Singapore Real Estate 'Steady increase' in number of unsold private units Source: Straits Times / Money MANY private developments have been launched but remain unloved by buyers as home loan curbs continue to suppress demand. The number of launched but unsold homes as at the end of June was higher than at the same time the previous year, according to official data last week. There has been a "a steady increase in unsold units in launched private residential projects" since the middle of last year, when tough restrictions were imposed under a total debt servicing ratio (TDSR) framework, JLL Singapore research director Ong Teck Hui said. TDSR forces home buyers to tighten their belts because it caps a borrower's monthly total debt repayments at 60 per cent of his gross monthly income. Mr Ong noted that there were around 5,200 unsold units in launched private residential projects, as at the end of June last year. However, that jumped about 20 per cent to reach around 6,300 units, as at the end of last month, he said. The Urban Redevelopment Authority does not give a breakdown of launched but unsold units by region. However, the three projects with the highest number of such units were all in the suburbs, The Straits Times found. The project with the biggest number of unsold private homes, as at June 30, was The Santorini in Tampines Street 86. The 99-year leasehold project has launched all 597 units, but has moved only 113, leaving 484 units, or 81 per cent, unsold. Sales were poor even though its developer, MCC Land, had engaged four real estate agencies to market the project when it was launched in March, a move deemed unusual at the time. Consultants said prices are still holding buyers back, which is prompting developers like MCC Land to change how they market new launches. In the past, developers would typically engage only one marketing agency, or two for projects with more than 800 units, but roping in more than two is now par for the course. The launch of City Gate at Beach Road this month involved six agencies: ERA, PropNex, Knight Frank, Savills, Teakhwa Real Estate and SLP Scotia. Consultants said that apart from enlisting more agents, developers could try to spend a longer period drumming up interest before the actual launch. "Developers are likely to adjust the length of their marketing programme," said Mr Joseph Tan, executive director of residential at CBRE. Developers have also lowered their selling prices below initial market expectations at recent launches, such as City Gate's. The second-biggest number of launched but unsold units was found at Kingsford - Hillview Peak, in Bukit Batok. The 512-unit project by Chinese developer Kingsford Development has 352 unsold units, or 69 per cent of the total. In third place was the 420-unit The Skywoods at Dairy Farm Heights by TA Corporation, with 319 launched but unsold units as at end-June. -By Melissa Tan Wary buyers shun completed homes Fears of private housing glut, poor rental market hurting sales: Experts Source: Straits Times / Money THE threat of an oversupply of private homes and a poor rental market are deterring home-seekers from buying completed homes, especially in the city centre. The upscale Districts 9, 10 and 11 account for the bulk of unsold units at completed developments across Singapore, according to data last week. Consultants said that buyers were still wary of taking the plunge, particularly in the luxury segment, due to a flood of new units entering the market and the increased difficulty in finding tenants. Private home vacancy rates have reached their highest point since 2006, according to Urban Redevelopment Authority (URA) figures. Developers appear to be responding by cutting prices further to boost sales in order to avoid penalties for failing to sell all their units by a deadline, consultants added. Fines are imposed if a builder fails to sell all the apartments in a project within two years of completion, under Qualifying Certificate (QC) rules. There were 1,412 completed but unsold homes at the end of June - 1,259 condominium units and private apartments, and 153 landed houses - according to the URA last Friday. The city centre accounted for the bulk of that - about 894 units, or 63.3 per cent - while the city fringe had about 414 unsold units, or 29.3 per cent of the total, said OrangeTee research head Christine Li. Both areas far outstripped the suburbs, where there were only 104 unsold completed units, or 7.4 per cent of the total. Ms Li pointed out that the prices of completed homes in the city centre slid 1.9 per cent in April through June from the previous three months, the largest quarterly drop since the second quarter of 2009. "This could suggest that some developers have started to become skittish and have started to cut prices in order to move units to avoid QC fines." Still, buyers will likely stay on the sidelines partly due to rising vacancy rates and a possible supply overhang in the near future, consultants said. The islandwide vacancy rate for all private homes, including landed housing, climbed from 6.6 per cent in the first quarter of this year to 7.1 per cent in the second - the highest level since the 7.4 per cent recorded in the first quarter of 2006. City centre homes were the worst hit in the second quarter of this year, with a vacancy rate of 8.5 per cent, said the URA. R'ST Research director Ong Kah Seng said that owners of some city centre units may have left the apartments empty because they were unable to fetch rents high enough to be cost-effective, given the high maintenance costs. For instance, tenants may speed up the normal process of wear and tear, or require the landlord to replace some parts of the house, he told The Straits Times. The cost of those repair or replacement work may not be worth the rent in some cases. "When there are significant 'pitch-dark' condominiums in the prime districts, it will paint a negative picture of lifelessness in Singapore's central region," he added. Consultants said that a bumper crop of completed homes could weaken the leasing market even further. JLL Singapore research director Ong Teck Hui pointed out that there were 9,016 private homes completed in the first six months of this year, compared with 13,150 units throughout the whole of last year and 10,329 units over 2012. Some developers have slashed prices to move remaining units in projects that are substantially sold. At the freehold The Vermont at Cairnhill, developer Bukit Sembawang had 37 units unsold by the end of June but has managed to move more than 30 this month by cutting prices, according to real estate agents. Prices per sq ft (psf) were reduced to just over $2,000 psf about two weeks ago, down from the previous average of around $2,400 psf, agents said, making a drop of up to 16 per cent. Cape Royale in Sentosa had not moved any of its 302 apartments as at the end of June, making it the project with the highest number of completed but unsold units. Developers IOI and Ho Bee decided to rent out units there instead of selling them. CapitaLand's The Interlace in Alexandra was next with 180 units left, but that is just 17 per cent out of its 1,040 units in total. -By Melissa Tan Rooftop greenery adds splash of colour to HDB estates Source: Straits Times / Singapore A PATCHWORK of deep red leaves and bright green grass stretches across the roof of a multi-storey carpark in Toa Payoh West. No one is allowed up there, yet the greenery can still be appreciated by many - those who live in the high-rise blocks around it. From converted roofs of old carparks to landscaped decks in new housing estates, more such gardens in the sky are on the way. About 28ha of greenery is now spread across more than 160 roofs of Housing Board blocks and carparks. Over the next few years, another 43ha will be added - the area of almost 60 football fields. "We are greening up a lot of HDB rooftops. It is pleasing to the eye, besides lowering the ambient temperature," National Development Minister Khaw Boon Wan noted in a blog post earlier this month. Some, like the one in Toa Payoh West, are closed to the public. Located on top of older HDB blocks and multi-storey carparks, they cut the glare from the flat space, and add a splash of green. "HDB continually works to identify the optimal locations for green roofs - for instance, carparks with many blocks that face them, so more residents can enjoy the view," said Mr Tan Sze Tiong, deputy director of environment and building performance research at the HDB Building Research Institute. Carparks chosen are those with more than enough spaces. But there is no problem if parking demand rises, for these green roofs are made up of portable trays that can easily be removed. Their permanent counterparts are 100 or so landscaped public rooftop gardens which feature in the designs of new housing estates. Many more are on the way. Since 2009, most new multi-storey carparks have been topped with these gardens. They feature plants ranging from turf to trees, and often include a playground, fitness areas and games courts. And the living rooms or bedrooms of surrounding units are carefully oriented to face these green havens. "Rooftop gardens provide visual relief. Without them, you would just see an expanse of concrete," said HDB landscape architect Rachel Teo. For Madam Sun Yuqin, the Punggol Regalia rooftop garden is not just a nice view from her balcony, but a place to exercise with friends every morning. "It's quite a nice setting," said the 73-year-old. Instant lush, green carpet THE quiet, green roof in Toa Payoh West, set up in 2006, was the first of its kind. The lush carpet is actually made up of many small, interlocking plastic trays. Known as the Prefabricated Extensive Green roof system, this low-maintenance arrangement was developed by the HDB itself. For an instant green roof, these trays simply have to be laid in place - and left there. Every six months, the plants are trimmed and fertiliser is added. No watering is needed. A special compartment under the soil layer collects rainwater to tide the plants through dry spells of up to 21 days. Tough, hardy species are also chosen. After much research, the HDB settled on two plants. One of them, Cyanotis cristata, even becomes more beautiful in dry weather. Its leaves turn from green to dark red - "as though they are ushering in the autumn season", National Development Minister Khaw Boon Wan observed in a blog post earlier this month. Another, Zephyranthes rosea, blooms with delicate pink flowers after rainfall. Both species not only survived February's record drought, but turned lush and green again afterwards. -By Janice Heng Q2 commercial property sentiment moderates: poll Source: Business Times / Property REAL estate investor and occupier sentiments in Singapore's commercial property market have fallen slightly from the previous quarter although both remain positive, according to a survey conducted by the Royal Institution of Chartered Surveyors (RICS). The RICS Global Commercial Property Survey Singapore Report, which compiles the market opinion of chartered surveyors in the region, recorded a decrease in the local Occupier Sentiment Index for Q2 2014. The index takes into account occupier demand, level of inducements and rent expectations. The number of respondents expecting a positive outlook fell from 27 per cent more in Q1 to 11 per cent more in Q2, leaving the index still in positive territory.
Occupier demand fell towards neutral levels, driven by a drop in industrial and retail demand. At the same time, aggregate inventory remained steady, although the supply available in the office segment decreased as well. Office space rental prices are expected to increase as a result. -By Amanda Eber Hotel industry set for growth despite rising competition Source: Today Online / Business SINGAPORE — The hotel industry in Singapore should continue to enjoy healthy demand despite rising room rates and strong competition, as the Republic’s existing and coming attractions are set to draw more regional tourists. In the first quarter of this year, Singapore’s international visitor arrivals held steady at about 3.9 million, which helped lift gazetted hotel-room revenue by 12 per cent on-year to S$800 million during the period, said the latest Singapore Tourism Board (STB) quarterly report released last week. That trend is set to continue, with visitor numbers likely to still be ticking higher, which should see demand for hotel rooms rise, said Euromonitor’sresearch analyst Cassandra Tan. “Tourist arrivals are predicted to grow at a compound annual growth rate of 4 per cent, driven by the wide array of events, including sporting events at the new Sports Hub and other coming attractions, such as the Singapore Pinacotheque de Paris opening in 2015,” added Ms Tan. “Not forgetting, the abundance of low-cost carriers in the Asia-Pacific also supports the frequency of visits, especially for short-haul trips.” Against this backdrop, major operators have enjoyed stronger earnings in the corresponding period, with Resorts World Sentosa recording on-year growth of 6 per cent in revenue from its attractions and hotels in the first quarter of the year, said a company spokesperson. And the industry will continue to grow on the back of healthy tourist demand, STB’s director for hotels, Ms Heng Li Lang, told TODAY. “With Singapore’s transformation and tourism growth over the past decade, demand for hotel rooms has risen and more hotels are being built. An estimated 12,700 upcoming rooms are expected from now till 2018.” However, tourists arriving in Singapore are also facing increasingly high hotel room rates, which averaged about S$261 in the first quarter after rising 2.7 per cent on-year. The increase was the strongest in the luxury hotel segment, with a 9.5 per cent increase to an average rate of S$467. “The scenario is primarily caused by the opening of new hotels in prime locations fetching higher-than-averagerates. Over the past five years, we have witnessed the opening of hotels in the Central Business District and Sentosa targeting the upscale and luxury market,” said Ms Tan. “These include, for instance, CapellaSingapore in 2009, the Fullerton Bay Hotel in 2010, W Singapore in 2012 and the Westin Singapore last year. This could in turn lead to implications such as tourists shifting away from the luxury hotels to mid-tier options, as well as lower expenditure in other segments such as shopping, dining and entertainment.” Reflecting that sentiment, STB’s first-quarter figures showed a 1 per cent on-year decline in tourism receipts for food and beverage, as well as a 6 per cent dip in receipts for shopping.
“We are mindful that rising costs can affect tourism spending and future growth,” said Ms Heng. “Hence, it’s imperative that we continue to work towards quality tourism, a yield-driven development that emphasises strong economic contribution, development of attractive tourism experiences, targeted marketing strategies, improvement of industry competitiveness and engagement with the local populace.” http://www.todayonline.com/business/hotel-industry-set-growth-despite-rising-competition Changi Business Park a strong draw Banks, high-tech firms among big tenants at park Source: Straits Times / Money BANKS are continuing to make a beeline for Changi Business Park (CBP) as they set up vast complexes to handle back office operations that used to be scattered across the island. The consolidation process has seen the CBP evolve into a major employment hub with thousands of workers relocating there over the past four years. The experience of Standard Chartered Bank illustrates how relocating to the CBP allows firms to get more of their operations under one roof - and save on the pricey rents they were paying in the central business district (CBD). StanChart was operating out of eight locations but has cut this to three - Battery Road, Marina Bay Financial Centre and CBP - with plans to eventually bring it to two by leaving Battery Road. StanChart went to CBP in May 2010 when it opened a 232,000 sq ft building that now hosts about 2,000 staff in human resources, technology and trade operations. Singapore is the global management centre for its technology and operations, noted Mr Nick Hughes, head of corporate real estate for Singapore and the region. A new CBP extension - a 154,000 sq ft, six-storey building - that is expected to accommodate up to 1,800 people will begin operations next year. DBS Asia Hub is also in the midst of expanding at CBP. An annex to be completed in the third quarter of next year will boost its floor space by about 60,000 sq ft. DBS, StanChart and fellow banks Citi, Credit Suisse and JP Morgan employ more than 10,000 people over 1.5 million sq ft of space at the park, according to The Straits Times estimates. The bank relocation rush started in 2009, when Citigroup moved its operation and technology units from Tampines Junction and Tampines Plaza. From five offices, it now has three - at Asia Square and Capital Square in Raffles Place and CBP. Its 400,000 sq ft CBP facility has about 4,500 employees in cash processing units and global processing centre for wealth management, among others. Like StanChart, DBS made its move in 2010, setting up the 340,000 sq ft DBS Asia Hub. This houses about 3,000 employees, mainly in support units such as technology and operations, human resources and risk management. Most of these workers used to be at support offices in Technopark@Chai Chee and the former DBS Building in Shenton Way, a DBS spokesman said. "Housing the support teams under one roof will facilitate faster decision-making and greater teamwork, which will eventually allow us to respond faster to customers' needs," she added. Credit Suisse joined the move in April last year, relocating most of its staff to One@Changi City, where it leases four floors of the nine-storey building. Moving to CBP has allowed the bank to consolidate operations from multiple sites to two main locations - One Raffles Link for front office staff and One@Changi City for back office support functions such as information technology, operations, finance and human resources, a spokesman said. JP Morgan is also reportedly leasing 130,000 sq ft at One@Changi City, having cut down on its space at Capital Tower in Robinson Road. The consolidation process under way at CBP is not just bringing efficiency gains but also allowing firms to slash leasing costs. Banks stand to enjoy up to 30 per cent rental savings by moving from the CBD to CBP, said Mr Ong Kah Seng, director of property firm R'ST Research. He noted that business park rents tend to be lower compared with suburban offices, and cheaper rent means staff may be able to have larger workspaces. He added that CBP offers larger pockets of space compared with other business parks and office blocks. CBP is also home to some high-technology businesses, data and software enterprises, and research and development companies, said a spokesman for industrial landlord JTC, which manages the park. CBP includes Changi City and UE BizHub East; together they house business, retail and hotel operations. These were launched over the past two years. Citi employee Maggie Poon said: "CBP is like a little city in itself, with a hub of activities... most offices are also within walking distance of Changi City Point and Singapore Expo MRT station, which enhances accessibility." The JTC spokesman said the park will continue to evolve, with upcoming developments including the Singapore University of Technology and Design (SUTD), which is scheduled to complete the first phase of its CBP campus by the end of this year. The university will also work with the JTC on an integrated masterplan for the park and its surroundings as part of the SUTD-JTC Industrial Infrastructure Innovation Centre established earlier this month. "We aim to develop CBP to house industries and enterprises that have strong synergies with SUTD and can leverage on its close proximity to Changi Airport, as well as incubate new industries and enterprises that could emerge from SUTD," the JTC spokesman said. -By Rennie Whang Global Economy & Global Real Estate S'pore, China looking at possible third joint project Invitation to join new Asian bank might also be accepted Source: Straits Times / Top of The News SINGAPORE and China are exploring the possibility of a third government-to-government project after the Suzhou Industrial Park (SIP) and the Tianjin Eco-city. The new joint venture was one of the topics discussed by Deputy Prime Minister Teo Chee Hean and Chinese Vice-Premier Zhang Gaoli here yesterday at a meeting that lasted more than an hour. Mr Teo also "expressed Singapore's intent to accept China's invitation" to be a founding member of the Asian Infrastructure Investment Bank (AIIB), said the Singapore Ministry of Foreign Affairs (MFA) in a statement. Mr Teo is in China for the second Singapore-China Social Governance Forum and to meet Chinese leaders. Mr Zhang suggested a third joint venture last October, during a meeting of the high-level Joint Council for Bilateral Cooperation, which he and Mr Teo co-chair. The new project would be in a yet-to-be-decided site in the western region of China. While less developed than the country's coastal east, it is the focus of a big urbanisation and modernisation push by the Chinese government. No other details of the new joint venture were available; the Singapore MFA would say only that Singapore officials have been visiting China's western cities in exploration of the proposal. Singapore's first government- to-government project with China was the SIP, which marks its 20th anniversary this year. It was set up in eastern Jiangsu province in 1994. Envisioned as a magnet for foreign investment and high-tech industries in Singapore's mould, the 288 sq km park now boasts investments from close to a hundred of the world's top 500 companies. The 30 sq km Tianjin Eco-city, which broke ground in 2008, was conceived as a model of ecologically conscious urban design. It has 10,000 residents and the aim is to grow this to 350,000 by 2020. But the two joint ventures have not been without controversy. The SIP's early years were marred by the Suzhou government (which had only a 35 per cent stake in it) promoting an alternative park to foreign investors. The situation improved after the Singapore Government reduced its stake from 65 per cent to 35 per cent in 2001. Tianjin Eco-city has grown more slowly than expected, Singapore officials have acknowledged. The building of its transport infrastructure, essential in attracting residents, has been delayed. During their meeting yesterday, Mr Teo and Mr Zhang discussed "how the AIIB can complement existing multilateral development banks, stay open and inclusive, and draw upon the best practices of existing multilateral development banks in terms of governance and operations", said MFA. The China-led bank, which is expected to have an initial fund of US$50 billion (S$62 billion) mostly from China, is meant to finance infrastructure building in the region. Analysts have said China's aim is for the new lending agency to rival the Japanese-controlled Asian Development Bank and other multilateral financial institutions such as the World Bank. Mr Teo, who is accompanied on his trip by Minister for Social and Family Development Chan Chun Sing, Senior Minister of State for Trade and Industry and National Development Lee Yi Shyan and Parliamentary Secretary for Social and Family Development Low Yen Ling, will meet Chinese Communist Party Organisation Department chief Zhao Leji today before leaving Beijing for Chongqing. -By Rachel Chang in Beijing Iskandar investment boom continues New investments in 2nd quarter doubled to $3.8b from 1st quarter Source: Straits Times / Money NEW investments in Iskandar Malaysia more than doubled in the second quarter compared with the first three months of the year as the zone's boom continues to roar along. The region recorded RM9.72 billion (S$3.8 billion) in new investment in the three months to June 30, bringing the year's total so far to RM14.56 billion. That half-year total is on track to equal or surpass last year's investment figure of RM25.33 billion. The second quarter surge came from new spending in the property, manufacturing and finance sectors, an Iskandar Regional Development Authority (Irda) spokesman told The Straits Times. While the first and second quarters have seen "good investments", Irda co-chairman and Johor Menteri Besar Mohamed Khaled Nordin said he expects investor confidence to keep growing throughout the year. China's Greenland Group was one of the bigger spenders in the second quarter, paying RM600 million to Iskandar Waterfront Holdings for about 5.6ha in Danga Bay, where it plans to develop properties worth about RM2.2 billion in gross development value. It also bought a 51.8ha plot in Jalan Tebrau. Despite Greenland's entry into the Iskandar property market, China is lagging behind in the spending stakes. Singapore was the biggest investor in the first half of this year, followed by the United States, Spain, Japan and the Netherlands. Among the companies that invested in Iskandar in the first half of this year was Compass Wool Processors, fully owned by Singapore company NK Ingredients. The firm is spending $50 million on a new plant in Southern Industrial and Logistics Clusters Nusajaya. NK Ingredients plans to use the grease extracted during wool processing to manufacture lanolin for cosmetics and other derivatives at its Jurong plant. Compass Wool business director Stefan Bernerius said: "Iskandar is a good logistics hub for the wool textile supply chain. It is located not far from the parent company and caters to its need for wool grease. "It is also less complicated than China, and less risky compared with other low-cost South-east Asian countries." The investment cash should keeping coming in, with the creative, health care, financial services and logistics sectors continuing to attract new spending this year and next year, said Irda chief executive Ismail Ibrahim. CIMB regional economist Song Seng Wun said these sectors, while part of a more integrated development plan, partly ride on the needs of Singaporeans. "For example, with our ageing population, Singapore needs more options when it comes to health care." From 2006 to June 30 this year, cumulative committed investment for Iskandar reached RM146.20 billion, of which 64 per cent came from Malaysian investors and 36 per cent were from foreign ones. As at April this year, Singapore has been the largest source of foreign investments in Iskandar, with about RM11 billion coming from or through the country - primarily in manufacturing, education, health care and property development. Mr Song said all investment should complement the growth of Johor while also supporting Singapore's growth as it provides opportunities to businesses here. "(But) sustainability could be a question in the real estate segment, where potential supply may outstrip demand, which could have a knock-on impact on other sectors," he said. -By Rennie Whang Pending home sales take unexpected dip in June Credit availability, slow wage growth reasons for the drop Source: Business Times / Top Stories [WASHINGTON] Fewer Americans than forecast signed contracts to buy previously owned homes last month, a sign residential real estate is struggling to strengthen. The index of pending home sales declined 1.1 per cent from the month before after rising 6 per cent in May, figures from the National Association of Realtors (NAR) showed yesterday in Washington. Limited availability of credit and sluggish wage growth are making it harder for prospective buyers to take the plunge, threatening to throttle the pace of the housing recovery. Continued gains in employment and a bigger supply of available homes will be needed to help accelerate the industry's progress, while increases in home prices may encourage more Americans to put their properties up for sale. "Housing is a significant question mark, while many other sectors of the economy seem to be performing adequately," Louis Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey, said before the report. There are a variety of reasons behind the sluggish growth in the industry, "ranging from credit availability to finances to just general attitudes about housing". Stocks dropped as industrial shares sank and investors watched crises overseas before a Federal Reserve policy decision this week. The Standard & Poor's 500 Index fell 0.3 per cent to 1,971.9 at 10.01am in New York. The S&P 500 Homebuilding Index declined one per cent. -From Washington, US RBA watches as home prices and mortgages go through the roof Central bank says it is holding fire as risky loans haven't risen significantly Source: Business Times / Property [SYDNEY] Central banks from Scandinavia to the UK to New Zealand are sounding the alarm about soaring mortgage debt and trying to curb risky lending. In Australia, where borrowing is surging, regulators are just watching. Australian household debt is at a 25-year high, according to statistics bureau figures, and a government inquiry this month found housing to be a significant source of risk to the financial system. The average mortgage is at least four times household income in almost 80 per cent of the country, research by Digital Finance Analytics shows. While the UK, Denmark and New Zealand introduce measures including loan limits, caps on interest-only mortgages and repayment tests, the Reserve Bank of Australia and the country's banking regulator are holding their fire, saying that risky loans haven't increased significantly. The central bank also has said that the price gains so far are spurring needed construction, easing housing shortages in some areas.
"If we think there is a need for higher construction, which we do, an environment of declining prices is probably not conducive to that outcome," RBA governor Glenn Stevens said on July 3. "Some pick-up in housing prices as a result of lower interest rates was to be expected." -From Sydney, Australia Britons warier about house- buying: survey Source: Business Times / Property [LONDON] Britons are feeling much less positive about buying a house while sentiment toward selling is improving, according to a survey yesterday which added to other suggestions that the housing market is losing a bit of steam. The survey by mortgage lender Halifax showed the balance of people who felt it was a good time to buy fell sharply by 29 points to five in the second quarter, the largest fall in this measure since the survey began in April 2011. Conversely, 57 per cent felt it would be a good time to sell in the next year, with 32 per cent thinking it would be bad.
Britain's housing market has had a rapid recovery, with prices rising by an annual 11 per cent nationally by one measure. A lack of new homes coming onto the market has been cited as an important factor. -From London, UK http://www.businesstimes.com.sg/specials/property/britons-warier-about-house-buying-survey-20140729 Australia's NAB sells £625m of property bad loans in UK Source: Business Times / Property [SYDNEY] National Australia Bank Ltd, the nation's biggest lender by assets, agreed to sell a £625 million (S$1.3 billion) parcel of mostly non-performing commercial property loans in the UK to an affiliate of Cerberus Global Investors. The sale will result in a small gain above the loans' net book value and release about £127 million of capital for the bank when it settles, NAB said in a regulatory filing yesterday. It will shrink the gross loan balance of the bank's UK commercial property portfolio by 20 per cent to £2.38 billion, it said.
NAB's shares have been weighed down by its UK operations, where mounting bad debts triggered the first drop in full-year earnings in 2012 for three years. -From Sydney, Australia Beijing revives builder bonds as market cools It is authorising debt sales for first time in 5 years in bid to avoid bankruptcies Source: Business Times / Property [SHANGHAI] China's government is authorising developer debt sales for the first time in five years in a bid to avoid bankruptcies as the property market cools. Jiangsu Future Land Co, a builder of homes in eastern China, sold two billion yuan (S$401.3 million) of five-year AA rated bonds last week to yield 8.9 per cent. That's less than the average 9.73 per cent on trust products that many developers relied on for financing after authorities stopped approving onshore note issuance in 2009. The China Securities Regulatory Commission reversed course in April when it granted four real estate companies the right to sell the securities, after the collapse of a builder south of Shanghai the previous month underscored financing strains. The government allowed the first mortgage-backed debt sale since 2007 last week, in the latest step to ease restrictions on the industry as new home prices drop in a record number of cities.
"The issuances are obviously an easing signal," said Xu Hanfei, a bond analyst in Shanghai at Guotai Junan Securities Co, the nation's third-biggest brokerage. "The CSRC will probably approve more note sales as long as developers have fund-raising demand. It would be helpful because bond costs are lower than trusts." -From Shanghai, China |