to stay vigilant.

Mr Tan referred to the message in the latest campaign of the Workplace Safety and Health Council: “Work safely. Your family awaits your return.”

He added: “It is a timely reminder of the importance of workplace safety and health, especially as we head into the Lunar New Year holidays.”

- By Channel News Asia

More locals employed amid tighter foreign hiring

Higher-wage earners bore the brunt of stricter regulations

Source: Business Times / Top Stories

Restructuring pains at the centre of the government's productivity drive are showing up in Singapore's most recent employment numbers.

It appears that the hiring of locals grew more quickly in 2013, as the growth in foreign workers continued to moderate from the tightened foreign manpower hiring measures.

Higher-wage workers were also found to have borne the brunt of the stricter regulations for employing foreign labour.

These were revealed in the Ministry of Manpower's (MOM) Employment Situation, 2013 report released yesterday, as well as in the analyses of various economists.

Total employment grew 134,900 or 4 per cent over 2013, mostly driven by the hiring of Singaporeans. Of this, foreign employment contributed 1.6 percentage points to the growth.

By stripping out foreign domestic workers and construction workers, foreign employment contributed just 0.5 percentage point to the milder overall employment growth of 3 per cent, Citi research economists Kit Wei Zheng and Brian Tan found - suggesting that most of the foreign labour hired were lower-paid workers.

As at last December, locals accounted for about two-thirds of people employed in Singapore (excluding foreign domestic workers). Foreigners made up the rest.

Meanwhile, unemployment stayed low and in line with economists' expectations, while income growth of Singaporeans strengthened over last year.

The annual average overall and citizen unemployment rates dipped to 1.9 per cent and 2.9 per cent respectively, while the permanent resident rate stayed unchanged at 2.8 per cent.

Income growth - which MOM measured using the nominal median monthly income of full-time employed citizens - also strengthened last year, amid the tight labour market.

It rose 7.1 per cent to $3,480 last June, better than the 5.8 per cent gain to $3,248 in the preceding year.

After adjusting for inflation (which eased an average 2.4 per cent in 2013, versus 4.6 per cent in 2012), growth in real median income went up to 4.6 per cent in 2013, from 1.2 per cent in 2012.

Several recent job surveys have pointed to weaker hiring intentions, but market watchers put this down to growing acceptance among companies that foreign worker tightening is here to stay.

CIMB analyst Song Seng Wun added that hiring may be weak in sectors such as capital markets and manufacturing, but should remain brisk in the health sciences, hospitality, sales, marketing and the consumer clusters.

Unemployment is expected to stay below 2 per cent this year while the local labour force's employment rate nudges higher. Companies are also likely to have to remunerate workers with higher salaries in the tight market.

Citi's Mr Kit and Mr Tan believe more pro-productivity schemes may be needed, and the upcoming Budget in February is likely to extend and enhance the Productivity and Innovation Credit (PIC) scheme to help ease the pain of higher labour costs.

"We do not expect further foreign worker levy hikes as the current schedule already involves further hikes and quota cuts through 2016 - though further tightening on employment pass holders is possible," they said.

- By Lee Meixian

Singapore Real Estate

HUDC and the story of housing windfalls

Source: Straits Times

First built as affordable homes for the sandwiched middle class, they were a ticket to a windfall three decades later. With the last HUDC estate heading towards privatisation - Braddell View - that chapter in Singapore's housing story is drawing to a close. It began with little fanfare in the Budget debate of 1974.

Half stake sold in Finexis Bldg at $2,300 psf on strata area

Deal values 12-storey freehold office block at $123.8 million

Source: Business Times / Property

AN offshore fund managed by Singapore-based Sin Capital Partners is understood to have bought a half-stake in Finexis Building at 108 Robinson Road in a deal that values the 12-storey freehold office block at $123.8 million.

This works out to nearly $2,300 per square foot on the building's strata area of 53,830 sq ft, which is close to its total net lettable area.

In late 2011, another Sin Capital-managed offshore fund acquired the other 50 per cent in Finexis Building. That deal valued the property at $110 million, or $2,043 psf on strata area. Both transactions were effected through a sale of shares in Robinson Land Pte Ltd, which owns the property.

In both deals, the seller was a partnership between Singapore-based Buxani Group and offshore investors advised by Mukesh Valabhji of Seychelles-based Capital Management Group (CMG). The duo picked up the property, formerly known as GMG Building, for $48 million in 2006 and invested a further $6 million sprucing it up.

- By Kalpana Rashiwala

Interest in city-fringe developments helps drive up business park leasing

Source: Straits Times

Business parks enjoyed strong leasing demand last quarter, driven mainly by interest in new developments on the city fringe, according to a report by property consultancy CBRE. At the Galaxis at Fusionopolis Phase 5 in North Buona Vista, 44 per cent of space was taken up last quarter, the report released yesterday said.

GIC buys stake in Australian student-hostel group

It partners Macquarie Capital in buying Iglu, which has A$150m property portfolio

Source: Business Times / Top Stories

GIC, in the midst of a buying spree, has invested in a young Australian student-accommodation company through a joint venture with Macquarie Capital.

They are to acquire a majority interest in Iglu, in a deal that is said to be the largest of its kind in the Australian student-accommodation sector.

Neither GIC nor Macquarie gave details on the investment value of the deal. They would only say that three-year-old Iglu's property portfolio is valued at A$150 million (S$167 million), and that it comprises more than 900 beds across three properties - two in Sydney and one in Brisbane.

GIC and Macquarie Capital said that they expect further funding to be put into building additional high-quality Iglu-managed properties near educational institutions and public transport in cities with a shortage of suitable student accommodation.

Of Iglu's two properties in Sydney, the one located near Sydney's Central Station, called Iglu Central, has 98 beds and has been fully occupied since its completion last year.

Its other Sydney property is the 395-bedder Iglu Chatswood, which has just opened to meet demand for the 2014 academic year. It is the only off-campus, purpose-built student accommodation asset on Sydney's North Shore, the primarily residential area of northern metropolitan Sydney.

Iglu's Brisbane property, Iglu Brisbane, will open in the heart of Brisbane's Central Business District in 2016, kitted out with more than 400 beds.

Commenting on the acquisition through a joint statement issued with GIC, Macquarie Capital Real Estate's global head Chris Green said: "The student-accommodation sector has excellent 

investment fundamentals with a well-documented supply shortage.

"We believe Iglu is an outstanding developer and operator of off-campus student accommodation in Australia, and so it is the ideal business to work with us to build a portfolio of premium assets in the best locations across the country."

Jones Lang LaSalle provided valuation services to GIC and Macquarie for the acquisition. Conal Newland, its director of student-accommodation services, said: "Our analysis of this latest transaction in the market on an individual-asset basis indicates net initial yields in the range of 7 per cent to 7.5 per cent for stabilised student-accommodation income streams on good-quality, purpose-built residences.

"There is currently over A$1 billion of potential investment looking to enter the Australian student-accommodation market to capitalise on the strong fundamentals that currently exist, such as the gap in supply and the demand for existing good-quality accommodation, the high occupancy rates, the annual real rental increases and the attractive total returns offered, relative to core asset classes."

Traditionally, the sector is not one that attracts investment from institutional investors, but this has been changing, said Mr Newland.

"We are seeing a number of investors increasing their exposure to alternative asset classes and the Australian student-accommodation market is offering some exciting opportunities.

"These investors are primarily focused on prime assets and experienced operators, with a view to benefiting from yield compression as more liquidity enters the market," he said.

GIC, in its recent acquisition spree, has snapped up stakes in both real estate and firms.

This month, it confirmed that it is partnering the Abu Dhabi Investment Authority and US real estate firm Related Companies to buy 1.1 million square feet of office space in New York City's Time Warner Center for US$1.3 billion.

Last month, it bought a large stake in mega-office complex Broadgate in London's main financial district; in August, it snapped up a 47-storey Grade A office tower in the heart of Jakarta's Central Business District. GIC did not reveal the investment value of these two deals. 

- By Felda Chay

Structure collapse kills one, injures 10 workers in Sentosa

One dead, 10 hurt in scaffolding collapse at Sentosa

Source: Today Online / Singapore

One was killed and 10 other workers were hurt in a scaffolding collapse accident at a construction site on Sentosa today (Jan 29).

The Singapore Civil Defense Force (SCDF) said they received a call for assistance at 3.19 pm this afternoon. One fire engine, one Red Rhino, 6 ambulances and 5 support vehicles were dispatched to the accident site at Palawan Beach in Sentosa.

11 workers were sent Singapore General Hospital with injuries, SCDF said.

There have been a spate of workplace accidents in Singapore in recent weeks, prompting Acting Manpower Minister Tan Chuan-Jin to write a note on his blog this morning where he urged companies to take ownership of workplace safety, saying that many of the recent accidents “could have been avoided”.

Real Estate Companines' Brief

CDLHT Q4 DPS up marginally at 2.92 cents

Strong contribution from Maldives offset weaker overall performance

Source: Business Times / Companies

CDL Hospitality Trusts (CDLHT) reported a distribution per stapled security (DPS) of 2.92 cents for the fourth quarter, 0.7 per cent higher than the year before, as strong contribution from its Maldives property offset a weaker overall performance.

The DPS works out to an annualised yield of 7.3 per cent, based on CDLHT's closing price of $1.605 yesterday, and comes on the back of a 1.3 per cent year-on-year increase in income available for distribution to $31.6 million.

For the three months ended Dec 31, 2013, revenue was up 2.8 per cent at $39.4 million. This was largely aided by a $5 million contribution from its Angsana Velavaru resort in the Maldives bought early last year, which offset slight declines in revenue from its hotels in Singapore and Australia.

The stapled group operates in Singapore, Australia, the Maldives and New Zealand. Its Singapore portfolio, the biggest contributor to revenue, fell as more hotel rooms came to the market and as companies worldwide cut back on travel budgets. Revenue per available room fell 6 per cent to $187, while the average occupancy fell to 87 per cent from 88.9 per cent.

- By Ong Chor Hao

Most Reits raise DPU despite US tapering

Their debt is locked at favourable rates, ahead of inevitable rise in interest rates

Source: Business Times / Companies

MOST real estate investment trusts (Reits) here improved on their distribution per unit (DPU) in the last reported quarter, despite a less-than-rosy outlook in light of the United States Federal Reserve's tapering of its stimulus programme.

Based on a survey of Reits that have since turned in their October-to-December report cards, this can be attributed to the fact that most of them have locked in most of their debt at favourable interest rates, ahead of the inevitable rise in rates.

Broadly speaking, Reits in the office and retail sector did well. The best performer, by way of improvement in DPU, was Frasers Commercial Trust. Its Q1 DPU jumped 29.7 per cent from 1.58 cents a year ago to 2.05 cents in the last reported quarter.

However, Ascott Reit's DPU fell 33.5 per cent, from 2.0 cents a year ago to 1.33 cents for the quarter ended December; this was mainly attributed to a rights issue launched last November. Unitholders' distribution rose 15 per cent to $26.3 million, raising full-year distribution to a record high of $114.8 million.

- By Mindy Tan

CRCT's Q4 DPU dips 4.3% to 2.20 cents

Income available for distribution rises 5.6% to $17.7m

Source: Business Times / Companies

CAPITARETAIL China Trust's (CRCT) distribution per unit (DPU) for the fourth quarter ended December dipped 4.3 per cent to 2.20 cents, despite income available for distribution rising 5.6 per cent to $17.7 million.

This was largely due to an enlarged base of issued units, due to payment of management fees, a preferential offering exercise completed in November last year, and payment of distribution via the distribution reinvestment plan. As at end FY2013, 803 million units were in issue, versus 748.9 million units.

Unitholders can expect to receive their DPU for Q4 along with their DPU of 2.13 cents for Q3, totalling 4.33 cents, on March 27.

For the quarter under review, net property income (NPI) rose 6.6 per cent to $25.8 million from $24.2 million a year ago while gross revenue rose 8.9 per cent to $41.2 million from $37.9 million.

- By Mindy Tan

Tuan Sing Q4 net falls 68% to $25.3m

Source: Business Times / Companies

TUAN Sing Holdings posted a 68 per cent year-on-year decline in fourth-quarter net profit on slower property sales and fair-value adjustments, the developer and industrial equipment supplier said yesterday.

Net profit for the period ended Dec 31, 2013 fell to $25.3 million, or 2.2 cents per share, but this included a $26.7 million fair-value adjustment that was 60 per cent less than the $67.5 million year-ago adjustment.

Excluding fair-value adjustments, the earnings per share would be 0.1 cent.

The directors proposed a final dividend of 0.5 cent per share.

- By Raphael Lim

AIMS AMP Reit's Q3 DPU up 7.4% at 2.77 cents

Source: Business Times / Companies

AIMS AMP Capital Industrial Reit's distribution per unit (DPU) for the third quarter ended December rose 7.4 per cent to 2.77 cents from 2.58 cents a year ago.

This was on the back of distribution to unitholders rising 26.3 per cent, from $11.6 million to $14.6 million.

For the quarter under review, net property income rose 26.6 per cent to $18.7 million from $14.8 million a year ago, while gross revenue rose 6.1 per cent, from $25.7 million to $27.3 million. This was primarily due to the rental contribution from the completed redevelopment of 20 Gul Way Phases One & Two, said Koh Wee Lih, chief executive officer of AIMS AMP Capital Industrial Reit Management, the manager of the trust.

On the portfolio management front, the trust secured 12 new and renewal leases (representing 1.9 per cent of the portfolio's net lettable area), pushing the trust's occupancy up to 98.2 per cent, with a weighted average land lease expiry of 38.4 years. The leases were secured at a weighted average rental increase of 27.2 per cent.

- By Mindy Tan

CDL Hospitality Trusts

For FY2013, CDL Hospitality Trusts (CDL-HT) registered a drop in both net property income (NPI) and distributable income by 1.4 per cent and 3.1 per cent, respectively. Revenue per available room (RevPAR) for the quarter dropped to $187, due mainly to lower gross revenue from its Singapore hotels and forex losses. This was mitigated by additional rental contributions of $10 million from Angsana Velavaru, Maldives.

SMRT Corporation

Jan 29: $1.165

Maybank Kim Eng, Jan 29

SMRT reported another disappointing set of numbers for Q3 FY2013/14, with net profit plunging 44 per cent y-o-y to $14.2 million. The combined operating loss for its fare-based business stood at $9.0 million, reflecting the challenging business environment for public transport operators. On the bright side, Q3 FY2013/14's rental profits improved 9.2 per cent y-o-y to $18.5 million.

Global Premium Hotels

Q4-2013 results for Global Premium Hotels (GPH) were in line with our expectations. Total revenue fell 1.4 per cent y-o-y to $15.0 million and gross profit rose 0.9 per cent to $13.2 million. Q4 2013 net profit climbed 20.1 per cent to $5.2 million. FY2013 revenue and EPS came to 100 per cent and 105 per cent of our prior respective full-year estimates.

UE hires bank to value Wearnes' auto portfolio

Source: Straits Times

United Engineers' review of newly acquired WBL Corp's (Wearnes') businesses has shifted to a higher gear. It has hired investment bank JP Morgan to carry out a valuation of its automotive portfolio.

Global Economy & Global Real Estate

US recovery? Keep the bubbly on ice

Source: Today Online / World 

Financial markets and the so-called Davos consensus are in broad agreement that something close to a classic cyclical revival may finally be at hand for the United States. But is it?

At first blush, the celebration seems warranted. Growth in real Gross Domestic Product (GDP) appears to have averaged close to 4 per cent in the second half of last year, nearly double the 2.2 per cent pace of the preceding four years. The unemployment rate has finally fallen below the 7 per cent threshold. And the Federal Reserve has validated this seemingly uplifting scenario by starting to taper its purchases of long-term assets.

But my advice is to keep the champagne on ice.

Two quarters of strengthening GDP growth hardly indicates a break-out from an anaemic recovery. The same thing has happened twice since the end of the Great Recession in mid-2009 — a 3.4 per cent average annualised gain in the second and third quarters of 2010, and a 4.3 per cent average increase in the fourth quarter of 2011 and the first quarter of 2012.

In both cases, the uptick proved to be short-lived.

A similar outcome this time would not be surprising. Indeed, much of the acceleration in GDP growth has been bloated by an unsustainable surge of restocking. Over the first three quarters of last year, rising inventory investment accounted for fully 38 per cent of the 2.6 per cent increase in total GDP.

Excluding this inventory swing, annualised growth in “final sales” to consumers, businesses and the government averaged a tepid 1.6 per cent. With inventory investment unlikely to keep accelerating at anything close to its recent rate, overall GDP growth can be expected to converge on this more subdued pace of final demand.


That gets to the toughest issue of all — the ongoing “balance-sheet recession” that continues to stifle the American consumer.

Accounting for 69 per cent of the economy, consumer demand holds the key to America’s post-crisis malaise. In the 17 quarters since “recovery” began, annualised growth in real personal consumption expenditures has averaged only 2.2 per cent, compared with a pre-crisis trend of 3.6 per cent from 1996 to 2007.

To be sure, there were indications of a temporary pick-up in annual consumption growth to nearly 4 per cent in the fourth quarter of last year. However, that is reminiscent of a comparable 4.3 per cent spurt in the fourth quarter of 2010, an upturn that quickly faded.

The lacklustre trend in consumption is all the more pronounced when judged against the unprecedented decline that occurred in the depths of the Great Recession.

From the first quarter of 2008 to the second quarter of 2009, real consumer spending plunged at a 1.8 per cent average annual rate. In the past, when discretionary spending on items such as motor vehicles, furniture, appliances and travel was deferred, a surge of “pent-up demand” quickly followed.

Not this time. The record plunge in consumer demand has been followed by persistently subpar consumption growth.


This should not be surprising. The American consumer was, in effect, ground zero in this horrific crisis.

Far too many US households made enormous bets on the property bubble, believing that their paper gains were permanent substitutes for stagnant labour income. They then used these gains to support a record consumption binge.

Compounding the problem, they drew freely on a monstrous credit bubble to finance the gap between spending and income-based saving.

When both bubbles burst — first housing, and then credit — asset-dependent US consumers were exposed to the American strain of the Japanese disease first diagnosed by Nomura economist Richard Koo.

Mr Koo has stressed the lingering perils of a balance-sheet recession centred on the corporate sector of the Japanese economy; but the analysis is equally applicable to bubble-dependent US consumers.

When the collateral that underpins excess leverage comes under severe pressure — as was the case for Japanese businesses in the early 1990s and American consumers in the mid 2000s — what Mr Koo calls the “debt rejection” motive of deleveraging takes precedence over discretionary spending.

The Japanese parallels do not stop there. As research by the economists Richard Caballero, Takeo Hoshi and Anil Kashyap has shown, Japan’s corporate “zombies” — rendered essentially lifeless by their balance-sheet problems — ended up damaging the healthier parts of the economy.

Until balance sheets are repaired, such “zombie congestion” restrains aggregate demand. Japan’s lost decades are an outgrowth of this phenomenon; the US is now halfway through the first lost decade of its own.

Indicators of US balance-sheet repair hardly signal the onset of the more vigorous cyclical revival that many believe is at hand.

The debt/income ratio for American households is now down to 109 per cent — well below the peak of 135 per cent reached in late 2007, but still 35 percentage points above the average over the final three decades of the twentieth century.

Similarly, the personal saving rate stood at 4.9 per cent late last year, up sharply from the low of 2.3 per cent in the third quarter of 2005; but it remains 4.4 percentage points below the average recorded from 1970 to 1999.

By these measures, American consumers’ balance-sheet repair is, at best, only about half-finished.


Optimists see it differently. Encouraged by sharp reductions in households’ debt-service costs and a surprisingly steep fall in unemployment, they argue that the long nightmare has finally ended.

That may be wishful thinking. Plunging debt service is largely an outgrowth of the Fed’s unprecedented zero-interest-rate policy. As long as the stock of debt remains excessive, consumers will dismiss the reduction in interest expenses as nothing more than a temporary subsidy from the Fed.

Moreover, the decline in unemployment largely reflects persistently grim labour-market conditions, which have discouraged many workers from remaining in the labour force.

If the labour-force participation rate was 66 per cent, as it was in early 2008, rather than 62.8 per cent, as it was last month, the unemployment rate would be just over 11 per cent, not 6.7 per cent.

Yes, there has been some progress on the road to recovery. But, as economists Carmen Reinhart and Ken Rogoff have long documented, post-crisis healing is typically slow and painful. Notwithstanding the Fed’s claims that its unconventional policies have been the elixir of economic renewal in the US, the healing process still has years to go. PROJECT SYNDICATE


BlackRock helps revive Japan's property market

 J-Reits' 2.23 trillion yen acquisitions in 2013 almost triple previous year's deals

Source: Business Times / Property

BlackRock Inc, the world's biggest money manager, is helping to drive a revival in Japan's property market as investors bet Prime Minister Shinzo Abe's plan to sustain economic growth will boost real estate returns.

BlackRock is looking for investments outside of Tokyo this year as it seeks higher yields, said John Saunders, managing director and head of Asian real estate. Japan real estate investment trusts (J-Reits) acquired properties worth 2.23 trillion yen (S$27.6 billion) in 2013, almost triple the previous year, after raising a record amount of cash from equity sales, according to the Association for Real Estate Securitization.

Real estate investment has climbed since Mr Abe pledged to end more than a decade of deflation and the Bank of Japan (BOA) eased monetary policy, sparking growth in commercial land values and a drop in office vacancy rates.

Acquisitions made by overseas investors will account for about 20 per cent of all transactions this year, up from 13 per cent in 2013, and commercial property sales may grow to the highest level since 2007, according to brokerage Jones Lang LaSalle Inc.

- From Tokyo, Japan

Blackstone to Purchase GE Warehouses in Nine U.S. States

Source: Bloomberg / News

Blackstone Group LP (BX), which formed an industrial real estate company in 2010, agreed to buy warehouses and development land in nine U.S. states from General Electric Co. (GE)’s property unit.

The properties, which account for almost all of GE’s industrial real estate holdings, total about 9.6 million square feet (891,800 square meters), with about half located in Texas, said Nancy Nyikes, a spokeswoman for Norwalk, Connecticut-based GE Capital Real Estate. The purchase price is about $550 million, said a person with knowledge of the deal, who asked not to be identified because the details are private. Nyikes declined to comment on the price.

Blackstone created IndCor Properties Inc. after the financial crisis depressed property values and has built the Chicago-based unit’s holdings to more than 100 million square feet through acquisitions. Investors have speculated that IndCor might go public this year or next.

Christine Anderson, a spokeswoman for New York-based Blackstone, declined to comment on the transaction, which was reported earlier today by newsletter Real Estate Alert.

GE’s real estate unit, among the biggest commercial-property investors globally before the financial crisis, shifted its focus back to lending in 2010 and has been taking advantage of a market recovery to sell older investments.

- By Hui-yong Yu

Home prices in 20 US cities up in Nov

 The gains are the biggest since February 2006

Source: Business Times / Property

Home prices in 20 US cities rose in November from a year ago by the most in almost eight years, providing a boost to household wealth.

The S&P/Case-Shiller index of property prices in 20 cities climbed 13.7 per cent from November 2012, the biggest 12-month gain since February 2006, after a 13.6 per cent increase in the year ended in October, a report from the group showed on Tuesday in New York. The median projection of 31 economists surveyed by Bloomberg called for a 13.8 per cent advance.

A limited number of available properties is helping to sustain home price appreciation even as higher mortgage rates cool demand and leave purchases out of reach for some Americans. Further strides in the housing market this year would be made easier by a pick-up in job and income growth.

"Home prices have been doing exceptionally well," Eric Green, global head of foreign exchange and rates at TD Securities USA in New York, said before the report. The effect on prices from "higher borrowing costs and downward pressure from more supply coming on is going to be balanced by the fact that you're going to continue to see the economy growing, incomes rising, and job growth."

- From Washington, US

Remove highway for Olympics, says Tokyo developer

Source: Business Times / Property

Mitsui Fudosan Co, Japan's largest developer by sales, said it is in talks with the government about the removal of a highway near Tokyo Station ahead of the 2020 Olympic Games.

The company is urging the government to relocate the expressway in the Nihonbashi area where Mitsui Fudosan is redeveloping office and commercial buildings, company president  Masanobu Komoda said at a press conference yesterday.

Mitsui Fudosan and local owners are in talks with the land ministry and the Tokyo metropolitan government, he said.

Mitsui Fudosan has proposed the relocation of the Inner Circular Route as the government prepares to extend expressways and build new roads ahead of the Olympics in six years.

- From Tokyo, Japan
source: Bloomberg / News 

Mitsui Fudosan Co., Japan’s largest developer by sales, said it is in talks with the government about the removal of a highway near Tokyo Station ahead of the 2020 Olympic Games.

The company is urging the government to relocate the expressway in the Nihonbashi area where Mitsui Fudosan is redeveloping office and commercial buildings, President Masanobu Komoda said at a press conference today. Mitsui Fudosan and local owners are in talks with the land ministry and the Tokyo Metropolitan Government, he said.

Mitsui Fudosan has proposed the relocation of the Inner Circular Route as the government prepares to extend expressways and build new roads ahead of the Olympics in six years. The revival of Nihonbashi, which includes plans to bury a highway and resurrect a river-cruise route that hasn’t been used since the Edo era, could boost the area’s economy by as much as 3.1 trillion yen ($30 billion) through higher property values and revenue from more visitors, according to Nihonbashi Michikaigi, a group of academics that advocates for the redevelopment.

“The highway hinders the scenery of Nihonbashi and it is bad for the environment,” said Komoda, who is also the chief executive officer of the company. “How we want to present Tokyo to the world during the Olympics served as a trigger in this movement. We are in serious discussions with the government about what to do with the highway.”

Nihonbashi Redevelopment

The Tokyo government and Metropolitan Expressway Co. will spend 552.2 billion yen to build new roads and extend expressways, according to the Olympic bid documents.

Mitsui Fudosan is redeveloping about 309,100 square meters (3.3 million square feet) of floor space in Nihonbashi by 2019, the company said on its website. The Tokyo Stock Exchange and Nomura Holdings Inc., Japan’s largest securities firm, are based in the area.

The Muromachi Furukawa Mitsui and Muromachi Chibagin Mitsui buildings, the company’s latest redevelopment in the area, will be completed by Feb. 1, it said today in a statement.

Average office rents in parts of Nihonbashi are 16,040 yen per tsubo, about half of the average in Marunouchi, the most expensive office area in Japan, broker CBRE Group Inc. said in a report. A tsubo, a standard measure of property area in Japan, is 3.3 square meters or 35.5 square feet.

-By Kathleen Chu

UK Jan house prices surge to 6-year high

Source: Business Times / Property

UK house prices rose for a 13th month in January to their highest level in almost six years as the economy gained momentum, Nationwide Building Society said.

The average cost of a home advanced 0.7 per cent from December to £176,491 (S$372,280), the most since April 2008, the Swindon, England-based lender said in a report yesterday. 

That is more than the 0.6 per cent increase forecast by economists in a Bloomberg survey. From a year earlier, prices climbed 8.8 per cent, the biggest annual increase since May 2010.

"The housing market is continuing to gather momentum on the back of further solid gains in employment, record-low mortgage rates and rising confidence," said Robert Gardner, chief economist at Nationwide. "The pick-up in activity appears to be fairly broad-based."

Surging home prices prompted the Bank of England (BOE) to end support for home loans under its Funding for Lending Scheme in November. BOE markets director Paul Fisher said last week that sharply rising values are a potential source of financial instability, and officials "should not risk adding policy oil to that particular fire".

-From London, UK

U.K. House Prices Surge in January to Highest Since 2008

Source: Bloomberg / Luxury

U.K. house prices rose for a 13th month in January to their highest level in almost six years as the economy gained momentum, Nationwide Building Society said.

The average cost of a home advanced 0.7 percent from December to 176,491 pounds ($293,000), the most since April 2008, the Swindon, England-based lender said in a report today. That’s more than the 0.6 percent increase forecast by economists in a Bloomberg survey. From a year earlier, prices climbed 8.8 percent, the biggest annual increase since May 2010.

“It is evident that the strength in house prices is spreading,” said Howard Archer, an economist at IHS Global Insight in London. “This can only fuel concern that a new housing bubble could really develop in 2014.” He forecasts home values will increase about 8 percent this year.

Surging prices prompted the Bank of England to end support for home loans under its Funding for Lending Scheme in November. BOE Markets Director Paul Fisher said last week that sharply rising values are a potential source of financial instability and officials “should not risk adding policy oil to that particular fire.”

Concern that prices may spiral comes as official data yesterday showed the U.K. economy grew 0.7 percent in the fourth quarter, capping the best year since 2007. While home values are increasing, they are still about 4 percent below their 2007 peak, Nationwide said.

‘Driving Factor’

“The pickup in activity appears to be fairly broad-based,” said Robert Gardner, chief economist at Nationwide. “The housing market is continuing to gather momentum on the back of further solid gains in employment, record-low mortgage rates and rising confidence.”

Demand has been partly fueled by a government incentive program known as Help to Buy, which guarantees loans to those who can only afford a small down payment. Nationwide said that first-time home buyers are “a key driving factor” in the market. U.K. mortgage approvals rose to 72,900 in December from 70,758 a month earlier, according to the median of forecasts in a Bloomberg survey. The BOE is due to publish the data tomorrow.

BOE Governor Mark Carney said last week there’s “no immediate need” to increase borrowing costs from a record-low 0.5 percent, after data showed unemployment fell to 7.1 percent, just above the 7 percent level that policy makers set as a threshold for reviewing interest rates.

The labor-market data “raises the prospect of higher interest rates ahead,” Nationwide’s Gardner said. “While we do not expect interest rates to rise until mid-2015, borrowers should be prepared for the prospect of interest rates increasing back toward more normal levels.”

- By Emma Charlton

Lower Manhattan landlords compete for bank's tenancy

Source: Business Times / Property

A venerable Wall Street firm's search for a new home has set off a fierce competition among developers in lower Manhattan, highlighting the challenges in a commercial district that has acres of vacant office space even as towers are under construction.

The firm, Bank of New York Mellon, plans to sell its current headquarters, a 50-storey Art Deco building at 1 Wall Street, and move to smaller space in lower Manhattan or New Jersey.

The jockeying to lure BNY Mellon, a 229-year-old commercial bank, underscores the changing fortunes of lower Manhattan, where financial institutions are a significant but shrinking presence, as Wall Street sheds employees.

The battle also illuminates the continuing use of public subsidies to fill new and already subsidised office towers under construction at the World Trade Center site, more than 12 years after the terrorist attack on the twin towers.

-From New York, US

Chinese buyers pushing up home prices in Australian cities

Source: Business Times / Property

Tina Ford, an Australian public servant, said she could hardly believe it when her three-bedroom apartment sold this month for A$1 million (S$1.1 million) at an auction in which all 16 registered bidders were ethnic Chinese.

"I'm over the moon, I'm gobsmacked," said Ms Ford, 53, adding that she "would have been ecstatic with A$940,000" and didn't expect to double what she had paid 14 years ago for her third-floor unit with a balcony 11 km from downtown Sydney in the suburb of Chatswood.

"I suspect that overseas investment, Chinese or otherwise, is certainly pushing prices up, but from a vendor's perspective, I'm ecstatic."

Such buying by locally resident Chinese and those from mainland China is inflating housing bubbles in and around Sydney, where prices in some suburbs have surged as much as 27 per cent in the past year. That's almost three times faster than the overall market.

-From Sydney, Australia

Marriott open to buying hotel operators: CEO

Source: Business Times / Property

Marriott International Inc, the owner of such brands as the Ritz-Carlton and Renaissance, would consider buying more hotel-management companies after its acquisition of South Africa's Protea Hospitality Holdings, chief executive officer Arne Sorenson said.

"We are open to buying more operators for reasons such as adding a new brand, for lack of distribution or because of the economics of a deal," Mr Sorenson said at the Americas Lodging Investment Summit in Los Angeles.

Marriott, the second-largest US hotel chain by market value, said last week it signed a definitive agreement to acquire Cape Town-based Protea for US$186 million. The transaction will almost double the Bethesda, Maryland-based company's rooms in Africa to about 23,000 and help it expand further in the region, where a growing middle class and rising travel are fueling the fastest pace of hotel development in the world.

Marriott is "opportunistic" in its choice of possible acquisitions, and its growth strategy has changed over the years, Mr Sorenson said. The company in March announced it would start a European budget chain called Moxy Hotels with the parent company of the Ikea furniture chain, and in 2011 formed a joint venture with Spanish lodging group AC Hotels. Marriott in June said it would introduce the brand in the US.

-From Los Angeles, US

Fitch says London homes to become less affordable

Source: Today Online / Business

Residential property in London, popular with overseas investors including Singaporeans, will become less affordable over the next two years as increasing consumer confidence and foreign demand push prices higher, said Fitch Ratings in a report yesterday.

A 20 per cent increase in mortgage lending this year from 2013 will also see the average London home price-to-income ratio, already as much as 40 per cent above the United Kingdom average, climb further, Fitch said in its Global Housing and Mortgage Outlook report

Home prices will climb strongly throughout the UK and rise moderately in the United States and Australia, it said, all locations popular with well-heeled Singaporeans.

“Driven by an economic recovery and supporting policies, the next two years are likely to see growth in new gross lending in most countries,” the report said. In major global cities, it expects affordability to be stretched further this year, thereby increasing downside risk.

The UK government’s Help-to-Buy programme, which guarantees mortgages to those who can only afford a small down payment, last year led to the biggest increase in home values since 2006.

The Bank of England is closely monitoring housing prices and has the tools to take the heat out of the market if it gets out of control, the central bank’s Deputy Governor Andrew Bailey said last month. While the central bank is pleased Britain’s economy is showing signs of sustained growth, policymakers have to make sure the recovery does not rely too much on property and property-related consumption, he said.

Fitch warned in its report that a possible UK rate rise later this year remains a key risk for borrowers.

It also said mortgage rates in the US are expected to climb further as the Federal Reserve begins tapering its bond purchasing programme this month, and refinancing will be cut by as much as 50 per cent this year.

In Australia, affordability will worsen this year as increases in housing price outpace income growth, Fitch said. Mortgage delinquencies will climb as unemployment increases, it said. Dwelling prices in Australia surged 9.8 per cent last year, according to the RP Data-Rismark Home Value Index.

In Japan, while there is expected to be less demand for mortgages after the government raises the consumption tax in April, home prices will remain stable on the back of policies such as the expansion of tax deductions for mortgage borrowers, Fitch said.

Goldman Sachs Said to Lead American Homes 4 Rent Bond Deal

Source: Bloomberg / Personal Finance

American Homes 4 Rent, the second-largest single-family landlord in the U.S., has selected Goldman Sachs Group Inc. to arrange a bond backed by rental home payments, less than three months after Blackstone Group LP (BX) completed the first sale of its type.

The company, founded by B. Wayne Hughes, could sell as much as $500 million of the debt, according to two people with knowledge of the offering, who asked not to be identified as terms aren’t set.American Homes 4 Rent (AMH) has spent $3.5 billion to acquire more than 21,000 rental houses across the U.S., making it the biggest landlord after Blackstone.

Rental bonds are providing a new source of capital to landlords, after private-equity firms, hedge funds and other investors went on a $20 billion buying spree in the last two years to purchase as many as 200,000 homes to lease, according to Jade Rahmani, a housing analyst with Keefe Bruyette & Woods Inc. Demand for rentals has increased after about 8 million homeowners lost their properties to foreclosures or sold at a loss since 2007.

“This could be a $15 billion or $20 billion-plus-a-year kind of an asset class,” Ryan Stark, a director who runs mortgage finance at Deutsche Bank AG, said at a conference in Las Vegas last week. The Frankfurt-based lender led the debut $479 million offering for Blackstone, which was tied to 3,207 homes.

Increasing Regulation

Representative Mark Takano, a California Democrat whose district was hit hard by the foreclosure crisis, said Congress should hold hearings to weigh regulating the new securities, because they’re helping increase the competitive advantage investors have over ordinary home buyers.

The deals show “a clear pattern for investment groups who are looking to gain from these questionable financial instruments,” Takano said in a statement after Bloomberg News reported the Goldman Sachs-American Homes 4 Rent deal.

Colony American Homes Inc., which has acquired more than 15,000 homes, is also preparing a rental-home bond. The securities are expected to come to market in March, led by JPMorgan Chase & Co. and Credit Suisse Group AG, according to three people with knowledge of that offering, who also asked not to be named because the deal is private.

Peter Nelson, chief financial officer for Agoura Hills, California-based American Homes 4 Rent, didn’t reply to a phone message seeking comment. Spokesmen for Colony American Homes, Goldman Sachs, JPMorgan and Credit Suisse declined to comment.

American Homes 4 Rent has returned 2.9 percent since selling shares to the public in July, including reinvested dividends.

-By John Gittelsohn and Heather Perlberg