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8th July 2014

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Government mulls changes to Land Acquisition Bill

Removal of Betterment Levy, which could allow landowners to receive better compensation should their land be acquired by the Government, is one of the amendments proposed.

Source: Channel News Asia / Singapore

SINGAPORE: The Government has tabled amendments to the Land Acquisition Bill, potentially paving the way for landowners to be better compensated when the authorities acquire part of their land for development.

It is proposing to remove the Betterment Levy, which is a levy placed on the compensation a landowner gets because of the perceived gain in the value of the remaining land after the acquired land has been developed.

For example, if the land in front of an owner's home is acquired for the development of an MRT station, any increase in the value of the remaining land - because of the proximity of a train station in future - will be deducted from the compensation given for the acquired land. The imposition of the Betterment Levy has resulted in some landowners given only nominal compensation in the past.

The Law Ministry said affected landowners will stand to receive better statutory compensation once the removal of the levy is in effect.

Other proposed changes to the law include enabling Management Corporation Strata Title developments to act on behalf of individual unit owners in the acquisition of common property. Under current laws when, say, car park lots in a condominium are acquired, every unit owner must go through the entire acquisition process - from engaging a valuer to submitting claims - even if the units are not affected.

The Law Ministry said this results in inconvenience. The last major changes to the Land Acquisition Act were made in 2007.Lawyers say abolishing the betterment levy would create feelings of fairness for land owners whose properties are being acquired, because it means the Government recognises the property belongs to them.

"A lot of the land owners, when their properties are being compulsorily acquired, they will feel that: 'Look, it's not my fault that you want to compulsory acquire my land. I don't have a choice in this, I don't have a say in this.' And as such, when you impose a betterment levy on me, it's really something that's not my fault. And you are imposing a levy on me," explained Mr Steven Lam, Director of Templars Law.

He said it can give people the feeling that authorities have not taken into consideration issues such as how when public facilities are being built, "it's going to create problems, it's going to create a nuisance, it's going to create things which affect me." 


REITs have ‘signalling effect’ on rents: Teo Ser Luck

Govt will look to publish additional information on retail rents by end-2014, to help businesses "make more informed decisions during lease negotiations", says the Minister of State for Trade and Industry.

Source: Channel News Asia / Singapore

SINGAPORE: Real Estate Investment Trusts (REITs) may have a “signalling effect” on retail rents in the vicinity of properties they own, Minister of State for Trade and Industry Teo Ser Luck said in parliament on Monday (July 7).

He was responding to a question by Workers’ Party Non-constituency Member of Parliament Yee Jenn Jong on whether the Government agreed with a recent report that showed REIT-ownership was not the determining factor for rents.

“REITs have some signalling effect on landlords around the area when the rental increases or decreases … But REITs may not be the dominant factor in influencing the market,” Mr Teo said.

The Ministry of Trade and Industry in May published a study that concluded REIT-owned shopping malls commanded higher rents compared to their single-owner peers due to better locations and enhancement works, instead of ownership.

This is in contrast to the growing perception that rents at malls owned by REITs are rising at a faster pace and threatening the survival of many local small and medium enterprises.

Mr Yee had also noted during this year’s Budget debate that REITs’ huge collective hold on the market allow them to force prices upwards.

Mr Teo noted that more detailed rental data on retail and industrial space, broken down by streets and planning regions, have been made publicly available since April. The government is also looking at publishing additional information on retail rents by the end of the year.

“This will add to the existing information available on the rental market and help businesses make more informed decisions during lease negotiations,” Mr Teo said.


Neighbourhood Renewal Programme may be extended to newer flats: Khaw

Priority will be given to towns that have not benefited from main or interim upgrading programmes, said National Development Minister Khaw Boon Wan in Parliament on Monday (July 7). 

Source: Channel News Asia / Singapore

SINGAPORE: The Ministry of National Development will consider the extension of the Neighbourhood Renewal Programme (NRP) to blocks built in the early 1990s.

National Development Minister Khaw Boon Wan said in Parliament on Monday (July 7) that if an extension is made, priority will be given to towns that have not benefited from main or interim upgrading programmes, such as those in the Pasir Ris-Punggol GRC.

Currently, only blocks built before 1989 are eligible for the NRP. Those which have already undergone the main and interim upgrading programmes are also excluded from the NRP.

About 75 per cent, or 140,000, of the 187,000 eligible flats have been selected for the programme so far.

"Now that we have crossed the three-quarter mark, it is timely to review the original set of selection criteria,” said Mr Khaw.

“We understand that residents in blocks built just after 1989 may feel that their blocks are also ageing, but they have just missed out on NRP, and they wish that NRP can also be extended to them."

Launched in 2007, the NRP enhances selected public housing precincts at the block and neighbourhood level. Physical improvements include drop-off porches and communal facilities like precinct pavilions.

- CNA/ec

HDB monetisation schemes helpful for seniors: Khaw

The Silver Housing Bonus and Enhanced Lease Buyback Scheme are helpful for seniors who wish to tap their HDB flats to enhance their retirement income, said National Development Minister Khaw Boon Wan in Parliament.

Source: Channel News Asia / Singapore

SINGAPORE: Eighty elderly households received the Silver Housing Bonus of up to S$20,000 in cash since the scheme was introduced in February last year, said National Development Minister Khaw Boon Wan in Parliament on Monday (July 7).

The 120 seniors in those households received the bonus when they moved to a smaller flat and topped up their CPF Retirement Accounts.

Under the Enhanced Lease Buyback Scheme, 312 households sold the tail-end leases of their flats to HDB since February last year for net proceeds to top up their CPF Retirement Accounts. After the top-ups, more than 90 per cent of the seniors have been able to meet their CPF minimum sum threshold.

Mr Khaw was responding to a question filed by Marine Parade GRC MP Assoc Prof Fatimah Lateef on the take-up rates for the schemes since February last year. He said both schemes are helpful for seniors who wish to tap their HDB flats to enhance their retirement income.

Mr Khaw added that the Government will continue to reach out to seniors to keep them informed about these options. 

- CNA/ec

Singapore Real Estate 

Mid-tier, luxury home sales stuck for now

Source: Straits Times 

Property investors hoping for a lift in the ailing real estate market were likely to have been disappointed last week. The Ministry of National Development (MND) said last Monday it was not time to wind back the property cooling measures as private home prices have remained largely unchanged despite falling for two consecutive quarters.

Space crunch 'drives up office rents in CBD and suburbs'

Source: Straits Times 

A space crunch in the Central Business District (CBD) and the completion of new suburban developments drove up office rents islandwide in the second quarter, consultants said. The data underlines two key trends: One is that firms that do not need a downtown address are relocating to the cheaper sites on the outskirts while CBD rents are rising on the back of robust demand for limited space.

Strata-titled space beside HDB Hub for sale at $65m

Source: Business Times / Property

[SINGAPORE] A row of prime heartland retail shops in Toa Payoh Central is up for sale by tender at an indicative price of $65 million, which works out to an average of about $11,245 per sq ft (psf) for the 5,780 sq ft property.

The average psf pricing seems high for a Housing Board retail shop, although a few consultants concede that there are not many records of transactions of such retail units for comparison.

Located in Block 190 of Toa Payoh Central, the property is a strata-titled shop subdivided for lease to four tenants, including Watsons. It has a remaining lease of 57 years.

Savills, the sole marketing agent, announced the sale yesterday but did not disclose the client.

-By Sheena Tan

Retail shops in Toa Payoh up for sale

The property has a strata area of about 5,780 square feet, and the tender will end on August 12, 3pm, according to exclusive marketing agent Savills.

Source: Channel News Asia / Business

SINGAPORE: A row of retail shops in Toa Payoh Central was put for sale by tender, according to real estate company Savills.

In a statement on Monday (July 7), Savills said the property has a strata area of about 5,780 square feet and is located next to the HDB Hub. It also has a remaining lease of about 57 years from the Housing and Development Board (HDB). The company is the exclusive marketing agent for the property.

Popular brands like Watsons, Hang Ten, StarHub and Hock Hua are among tenants in the property. It expects "immense competition for the property due to its location and rarity", according to the statement.

Savills added that "the defensive nature of this investment also bodes well for the current volatile investment climate". The tender closes at 3pm on August 12, the company said.

Agnes Tay, director and head of Commercial at Savills, said: "This property is strategically located at the central of Toa Payoh, so we are expecting not only investors, but also end-users, retailers, to consider this option.

"So we are expecting, we are calling for an asking price of S$65 million. We actually are looking forward to good competition for this property." 

- CNA/kk/nd

Real estate agency's bid to buy S'pore developer fails

Source: Straits Times

A local real estate agency's $55 million deal to acquire a Singapore property developer has collapsed before it even got off the ground. GPS Alliance, which operates here but is listed in Australia, announced on June 2 that it would buy privately held Forte Development from owner Lee Boon Leng.

Early 1990s HDB blocks may get upgrade

Source: Straits Times

HOUSING Board precincts built in the early 1990s could be eligible for a major makeover under the Neighbourhood Renewal Programme (NRP). Minister for National Development Khaw Boon Wan said in Parliament yesterday that his ministry is looking into expanding the eligibility criteria.

CPG to direct masterplan for Myanmar SEZ

It leads five-member S'pore-based group overseeing special economic zone

Source: Business Times / Property

 [SINGAPORE] Local firm CPG Consultants will lead a Singapore-based consortium that will oversee a masterplan for the development of the Kyauk Phyu Special Economic Zone (SEZ) in Myanmar, CPG announced yesterday.

The five-member consortium, which includes professional services firm Ernst & Young and property consultancy DTZ, will head the masterplanning of the 75 sq km site, and work with the Myanmar government to call a tender for international investors with a track record and the technical and financial capability to develop a deep-sea port, an industrial park and an integrated residential area in the SEZ.

Kan Zaw, the Union Minister of National Planning and Economic Development in Myanmar, said that Kyauk Phyu, located on the Bay of Bengal in western Myanmar, is "uniquely positioned to serve as a trade corridor" among China, India and Asean.

Nina Yang, the executive director of urban planning at CPG Consultants, added that the resource- rich Kyauk Phyu SEZ, roughly equi-distant from the three major cities of Naypyidaw, Yangon and Mandalay, can tap the country's emerging domestic market; its naturally sheltered, deep-sea harbour will be able to host large vessels and protect them from storm surges.

-By Amanda Eber

Brazil-based property developer EcoHouseon MAS Investor Alert List

Source: Business Times / Singapore

THE Monetary Authority of Singapore (MAS) has placed the EcoHouse Group on its Investor Alert List (IAL).

The MAS would not say when EcoHouse - a Brazil-based property development firm which builds investor-funded housing for Brazilian families - was placed on the IAL, but the regulator's website showed that the list was last modified on June 23.

The IAL is a list of unregulated entities that may have been wrongly perceived as being licensed or authorised by the MAS.

Since September 2011, EcoHouse has attracted more than 1,500 local investors, who put in a total of $65.55 million in its Brazilian property development projects.

-By Kelly Tan

Real Estate Companies' Brief

Savills appoints MD for investment sales

Source: Business Times / Property

[SINGAPORE] Global real estate provider Savills has announced the promotion of Steven Ming, its deputy managing director and head of investment sales, to managing director of investment sales and residential services.

The expanded role gives him oversight of the business space, residential sales, residential leasing, prestige homes and international residential sales businesses at the Savills office here.

Mr Ming joined Savills a decade ago as associate director and ran a prestige homes business that focused primarily on Good Class Bungalows and luxury residential sales.

In late 2005, he was involved in residential collective sales, and went on to head the investment sales department the following year. He has since led the team in closing $6 billion in investment transactions.

-By Vivien Shiao

Global Economy & Global Real Estate

Ascott Reit makes forays into KL, Wuhan and Xi'an

Acquisition of three serviced residences for a property value of $173.9m

Source: Business Times / Companies

ASCOTT Reit has signed conditional deals to acquire its first serviced residences in Kuala Lumpur and the Chinese cities of Wuhan and Xi'an for a total property value of $173.9 million. 

The consideration includes a debt component of $42.3 million.

On a pro forma basis, the acquisitions are expected to raise its FY13 distribution per unit (DPU) from 8.71 cents to 8.81 cents, and generate an Ebitda (earnings before interest, taxes, 

depreciation and amortisation) yield of 5.1 per cent for FY13.

Ascott Reit will acquire the 207-unit Somerset Ampang Kuala Lumpur from its sponsor, The Ascott, for RM175 million (S$68.4 million).

It is banking on more multinational corporations setting up offices in Malaysia, with the government promoting investments, which will in turn drive expatriates' and business travellers' demand for serviced residences.

-By Lee Meixian

KepLand raises stake in Vietnam property project

Holding to be raised from 55% to 98% for development's remaining phases

Source: Business Times / Companies

KEPPEL Land, which owns 55 per cent of a residential development project in Vietnam known as The Estella, has entered into a deal to raise the stake to 98 per cent for the remaining two phases of the development.

The Singapore-listed company and its Vietnamese partner, Tien Phuoc Co Ltd, had embarked on the project through Estella Joint Venture Company Limited.

Keppel Land is paying Tien Phuoc US$11.46 million for the additional 43 per cent stake.

The transaction under a conditional share purchase agreement is expected to be completed by the end of the year.

Is Batu Pahat in Johor the next Iskandar?

Developing the area could signify the northward expansion of the Singapore-Johor megalopolis

Source: Business Times / Editorial & Opinion

ON July 30, the Iskandar Malaysia economic corridor will celebrate its eighth anniversary. Thus far, Iskandar has been a great success story, attracting over $54 billion in investments since 2006. Nonetheless, it may already be time to search for the next frontier of investment.

THE Hillview Loft condominium complex, perched on a quiet hill and surrounded by lush rainforest, towers above the city of Batu Pahat, Johor. Dubbed "The Fortress" by some residents, the three luxury high-rise buildings are housed within a gated compound equipped with entry checkpoints and 24-hour security. Wealthy Malaysians and a handful of expats from all over the world - Canada, China, Germany, the Middle East, Singapore, and the United States - park their BMWs and Range Rovers in an underground deck beneath the Olympic-sized swimming pool. After work, residents hit the in-house gym or the synthetic-grass tennis courts before retiring to their flats to chow down on organic dinners purchased from local markets.

Batu Pahat's transformation

Located just 110 kilometres north-west of Singapore and 240 kilometres south-east of Kuala Lumpur, the district of Batu Pahat (meaning "chiselled stone" in Malay) is comprised of nearly half-a-million people. Some 20 years ago, the sort of lifestyle and economic prosperity seen today would have been unthinkable; Batu Pahat was little more than a set of sleepy villages. But today, "BP", as it is affectionately referred to by locals, is the second largest city in the state of Johor (after Johor Bahru) in terms of both population and manufacturing production. The area has transformed itself into something of a boomtown, relying on industries as wide-ranging as textiles, food processing, and electronics to spur growth. BP accounts for 50 per cent of the textiles exported out of Malaysia, and is home to production facilities for a number of multinational corporations, including Fujitsu and Sharp.

-By Madhu Narasimhan & Jonathan S WeinTraub

Iskandar: Too many homes, too soon?

Source: Straits Times

It has been touted as an affordable real estate investment destination in an up-and-coming market, an attractive alternative to Singapore's pricey housing scene. But property buyers in Iskandar are now facing two big investor problems: a potential oversupply of homes and an inadequate supply of property data.

China govt travel rules seen to benefit serviced residences

Source: Business Times / Companies

CHINA'S anti-corruption crackdown, which has seen it cut government officials' travelling and entertainment budgets, may actually be a good thing for serviced apartments, Ronald Tay, the chief executive officer of Ascott Reit's manager, told the media and analysts yesterday.

This is because many of the enforcement actions are likely to turn the bureaucrats away from luxury hotels to serviced apartments instead.

"(The crackdown) has anecdotally impacted hotels more, rather than serviced residences. We don't have many restaurants and banquet facilities like in four and five-star hotels. Many restaurants and F&B businesses in hotels have been very negatively affected because of the crackdown, which directly affects the profitability of hotels too.

"We also understand that when government officials travel, they can't stay in star-rated hotels, so the occupancies at four and five-star-rated hotels have been affected . . . It is a good thing for our serviced apartments that we don't have star ratings, so we are not affected by the crackdown."

-By Lee Meixian

Property price cap eased for Beijing developers: report

Source: Business Times / Property

[HONG KONG] China's Poly Real Estate Group has received regulatory approval to price a Beijing project at a record high of almost 100,000 yuan (S$20,000) per square metre, signalling an easing on pricing policy for developers in the capital, a local report said yesterday.

Last month, seven projects in Beijing that received selling approval had planned to set prices above 40,000 yuan, a cap that the local authority set last November, China's national business daily added. The cap made developers less interested in bidding for expensive land in the city.

Any move to drive up home prices in China, which are already near record levels, can be controversial. The central government would prefer that local authorities help curb property speculation because it fears unaffordable property prices could cause social unrest.

At the same time, some Chinese cities have tried to limit property price cuts to 15-20 per cent from the original asking price, developers and real estate agents said in May, in a bid to slow a steeper industry downturn and boost confidence in the market.

-From Hong Kong, China

Brewer SABMiller to divest US$1.1b stake

Sale of hotel-casino comes as firm aims to beef up Africa beverage operations

Source: Business Times / Property

[LONDON] SABMiller plc said it will sell a US$1.09 billion stake in South African hotel and casino operator Tsogo Sun Holdings Ltd as the world's second-biggest brewer looks to bolster beverage operations in Africa.

Following a review of its 39.6 per cent holding in the Johannesburg-based company, SABMiller will divest the stake in a two-stage transaction involving a sale to institutional investors and a buyback of shares by Tsogo Sun, the maker of Peroni and Castle Lite said yesterday in a statement.

The beverage maker generates almost one-third of its earnings from the African continent, and South Africa is the second-biggest provider of the company's revenue after Latin America.

It struggled to grow in South Africa last year amid rising inflation and increased competition from Heineken NV and Diageo plc, while expansion across Africa has been hampered by tough economic conditions in South Sudan and Zimbabwe.

-From London, UK

SABMiller To Sell $1.09 Billion Stake In Tsogo Sun

Source: Bloomberg / Luxury

SABMiller Plc (SAB) said it will sell a $1.09 billion stake in South African hotel and casino operator Tsogo Sun Holdings Ltd. (TSH) as the world’s second-biggest brewer looks to bolster beverage operations in Africa.

Following a review of its 39.6 percent holding in the Johannesburg-based company, SABMiller will divest the stake in a two-stage transaction involving a sale to institutional investors and a buyback of shares by Tsogo Sun, the maker of Peroni and Castle Lite said today in a statement.

The beverage maker generates almost one-third of its earnings from the African continent, and South Africa is the second-biggest provider of the company’s revenue after Latin America. It struggled to grow in South Africa last year amid rising inflation and increased competition from Heineken NV and Diageo Plc (DGE), while expansion across Africa has been hampered by tough economic conditions in South Sudan and Zimbabwe.

In addition to protecting market share in South Africa, “there remains a lot of whitespace opportunity for them in Africa as well,” Philip Gorham, an analyst at Morningstar, said in an e-mail. “Kenya is an opportunity. Their presence is quite patchy, and they could look to plug some geographic gaps.”

Decelerating Volume

Since taking the helm last year, SABMiller Chief Executive Officer Alan Clark has sought to offset declines in Europe and a difficult U.S. market by cutting costs and targeting developing economies across Latin America and Africa. SABMiller gets more revenue from developing regions than other major brewers.

“Gaming and hotels are not core to our operations and we have concluded that the time is right for us to exit our investment,” Clark said in today’s statement.

SABMiller shares fell 0.9 percent to 3,368.5 pence as of 1:19 p.m. in London. Tsogo Sun declined as much as 7.4 percent, the most on an intraday basis in more than a year, and traded 2.8 percent lower at 26.15 rand in Johannesburg, giving the company a market value of 30.9 billion rand ($2.9 billion).

“We support Tsogo Sun in buying back the shares,” said Johnny Copelyn, CEO of the casino operator’s biggest shareholder Hosken Consolidated Investments Ltd. (HCI), which now owns 47 percent of the company. “It’s a good company. The industry has a good future,” he said by phone.

SABMiller said in April it was considering options for the stake. The possibility that the brewer could sell its holding increased after SABMiller merged Tsogo Sun with Gold Reef Resorts Ltd. in 2011, a transaction that reduced its stake from 49 percent.

‘Anemic Growth’

SABMiller was founded in South Africa, where it first sold beer to thirsty miners more than a century ago. The company controls about 90 percent of the beer market in South Africa, yet the slowing economy, social instability and the weakening rand have weighed on improvements there.

“We think SABMiller is likely to report another quarter of anemic growth before trends improve,”Trevor Stirling, an analyst at Sanford C. Bernstein, said in a note today.

Tsogo Sun has more than 90 luxury hotels in seven African countries including Nigeria and the Seychelles. Its interests include Montecasino, Johannesburg’s Tuscany-themed hotel, theater and casino complex.

“There are wider implications in that it further entrenches HCI as the parent in Tsogo,” De Wet Schutte, a Cape Town-based analyst at Avior Research, said by phone. The buyback “won’t stretch Tsogo’s balance sheet, they’ve got ample capacity in the balance sheet to buy back these shares and still continue with the fairly large capex program.”

-By Matthew Boyle, Kamlesh Bhuckory and Chris Spillane

Dubai may limit sales of off-plan property

It is mulling over rules to address property flipping

Source: Business Times / Property

[DUBAI] Dubai is considering regulations to limit the sale of properties before they are built to address one of the main causes of the 2008 property crash, according to the International Monetary Fund. "The Dubai authorities are completing a review of the off-plan transaction market, and will issue additional regulations, which could slow down real estate sector price growth, in the coming months," the IMF said in its Article IV consultation dated July 3.

Dubai's recovery from the verge of default in 2009 fuelled a 35 per cent increase in real estate prices last year, according to broker Knight Frank, sparking concerns the emirate is at risk of a bubble in the real estate market. That prompted authorities to double property transaction fees to 4 per cent last year and the United Arab Emirates' central bank to impose mortgage caps.

The buying and selling of off-plan properties for a quick profit, known as flipping, was seen as a major cause of the crash in 2008. Buyers usually put down a deposit of about 10 per cent on off-plan homes and make additional payments as construction progresses, with a final sum due when the property is delivered. At the height of the property bubble, contracts often changed hands before any construction took place.

Emaar Properties, Dubai's biggest developer, banned the resale of incomplete properties before 40 per cent of the home's total value is paid. The move was made to minimise speculation.

-From Dubai, UAE

Swiss property, equity markets still at risk

Instability is due to low interest rates: SNB board member

Source: Business Times / Property

[ZURICH] Switzerland's property and equity markets are still at risk of instability due to the low interest rate environment, a board member of the Swiss central bank said in a newspaper interview published on Sunday.

Real estate prices, mortgage lending and equities have risen strongly in Switzerland in recent years, a by-product of ultra-low interest rates set by the Swiss National Bank (SNB) to lower the appeal of the Swiss franc.

The SNB cannot easily raise rates as this would clash with its efforts to cap the franc. Fritz Zurbruegg said the low rates raised risks for Swiss financial stability.

"We always constantly point out the risks that others do not like," Mr Zurbruegg said, when asked in an interview with Switzerland's SonntagsZeitung and Le Matin Dimanche whether there was a risk of a crash in the property and stock markets.

-From Zurich, Switzerland

Aussie construction index at 7-month high

Source: Business Times / Property

[SYDNEY] A survey on Australian construction activity released yesterday showed the sector expanding for the first time this year in June, led by strength in home building and a rebound in engineering work.

The overall index of construction activity climbed 5.1 points to 51.8 in June, the highest in seven months and above the 50 threshold that is supposed to separate growth from contraction, the report by the Australia Industry Group and Australian Housing Association showed.

The survey's measure of house building added 2.2 points to reach 56.6, offsetting a 16.7 point drop in the volatile apartment sector to 49.2. New orders in home building also surged 5.6 points to 60.1, suggesting the improvement in activity has some way to run yet. New orders for all sectors climbed 6.7 points to 52.6.

The Reserve Bank of Australia (RBA) has been counting on a revival in non-resources investment to help offset a cooling mining sector.

-From Sydney, Australia

GDF buys Lend Lease's UK facilities mgt unit

Source: Business Times / Property

[PARIS] French gas and power group GDF Suez has bought the UK facilities management business of Australian property group Lend Lease, the firm said yesterday.

GDF is making the acquisition through its Cofely energy and technical services unit and said that the deal will provide Cofely with a guaranteed revenue stream of £2.5 billion (S$5.33 billion) through a portfolio of contracts with the healthcare, education, government and retail sectors. It gave no financial details.

Cofely said in December that it planned to buy several smaller peers with combined revenue of one billion euros to drive home its advantage as Europe's biggest provider of energy services for buildings.

Last year, it bought the facilities management business of British infrastructure firm Balfour Beatty for £190 million.

-From Paris, France

Homes in London’s Priciest Districts Trail Rest of City

Source: Bloomberg / Luxury

Home price gains in London’s most-expensive districts are trailing the rest of the city as uncertainty over the 2015 national election, high asking prices and tax changes deter buyers.

Values in the 13 neighborhoods that Knight Frank LLP defines as prime central London rose 8.1 percent in the 12 months through June, the broker said in a report today. Home prices in the whole city jumped 26 percent in the second quarter from a year earlier, the biggest gain in 27 years, Nationwide Building Society said July 2.

Prime London districts including Mayfair and Chelsea have risen by more than 70 percent since the last trough in 2009 as overseas economic turmoil and a weakened pound drew buyers. Chancellor of the Exchequer George Osborne will introduce a capital-gains tax on homes sold by people living abroad next year and the opposition Labour Party wants to implement an annual tax on homes worth more than 2 million pounds.

“We’ve had 44 months of growth and buyers at some stage have a pause for breath,” Tom Bill, head of London residential research at London-based Knight Frank, said by phone.

Homes valued at less than 2 million pounds increased by about 14 percent in the 12 months through June, while those offered for 10 million pounds or more climbed 3.5 percent, according to the report.

The City of London financial district and its fringes, along with Islington, were the best-performing districts with gains of 16 percent each, Knight Frank said. Homes in Belgravia rose 1 percent, the smallest gain among the areas covered by the report.

Contract exchanges for homes have fallen by almost 37 percent from a year ago and the number of new properties coming onto the market is down about 25 percent, according to the report. The number of new people interested in buying a home in London’s best districts has fallen more than 14 percent in a year, Knight Frank said.

-By Neil Callanan

UPP Reaches $240 Million Dorm Deal With London University

Source: Bloomberg / Luxury

UPP Group Holdings Ltd., the U.K.’s second-largest provider of student housing, and the University of London announced a 140.7 million-pound ($240 million) project to build 1,200 rooms that will be designed and operated by UPP.

The 50-year deal for the project in the Bloomsbury area of central London will receive 113.8 million pounds of bond debt from Pension Insurance Corp., according to a statement today. The University of London will take an undisclosed stake in the UPP unit that will develop the property.

“There is an insatiable demand for that location,” UPP Chief Executive Officer Sean O’Shea said by telephone. “Within a three-mile radius there’s over 30,000 students.”

Investors are expected to spend 2.5 billion pounds on U.K. student accommodation this year, almost 25 percent more than in 2013, broker Savills Plc said last month. London-based UPP plans to invest more than 1 billion pounds on the construction of university residence halls in the next three years, according to its website.

The property in Bloomsbury is due to be completed during 2016, according to the statement.

-By Neil Callanan

Macquarie to Buy Rest of International-Matex for $1 Billion

Source: Bloomberg / News

Macquarie Infrastructure Co. (MIC), a U.S. owner of storage terminals for oil products and chemicals, agreed to buy the 50 percent of International-Matex Tank Terminals it doesn’t already own for $1.03 billion in cash and stock.

Macquarie Infrastructure, part of Australia’s Macquarie Group Ltd., will purchase the stake from the founding family, the New York-based company said in a statement today. Members of the Coleman family will step down from roles as chairman, chief executive officer and head of government relations for the company.

The accord comes after years of disagreement and arbitration between Macquarie and other investors, including members of the Coleman family, according to U.S. regulatory filings. Macquarie Infrastructure bought its initial 50 percent stake in the company in May 2006.

“We believe the acquisition will deliver dividend growth for shareholders of MIC and further enhance our ability to drive operational improvement and growth investments,” James Hooke, CEO of Macquarie Infrastructure, said in the statement.

The company’s board authorized increasing its quarterly cash dividend. The dividend payable for the second quarter will be 95 cents a share, up 1.3 percent from the prior quarter. The dividend will be payable on Aug. 14 to shareholders on record on Aug. 11.

Macquarie Infrastructure said it will buy the remaining stake for $910 million in cash and $115 million in stock.

Marine Terminals

After the deal, International-Matex Tank Terminals will become the largest business division within Macquarie, which has a market value of $3.5 billion. The company said it doesn’t expect the transaction to close before late July.

International-Matex Tank Terminals owns and operates 12 bulk liquid storage terminals in North America, with a capacity of 42 million barrels, including marine terminals on the U.S. east, west and Gulf coasts, according to a company website.

Macquarie’s earnings before interest, taxes, depreciation and amortization, or Ebitda, from International-Matex Tank Terminals has more than tripled to $279.6 million for the 12 months through March 31, the company said in a statement. Macquarie’s 50 percent stake in the business contributed $39.7 million to Macquarie’s first quarter Ebitda, according to the company’s earnings report April 30.

-By Zain Shauk