Real News‎ > ‎2014‎ > ‎July 2014‎ > ‎

18th July 2014

Singapore Real Estate

Ease ABSD for Singaporeans, urges Wing Tai boss

But it should be kept for foreigners as hot money remains an issue

Source: Business Times / Top Stories

[SINGAPORE] Wing Tai chairman Cheng Wai Keung has a solution for the property sector's angst over the ABSD (additional buyer's stamp duty): "Keep ABSD for foreign buyers but fine-tune it for Singaporeans who wish to buy more than one property."

He argues that the ABSD should be retained for foreigners who buy residential property, as the danger posed by foreign hot money still lurks.

However, there is scope to fine-tune the ABSD for Singaporeans, given that the total debt servicing ratio (TDSR) framework is in place to limit their debt exposure.

Foreigners buying any residential property here pay 15 per cent ABSD; the same rate applies to buyers that are corporate entities.

-By Kalpana Rashiwala

SICC aims to solve land issues this month

Source: Business Times / Top Stories

[SINGAPORE] The general committee of Singapore Island Country Club (SICC) is expected to meet the authorities and NTUC this month to "reach common grounds" on the final demarcation of its land, for which the government is not extending the lease.

This was noted in a three-page circular to SICC members sent by SICC president Tay Joo Soon yesterday. The Business Times obtained a copy of it.

The government had informed SICC last December that it would not extend the lease for its Bukit location next to MacRitchie Reservoir, where the club has two 18-hole courses. Following an appeal by the SICC committee, the government allowed the renewal of the lease for one of the courses at Bukit till 2030. But the other course is to be made public, and be managed by the labour movement.

The circular said: "We will be meeting Singapore Land Authority, NTUC and Ministry of Law later this month, and hope to reach common ground on the final demarcation of the leasehold land."

Developer loses suit against couple over building of lofts

Source: Straits Times

A condominium developer has lost a bid for damages of about $760,000 from a couple whom it claimed had built two unauthorised lofts in their penthouse apartment. The High Court, in a written judgment published yesterday, found that developer Macly Assets had given written permission for the timber lofts to be built.

Workplace Safety & Health Awards 2014

Source: Straits Times (Pg 91 -110)

Real Estate Companies' Brief

Chinese tycoon eyes 60% of IReit Global's IPO

Source: Business Times / Companies

[SINGAPORE] A Chinese tycoon plans to buy about 60 per cent of the initial public offering of IReit Global, a Singapore real estate investment trust that will invest in European properties, in his latest push to ramp up Reit investment in Singapore.

Rich Chinese investors have become increasingly interested in Singapore's Reits, admiring their stable returns and seeking alternatives to park their wealth, while the Chinese property market, where many of them have made their fortunes, remains shaky.

Tong Jinquan, a self-made property tycoon ranked by Forbes as China's 35th richest man, plans to buy 254 million of the 423 million units in the IPO, which are being offered at S$0.88 a unit, according to the prospectus filed on Wednesday evening.

The IPO aims at raising about S$372 million. "Chinese investors have been key buyers of properties in Singapore in the past. Now the property outlook is softening, and they are exploring other asset classes, including Reits," said Vikrant Pandey, an analyst at brokerage UOB Kay Hian.

-From Singapore

CDLHT tops year-to-date gains by stapled trusts

Source: Business Times / Companies

THE six stapled trusts on Singapore Exchange (SGX) have averaged a price and total return gain of 4.8 per cent and 8.3 per cent respectively for the year to date (YTD), said an SGX My Gateway report.

These include Frasers Hospitality Trust, which was listed only on Monday.

Stapled securities consist of different securities stapled together, so that the combined entity is treated as one security to be traded.

In terms of total YTD return, the three best-performing trusts were CDL Hospitality Trusts (CDLHT), Far East Hospitality Trust and Ascendas Hospitality Trust.

-By Raphael Lim

CapitaMalls Asia to be delisted next Tuesday

Source: Business Times / Companies

Capitamalls Asia will be delisted from the Singapore Exchange, and Hong Kong Exchange on July 22, its parent CapitaLand said yesterday.

Delisting not on the cards for Wing Tai

Chairman says the group wouldn't go that way to avoid QC rules, calls for the rules to be lifted

Source: Business Times / Companies

WING Tai Holdings will not be doing an SC Global. It won't take the delisting route, declares chairman Cheng Wai Keung, as a way out from rules requiring the company to dispose of all units in its high-end residential projects here within two years of completion.

He also called on the authorities to lift this condition, which is stipulated under the Qualifying Certificate (QC) that foreign housing developers need to obtain when they buy a residential site from private-sector sources. After all, the government has given such reprieve to developers in the past amid external shocks that rocked Singapore's property market, he argued.

The Cheng family owns slightly more than 50 per cent of mainboard-listed Wing Tai which, like many other developers, is stuck with unsold units in high-end residential projects developed on sites bought at high prices before the 2008 global crisis.

Wing Tai has sold only three of the 43 units at Le Nouvel Ardmore. The freehold project received Temporary Occupation Permit (TOP) in April and hence Wing Tai has up till April 2016 to finish selling the project.

-By Kalpana Rashiwala

Global Economy & Global Real Estate

'Riskier' to invest in real estate in emerging markets

Source: Straits Times

Political unrest is helping to make real estate investment riskier in emerging and frontier markets but there are still opportunities to be found, said a report from consultancy Cushman and Wakefield yesterday. It found that developing countries in South-east Asia are generally riskier and less transparent than those in Africa and the Middle East.

Wider design focus for Michael Graves

Now relying on a wheelchair to get around, the distinguished US architect creates buildings for survivors, reports BARBARA SADICK

Source: Business Times / Property

IN 2003, Michael Graves had just returned home from a business trip to Germany and Switzerland. He wasn't feeling well and told colleagues at his architectural firm that he was leaving early to go home and rest.

By the next morning, Mr Graves - one of America's most prominent architects and designers - was fighting for his life against a mysterious virus. It was not until two years later, after treatment in eight hospitals and four rehab centres, that he finally got back to work - paralysed from the chest down and needing to use a wheelchair.

This story is not about the virus or his rehab, but about what Mr Graves has done with the rest of his life: design hospitals and rehab centres for people like himself, for wounded soldiers and for others facing huge physical challenges. Most of what exists now for such people, he says, is just too depressing to even die in.

-From New York, US

Malaysian mall landlord rings up rosier Q2 results

Source: Straits Times

Construction of New U.S. Homes Declines on Plunge in South

Source: Bloomberg / Luxury

Housing starts unexpectedly declined in June to a nine-month low, led by a record plunge in the South that shows the construction industry must still overcome hurdles before it can contribute more strongly to U.S. economic growth.

Work began on 893,000 homes at an annualized rate, down 9.3 percent from a 985,000 pace in May that was weaker than previously estimated, according to figures from the Commerce Department issued today in Washington. Other reports showed manufacturing was gaining steam this month and fewer Americans filed claims for jobless benefits last week as consumer sentiment hovered near this year’s high.

A shortage of buildable lots and experienced construction workers, higher prices and mortgage rates that have climbed from record lows mean residential real estate will struggle to help the world’s largest economy. The figures, along with a decline in building permits, corroborate Federal Reserve Chair Janet Yellen’s view that progress in the housing market has been “disappointing.”

“Something that was anticipated to be a big recovery in the spring just has turned out not to be,” said Jay Morelock, an economist at FTN Financial in New York whose starts estimate was among the lowest in the Bloomberg survey. “We see more or less a stabilization. I don’t think it’s going to crash and I don’t think it’s going to accelerate.”

Stocks tumbled, with the Standard & Poor’s 500 Index (COMFCOMF) falling the most in three months, amid escalating tension in Ukraine and the Middle East. The S&P 500 lost 1.2 percent to 1,958.12 at the close in New York.

Ukraine, Israel

Equities extended losses in the final hour of trading after reports that Israel began a ground operation in the Gaza Strip. The crisis in Ukraine escalated after a passenger jet crashed in the main battleground of the civil war. The government in Kiev blamed pro-Russian rebels for shooting down the Malaysian Airlines jet, while the separatists denied the accusations.

The median estimate of 79 economists surveyed by Bloomberg projected housing starts would climb to a 1.02 million rate. Estimates (NHSPSTOT) ranged from 957,000 to 1.1 million after a previously reported 1 million in May.

Construction slumped 29.6 percent in the South, the biggest plunge in data going back to 1959, to a 375,000 pace, the weakest in almost two years. The three other regions showed increases, led by a 28.1 percent jump in the Midwest to a 219,000 annualized rate, the strongest since August 2007. The Northeast rose 14.1 percent and the West climbed 2.6 percent.

Lot Shortage

Starts in the South may have been hurt by a shortage of buildable lots as development was held up by the unusually harsh winter, said Brad Hunter, chief economist of housing-research firm Metrostudy in Palm Beach Gardens, Florida. Builders in North Carolina say they don’t have enough supply of land, and homes now under construction are usually sold before they’re completed, he said.

“It’s more of a supply issue than a demand issue in North Carolina,” Hunter said in a telephone interview. “Sales agents say it’s easy to sell if they have inventory.”

Other economists thought the magnitude of the slump in the South made the data suspect.

“It’s so bizarre I don’t put any weight on it,” said Mark Zandi, chief economist for Moody’s Analytics in West Chester, Pennsylvania. “If it came in on the light side I’d be more uncomfortable because it might suggest construction just isn’t getting traction. But this is just so out of bounds that it doesn’t feel right to me.”

Swings Common

Big swings in the regional data are common. The Census Bureau notes in its release that because month-to-month movements “may be irregular,” it may take four months to establish an underlying trend in total housing starts.

The figures on construction applications were also mixed. Building permits decreased 4.2 percent in June to a 963,000 annualized rate, a second consecutive decline. Nonetheless, the drop was concentrated in the more-volatile multifamily projects, which fell 14.9 percent. The number of permits issued for single-family houses, the biggest part of the market, rose 2.6 percent to the highest level since November.

Residential real estate has been slow to emerge from an early-year, winter-driven slump -- a development not lost on Yellen.

While housing has recovered from its lows, “activity leveled off in the wake of last year’s increase in mortgage rates, and readings this year have, overall, continued to be disappointing,” Yellen said this week during her semi-annual testimony to the Senate Banking Committee.

Mortgage Rates

The average rate for a 30-year fixed mortgage was 4.13 percent this week, according to Freddie Mac in McLean, Virginia. While down from 4.53 percent at the start of the year, it’s higher than the 3.35 percent in May 2013.

Prices have increased as well, hurting affordability for those getting into the market. The median selling price of a new home sold in May increased 6.9 percent from the same month last year to reach $282,000.

At the same time, payroll gains are brightening the outlook for the market. A report yesterday showed confidence among homebuilders rose in July to the highest level in six months. The National Association of Home Builders/Wells Fargo sentiment measure climbed to 53 from 49 in June, the Washington-based group reported. Readings above 50 mean more respondents said conditions were “good.”

Another report signaled employment will probably keep growing. Jobless claims declined by 3,000 to 302,000 in the week ended July 12, the Labor Department said. More muted firings typically pave the way for acceleration in job growth.

Continuing Claims

The report also showed the number of people continuing to receive jobless benefits fell to a seven-year low.

Lennar Corp. (LEN) is among companies counting on continued gains in hiring to drive sales. The Miami-based homebuilder reported a quarterly profit that beat analysts’ estimates as it raised prices and delivered more properties.

“The fundamental drivers of improvement in the housing market remain a steadily improving economy with a slowly improving employment picture unlocking pent-up demand while supplies remain constrained to meet that demand,” Chief Executive Officer Stuart Miller said on a June 26 conference call. A shortfall in single- and multifamily homes is “likely to continue to define the housing markets for the foreseeable future and will drive the housing recovery forward.”

Manufacturing, on the other hand, is gaining traction. The Federal Reserve Bank of Philadelphia today reported its factory index jumped to 23.9 in July, the highest level since March 2011. Readings greater than zero signal growth in the area of eastern Pennsylvania, southern New Jersey and Delaware.

The central bank’s orders index, at 34.2, was the highest since July 2004 and the second-strongest since 1988.

Manufacturing Strength

“The manufacturing data looks very good,” said Aneta Markowska, chief U.S. economist at Societe Generale in New York. “That fits a little bit better with our outlook for the economy.”

American households are also feeling upbeat. The Bloomberg Consumer Comfort Index was little changed at 37.5 in the week ended July 13 compared with 37.6 in the prior period, a report today showed. The index has been hovering close to the 2014 high of 37.9 reached in April. Last week’s reading was the fourth-strongest since the start of 2008.

The report also showed the buying-climate gauge climbed to its second-highest reading in more than six years.

“The reason businesses are getting more optimistic is because they’re aware of the position that households are in, which is getting healthier at the margin,” Markowska said.

-By Victoria Stilwell

Blackstone May Reach $100 Billion in Core Real Estate

Source: Bloomberg / News

Blackstone (BX) Group LP may have $100 billion of low-risk real estate under management in a decade as the firm expands beyond distressed properties, Chairman and Chief Executive Officer Stephen Schwarzman said.

“The core-plus asset class is about three times the size of what we’re doing in the opportunity class,” Schwarzman said today on the New York-based company’s second-quarter earnings call. If Blackstone can continue to generate strong returns, “you could look at a business like this over a 10-year period and have $100 billion under management.”

Core real estate includes high-quality, well-leased properties such as prime office buildings, apartment towers and shopping malls. Core-plus refers to similar assets that might need a little extra work to boost values. Blackstone aims for net returns of 10 percent to 12 percent with core-plus real estate, Schwarzman said.

Blackstone, the largest private-equity real estate investor, has begun raising its first core-plus fund and expects to gather more than $5 billion in the next year, Schwarzman said. The firm has amassed about $2.8 billion in separately managed accounts for the strategy, President Tony James said on the call.

Blackstone manages about $80.4 billion of total real estate assets, which includes about $10 billion of debt.

Core real estate represents the vast majority of the almost $29 trillion in global property investments, according to CBRE Global Investors, a unit of CBRE Group Inc.

Global Fund

Property investors flocked to core assets after the financial crisis in search of yields better than government bonds with less risk than opportunity funds, which use high levels of debt to help generate returns.

Blackstone next year plans to raise a new global real estate fund that’s likely to be larger than the current $13.3 billion Blackstone Real Estate Partners VII, Schwarzman said.

The BREP VII fund’s equity -- already closer to $16 billion with co-investment from fund clients and the ability to recycle a portion of proceeds from investments that are sold -- probably will increase, Schwarzman said.

“At our current investment pace, we’d likely be back in the market with our next global fund early next year,” he said.

Blackstone has raised $4.4 billion for its first Asian real estate fund, putting it on pace to reach its $5 billion goal.

-By Hui-yong Yu

Young Adults Stay at Home as U.S. Multigenerational Living Rises

Source: Bloomberg / Luxury

The share of young adults living with parents or other family members in the U.S. continues to grow in the aftermath of the most severe recession in the post-World War II era.

A record 57 million Americans, or 18.1 percent of the population, lived in a multigenerational household in 2012, a report released today by the Pew Research Center in Washington showed. Almost one in four 25- to 34-year-olds had such living arrangements, and young men in particular were more likely to reside with their families.

“This is kind of the private safety net -- for economically vulnerable individuals, this is the way they pool their resources,” said Richard Fry, a co-author of the report with Jeffrey Passel. Five years into the economic recovery, “it’s still not a particularly vigorous labor market, especially for young adults.”

The share of Americans living with multiple generations has been on the rise since 1980, when it reached a post-World War II low of 12.1 percent. The trend accelerated during the recession and has continued to rise, though more slowly, since then. The number of Americans with such living arrangements in 2012 was double what it was in 1980, according to the report.

The findings highlight the economic struggles young Americans continue to face in the wake of the recession as unemployment for the age group remains elevated above its historical average. Some are also deferring marriage or staying in school longer, which may give them additional cause to live with family, according to the report.

Young Adults

Young adults are more likely than any other cohort to live in multigenerational homes, exceeding even the elderly -- who have typically held that distinction, according to the report. Some 23.6 percent of those 25- to 34-years old lived with multiple generations in 2012, compared with 22.7 percent of Americans 85 and older.

Of the young adults in multigenerational homes, 80 percent were residing with their parents. Within the cohort, men are “significantly” more likely than women to be living with multiple generations, which is different from most other age groups.

The rise in multigenerational living also comes as racial and ethnic minorities, who are more likely to reside in such arrangements, make up a growing share of the population.

Some 27.2 percent of Asian Americans lived with multiple generations in 2012, more than any other minority, followed by 24.6 percent of blacks and 24.4 percent of Hispanics. Some 14.3 percent of whites lived in multigenerational homes.

Immigration’s Impact

“Regardless of the economy, as a result of immigration, the proportion of the population that’s non-white is going to rise,” Fry said. “This is why one would continue to expect to see multigenerational living arrangements -- they probably haven’t peaked.”

The study also showed that children living with multiple generations are increasingly living in households headed by a grandparent, not a parent. That may be a sign that “economic assets and wherewithal has shifted from young adults toward older adults,” the report said.

The analysis uses data from the U.S. Census Bureau and defines multigenerational households as those that are comprised of two generations (parents and adult children), three generations (parents, adult children and grandchildren), skipped generations (grandparents and grandchildren) or more than three generations.

Pew classifies a multigenerational household as those with at least two adult generations. It’s a broader definition than that of the Census Bureau, which identifies it as those with three or more generations. As a result, the center finds that 11.2 percent of all households were multigenerational in 2012, compared with 3.8 percent using the Census interpretation.

-By Victoria Stilwell