Real News‎ > ‎2014‎ > ‎July 2014‎ > ‎

3rd July 2014

Singapore Real Estate

$22m asking price for five shophouses at Club Street

Foreigners can buy as properties were recently rezoned to commercial use

Source: Business Times / Property

FIVE adjoining shophouse properties at Club Street have been put on the market with an asking price of $22 million.

They comprise Nos 1, 3 and 5 Club Street, which are three storeys high and have an attic, and Nos 7 and 9, which are two storeys high. All five have balance land tenure of about 80 years.

The properties are being marketed jointly by JLL and Historical Land Pte Ltd. The latter is a boutique property agency specialising in shophouses.

The five shophouses are being offered as a package. Nos 1, 3 and 5 are owned by Citystate Properties while Nos 7 and 9 are owned by Dr Ling Ai Ee, who is also one of the shareholders of Citystate Properties.

-By Kalpana Rashiwala

Demand in strata-titled industrial market slows

Source: Business Times / Property

ACTIVITY in the strata-titled industrial market has gone down significantly, with demand coming mostly from end-users, said property consultancy DTZ Research.

All in all, 224 strata-titled factory units changed hands in Q2, said DTZ, which based its data on caveats downloaded from the URA Realis tool. This brought total transactions in the first half of this year to 523 - 57 per cent fewer than in the corresponding period last year.

Average capital values and rents for conventional industrial space (that is, traditional factories) held steady, based on a basket of private sector-owned properties DTZ tracks.

Conventional industrial average capital values for first-storey spaces in Q2 were flat at $627 per sq ft; those for upper-storey spaces were $470 per sq ft.

-By Sheena Tan

Leasing commitment for 21% of CapitaGreen

Source: Business Times / Property

CAPITAGREEN, the 40-storey Grade A office building in the central business district (CBD), has achieved aggregate leasing commitment for 21 per cent of its net lettable area (NLA).

The building, jointly developed by CapitaLand, CapitaCommercial Trust and Mitsubishi Estate Asia, is on track to be completed by year-end.

Its tenants include multinational firms such as Jardine Lloyd Thompson and Jones Day, said the partners during the building's topping-out ceremony yesterday.

Lim Ming Yan, president and group chief executive officer of CapitaLand, said: "By adopting innovative technologies and design-and-build methodology, we shortened the construction timeline to 36 months from the industry average minimum of 40 months it would take to complete a building of this scale using conventional construction methods."

-By Raphael Lim

One-fifth of CapitaGreen leased ahead of completion

The new 40-storey building at Market Street, slated to be completed by end-2014, has secured pre-commitment for 21 per cent of its net lettable area.

Source: Channel News Asia / Singapore

SINGAPORE: The upcoming CapitaGreen, a Grade A office building at Market Street, has secured leasing pre-commitments for 21 per cent of its net lettable area, joint developer CapitaCommercial Trust (CCT) said on Wednesday (July 2).

About 150,800 sq ft of the 40-storey building’s total net lettable area of 700,000 sq ft has been committed, CCT said. The tenants include multinational firms such as commodities trading giant Cargill, Swiss private bank Bordier & Cie, insurance broker Jardine Lloyd Thompson, law firm Jones Day and an unnamed international gym operator.

A topping-out ceremony to mark the progress of the building’s construction was held on Wednesday by the development’s joint venture partners – CCT, CapitaLand and Mitsubishi Estate Asia. National Development Minister Khaw Boon Wan officiated the ceremony and planted nine plant species, to showcase the plants that will be grown in the building.

Ms Lynette Leong, CEO of CCT, said in a statement: "Given that CapitaGreen is the only new Grade A office development in the CBD completing in the next two years, it is well positioned to leverage on the limited office supply to progressively attract more tenants."

CapitaLand said that by adopting innovative technologies and design-and-build methodology, the construction timeline has been shortened from 40 months – the average industry minimum to complete a building of this scale – to 36 months.

CapitaGreen is due to be completed by the end of this year.

- CNA/cy

Redeveloped Tanglin Halt could yield 5,000 new homes: Analysts

Property watchers estimate that the public housing estate at Tanglin Halt, earmarked for the Selective En Bloc Redevelopment Scheme, can yield more than 5,000 new homes when redeveloped.

Source: Channel News Asia / Singapore

SINGAPORE: Flats in Tanglin Halt were built in early 1960s, and are one of Singapore's oldest. In ten years' time, they will be among 31 blocks at Tanglin Halt Road and Commonwealth Drive that will be cleared under the Selective En Bloc Redevelopment Scheme.

Under the Master Plan 2014, the area has been zoned for mainly residential use. And when redeveloped, analysts say it can yield more than 5,000 homes - 50 per cent more than the current number.

Authorities have not said if the site will be used for private or public housing, but some property watchers say new HDB homes are likely to be built in the vacated area.

"We also have to look at the characteristics of the neighbourhood. If the neighbourhood is predominantly HDB, and there is also strong demand for HDB flats in that area, then perhaps the more suitable type of housing could be HDB," said Mr Nicholas Mak, the Executive Director for Research and Consultancy at SLP International Property Consultants.

"But having said that, I would not exclude the possibility that authorities may reserve one or two land parcels to be developed into private housing," he said.

And if the site is put up for private residential development, analysts estimate that it may cost up to S$900 per square foot, according to bids in recent tenders. But developers will be willing to pay, say analysts, as there are not many sites in mature estates offered under the Government Land Sales programme.

Tanglin Halt's location is another draw. Said Mr Ku Swee Yong, CEO of Century 21 Singapore: "It is a short walk to the Commonwealth MRT station, and a few minutes more to walk to Holland Village. The location is a mature precinct and if you were to develop one or two private residential projects there, you could in theory get people who are upgrading from the older HDB flats into the new private residential units." 

Over at Dawson, five new HDB projects will be built, offering some 3,700 new flats which Tanglin Halt residents will have priority to purchase. 

The new projects will have commercial facilities such as a supermarket and hawker centre. Analysts say this will bring more activity to the estate, but it is likely to remain a residential area. 

"Unless the authorities were to plan to have, let's say, a major shopping mall located near the area, otherwise it will predominantly be a residential area. But for other types of weekend activities, they may go elsewhere," explained Mr Mak. 

The rejuvenation plans also had analysts pointing out possible areas of concern, such as the potential overd evelopment of certain areas, which could affect their original character. "If we were to tear down everything and redevelop it into new things, yes, we would have very nice, new, clean and well-landscaped buildings. But these would be all very high-density, without much character, old-world charm or shared history," said Mr Ku. 

"If we could at least preserve one part of Tanglin Halt, especially the town square which existed since the late 50s and has a lot of history, I think that would actually give the old neighbourhood some identity and focus," he added. 

- CNA/ly

Real Estate Companies' Brief

Australand shares advance on FCL's offer

Source: Business Times / Companies

[SYDNEY] Australand Property Group shares rose by the most in a month after Frasers Centrepoint Ltd said that it will move ahead with a A$2.6 billion (S$3 billion) off-market takeover offer for the Australian developer.

Australand shares gained 0.9 per cent to A$4.48 as at 11.58 am here, set for the biggest advance since June 4. Frasers shares lost 0.3 per cent to $1.895 in Singapore.

Since proposing to bid for the Sydney-based company last month, Frasers has completed due diligence and will move forward with its A$4.48 a share offer to acquire all Australand securities, the companies said in regulatory filings on Tuesday.

The acquisition would give Frasers control of Australand's A$2.3 billion of office and industrial properties and A$9.3 billion of developments in Australia, where the Singapore company is building the 2,000-apartment Central Park project in downtown Sydney. For shareholders of Australand, it offers a better payout than bids from domestic competitors Stockland and GPT Group received over the past 18 months.

-From Sydney, Australia

Views, Reviews & Forum

Some flexibility in CPF use for servicing home loans

Source: Straits Times

We refer to the letters from Mr David Lee Wing Choy ("CPF scheme an obstacle to home-loan financing"; last Friday) and Mr Rajasegaran Ramasamy ("Let loans be settled before transferring CPF money"; last Saturday).

Global Economy & Global Real Estate

Everbright bought land next to CapitaLand's Chongqing site

Source: Business Times / Companies

CHINA Everbright Limited (CEL), which recently bought a stake in Singapore-listed Chongqing developer Ying Li, also bought a piece of land late last year in Chongqing - right behind the site of CapitaLand's landmark $4.1 billion investment.

CapitaLand's sizeable commitment gave Everbright the confidence that its own investment could work out, CEL's head of real estate investment and fund raising, James Pan, told The Business Times.

"We understood the site based on our own research, and CapitaLand's purchase just gave us more confidence. We can see this area becoming mature in five years," he said.

"It takes time, but eventually it will be a good location," he added.

-By Cai Haoxiang

UK home prices rise at fastest rate in 9 years

Source: Business Times / Property

[LONDON] British house prices rose at their fastest annual pace in more than nine years last month, and prices in London have shown their biggest jump in a generation, figures from mortgage lender Nationwide showed yesterday.

House prices rose by 1.0 per cent on the month in June after a 0.7 per cent rise in May, taking the annual rate of increase to 11.8 per cent - the biggest rise since January 2005.

Both the monthly and the annual growth rates exceeded all forecasts in a Reuters poll, in which economists had predicted that the rate of growth would stabilise.

But the most striking number was for London, where house prices in the three months to June were 25.8 per cent higher than a year earlier - an annual increase not seen since 1987. "The price of a typical property in London reached the £400,000 (S$855,068) mark for the first time, with prices in the capital now around 30 per cent above their 2007 highs and more than twice the level prevailing in the rest of the UK," said Nationwide's chief economist Robert Gardner.

-From London, UK

Developers offer buybacks in weakest markets

They are giving homebuyers an option to sell back their homes at above the purchase price

Source: Business Times / Property

[BEIJING] Property developers in two of China's weakest housing markets are offering to buy back homes above the purchase price to boost sales as demand slows.

In Hangzhou, where home prices fell the most in May among 70 Chinese cities watched by the government, Shanheng Real Estate Group is giving homebuyers an option to sell back their apartments in five years for 40 per cent above the purchase price. In Wenzhou, DoThink Group is offering to repurchase homes at three of its projects for 120 per cent of the purchase price after three years.

The offers are the latest strategy by developers across China, including reducing prices, delaying project launches and offering incentives to potential buyers, as they seek to maintain sales targets. Prices of new homes fell in May from April in half the 70 cities tracked by the government, the largest proportion since May 2012, according to government data. A more persistent and sharper downturn in the property sector is the biggest risk for China's economy in the next couple of years, according to UBS.

"Obviously they're relatively cash-thirsty," said Dai Fang, a Shanghai-based analyst at Zheshang Securities. "If it works, there surely will be other developers following suit."

-From Beijing, China

Chinese developers muscle in on HK

They see the southern territory as a lucrative market

Source: Business Times / Property

[HONG KONG] Chinese developers are moving aggressively into Hong Kong, outbidding their cross-border rivals for prime sites as policy uncertainty and falling property prices on the mainland send them scouring for opportunities to invest overseas.

The mainlanders see the southern territory as a lucrative market based on the absolute earnings enjoyed by Hong Kong-listed developers, which have beaten those of companies listed in mainland China over the past decade.

With some bids up to 20 per cent above analysts' forecasts, mainland companies such as state-controlled Poly Property Group Co Ltd are pushing up prices for popular sites in one of the world's most expensive real estate markets.

Fears of a bubble - prices have more than doubled in the Asian financial hub since 2008 - have proven no deterrent, while forecasts from some analysts of a 10 per cent drop in prices this year have fallen on deaf ears.

-From Hong Kong, China

For sale: Canada's railway hotels

Buyers attracted by the 'story' behind the properties built to resemble castles

Source: Business Times / Property

[OTTAWA] The age when rail travel dominated in Canada has long passed. But the railway-built hotels that era left behind have retained much of that period's glory and glamour.

Now a decision by Ivanhoé Cambridge, which is owned by Quebec's largest investment fund, to largely eliminate hotels from its holdings has put a handful of Canada's most famous landmarks on the market.

First to go last year was the Fairmont Chateau Laurier in Ottawa, a turreted, stone-clad castle that was home to some prime ministers and which is often assumed by some tourists to be part of the neighbouring Parliament buildings.

The ivy-clad Fairmont Empress in Victoria, British Columbia (BC), was sold last week to a real estate developer, Nat Bosa and his wife Flora.

-From Ottawa, Canada

Blackstone Said to Buy Park Avenue Tower for $750 Million

Source: Bloomberg / News

Blackstone Group LP (BX), whose Equity Office unit owns almost 200 U.S. properties, agreed to buy Park Avenue Tower in New York for about $750 million, said three people with knowledge of the transaction.

The seller is San Francisco-based Shorenstein Properties LLC. The 615,850-square-foot (57,200-square-meter) building is located at 65 E. 55th St. in midtown Manhattan, the area with the most-expensive U.S. office rents.

Law firm Paul Hastings LLP, which leases 16 of the building’s 35 floors, is vacating when its agreement is up in 2016, giving Blackstone the opportunity to raise rents when it finds a new tenant, said two of the people, who asked not to be identified because the deal is private. Another occupant, hedge fund Davidson Kempner Capital Management, also plans to move, creating a second potential source of higher rents, they said.

Peter Rose, a spokesman for New York-based Blackstone; Tim Gallen, a Shorenstein spokesman; and Arielle Lapiano, a Paul Hastings spokeswoman, declined to comment. A telephone message left at Davidson Kempner’s office wasn’t returned.

Eastdil Secured LLC was the adviser on the transaction, which was reported late yesterday by the New York Post.

Blackstone in 2007 was set to acquire Park Avenue Tower as part of its $39 billion purchase of what was then known as Equity Office Properties Trust. Simultaneous with that deal’s closing, the company arranged for Equity Office to sell Park Avenue Tower and six other New York buildings to developer Harry Macklowe for about $7 billion.

Shorenstein Purchase

Macklowe was forced to hand back the properties to lenders during the credit crisis and Shorenstein acquired the building for about $625 million in 2008.

The building’s original developer, George Klein of Park Tower Realty, will retain a small stake, said the people with knowledge of the Blackstone deal.

Chicago-based Equity Office owns stakes in about 70 million square feet of office buildings throughout the U.S., including in New York, Boston and Northern and Southern California. Blackstone has been selling some properties in the unit as the commercial real estate market strengthens.

At the same time, Blackstone is buying office buildings where it sees potential for gains through new leases or property improvements. The firm in September acquired the Hughes Center complex in Las Vegas for $347 million in a bet on growth in Nevada’s economy.

-By Hui-yong Yu

Downtown NYC Office Market Tightens as Leasing Surges

Source: Bloomberg / News

Lower Manhattan office leasing surged in the first half, pushing down vacancies as tenants took advantage of some of the borough’s lowest rents, Cushman & Wakefield Inc. reported.

Agreements were signed for 3.7 million square feet (344,000 square meters) downtown in the year through June, up 31 percent from the same period a year earlier, the New York-based brokerage said today. The vacancy rate dropped to 10 percent from 12.2 percent at the end of 2013, in part because of large leases at Brookfield Place, where Time Inc. (TIME) and Bank of New York Mellon Corp. took more than a million square feet combined.

Leasing in lower Manhattan gained momentum as “sticker shock” in the midtown south market drove media and technology tenants to seek cheaper alternatives to the vintage buildings in that area, roughly between 30th and Canal streets, according to Donald Noland, regional research director at Cushman. For downtown, it was the strongest first half in the last 12 years, except for 2011, when Conde Nast Publications Inc. agreed to rent about 1 million square feet at 1 World Trade Center.

“We’re really seeing some strong growth numbers,” Noland said.

Landlords were offering space in older, less well-appointed office buildings in midtown south -- which includes such neighborhoods as the Flatiron District, Chelsea and Soho -- at about $63 a square foot, he said. That compares with about $40 a square foot for similar properties in lower Manhattan. Costs downtown will rise as vacancies fall further, Noland said.

Brookfield Leases

Magazine publisher Time Inc. last month decided to relocate its headquarters from Midtown, taking 700,000 square feet at 225 Liberty St. in Brookfield Place. BNY Mellon, the world’s biggest custody bank, agreed to rent about 350,000 square feet in the same building in the complex, owned by Brookfield Property Partners LP. (BPY) Financial terms of the leases weren’t disclosed.

Downtown’s rebound may help developer Larry Silverstein as he tries to finance the construction of 3 World Trade Center. The tower at 1 World Trade Center is also seeking tenants for about 1.3 million square feet of space as it nears completion later this year.

For all of Manhattan, office tenants took 16.7 million square feet in the first half, up 35 percent from the same period a year earlier. In Midtown, the largest and most expensive U.S. office market, leasing rose 23 percent. Deals there included law firm White & Case LLP’s agreement for 440,000 square feet at 1221 Avenue of the Americas, and money manager Neuberger Berman Group LLC’s 355,000-square-foot lease at 1290 Avenue of the Americas.

Rent Spike

Companies want “to lock in deals before we see another rent spike,” Bruce Mosler, Cushman’s chairman of global brokerage, said at a briefing for reporters.

There were 25 leases for 100,000 square feet or larger in the first six months of the year, compared with 18 such deals a year earlier, according to Cushman.

Across Manhattan, asking rents climbed almost 5 percent in the 12 months through June to an average of $64.82 a square foot. Rates downtown averaged $49.21 a square foot, up 7 percent. In Midtown, rents rose 4 percent to an average $70.82 a square foot, while the increase in midtown south was 1 percent to $60.17.

Laggards already have lost the opportunity to lease office space in Manhattan for less than $40 a square foot, said Gus Field, vice chairman at Cushman.

“The $30 deal is dead downtown,” he said. Field said he expects low-end rents in the area to keep climbing into the low $50s a square foot.

Downtown’s vacancy rate of 10 percent is now lower than Midtown’s 11 percent, which is a rarity, Field said. Midtown south’s vacancy rate was 8.2 percent, the lowest in the U.S. for the last 26 quarters, he said.

-By David M. Levitt

U.K. Said to Press for More House Building as Prices Soar

Source: Bloomberg / Luxury

U.K. Prime Minister David Cameron’s administration plans to accelerate the building of cheap homes, addressing a dip that will probably be reported just before next year’s election, said a government official familiar with the plans.

Housing is emerging as a key theme of the May 2015 election, with opposition Labour Party leader Ed Miliband arguing that Cameron’s Conservative-led government has failed to tackle rising living costs. The challenge was underlined by a Nationwide Building Society report today showing London home prices jumped the most in 27 years in the second quarter.

While official projections show total housing completions and private housing starts will rise this year, that may change next year as a government-sponsored program to build cheaper houses for rent and sale ends in April 2015. Since the spending was front-loaded, statistics due before May next year will probably show a fall in total housing starts. The BBC reported yesterday that housing starts may be down about 4 percent.

“Housing starts are now at their highest since 2007 but we’re going further, building on the success of schemes like ‘Help to Buy’ to get Britain building and investing billions of pounds in new affordable homes,” Housing Minister Kris Hopkins said in an emailed statement today. “I’ll be bringing pressure to bear on the small number of slow-coach councils that need to raise their game to meet what they have signed up to do and deliver the new homes their communities rightly expect.”

Ministers will ensure the 1.7 billion-pound ($2.3 billion) Affordable Homes Program 2015-18 can start building 165,000 properties as soon as funding is released in April 2015, according to the government official, who asked not to be named because the plans haven’t yet been announced. Measures planned also include “naming and shaming” local authorities which haven’t spent money allocated to them for cheap homes.

Ministers at the Department for Communities and Local Government are also looking at removing delays between projects gaining planning permission and starting work, according to the official.

-By Robert Hutton