Real News‎ > ‎2014‎ > ‎June 2014‎ > ‎

18th June 2014

Singapore Real Estate

Watch smart nation take off in Jurong Lake District

It will be largest commercial centre outside CBD and test bed for intensive smart nation initiative

Source: Business Times / Top Stories

The Jurong Lake District (JLD) is set to become the most futuristic part of the island, thanks to its status as a test bed for Singapore's push to become the world's first smart nation.

It will also be the largest commercial and regional centre outside of the Central Business District (CBD).

Minister for Communications and Information Yaacob Ibrahim said yesterday that the lake district is envisioned to be a mixed-use urban precinct characterised by sustainable development and connectivity.

He said this at the Infocomm Media Business Exchange 2014, (IMBX2014) opening ceremony at Marina Bay Sands. IMBX2014 is part of this year's CommunicAsia, EnterpriseIT and BroadcastAsia 2014 event organised by Singapore Exhibition Services.

The minister said that with the smart nation initiative, Singapore will build on the achievements of the intelligent Nation 2015 (iN2015) master plan. The Infocomm Development Authority of Singapore (IDA) will strengthen the hard and soft infrastructure in a holistic manner.

This includes developing a Smart Nation Platform (SNP) as well as initiatives that improve soft infrastructure, such as creating standards for the Internet of Things@Home and building of talent in new areas like Games Science.

Dr Yaacob noted that a smart nation can become a reality only if there is a successful combination of policy, people and technology. "A key component in our smart nation vision is the SNP. As part of the SNP, we will further our capabilities in pervasive connectivity, by building new infrastructure and common technical architecture to support an innovative ecosystem across Singapore."

On top of enhancing the existing connectivity in Singapore with technologies such as HetNet (Heterogeneous Network), the SNP will aim to bring together a nationwide sensor network and data analytics abilities, provide better situational awareness through data collection and efficient sharing of collected sensor data. HetNet allows for more optimal use of the wireless spectrum by allowing devices to switch seamlessly between various types of wireless networks.

The SNP will be developed in various phases, with the first phase (focusing on the connectivity and sensor aspects) expected to be available by 2015.

JLD is one of the new growth areas identified in URA's Master Plan to support economic growth for the next 10-15 years, and to decentralise commercial activity from the city centre. IDA, in collaboration with the Urban Redevelopment Authority (URA), Economic Development Board (EDB) and other government agencies, has launched the Smart and Connected JLD Pilots and Trials initiative, which will test smart nation applications that improve the quality of life and enable sustainable use of resources. The initiative will be progressively deployed and trialed from the third quarter of this year.

Fifteen projects will be trialed, each giving a glimpse of what a smart nation could look like. More than 20 companies are involved in these trials and around 1,000 sensors will be deployed. Devices called Above Ground (AG) boxes will provide the connectivity to the sensors. These sensors will provide data for a wide variety of solutions, focusing on three main areas: urban mobility; sustainability; and improving sensing and situational awareness.

The AG boxes comprise a ready-built common infrastructure for sensor deployment and can supply points of access for fibre-optics connectivity and power.

One of the new services to be tried out will be a smart queue monitoring system that will use advanced video sensing to determine, in real time, the length and flow of queues in places like 

taxi stands, where the queue and taxi arrivals can be determined.

One possible use of the data could be at shopping centre taxi stands where information like potential wait times can be provided to consumers. The information could also be sent to taxi companies to alert them of taxi demand and busy stands so that they can direct nearby empty taxis there.

Another pilot is aimed at enhanced energy management. The project will enable buildings and public spaces to better monitor and benchmark energy consumption as well as track initiatives to reduce energy usage.

National University of Singapore (NUS) is developing a system which will determine vehicular and pedestrian movement, as well as queue length at traffic junctions using video sensing. This will provide a better estimate of congestion at traffic junctions. At each junction, this can enable real-time optimised traffic light signalling that will benefit both drivers and pedestrians.

Each of the other projects aims to try out innovative services which make use of the huge amounts of real-time data that can be collected through the sensors connected to the integrated network.

IDA executive deputy chairman Steve Leonard noted that Singapore has made great headway in just over a year from conceptualisation to real action in building Singapore as the world's first smart nation.

He said: "One of the first building blocks for this vision to become reality is the development of SNP. It will serve as a foundation on which companies of all sizes, as well as government agencies, can experiment and innovate with new ways to collect, move and interpret data in order to better serve citizens. We welcome great ideas and input from across all communities and industries as we work to build Singapore into a smart nation."

-By Amit Roy Choudhury

Jurong Lake District to serve as Smart Nation Platform test bed

Source: Channel News Asia / Singapore

SINGAPORE: Some of the key technologies that will make up the Smart Nation Platform (SNP) will be tested at the Jurong Lake District.

When fully rolled out, the technologies are expected to make life better and more efficient for people living in and moving around Singapore.

One way this will be carried out is through the use of sensors installed around the island to collect data on the behaviour and preferences of people. Authorities can then use the data to facilitate planning and enhance urban mobility.

For example, video sensors at taxi stands can help to monitor the length of taxi queues. This real-time information can then be provided to commuters to help them make better travel decisions, and also to alert taxi companies as to where there is the highest demand for cabs.

Sensors could also be used to monitor the amount of rubbish in bins, or detect littering, so that cleaning schedules can be fine-tuned to be more efficient.

Such monitoring systems are among 15 technologies being tested as part of a pilot programme at the Jurong Lake District. More than 1,000 sensors will be deployed as part of the programme.

To facilitate data collection from these sensors, above-ground (AG) boxes could be installed islandwide. There are already three AG boxes implemented as part of the pilot programme, with further plans to roll out some 100 more across the island.

AG boxes will allow “people to either take a piece of wire from their sensor -- it can be a smell sensor, sound sensor, air sensor, or CCTV -- and connect it to the box, which will feed it with both connectivity and power,” said Khoong Hock Yun, assistant chief executive of the Infocomm Development Authority of Singapore (IDA).

“It provides various potential services, like light control systems, traffic monitoring, environment sensors, pedestrian crossing, speeding monitors, traffic light controls, monitoring how crowded a junction is, through such a box."

These AG boxes will also boost street-level Internet connectivity by supplying points for fibre access and power.

As more data is collected under the Smart Nation Platform, some firms are already testing applications that can tap on such information to benefit citizens. These include apps that can help users, particularly those with mobility constraints, to find travel routes that cater to their specific needs.

“We are developing the app, but the data set is, at the moment, still in a gathering phase,” said Tan Teck Guan, vice president of land information systems at ST Electronics.

“The engine that we have is to make use of all this data to determine the best route for the people to use. The idea is to organise the data, manage the data, and provide it in a useful manner so that people can find it beneficial to themselves."

IDA and partner agencies are working with more than 20 industry players to test such technology from the third quarter of 2014. 

- CNA/ec

Government to own 'brains' of Smart Nation Platform: IDA

Data privacy a "paramount consideration", says the Infocomm Development Authority of Singapore.

Source: Channel News Asia / Singapore

SINGAPORE: The Government will own the operating system of the Smart Nation Platform (SNP) in order to safeguard the robustness and trustworthiness of the system, and to protect all data collected, the Infocomm Development Authority of Singapore (IDA) said on Tuesday (June 17).

"Civil servants are citizens too, so we are concerned about data privacy. It is about striking the right balance between trust and data collected," said Mr Khoong Hock Yun, IDA Assistant Chief Executive, during a press briefing on the sidelines of the imbX 2014 trade show.

He said the OS will be owned by the Government given that it is the "brains" of the entire Smart Nation Platform. The OS is responsible for crunching all the data collected by the network of sensors that will be rolled out as part of the SNP.

He added that the IDA is open to having private sector entities operate and manage the OS, but any such company will have to adhere to Government-stipulated parameters and regulations. There is no equivalent OS available in the market right now, so the IDA is building the system in collaboration with industry stakeholders, Mr Khoong said.

At the same briefing, IDA Executive Deputy Chairman Steve Leonard said that the Personal Data Protection Act currently excludes public sector agencies which already have their own data protection policies in place. However, with the increasing amounts and types of data being collected to enable the smart nation reality, he said this will be evaluated.

"I have no doubt that there will be ongoing evaluation and dialogue," Mr Leonard said, adding that the agency is learning from Europe in terms of how to use and protect the personal data collected by the system.

Mr Leonard also highlighted that one key way Singapore's smart nation initiative differs from smart city projects in other countries is the Republic's whole of Government approach to the project. Also unique is "unanimous support" from senior leaders for the initiative, he said.

Echoing the sentiment, Mr Khoong said that many smart city projects are innovative but face challenges when looking to scale up, but Singapore is unique in its ability to "join the dots" and scale the initiative to a national level.

- CNA/es

Central Region share of GLS confirmed list on the rise

URA: This will provide more housing options nearer to jobs in central area

Source: Business Times / Top Stories

[SINGAPORE] After creating jobs closer to homes in the suburbs in recent years, the government is increasingly bringing private homes closer to jobs in the city.

In the confirmed list of the Government Land Sales (GLS) Programme for H2 this year, the proportion of private housing supply in the Central Region has risen to 33.2 per cent. This is up from 28.9 per cent in H1 2014 and 15.1 per cent in H2 2013. The recent low was 8.6 per cent in H1 2012.

Central Region comprises Core Central Region (CCR) and Rest of Central Region (RCR).

"The sale and development of residential sites in the Central Region," said a spokeswoman for the Urban Redevelopment Authority (URA), "will provide more housing options nearer to employment centres within the Central Area.

-By Kalpana Rashiwala

Jem jinx continues with 'indoor downpour'

Source: Business Times / Singapore

PARTS of Jem shopping mall were flooded from noon yesterday, after the sprinklers on the third level of the atrium were triggered, sending water into the common areas of the Jurong mall's basement one and the first and second floors.

News reports said some shops were cordoned off for about four hours, and the first floor was under about three centimetres of water.

Customers were evacuated; retailers such as Soo Kee Jewellery and the shop selling Ogawa massage chairs reported damaged goods and furniture.

Some Twitter users posted tweets online about an "indoor downpour".

-By Lee Meixian

JEM shops soaked by "indoor rain"

Some shops in Jurong shopping mall JEM were cordoned off for about four hours after the sprinklers on the third level of the mall went off, covering the floor with about three centimetres of water.

Source: Channel News Asia / Singapore

SINGAPORE: An issue with Jurong shopping mall JEM's atrium sprinklers caused parts of the shopping mall to be covered with about three centimetres of water on Tuesday.

A statement from mall management Lend Lease said the atrium-side sprinklers on the third floor had been triggered at 12:15pm, resulting in water collecting at a small section of the mall's common areas on Basement 1, the first and second floors.

Lend Lease did not say what triggered the sprinklers but that the water was cleared by 4pm.

Channel NewsAsia understands about 15 shops were cordoned off after cleaners had mopped up the affected area.

Salesgirl Dharishini Doraisamy told Channel NewsAsia the incident was like "indoor rain" that lasted for a few minutes. 

Despite Lend Lease saying that JEM is still open for business, some shops remained closed, with Lowry's Farm and Poh Heng Jewellery staff saying they would remain shut for the rest of the day to clean up. 

Ogawa, a manufacturer of massage chairs, said about 10 chairs and other smaller equipment were damaged, though the extent of the damage was unclear.

JEM opened almost a year ago to the day on June 15, 2013 - after a four-day delay because it could not secure a fire permit in time.

Last August, two fires broke out, and in September, the mall was closed for almost two weeks after a burst pipe led to the collapse of a false ceiling.

- CNA/es/fa

Sprinklers go off at Jem, damaging goods

Source: Today Online / Singapore

SINGAPORE — For almost half an hour yesterday, torrents of water fell three storeys down to the atrium of Jem shopping mall, stunning lunchtime shoppers, damaging goods and forcing some shops to close temporarily.

The incident, which happened around noon, resulted in a clean-up operation lasting about three hours.

In a media statement, mall manager Lend Lease said some sprinklers on the third floor were triggered, “resulting in water ingress at a small section of the mall’s common areas” in the basement, as well as on the first and second levels. However, it did not specify what had caused the sprinklers to go off.

The water was cleared by 4pm, Lend Lease said.

Ms Yeo Meiqi, a salesperson at a Guess store on the second floor, said: “I thought it was raining outside until I turned around and saw the heavy showers. I couldn’t see beyond the ‘waterfall’.”

Other shop assistants said they had heard a loud bang before water came gushing.

When TODAY visited Jem at 3pm, workers were seen mopping up and vacuuming the affected area in the atrium on the first floor, which was cordoned off. More than 10 shops — mostly jewellery, optical and skincare stores — were in the area. Most of them were closed and staff were busy cleaning the premises. Lifts and escalators around the area were shut down.

By evening, a majority of the affected shops resumed business.

Jem, which is located next to Jurong East MRT Station, has been plagued by incidents in its first year of operation. In June last year, it had to postpone its opening by four days because it had failed to secure a fire permit in time. In August, a fire broke out at its supermarket and the engine compartment of a car caught fire in the carpark, in separate incidents.

In September, a portion of a ceiling on the first floor collapsed due to a burst water pipe, causing the mall to close for more than two weeks.

Views, Reviews & Forum

The infrastructure solution

Policymakers should ensure infrastructure realises its full potential so that those who depend on it can realise theirs

Source: Business Times / Editorial & Opinion

"INFRASTRUCTURE, by the nature of the word, is basic to the functioning of societies," said former US secretary of state Madeleine Albright in February 2013. And yet, infrastructure has arguably been the forgotten economic issue of the 21st century.

Indeed, failure to make the right infrastructure investments has impaired many countries' potential to boost economic growth and employment. Though the debate about infrastructure tends to focus on the need for more money and more creative financing, the real problem is not insufficient investment.

Rather, the built environment is deteriorating as a result of a fragmented approach to infrastructure planning, finance, delivery and operation, which emphasises cost, asset class and geographical location.

-By Martin Neil Baily & Robert Palter

Global Economy & Global Real Estate

GLP inks deal to lease Greater Tokyo property to Logitem

Source: Business Times / Companies

GLOBAL Logistic Properties (GLP) has signed a new build-to-suit agreement to lease an upcoming 62,000 square metre facility in Greater Tokyo to Japan Logistic Systems Corp (Logitem).

The four-storey facility, GLP Yoshimi, is scheduled to commence construction in September and is targeted for completion in August 2015.

"The strategic location of GLP's facilities makes it ideal for the establishment of efficient logistics operations," said Hirotake Nakanishi, representative director and president of Logitem. 

"Furthermore, GLP's flexible network and high quality specifications are well suited to accommodate our growth, enabling us to better serve our customers."

With the lease, Logitem becomes one of GLP Japan's 10 largest customers in the country by leased

-By Raphael Lim

China's May FDI falls by most in 16 months

Foreign firms invest US$8.6b; cooling economy and high entry barrier cited

Source: Business Times / China

[BEIJING] The amount of new foreign investment that China attracted in May shrank by the most in 16 months, hurt partly by its cooling economy, though the trade ministry said the outlook may be brightening for exporters.

The Ministry of Commerce said yesterday that China attracted US$8.6 billion in foreign direct investment (FDI) in May, down 6.7 per cent from a year ago and the weakest performance since January 2013.

Cumulatively, China drew US$49 billion of FDI in the first five months of 2014, up 2.8 per cent from a year earlier, also the worst showing in a year.

Slowing momentum in the world's second-largest economy, with growth forecast to slide to a 24-year low this year, may have deterred companies from ploughing more cash into China, economists say.

-From Beijing, China

China FDI falls by most in 16 months

Source: Today Online / Business

BEIJING — The amount of new foreign investment that China attracted last month shrank by the most in 16 months, hurt by waning growth in Asia’s largest economy. However, the government has remained optimistic, saying the outlook is brightening for exporters.

China drew US$8.6 billion (S$10.8 billion) in foreign direct investment (FDI) last month, down 6.7 per cent from May last year and the weakest performance since January 2013, Commerce Ministry data showed yesterday. Cumulative FDI for the first five months was US$49 billion, up 2.8 per cent from the same period a year ago, also the worst showing in a year.

Slowing momentum in the economy, with growth forecast to slide to a 24-year low of 7.3 per cent this year, has deterred companies from ploughing more cash into China. Expectations that the yuan would weaken and political tensions affecting trade could also have caused firms to delay new investments, economists said.

“There is indeed a trend of foreign firms investing less in China. Slowing economic growth is the main reason,” said ANZ Bank’s economist Zhou Hao.

However, the Commerce Ministry sounded hopeful yesterday, with its spokesman Shen Danyang saying: “Trade growth is expected to stabilise in coming months. Beijing has launched a slew of measures to underpin the trade sector and we can see exporters’ sentiment being boosted.”

He added that China’s move to boost the services sector in its economic restructuring has given foreign investors more opportunities.

In the first five months of the year, China’s services sector drew US$27.5 billion in FDI, up a fifth from a year ago and faring much better than manufacturing, where FDI fell 16.5 per cent to US$17.4 billion.

The biggest rise in FDI in the five-month period was from South Korea, with investment surging 88 per cent on an annual basis.

In contrast, investment from Japan, whose ties with China have been strained by territorial disputes, plunged 42 per cent, much sharper than a 22 per cent fall in investment from the European Union and a 9 per cent drop from America. AGENCIES

Colony Plans to Sell $559 Million of Rental-Housing Bonds

Source: Bloomberg / Luxury

Colony Capital LLC’s Colony American Homes Inc. is planning to sell $558.5 million of bonds backed by rental homes it manages, the fifth deal in the new securitization market since November.

The transaction, Colony’s second, includes $291.2 million of bonds set to receive AAA grades from Morningstar Inc., according to a presale report yesterday from the firm’s credit-rating unit. The Scottsdale, Arizona-based firm issued $513.6 million of rental-home bonds in April.

Colony was “very pleased” with the terms of its debut offering, “which further validates single-family rental housing as an institutional asset class,” Richard Saltzman, chief executive officer of the firm’sColony Financial Inc. (CLNY), which invests in the rental-home manager, said last month on a conference call. Colony American Homes also is working on potentially becoming a publicly traded company, he said.

Blackstone Group LP (BX) last year became the first among the hedge funds, private-equity firms and real-estate investment trusts that expanded in the rental business amid the U.S.foreclosure crisis to tap the securitization market. Its second sale last month was the fourth for such debt and brought total issuance to about $2.5 billion.

Colony’s latest deal is backed by 3,727 leased properties in seven states, according to Morningstar. JPMorgan Chase & Co. and Credit Suisse Group AG are managing the sale, it said.

-By Jody Shenn

Basque Nation-Building Lures Emigrants Home to Bilbao

Source: Bloomberg / Luxury

Ramon de la Sota returned to Spain to set up investment firm ARGI Industrial Parters -- and work toward making his Basque homeland an independent European state.

“We’re very Basque nationalist,” de la Sota, 35, a former General Electric Co. (GE) executive who studied at Insead business school in Paris, said over lunch with a group of fellow returnees in downtown Bilbao. “But independence is a long-term project. There are things we have to do first.”

With a new king, Felipe VI, preparing to take the throne tomorrow and Scots and Catalans readying for back-to-back referendums on independence later this year, constitutional reform has been thrust on to the agenda in Spain. Yet for leaders in Bilbao, the business capital of the northern Basque region, building up the economy comes before joining the rush to redraw the map of Europe.

“We are paying very close attention to what happens in Scotland and Catalonia,” Bilbao Mayor Ibon Areso, a member of the Basque Nationalist Party, said in an interview. “But at the moment our priority is the economy and creating jobs.”

The Basque Country, which already has its own police force and collects its own taxes, was the focus of a separatist campaign by terrorist group ETA until 2011. Despite the shadow of violence, it became the richest region in Spain, with BBVA, the country’s no. 2 bank, and Iberdrola SA (IBE), the biggest power company, both based in Bilbao.

Bubble Dodged

The Basque Country dodged the worst excesses of Spain’s real-estate bubble, though the region wasn’t able to escape the economic crisis entirely. Exporters suffered after the global recession of 2009, and unemployment in Vizcaya province, which has Bilbao as its capital, jumped to 18 percent in 2012 from 11 percent two years earlier. It reached 19 percent in the first quarter.

Areso, who became mayor this year, and Andoni Aldekoa, City Hall’s chief executive officer, have a plan to counter the new age of austerity. A key plank of their strategy: The city has zero long-term debt. Even as Bilbao used public money to transform its downtown area from a post-industrial wasteland in the 1990s, its officials managed to pay off its debts in 2011.

Now Aldekoa is using the fame of Frank Gehry’s Guggenheim Museum, the centerpiece of the downtown regeneration, to attract talent and promote the region’s companies as he helps the city’s traditional industries such as autos and engineering to find a new place in the global economy.

Auto Intelligence

Take the Automotive Intelligence Center outside the city, in Amorebieta. It brings together local companies to pool their resources on research projects for the auto industry, which accounts for about 20 percent of output across the region. Under the center’s umbrella, Basque companies developed an electric drive-train for Daimler AG’s Mercedes-Benz Vito van.

Another consortium is developing carbon-fiber suspension arms to reduce the weight of vehicles by replacing the traditional pressed-steel components. The first prototypes are about to be made on site and may eventually go into production at factories in China, Brazil or Mexico as Basque companies dovetail with global supply chains.

It’s a role Bilbao has been practising since it was founded as a center for trade and commerce on the banks of the River Nervion near Spain’s northern Atlantic coast in 1300.

Industrial Heritage

The leg-irons, or “bilboes,” that Denmark’s Prince Hamlet imagines wearing in Act V of Shakespeare’s 1603 play were named after the city, and the region’s deposits of high-quality ore made it a major supplier to the U.K. during the industrial revolution.

The Basque Country’s output per person today is 132 percent of the European Union average, according to Eurostat, the EU statistics agency.

“We never lost sight of the importance of industry here,” Ines Anitua, the Automotive Intelligence Center’s managing director, said in an interview in Amorebieta, citing help from the government’s industrial strategy.

Collaboration is a key part of the Basque identity, according to Lander Jimenez, 38, an environmental engineer who grew up on a cooperative housing development near Bilbao and returned to the city with his family after living in the U.S. and the U.K.

The Basque word for relationship -- harreman -- is formed from the words for give and take, Jimenez said. His engineering firm is part of Mondragon Corp., the region’s biggest company, which is itself collectively owned and sets limits on how much its bosses can be paid relative to workers.


“We are a very self-conscious nation,” said Asier Alea, 41, who has an MBA from the Massachusetts Institute of Technology’s Sloan Management School and joined Jimenez, de la Sota and former Goldman Sachs Holdings Inc. risk manager Jon Recacoechea to discuss the reasons they’d come home.

“That can lead to a degree of clannishness,” he said. “But we’re also driven to help each other.’

Basque identity was suppressed under the dictatorship of Francisco Franco, who bombarded the region during the Spanish civil war: Guernica is about 20 miles from Bilbao. In response, the most radical sector of the nationalist movement created ETA, the guerilla group that killed more than 800 people fighting for independence. While ETA renounced violence in 2011, it still hasn’t disbanded and the legacy of that conflict still colors the debate over a possible secession.

Human Chain

For all the economic focus among some, the nationalist movement as a whole isn’t shelving its push for independence. About 150,000 Basques including de la Sota and his family turned out this month at an event calling for a vote on the region’s status. Basque Nationalist Party officials also joined to form a ‘‘human chain” from Durango, near Bilbao, to Pamplona in the neighboring region of Navarre, echoing a demonstration in Catalonia last year when more than a million people joined arms across the region.

That mix of tradition, sense of community and the prospect of building a Basque nation-state is pulling back members of their generation who made careers abroad, according to de la Sota and his friends. They in turn aim to make Bilbao a more attractive place for others to return to.

The next episode in the city’s development will center on Zorrotzaure, a mile-long peninsula downriver from the Guggenheim. City Hall has a 20-year program to redevelop the area on a blueprint drawn up by Zaha Hadid, the Pritzker Prize-winning architect. The first phase involves reopening the industrial-era canal that runs down one side, to turn the peninsula into an island. The diggers started work in May.

Meanwhile, Aldekoa flies round the world promoting the city’s companies. Last month he was in Singapore at the invitation of the city-state’s government with a dossier of local businesses. He’s also visited London, Mexico, and Cannes in southern France this year.

“Bilbao is the best chance the Basque Country has of developing an international hub,” said Alea, who returned with his New Yorker wife in 2007. “Had Bilbao not existed, I doubt that I would have been able to come back.”

-By Ben Sills

Malaysia tycoon eyes casino licence for Berjaya Hills

Source: Straits Times

All Aboard Florida Sells $405 Million of Debt for Railway

Source: Bloomberg / U.S. Politics

All Aboard Florida, a unit of Fortress Investment Group LLC (FIG), issued $405 million of debt to help finance a high-speed railway along the state’s eastern coast over the opposition of some local residents.

AAF Holdings LLC sold 12 percent, five-year bonds with a payment-in-kind toggle option, which allows interest to be paid in additional notes, according to data compiled by Bloomberg. The PIKs, one of the riskiest forms of debt, yielded 10.25 percentage points more than similar-maturity Treasuries. AAF increased the offering from $390 million previously marketed.

The company applied for a $1.6 billion loan from the Federal Railroad Administration, according to Lauren Dunaj, a spokeswoman for All Aboard Florida who works for Finn Partners.

The railway, estimated to cost more than $2 billion, would link Miami to Orlando with transit times of less than three hours, according to the project’s website. Orlando and Miami are the top tourist destinations in Florida. The train will also stop at downtown locations in Fort Lauderdale and West Palm Beach, population centers with international airports.

The train will speed past smaller, less-affluent towns and cities along Florida’s east coast without stopping. Some jurisdictions, including Port St. Lucie and Martin County, have passed resolutions against the project, saying it will create noise and traffic problems.

Florida’s Republican Governor, Rick Scott, sent letters to All Aboard Florida and the Federal Railroad Administration last week asking for more time for public input before the project is approved.

Fortress, the first publicly traded private-equity and hedge-fund manager in the U.S., acquired All Aboard Florida’s parent company, Florida East Coast Industries Inc., for $2.65 billion in July 2007, Bloomberg data show.

-By Caroline Chen and Toluse Olorunnipa

Blackstone India Office Bets Show Turnaround: Real Estate

Source: Bloomberg / News

Blackstone Group LP (BX), the world’s largest real estate investor, is leading a wave of investors in Indian commercial property as rents at three-year lows and Asia’s worst-performing currency lured global companies.

“We are seeing rental growth in almost all markets,” said Tuhin Parikh, Blackstone’s senior managing director in the real estate group in Mumbai. “All the tenants facing the West are seeing a huge uptake in what they do and therefore taking large spaces in India.”

Blackstone, which opened its Mumbai office in 2005, Rothschild family-backed Xander Group Inc. and APG Asset Management NV of the Netherlands are among investors increasing their office assets in Asia’s third-largest economy. New York-based Blackstone has invested $1 billion in commercial real estate across India to become the largest landlord in the country among private-equity investors, said IIFL Ltd., a Mumbai-based brokerage.

Demand for Grade-A offices will climb 3 percent to 22.9 million square feet (2.1 million square meter) in 2014 from last year, the first increase in three years and the highest since 2012, according to broker Cushman & Wakefield Inc. The strongest demand will be in Bengaluru, the southern city formerly known as Bangalore, followed by the capital New Delhi and its surrounding area, the financial hub of Mumbai and Pune, a satellite town, southeast of Mumbai, the New York-based broker said.

‘Growing Sophistication’

Office rents in India’s main central business districts have declined about 5 percent since the first quarter of 2013 to the lowest since 2011, said Sigrid Zialcita, managing director of research for Asia-Pacific at Cushman & Wakefield in Singapore. Rents in Mumbai’s CBD, at $4.5 per square foot per month in the quarter ended March, compare with $6.61 in Shanghai, data from Cushman & Wakefield showed.

The Indian rupee was the worst-performer against the dollar in Asia from 2011 to 2013, dropping 26 percent. This year, the currency is the fourth-best performer in the region, up 2.4 percent, data compiled by Bloomberg showed.

“The current trend emphasizes the growing sophistication and effort made by global investors in seeking strong themes, even in seemingly challenging geographies to benefit from pockets of growth,” said Priyaranjan Kumar, the regional director of capital markets at Cushman & Wakefield in Singapore.

Xerox Corp. (XRX), the U.S. printer and photocopier pioneer, and Australia & New Zealand Banking Group Ltd., Australia’s third-largest lender, are among companies that have opened new offices in the past year as expectations that newly elected Indian Prime Minister Narendra Modi will revive the economy have grown since his landslide victory in May.

Vacancies Fall

India has been in the top five global office markets for at least the past seven years, with average annual net demand of more than 30 million square feet, Cushman & Wakefield said.

The recovery is helping to resolve a glut. India’s slowing economy had led to declines in office occupancies that froze development and prompted some builders to convert commercial projects into housing.

Office demand fell 5 percent in the first quarter to about 6.3 million square feet from 6.6 million square feet in the same period a year earlier, said property broker CBRE Group Inc. The demand is at its lowest in eight years, dropping 45 percent from the high in 2008, as inventories peaked amid more supply, IIFL said.

Vacancy rates in Mumbai, which peaked at 22.8 percent in 2012, declined to 19.7 percent in the quarter ending in March from the previous quarter, Cushman & Wakefield said. In Gurgaon, near New Delhi, they fell to 10.49 percent in the three months ended March from 12.32 percent in the December quarter, it said.

Xander, APG

Xander Group, with about $2 billion of equity capital in property assets, and a consortium led by Dutch pension fund asset manager APG announced a $300 million venture in May that will buy commercial assets across India’s main office markets. The APG-led group is seeking to capitalize on demand from companies in the information technology and financial services industries that serve global businesses from hubs across India.

“India’s top six cities have consistently witnessed the largest net absorption of office space in the Asia-Pacific region, and perhaps globally,” Sachin Doshi, head of non-listed real estate for Asia-Pacific at APG in Hong Kong said in a statement last month. “This, combined with limited new developments for office projects in India, creates a unique demand-supply gap for good quality office space.”

GIC, Ascendas

Among others, GIC Pte, Singapore’s sovereign wealth fund, and Ascendas Pte, a Singapore-based business-park developer, plan to invest as much as S$600 million ($480 million) in Indian commercial property to meet rising demand, they said in November. Through a fund, they will invest in business space in Bangalore, Chennai, New Delhi and surrounding areas, Hyderabad, Mumbai and Pune, the companies said.

Companies across Europe indicated an increased appetite for global expansion into India, according to an April 28 report by CBRE. Almost half of the firms that responded to the survey said India was their destination of choice because of rapid population growth and gradually recovering economic prospects, beating China as a preferred location, CBRE’s European Occupier Survey showed.

Xerox leased 271,000 square feet of additional office space in Bengaluru last year, according to broker Colliers International. The Norwalk, Connecticut-based firm, which has more than 10,000 employees in India, expanded “based on the high-tech growth and ability to hire quality employees in the region,” Arpana Mehra, vice president of the company’s human resources department, said in an e-mail.

Banks Expanding

Melbourne-based ANZ leased 40,000 square feet of extra office space in Bengaluru last year, according to CBRE. The new office, across the road from an older facility, added 350 people, taking the support staff to 6,350, said Stephen Ries, a spokesman for the bank.

Morgan Stanley is opening an offshore center in Bengaluru this year to support global operations, adding to existing centers in Mumbai, according to a Dec. 23 statement from the New York-based company. The firm’s Mumbai centers support functions including technology, data, operations and finance. Inc., Bank of New York Mellon Corp., and Fidelity Investments are among global companies that took up new offices in India last year, according to Colliers.

Robust Demand

Demand from such tenants is what Blackstone is after. Since its first deal in the Asia-Pacific region in 2007, Blackstone has invested $7 billion through about 30 transactions, including $3 billion of equity, according to the company. About a quarter of its Asian assets are in India.

“We see supply slowing down pretty dramatically, but demand is pretty robust, especially in the office-park business,” Parikh said.

Large office parks, where buildings are grouped together, are what makes India attractive, Parikh said. Demand for space in these parks tends to increase when Western economies, like in the U.S. and Europe now, recover, prompting companies to boost their global support functions.

Blackstone and a partner acquired an office tower in Mumbai’s Nariman Point CBD for 9 billion rupees ($152 million) in November, according to IIFL. It also bought business parks in Bengaluru and Pune last year, IIFL said.

‘Aggressive Buyers’

Blackstone has become an “aggressive buyer” in the past two years as developers faced “liquidity issues and prices corrected,” said Bhaskar Chakraborty, a Mumbai-based analyst at IIFL. “It’s strategy is to take over rent-yielding commercial projects from cash-strapped developers.”

Among office property developers, DLF Ltd. (DLFU) will benefit the most from a recovery in demand as the builder has 5 million square feet of “ready to move in” space, IIFL said. Shares of DLF, India’s largest developer, gained 30 percent this year recouping last year’s 28 percent decline.

Most investors are buying completed offices that are income producing assets, said V. Hari Krishna, director at Kotak Investment Advisors Ltd., a private-equity fund with about $800 million of Indian property assets. Yields for office assets have declined to between 9.5 percent and 10 percent compared with 11 percent a year ago, he said.

“Brokers say this year, demand inquiries and potential leasing is the best they have seen since 2008 across cities,” Hari Krishna said.

With Modi at the helm of the new government, there is optimism he will help jump-start the economy, said Anshuman Magazine, chairman of CBRE South Asia Pvt, in New Delhi.

The election win has prompted economists to raise growth forecasts in the world’s second-most populous nation. Morgan Stanley, Citigroup Inc. and Nomura Holdings Inc. are forecasting faster expansion in the next few years on Modi’s plans to attract investment and build more ports, roads and bridges. Morgan Stanley raised the country’s gross domestic product estimate to a four-year high of 6.5 percent in the year through March 2016 from 6.2 percent.

“Everybody has become very optimistic,” Magazine said. “The biggest frustration was decision making. Even if the new government just starts taking decisions, it will stimulate the economy, and in turn real estate demand.”

-By Pooja Thakur

HUD Nominee Faces Senators as Housing Recovery Sputters

Source: Bloomberg / Personal Finance

Julian Castro, nominated in May to serve as secretary of the Department of Housing and Urban Development, is set to take over at a critical time for the agency as the housing recovery sputters.

After five years of focusing on stemming a record wave of home foreclosures, HUD faces a new crisis as tighter standards cause home lending to slump to a 17-year low. The Federal Housing Administration, a mortgage insurer run by HUD that helps lower-income borrowers buy houses, is on pace to back only 500,000 loans for purchases this fiscal year, about half the number in fiscal 2010.

Castro, 39, a third-term mayor of San Antonio who has said little publicly about the mortgage crunch and U.S. housing policy, faced questioning in his Senate confirmation hearing today. The real estate industry is calling for the FHA to make changes to boost lending.

“We need to step on the housing accelerator again because there is widespread concern about access to credit,” said Brian Chappelle, a former FHA official and partner at Potomac Partners LLC, a consulting firm for lenders in Washington. “Tens of thousands of creditworthy people aren’t getting mortgages.”

Raised by a single mother in San Antonio, Castro graduated from Stanford University with a bachelor’s degree and Harvard Law School. He was thrust into the spotlight in 2012, giving the keynote address at the Democratic National Convention.

$1.1 Trillion

As mayor of San Antonio, Castro’s work on housing has centered on increasing the number of affordable rentals and redeveloping neighborhoods plagued by crime and joblessness. Under his leadership, San Antonio was one of only two cities nationwide that secured funds from both HUD and the Department of Education for local revitalization efforts. San Antonio got a total of $54 million.

At the hearing, Castro said he plans to navigate between helping lower-income homebuyers and avoiding the kind of financial stress that led to a bailout of the FHA in 2013.

“My perspective, whether it relates to requirements for down payments or other measures, is that we achieve this balance to stay within the historic mission of the FHA to ensure that first-time homebuyers, that folks of modest means who are creditworthy, that they have the opportunity to reach the American dream of homeownership,” Castro said. “But at the same time that we have policies in place that ensure what happened a couple of years ago doesn’t happen again.”

Industry groups that support Castro’s nomination, including the National Association of Realtors and the Mortgage Bankers Association, said he should focus on increasing homeownership once he gets to Washington and begins overseeing the FHA’s $1.1 trillion of loan guarantees.

Fee Increases

“His vision for strong communities and affordable housing is especially appropriate for HUD, which has helped make the dream of homeownership a reality for millions of Americans,” NAR President Steve Brown wrote in a June 12 letter to the Senate Banking Committee, which conducted today’s hearing.

Castro is likely to be approved by the Democratic majority in the Senate, Democratic leaders said. He will replace outgoing HUD Secretary Shaun Donovan, who has been named to lead the Office of Management and Budget.

Castro will walk into a standoff between his agency and industry groups such as NAR, which are pressing HUD to relax premium increases instituted after the housing bubble burst. Losses of more than $50 billion caused FHA to take a taxpayer subsidy of $1.7 billion last year, the first in its 80-year history.

Priced Out

The FHA was created in the wake of the Great Depression to help first-time buyers and others without significant savings own a home. Its insurance guarantees that lenders won’t suffer losses on mortgages with down payments as low as 3.5 percent.

The agency finances its efforts by charging borrowers an upfront premium and monthly fees. Steady increases in those charges since 2008 have raised costs for a borrower with a $150,000 mortgage by more than $100 a month.

Industry groups estimate between 125,000 and 375,000 renters have been priced out of FHA loans by the increases. Now, with the agency’s finances improving, “FHA should be able to make some changes to the record-high premium structure,” NAR Vice President Joe Ventrone said.

FHA officials have said the agency’s finances are still too precarious for a reduction in the charges. Last month they announced a program to cut premiums by about $300 a year for homebuyers who undergo housing counseling, and said the effort could reach about 100,000 borrowers in its first year.

Credit Scores

The program makes a 50-basis-point, or 0.5 percentage point, cut in the upfront premium, which is rolled into the long-term cost of the loan. It cuts only 10 basis points in the annual fees, which have a greater impact on borrowers’ monthly debt costs and eligibility for loans, Chappelle said.

“It helps,” he said, though “they really need to restructure it if they want to have an impact.”

As HUD secretary, Castro also will face a related challenge -- convincing lenders to originate mortgages for Americans with less-than-perfect credit. U.S. lenders made $226 billion in mortgages in the first quarter, a 17-year low, according to the Mortgage Bankers Association.

Borrowers with credit scores that would have qualified for an FHA loan prior to the 2008 housing crash are now being deemed unqualified by lenders who are exercising more caution. As a result, entry-level buyers are kept out of the market.

FHA allows a minimum FICO credit score of 580 on a scale of 300 to 850; the average score for an FHA borrower today is 684, up from 657 in 2008. For loans backed by government-run mortgage financiers Fannie Mae and Freddie Mac, the average is even higher: around 740.

Enforcement Actions

Lenders are wary of riskier borrowers because the firms are forced to eat the costs of bad loans that the FHA determines don’t meet its underwriting standards. The Department of Justice has recovered hundreds of millions of dollars in settlements from banks including JPMorgan Chase & Co. (JPM) and Bank of America Corp. for improperly originating FHA loans during the housing bubble. Investigations into other lenders are ongoing.

While the HUD secretary doesn’t direct the investigations of old loans, Castro could work to improve the agency’s review process for new loans so lenders are reassured that they won’t be subject to unexpected enforcement actions, said Tim Rood, chairman of the Collingwood Group, a Washington-based housing-policy consulting firm.

“The threat of these ambiguous and ever-further-reaching enforcement actions does come with a price,” Rood said. “You’re going to have a lot less lending, a lot tighter lending, a lot more expensive lending -– all the things that work completely contrary to the administration’s and presumably Castro’s objective of expanding credit.”

Melvin Watt

The shift in leadership at HUD comes as regulators are playing an increasingly central role in determining credit availability.

Congressional efforts to overhaul the nation’s housing finance system aren’t expected to move forward this year. Any policy changes will be largely under the control of the administrators of FHA and the Federal Housing Finance Agency, which oversees Fannie Mae (FNMA) and Freddie Mac. The two companies buy loans and package them into guaranteed securities.

With FHA insuring about 15 percent of new home loans, and Fannie Mae and Freddie Mac backing another two thirds, the rules governing what loans they will guarantee can have a far-reaching impact on the market.

At FHFA, former North Carolina congressman Melvin L. Watt took over the job of director in January and has been focusing on easing credit. In May he announced that he is loosening the rules under which banks are forced to buy back loans with origination flaws.

Foreclosures Down

Castro will also have to address the remaining overhang of the housing meltdown, especially in states such as Florida and Nevada where home prices haven’t recovered. HUD, which ends up owning the foreclosed houses backed by FHA loans, is helping homeowners with loan modifications and selling some troubled mortgages to investors who agree to aid borrowers.

Lenders started foreclosures on 49,240 homes in May, a decrease of 32 percent from a year earlier and the lowest level since December 2005, according to data compiled by HUD. Demand for the government programs to support troubled borrowers has also waned. New enrollments in the Home Affordable Modification Program, which allows delinquent borrowers to lower monthly payments, have slowed to 10,000 a month, about half the rate from two years ago.

President Barack Obama noted the changes in the housing market during the May 23 press conference where he announced Castro’s nomination.

Obama Nomination

Compared to five years ago, “home sales are up 35 percent,” Obama said. “New foreclosures are down by nearly half. And while we’re not anywhere near where we need to be yet, millions of families have been able to come up for air because they’re no longer underwater on their mortgages.”

Obama then introduced Castro, who recalled that his mother of Mexican descent had raised him and his twin brother Joaquin in rental housing because she couldn’t afford to buy a home.

“It was there that both of us got a sense of what is possible in America, and an understanding that just because you were of modest means does not mean that your aspirations or your opportunity ought to be limited,” said Castro at the White House. “And it certainly means that you can have the talent to succeed and achieve the American Dream.” 

-By Clea Benson and Alexis Leondis

Citigroup Pays Record $697 Million for Hong Kong Office Tower

Source: Bloomberg / News

Citigroup Inc. (C) paid a record HK$5.4 billion ($697 million) to a unit of Wheelock & Co. for a Hong Kong office tower that will bring most of its 5,000 employees in the city under one roof.

The price for the 512,000 square-foot property in the Kowloon East district is the largest ever office transaction in Hong Kong, the New York-based bank said in a statement yesterday. The tower, scheduled for completion by the end of 2015, will be used to house staff currently spread out across offices in the city, said Weber Lo, the bank’s chief executive officer for Hong Kong and Macau.

Citigroup’s purchase may mark a return of investment demand in Hong Kong’s office market as falling vacancies and high rents pose a challenge for companies seeking large office spaces. Banks and insurers, including Agricultural Bank of China Ltd. and Manulife Financial Corp., have bought buildings in the city, which is home to the highest office rents in the world after London, according to property broker Cushman & Wakefield Inc.

“The lack of supply in Hong Kong has been a challenge for many large occupiers, such as Citi, who are in Hong Kong for the long term,” said Sigrid Zialcita, managing director of research for Asia-Pacific at Cushman & Wakefield in Singapore. “Hong Kong has not lost its luster as a regional financial hub, even with competition from Singapore and Shanghai.”

Industrial Zone

The overall vacancy rate in Hong Kong fell for a second consecutive quarter in the first three months this year, to 3.6 percent, according to CBRE Group Inc., which advised on the transaction. Office rents in Central may drop as much as 5 percent this year on increased demand from mainland Chinese firms and an improved economic outlook, the realtor said.

Citigroup is paying about 20 percent more for the Kowloon tower than Manulife, which paid HK$4.5 billion last year to Wheelock for a similar-sized block at the same development, called One Bay East. The waterfront district where the two towers are located, formerly an industrial zone, is earmarked by the Hong Kong government as an alternative financial hub.

Central is Hong Kong’s main financial district, where banks including HSBC Holdings Plc and Goldman Sachs Group Inc. have their regional headquarters. Agricultural Bank, a Beijing-based lender, paid HK$4.9 billion in 2012 for a 28-story office building near Central.

‘Continued Growth’

“There aren’t many banks historically that have bought their real estate,” said Ben Dickinson, head of Hong Kong markets at broker Jones Lang LaSalle Inc. “Most banks in Hong Kong prefer to retain the flexibility leasehold occupation offers them. It’s going to be interesting to see if it changes the perception for occupiers in Hong Kong whether more people will look at purchase.”

Wheelock shares fell 0.8 percent to close at HK$32.80 in Hong Kong, compared with the 0.1 percent drop in the benchmark Hang Seng Index.

Hong Kong is one of the eight markets in Asia where the bank generates more than $1 billion of revenue annually and has close to 5,000 employees, Citigroup spokesman James Griffiths said.

The purchase “underlines our belief and confidence in Hong Kong’s continued growth as a leading global financial center and hub for some of our core regional businesses,” Stephen Bird, Citigroup’s Asia-Pacific chief executive officer, said in yesterday’s statement.

-By Michelle Yun

Hilton to Open First Zambia Hotel as Capital Gets a Facelift

Source: Bloomberg / Luxury

Zambia’s state pension fund will finance a $98 million urban regeneration project in the nation’s capital that will include a 148-room hotel operated by Hilton Worldwide Holdings Inc. (HLT)

“It is scheduled to be completed by mid-2015,” David Chewe, investments director at Zambia’s National Pension Scheme Fund Authority, said in an e-mailed reply to questions. “This is part of the renewal of the central business district, and it is hoped that other developers and property owners would respond positively.”

The development in downtown Lusaka will include a shopping mall and office block alongside the Hilton Garden Inn, which will be managed by the hotel operator, Chewe said on June 13. Hilton, the world’s biggest hotel chain, is joining other operators, including Radisson Hotels International Inc. and InterContinental Hotels Group Plc (IHG), in establishing a presence in Zambia, Africa’s second-biggest copper producer.

Marriott International Inc., the second-largest publicly traded hotel chain, paid about $200 million in April for South Africa’s Protea Hospitality Corp., which has seven hotels in Zambia. Africa is seeing the world’s fastest pace of hotel development as investors and operators tap an expanding middle class and rising travel to compensate for slowing growth in European and U.S. markets.

Tourism Growth

Hilton is taking advantage of economic growth that the Zambian Finance Ministry forecasts will be about 6.5 percent this year, before averaging 8 percent from 2015. Tourism in Zambia is also set to grow, Hilton said in a statement last week.

The government is targeting tourism to reduce its dependence on copper, which accounts for about 70 percent of export earnings. The country shares the Victoria Falls with neighboring Zimbabwe and has 10 national parks.

Tourist arrivals grew by 6.5 percent to 914,576 last year, according to the Finance Ministry’s 2013 Annual Economic Report.

Hilton has 17 hotels in Africa, according to the website of the McLean, Virginia-based company. Its first Lusaka hotel will take on the Hilton Garden Inn brand.

-By Matthew Hill