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22nd June 2014

Singapore Real Estate

Mega reclamation project off Johor raises concerns

Source: Straits Times

Singapore has expressed concern to Malaysia over a proposal for a massive reclamation project to create an island in the Strait of Johor below the Second Link. The Ministry of Foreign Affairs (MFA) confirmed yesterday that Singapore has asked for more information so it can study the possible impact on the Republic and the strait. "They have agreed to do so and we hope to receive the information soon," a spokesman said in response to media queries.

Global Economy & Global Real Estate

Dublin’s Cafe Insane to Test Revival in Pub Deals: Real Estate

Source: Bloomberg / Luxury

It’s Champagne Friday at Dublin’s Cafe en Seine and a violinist is serenading Dom Perignon-sipping drinkers celebrating the start of the weekend.

The Irish are returning to bars like this one on Dawson Street, known locally as “Cafe Insane,” after Europe’s worst banking crisis prompted many to drink at home to save money. Next month’s sale of the bar and three other popular Dublin hangouts will test the strength of the revival and the level of demand for commercial real estate.

“Given that the economy has been dormant for the last number of years, there’s some light at the end of the tunnel,” said John Younge, a Dublin-based pub auctioneer who expects to sell 10 bars in Ireland this year, twice as many as in 2013. “Maybe people are more optimistic than they used to be.”

Irish pubs in April had the biggest annual increase in sales since 2006 as drinkers began to emerge from five years of austerity after the near-collapse of the country’s banking system forced Ireland to seek an international bailout.

“It got popular to stay at home and not spend money,” said David L’Estrange, whose accounting firm specializes in advising bar owners and who himself has stakes in three Dublin pubs. “Now they’re spending it. They’re going out again.”

The establishments are primarily for singles, usually referred to as boy-meets-girl -- or boy -- bars in Ireland, with an estimated combined value of about 12 million euros ($16 million). Three of them, including the George, the city’s biggest gay bar, are in receivership. In such cases, the buildings are typically sold to pay debts.

The Dragon

The fourth, the Dragon, is owned by brothers William and Desmond O’Dwyer, who built up a chain of outlets during Ireland’s Celtic Tiger boom. Desmond O’Dwyer declined to comment and William wasn’t able to be reached.

Ireland’s rampant economy caused the average price of a Dublin bar to more than double to 5.9 million euros in the five years through 2007, according to Morrissey’s, an auctioneering firm based in the city. Last year, that figure dropped to 760,000 euros, 90 percent below the market’s peak, as drink sales in pubs plummeted. In 2009, the Thomas Read Group chain of more than 20 outlets collapsed.

Now signs of life are emerging again. Across Ireland, bar sales rose 1.4 percent in April from a year earlier.

C&C Group Plc (GCC), the Dublin-based beverage company that owns Magners cider, reported a 23 percent increase in Irish operating profit for the 12 months through February. The company attributed the increase to the improving economy and its enlarged range of craft beers.

‘Googleland’ Effect

The number of jobs in Ireland rose by about 43,000 during the first quarter from a year earlier as Dublin drew workers from across the globe to Google Inc., Facebook Inc. (FB) and Airbnb Inc., which have located their European headquarters around the Grand Canal Square area. The district is nicknamed Googleland after the 2,500 workers on the company’s campus there.

“All the pubs down in that area are doing quite well,” said John Ryan, the real estate broker at CBRE Group Inc. who’s handling the sale of the four bars. “They’re young, well paid, they’re mobile, they don’t have any commitments.”

Some bar owners are more circumspect.

“It’s come back a little, but not hugely,” said Oliver Hughes, an investor in the Porterhouse Brewing Company, which runs bars in Dublin, London and New York. “There’s been a nice, gentle uplift.”

Investors bought 20 Dublin bars in 2013, almost double the tally for the previous year and the most since 2006, according to data compiled by CBRE. There were five deals in the first quarter of this year with an average value of 1.58 million euros, the broker said.

Would-Be Buyers

L’Estrange, the son of a cattle dealer, said he’s got almost 30 clients prepared to buy pubs for as much as 4 million euros each.

Many pub owners are grappling with bank borrowings along with the decline in alcohol sales, Morrissey’s said in a report. In some deals, barmen running a pub have bought the premises from an owner in financial distress, according to Robert Hoban, director of auctions at Allsop Space.

“Your pub buyers are owner-operators or they’re buying a premises with a tenant in mind,” said Hoban, whose firm has sold almost 12 million euros of bars across Ireland since 2011. “People are interested in getting back into the pub game but they’re being very, very judicious about what they buy.”

Troika Officials

This year’s most eye-catching deal was the sale of Foley’s, a Dublin landmark close to where officials from the troika of the European Central Bank, European Union and International Monetary Fund stayed while negotiating Ireland’s bailout.

In 2012, when a receiver was first appointed by Lloyds Bank Group Plc’s Bank of Scotland unit, valuers estimated the pub would fetch 1.5 million to 1.7 million euros, according to the receiver, David O’Connor at BDO Ireland.

By December 2012, bids had reached 2.8 million euros before the bar, best known for the giant “Guinness Time” clock hanging outside, was withdrawn from the market for legal reasons. Earlier this month, Foley’s was sold for 3.3 million euros.

“We were delighted,” O’Connor said. “The bank was ecstatic.”

The O’Dwyers, backed by lenders including Anglo Irish Bank Corp. and Allied Irish Banks Group Plc (ALBK), developed many of the bars that attracted Dublin’s younger drinkers before the real estate bubble burst. One of their companies had short-term bank debts of about 109 million euros at the end of 2008, company filings show. Allied Irish Banks appointed receivers to some of the businesses in 2009, according to the filings.

‘Legendary Venue’

Now, the lease for the Cafe en Seine, a pub with 1,300 square meters of space on three floors, is available for 3.5 million pounds, while the 1,100 square-meter Howl at the Moon, which describes itself as “Dublin’s most legendary party venue,” is being offered for more than 1.5 million euros.

The George, the self-proclaimed linchpin of the city’s gay scene, is for sale for 3.5 million euros, as is the Dragon. The two bars are about 150 meters apart on South Great George’s Street, a red-bricked avenue close to Dublin Castle.

L’Estrange says that Irish drinkers are becoming more discerning. While the industry isn’t out of the woods yet, pubs that can offer decent food, craft beers and cocktails will survive, he said. Cafe en Seine encourages its customers to drink bottles of Cristal and Dom Perignon champagne by offering a 25 percent discount for three hours every Friday night.

“There has to be real value in the trade,” he said. “They’re not going to sit there and drink 10 pints of Guinness like their grandfathers and fathers did.”

-By Donal Griffin, Neil Callanan and Dara Doyle

SouFun Leads June Drop on Sales Concern as Housing Slow

Source: Bloomberg / News

Real-estate companies are leading declines among Chinese stocks traded in the U.S. this month, with SouFun Holdings Ltd. (SFUN)headed for the worst drop in two years, as a housing slowdown spurs concern that sales will slow.

SouFun, China’s biggest real-estate information website, has sunk 25 percent in June, the steepest monthly decline since July 2012. E-House China Holdings Ltd., a Shanghai-based property brokerage, has plunged 13 percent while online property listing website Leju Holdings Ltd. has lost 18 percent. The Bloomberg China-US Equity Index (HSCEI) rose 0.1 percent to 104.69 last week in New York.

China’s new-home prices fell in half the cities tracked by the government for the first time in two years. Sales growth at all three companies will be less than half the pace of 2013, analyst estimates compiled by Bloomberg show. Agents in Shenzhen are threatening to boycott SouFun over the cost it charges for listings, the South China Morning Post reported June 19, a week after Deutsche Bank AG cut the stock to hold, citing concern discounts on fees will erode profit.

“You’ll see price reductions, commission reductions and a market that’s weak with reduced levels of transactions,” Tim Ghriskey, chief investment officer at New York-based Solaris Asset Management LLC, which manages about $1.5 billion in assets, said by phone June 20. “A correction in housing tends to be an extended event, especially when there’s been excessive speculation and significant overbuilding.”

Home Prices

Yiwen Zhang, an investor relations representative at SouFun, didn’t respond to a request for comment made after regular business hours in Beijing last week.

The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., slipped 0.7 percent to $37.83 last week. The Standard & Poor’s 500 Index climbed 1.4 percent to a record as investors speculated economic growth will accelerate.

China’s new-home prices fell in 35 of the 70 cities tracked by the government for the first time in two years, according to a statement by the National Bureau of Statistics June 18. That was the highest number since May 2012.

Deutsche Bank analysts led by Vivian Hao cut their rating on SouFun from buy on June 12, saying in an e-mailed research note that there is a “fair chance” the company will lower its 2014 earnings guidance because of its plan to discount some listing fees by 40 percent. SouFun hasn’t decided whether it will adjust its revenue guidance, Vincent Mo, SouFun’s chairman and founder, said in a conference call with analysts June 17.

Housing ‘Correction’

The housing sector “is in need of a correction and the Chinese government is well aware of that,” Ghriskey said.

SouFun fell 3.9 percent to $9.01 on June 20. E-House (EJ) slumped 4.4 percent in the week to $8.17 and Leju tumbled 8.7 percent to $9.56.

SouFun’s revenue will increase 19 percent in 2014, according to the average of seven analyst estimates compiled by Bloomberg, compared with a 48 percent surge in 2013. Sales growth at E-House will slow to 24 percent in 2014 from 58 percent, and Leju’s rate will be 49 percent, from 96 percent in 2013.

The Hang Seng China Enterprises Index fell 1.2 percent to 10,395.45 last week. The Shanghai Composite Index (SHCOMP) dropped 2.1 percent to 2,026.67.

-By Jenna M. Dagenhart