Real News‎ > ‎2014‎ > ‎June 2014‎ > ‎

26th June 2014

Singapore Real Estate

GSH Corporation-led group buys Equity Plaza for $550m

The sellers are Keppel Land and its fund management arm

Source: Business Times / Companies

KEPPEL Land and its fund management arm Alpha Investment Partners have entered into an agreement to sell Equity Plaza in Raffles Place for $550 million, or $2,181 per square foot of net lettable area, to a consortium company 51 per cent owned by Sam Goi-controlled GSH Corporation.

Other members of the consortium company, Plaza Ventures, are Vibrant DB2, owning a 35 per cent stake, and Mr Goi's private investment vehicle TYJ Group, with a 14 per cent stake.

Vibrant DB2 is a 51:49 joint venture between listed Vibrant Group, formerly known as Freight Links Express, and niche property developer DB2 Properties.

Equity Plaza - formerly known as The Exchange and The Quadrant - is on a site with a balance lease term of about 74 years. The building is currently about 97 per cent tenanted. The $550 million transaction price is said to reflect around 3 per cent net yield based on the current rental income of the property being generated by existing leases.

-By Kalpana Rashiwala

Equity Plaza sold for S$550m to consortium led by GSH Corp

Keppel Land sells 28-storey office tower to GSH Corp at S$2,181 per square foot.

Source: Channel News Asia / Business

SINGAPORE: Equity Plaza, a 28-storey office tower in Singapore's central business district (CBD), has been sold for S$550 million to a consortium led by mainboard-listed GSH Corp.

Real estate consultancy CBRE, which brokered the sale, said the price works out S$2,181 per square foot (psf) based on the building's current net lettable area of about 252,135 square feet. 

Keppel Land was the seller of the property. GSH said it intends to retrofit Equity Plaza, which is 22 years old, to get it on par with newer buildings in the area.

"The subsequent investment to upgrade the facade and overall quality of the building will position the group to realise substantial value from the acquisition in the near future," GSH CEO Gilbert Ee said.

Mr Jeremy Lake, CBRE's executive director for investment properties, said the sale of Equity Plaza reflects continued interest in Singapore's office market.

Just last month, Prudential Tower, another building in the CBD, was sold for S$512 million, or approximately S$2,316 psf.

- CNA/ly

Value of prime strata retail units up in Q2

Growth largely due to limited supply; but rents in most areas remain flat

Source: Business Times / Property

[SINGAPORE] Limited supply of prime strata retail units is lending support to their capital values, which inched up in the second quarter even while retail rents remained largely flat.

Based on a basket of completed properties tracked by DTZ Research, both the average resale capital values of prime retail units in Orchard/Scotts Road and suburban areas grew 0.8 per cent quarter-on-quarter. These units are those with good frontage or pedestrian traffic.

"Capital value growth is expected to stay firm due to the limited supply of prime strata retail units," said Lee Lay Keng, DTZ's regional head (SEA) of research.

"While investor interest in strata retail units remains strong due to their relatively affordable quantum and the absence of cooling measures for the retail sector, the limited supply means that sellers require a premium before letting go of their units," she said.

-By Lynette Khoo

Private home prices 'may fall up to 20%'

Source: Straits Times

Private home prices are expected to keep falling this year but analysts say a crash is unlikely. OCBC Investment Research forecast yesterday that values could dip 10 to 20 per cent from the start of this year to the end of next year.

Real Estate Companies' Brief

Singapore residential property sector

Source: Business Times

We forecast residential prices to dip 10-20 per cent over 2014 to 2015 but see a price crash in excess of 20 per cent to be unlikely, even after accounting for the anticipated physical oversupply and interest rate uptrend ahead.

Global Economy & Global Real Estate

Work still going on at reclamation site in Johor Strait

Source: Straits Times

A strip of sandbank stretching from mangrove swamps in south Johor Baru to the middle of the narrow Johor Strait can be seen from the Second Link bridge some 2km away.

China residential sector primed for shake-up as downturn drains cash

Developers' cash to short-term debt ratios at two-year lows, study shows

Source: Business Times / Property

[HONG KONG] An oversupply of residential property and a market slowdown have left Chinese developers with their worst cash crunch in more than two years, revealing the extent of China's real estate downturn and paving the way for further consolidation in the sector.

A Reuters study of more than 80 China-listed developers that have declared March quarterly earnings showed cash to short-term debt ratios at two-year lows amid a steady decline in margins since 2011.

That was the year the government moved to rein in the overheating housing market through measures including higher mortgage rates and limits on how many homes each family can buy.

But the government crackdown is only part of the story. A downturn in property prices, pressure to pay for last year's record land purchases, and a tighter credit market have combined to put severe strains on developers' liquidity.

-From Hong Kong, China

China’s real estate wrongs

Source: Today Online / China & India

China’s real estate sector has been a source of serious concern for several years, with soaring property prices raising fears of overheating in the housing market. However, with price growth easing, it seems that the government’s campaign to rein in property risk is finally taking hold. The danger now is that the housing market will collapse — bringing China’s economic prospects down with it.

In its effort to control rising housing prices, China’s government has pursued nine distinct policies, not all of which have served their purpose. Though policies such as limits on mortgages for first-time buyers and minimum residency requirements for purchasing property in a first-tier city such as Beijing or Shanghai helped ease demand, supply-side tactics such as limiting credit to real estate developers and imposing new taxes on property sales have proven to be counterproductive.

This flawed approach allowed China’s housing prices to continue to rise steadily, fuelling major housing bubbles, especially in first-tier cities. The average Beijing resident would have to save all of his or her income for 34 years before being able to purchase an apartment outright. In Shanghai and Guangzhou, the equivalent is 29 and 27 years respectively — much higher than in other major international cities.

The expectation that this trend will continue has driven home owners to retain possession of their properties, even though rental rates amount to less than 2 per cent of a property’s market value. But, with the real estate sector finally facing a downturn, the time to rethink this investment strategy has arrived. In the first four months of this year, housing sales dropped by nearly 7 per cent year-on-year, with construction of new floor area falling by more than 22 per cent. As a result, downward pressure on property prices is mounting.


In normal times, citizens and officials alike would welcome this trend. But, at a time of weakening economic performance, China cannot afford an implosion of the real estate sector, which accounts for at least 30 per cent of overall growth. Indeed, though China’s government has expressed its willingness to sacrifice some growth in its pursuit of structural reform and rebalancing, the impact of a housing-market collapse on the financial sector would cause growth to slow beyond the acceptable limit.

That impact partly reflects the highly problematic nature of the Chinese government’s long-awaited move to liberalise interest rates. Instead of taking a direct approach — lifting the interest-rate cap imposed on banks — liberalisation has been achieved by allowing shadow banking to flourish. As a result, a large number of non-bank financial institutions — such as wealth-management companies and online financial-services providers — are now using promises of high returns to attract small investors. Making matters worse, the monetary authorities have tightened the credit supply in an effort to deleverage the Chinese economy.

While both interest-rate liberalisation and deleveraging are critical to the long-term health of China’s economy, the skyrocketing cost of borrowing is forcing many low-risk companies, which are unable to offer sufficiently high rates of return, out of the market.

At the same time, real estate developers who have borrowed heavily from shadow-banking institutions, based on the assumption that property prices would continue to rise steadily, may struggle to repay their debts, with a sharp decline in prices inevitably leading to defaults. Given that the formal banking sector provides a large share of shadow-banking finance, this could initiate a chain reaction affecting the entire financial sector.

Many remain convinced that China’s government — which wields the world’s largest foreign-exchange reserves and virtually unchecked authority — would be able to prevent a major financial crisis. But the financial crisis in the fast-growing city of Wenzhou, triggered by bad loans, suggests otherwise — not least because the economy has yet to recover fully. There is no reason to believe that a similar crisis could not occur on a national scale.

To avoid such an outcome, China’s leaders must urgently adopt counter-cyclical measures. They should begin by eliminating non-market-based restrictions on the real estate sector, which have generated serious distortions not only to the economy, but also to people’s lives, with couples divorcing temporarily to gain the right to purchase an additional apartment.

When it comes to the real estate sector, China’s government has consistently had the right objective and the wrong strategy. It is time to align intention with action. Otherwise, China’s financial sector — indeed, its entire economy — will suffer.

-By Yao Yang

China's richest woman controls firm behind Forest City project

Source: Straits Times

China Vanke expanding overseas, in talks with strategic investors

Developer selling stake, taps offshore capital markets

Source: Business Times / Property

[HONG KONG] China Vanke Co Ltd , the country's largest residential property developer, said yesterday that it is in talks with global investors, including funds and real estate peers, to sell a strategic stake as the company seeks to expand overseas and tap offshore capital markets.

The stake sale could be accomplished by issuing new shares or via the purchase of shares from the secondary market, Vanke chairman Wang Shi told reporters at the company's Hong Kong-listing ceremony yesterday.

"By moving to Hong Kong, it will help our international brand . . . help to attract strategic investors. It will be more healthy for Vanke to leverage on this international platform," Mr Wang said.

Vanke converted its B-shares in Shenzhen into H-shares and listed in Hong Kong by way of introduction without raising any new capital. The Hong Kong shares traded at HK$13.24 (S$2.13) in the late morning, higher than its B-shares' last closing price (June 3) of HK$12.41.

-From Hong Kong, China

First-quarter GDP falls the most in five years

Source: Business Times / Top Stories

[WASHINGTON] The US economy contracted at a much steeper pace than previously estimated in the first quarter to record its worst performance in five years, but there are indications that growth has since rebounded strongly.

The Commerce Department yesterday said that gross domestic product (GDP) fell at a 2.9 per cent annual rate, instead of the one per cent pace that it had reported last month.

While the economy's woes have been largely blamed on an unusually cold winter, the magnitude of the revision suggests other factors at play beyond the weather. Growth has now been lowered by a total of three percentage points since the government's first estimate was published in April, which had the economy expanding at a 0.1 per cent rate.

The difference between the second and third estimates was the largest on records going back to 1976. Revisions to GDP numbers are not unusual as the government does not have complete data when it makes its initial and preliminary estimates. Economists had expected growth to be revised to show it contracting at a 1.7 per cent rate.

-From Washington, US

Higher foreign direct investment expected: UN

Source: Straits Times

Norway sovereign fund beefs up to buy more real assets

It's moving into infrastructure and private equity

Source: Business Times / Property

[OSLO] Norway's US$890 billion sovereign wealth fund, the world's biggest, is building up its organisation and preparing for a move into infrastructure and private equity, its chief executive officer, Yngve Slyngstad, said.

The fund, in a strategy document released on Monday, revealed it was boosting its staff by about 60 per cent over the next three years to tackle increased investments in real estate and said it's preparing for more investments in assets "with income streams that grow in line with the global economy".

That means "real assets" such as property, private equity and infrastructure, Mr Slyngstad said on Monday. "We're always preparing the organisation for possible changes in the mandate," he said, adding that the final say lies with the government.

The investor's preparations come after the new Conservative-led government this year backed away from pre-election talk of allowing the fund to expand from its current mandate of bonds, stocks and real estate.

-From Oslo, Norway

Nakheel to pay off bank debt ahead of schedule

Source: Business Times / Property

[DUBAI] Nakheel, the real estate giant at the heart of Dubai's financial crisis, said yesterday it will pay off all its bank debt of 7.9 billion dirhams (S$2.67 billion) ahead of schedule.

"Our payment is covering up to the last instalment (scheduled for) 2018," Nakheel chairman Ali Rashid Lootah told reporters.

The full amount would be paid in August despite an earlier pledge to settle only US$1.65 billion this summer. The government-related entity, which built Dubai's palm-shaped island and a cluster of isles in the form of a world map, is to meet its obligations from its own revenues.

"All this cash is generated from Nakheel's own income, not from the support fund of the government," said Mr Lootah.

-From Dubai, UAE

Marriott sees revenue boost with global recovery

Source: Business Times / Property

[JOHANNESBURG] Marriott International Inc, the world's second-largest publicly traded hotel chain, said expansion into new African markets and a global economic recovery may boost revenue by as much as 10 per cent this year.

"We would see the existing hotels grow their top line by something between 4 and 6 per cent and should add another 4 to 5 per cent new hotels," chief executive officer Arne Sorenson said by phone from Cape Town on Tuesday. "If you combine those two, you get revenue growth for us that's in the 10 per cent range."

The owner of brands including Ritz-Carlton and Renaissance is benefiting from an increase in both business and leisure travel worldwide as the global economy improves. The number of individual cross-border journeys could increase to 2 billion by the end of the decade from 1.1 billion in 2013, according to Mr Sorenson. Marriott's revenue increased 8 per cent to US$12.8 billion in 2013. "It's both the burgeoning middle class around the world and it's growing economies," Mr Sorenson said. "So if you look at the United States for example, we continue to see GDP growth in the 2 to 3 per cent range broadly. Europe is stronger than it has been in a number of years, hardly robust but still at this point firmly positive."

Marriott is boosting its presence in Africa and the Middle East on the back of the acquisition of Cape Town-based Protea Hospitality Holdings for about US$200 million in April. The Bethesda, Maryland-based company will open as many as 50 new hotels in the region over the next three years, Alex Kyriakidis, the chain's president for Middle East and Africa said in the same interview. That will bring the total to more than 200. "Today we have 45" new hotels in the pipeline, Mr Kyriakidis said. "We will probably add several more over the next two or three years - some of which will be construction; some of which will be conversions."

-From Johannesburg, South Africa

JPMorgan Said to Sell $304 Million Mortgage-Bond Issue

Source: Bloomberg / Luxury

JPMorgan Chase & Co. (JPM) sold bonds tied to about $304 million of U.S. home loans without government backing, adding to signs of life in the market.

The transaction included $171 million of top-rated securities paying a 3 percent coupon, which were sold at 102.2 cents on the dollar, according to a person with knowledge of the offering who asked not to be identified citing lack of authorization to speak publicly. That’s about 1.5 cents on the dollar less than comparable benchmark Fannie Mae-guaranteed bonds, according to data compiled by Bloomberg.

The notes are unlike other recent deals because they’re backed almost entirely by 15-year mortgages, which are often taken by “more financially secure” borrowers relative to more common 30-year loans, according to a presale report by Standard & Poor’s. The average size of the mortgages, at about $558,000, was also smaller than the $850,000 in previous JPMorgan deals since the 2008 financial crisis, S&P said. They were mainly “jumbo” loans, it said.

The transaction’s contracts included an “untested and rigid” process for forcing JPMorgan or other originators of the underlying loans to buy back misrepresented debt, S&P said. Seeing that “the framework is more restrictive than those in other recent prime transactions, we imposed additional loss coverage requirements in our review.”

While issuance of non-agency securities tied to new loans jumped to $13.4 billion last year from $3.5 billion in 2012, sales collapsed after September, Bloomberg data show. Issuance totals about $2.1 billion this year, and Citigroup Inc. (C) has been also planning a sale this month. Offerings peaked at $1.2 trillion in both 2005 and 2006.

Jumbo mortgages are those larger than allowed in government-supported programs. Limits now range from $417,000 to $625,500 for Fannie Mae and Freddie Mac loans with the lowest costs for borrowers using 20 percent down payments.

-By Jody Shenn

Illinois Town’s Bond Sale Halted Over Fraudulent Hotel Deals

Source: Bloomberg / News

A city outside Chicago was blocked from selling bonds after the U.S. Securities and Exchange Commission accused it of defrauding investors and steering secret fees to a municipal official.

The case against Harvey, Illinois, a struggling city of 25,000 battered by poverty and crime, involves about $14 million in bonds sold from 2008 to 2010 that were to pay for development of a Holiday Inn hotel and conference venue.

The SEC said that the city hoodwinked investors by using $1.7 million to pay payroll and other operating expenses, while the hotel stands in disrepair with holes in its facade, exposed studs and a gutted interior. The SEC said Comptroller Joseph Letke, 55, also profited by receiving $269,000 in undisclosed payments while advising the developer of the ill-fated project.

“Harvey’s bond investors were misled into believing their money would go toward construction of a Holiday Inn when instead the bulk of it was diverted into Harvey’s general coffers and Letke’s pocket,” David Glockner, the director of the SEC’s Chicago office, said in a statement.

The agency has been moving more aggressively to crack down on public officials who mislead investors in the $3.7 trillion municipal bond market. It has previously brought fraud cases against Illinois and New Jersey, and this month settled with a Chicago charter-school operator for failing disclose insider business dealings that led the state to withhold grants.

Star-Crossed Hotel

The SEC yesterday filed fraud charges against Harvey and its comptroller. It asked the U.S. District Court in Illinois to block new bond sales as the city considered raising more money for its latest redevelopment project, a 43,500-square-foot grocery store, as soon as this week. The agency said today that U.S. Judge Rebecca Pallmeyer issued an order blocking any such sales through July 14.

That sale was being readied despite what the comptroller characterized as a crisis that may leave Harvey unable to pay bondholders by August, according to the SEC’s complaint.

Letke didn’t immediately respond to messages left at his offices seeking comment about the sanction. A spokesman for the city said Mayor Eric Kellogg has no comment on the agency’s allegations.

“The city of Harvey is aware of the judge’s order and will cooperate fully,” Sean Howard, the spokesman, said in a telephone interview.

Poverty Ravaged

Harvey, south of Chicago in Cook County, is a struggling area. More than one-third of its residents lived below the poverty line from 2008 through 2012, with the median household income $28,123, roughly half what it is for the state.

The borrowing was to turn a hotel into a new, full service Holiday Inn with 10,500 square feet of meeting rooms. The city said in bond documents that it would benefit from proximity to Midway Airport, which is 22 miles (35 kilometers) away.

The project was troubled from the beginning, as almost all proceeds from the initial bond sale in 2008 were used to pay past-due loans, taxes and construction bills, according to the SEC.

The agency said the city went on to defraud investors by tapping bond money to pay bills instead of financing the project. Regulators said it failed to disclose that to investors or Letke’s fees from the project’s developer.

The project turned into a “fiasco” that left the Holiday Inn and conference center a “decrepit shell,” according to the SEC.

“We moved quickly to stop this city and its comptroller from issuing more bonds under false pretenses,” Andrew Ceresney, director of the Division of Enforcement, said in a statement.

The agency’s action follows articles in the Chicago Tribune documenting mismanagement in the crime-ridden suburb, including the failure by state officials to enforce laws requiring yearly audits of its books and the disclosure of campaign contributions.

-By William Selway and Elizabeth Campbell

Bilfinger Turns to Industrial Deals After Sealing U.K. Takeovers

Source: Bloomberg / Luxury

Bilfinger SE (GBF), the German builder transforming itself into a provider of factory and property services, still has 700 million euros ($955 million) for industrial acquisitions after buying two U.K. building-management companies.

“Future acquisitions will largely be in Bilfinger’s other business segments” of industrial services and power plant maintenance, Chief Executive Officer Roland Koch said in an interview at Bloomberg’s Frankfurt office. “We have plenty of ideas.”

Bilfinger will first integrate real estate consultant GVA and Europa Support Services to boost its building-management business in the U.K. more than 11-fold to 400 million euros a year, Koch said. It bought Europa in December and said June 23 it has GVA shareholder support to complete that deal.

Bilfinger, once Germany’s second-biggest builder, has been withdrawing from construction as it tries to stabilize earnings by avoiding the cyclical peaks and troughs of the building industry. As the 134-year-old company focuses on industrial and power services, as well as facility management, it added almost 6,000 employees through purchases in 2013.

Koch has bought 25 companies with an enterprise value of about 1 billion euros since taking the helm in 2011. One goal is to increase Bilfinger’s reach outside Europe, where it gets less than 20 percent of sales. The Mannheim-based company said last month it will sell civil engineering businesses with sales of about 800 million euros as it steers away from construction.

Hochtief Differs

The strategy is different from that pursued by Hochtief, Germany’s biggest builder, which has reversed a push into services to concentrate on engineering projects.

“We are talking about growth opportunities that aren’t exactly in line with broader macroeconomic data,” said Koch, who previously served as premier of the German state of Hesse. “The outsourcing of industrial facilities, retrofit programs for power plants and changing energy sources are not exactly markets that are tied to macro trends.”

The approach is rewarding investors, as Bilfinger shares have returned about 47 percent in three years, including reinvested dividends. That compares with a 15 percent return for Hochtief and a 37 percent return for the Euro Stoxx Industrial Goods & Services Index of 46 companies.

The shares fell 0.6 percent to 83.16 euros at 11:40 a.m. today in Frankfurt, giving Bilfinger a market value of 3.8 billion euros.

Stable Contracts

“In services you naturally have a lot more visibility than you do as a construction company because you have a higher proportion of long-term contracts,” said Ingbert Faust, a Frankfurt-based analyst at Equinet who has a hold recommendation on the shares. “Margins are higher than they were in the earlier segment, but the capital employed is also higher.”

Bilfinger’s construction output, the industry’s measure of completed work, declined 26 percent last year to 1 billion euros. The figure increased 7 percent to 4 billion euros at the industrial division, the largest unit. Output rose 4 percent in building and facility services and fell 5 percent in energy operations. Total revenue rose 0.9 percent to 8.4 billion euros.

Bilfinger is forecasting output of at least 11 billion euros by 2016 with earnings of about 400 million euros. That compares with 8.5 billion euros and 249 million euros respectively last year.

IBM Property

The building and facility division -- now larger with Europa and GVA -- provides services such as electrical maintenance, cleaning and the provision of furniture. Bilfinger runs more than 200 International Business Machines Corp. (IBM) properties and manages real estate for Deutsche Bank AG.

Bilfinger hasn’t disclosed prices paid for most deals as the majority involve closely held companies. Recent purchases have been 300 million euros or less, according to the company.

Equinet estimates that GVA is worth about 160 million euros. The company manages student housing and helps clients such as fashion retailer Mint Velvet find store locations. Europa had 142 million pounds ($241 million) in sales in 2012.

In the U.K., Bilfinger’s plans include doing more property management in the City of London financial district, Koch said.

The company is also expanding in the U.S. amid an industrial recovery, and acquisitions there have been a success, Koch said. One of the biggest recent deals was last year’s purchase of Johnson Screens Inc., a U.S. provider of industrial filters and water-well screens.

BASF SE, the world’s largest chemical company, is investing more than 1 billion euros in U.S. facilities to take advantage of lower energy costs. Bilfinger, which counts BASF among its biggest customers, stands to benefit.

“It is naturally an opportunity for us,” Koch said. “We will follow a Wacker Chemie, a BASF, a Bayer or a Lanxess. We follow American companies worldwide and are set up in a way that lets us do so.”

-By Alex Webb and Dalia Fahmy

Crown Estate Profit Soars as Property Value Reaches $16 Billion

Source: Bloomberg / News

The Crown Estate, the property company that generates income for Queen Elizabeth II, reported record annual earnings as the value of its real estate reached 9.4 billion pounds ($16 billion) for the first time.

Net income increased 5.7 percent to 267.1 million pounds for the year through March 31, the London-based company said in a statement today. The value of the Crown Estate’s total assets rose 14.6 percent to 9.9 billion pounds.

“This record performance shows that from the heartlands of our real estate business to our investment offshore, we’re truly at our best when we’re actively managing,” Chief Executive Officer Alison Nimmo said in the statement.

U.K. commercial property values have been climbing as an improving economy boosts demand for stores and office space. The Crown Estate said every shop it owns in London’s West End district, including the majority of Regent Street, is currently occupied and recent lease signings include brands such as J. Crew and Osprey.

It sold a 25 percent stake in its 320 million-pound St. James’s Market project, including 50,000 square feet of planned stores and restaurants, to Toronto-based Oxford Properties Group Inc. during the year.

In addition to the Regent Street shops, the Crown Estate owns shopping centers, golf courses, Ascot racecourse, parks, farms and almost all of the U.K.’s seabed, according to documents posted on its website.

The Crown Estate oversees real estate surrendered in 1760 by the monarchy in exchange for annual payments. The U.K. Treasury collects its earnings and provides the queen with a percentage.

-By Neil Callanan

NYC’s 1 World Trade Center Tower Gets 2 More Tenants

Source: Bloomberg / News

Lower Manhattan’s 1 World Trade Center is about 56 percent leased after two additional tenants agreed to rent space in the tower, the tallest in the Western Hemisphere.

Legends Hospitality LLC, the company that will operate the skyscraper’s observatory, is taking 4,759 square feet (442 square meters) and BMB Group, a London-based investment adviser to sovereign-wealth funds, will rent 2,191 square feet, according to a statement today by the Durst Organization, the building’s co-developer.

The deals follow an agreement last month by advertising firm KiDS Creative LLC for 34,775 square feet on the 87th floor, which was the first lease signed at the 3 million-square-foot tower in three years. The building, which will have Conde Nast Publications Inc. as its anchor tenant, is scheduled to open before year’s end.

“Tenant prospects appreciate the status and allure” of having offices in the 1,776-foot (541-meter) skyscraper, Eric Engelhardt, director of leasing at 1 World Trade Center for Durst, said in the statement. “This globally recognized address resonates perfectly with these companies’ own international reach and prestige.”

Legends Hospitality is led by Chairman and CEO Dave Checketts, former president of the National Basketball Association’s New York Knicks. The company, owned by Checketts Partners Investors Fund, the New York Yankees and the Dallas Cowboys, will run the observatory on floors 100 to 102 of 1 World Trade Center. It will have management and administrative offices on the 45th floor, according to the statement.

Downtown Leasing

BMB Group, which is renting space on the tower’s 46th floor, is relocating from the nearby 7 World Trade Center. Both companies’ leases are for 10 years, according the Durst Organization, which is developing the skyscraper with the Port Authority of New York and New Jersey.

Cushman & Wakefield Inc. is handling the leasing of the building along with Durst.

The tower and neighboring 4 World Trade Center, which opened in November, are bringing more than 2 million square feet of empty space to the lower Manhattan market. In the year through May, office leasing downtown rose 38 percent from a year earlier to 972,000 square feet, the most for the period since 2000, according to a report by CBRE Group Inc.

Conde Nast, the publisher of titles including Vogue, Vanity Fair and GQ, will occupy almost 1.2 million square feet at 1 World Trade Center.

-By Jonathan Lamantia

Dublin House Prices Surge Most Since 2006

Source: Bloomberg / Luxury

Dublin home prices jumped the most in almost eight years last month amid warnings from analysts and regulators that a lack of supply in the Irish capital could stoke fresh financial instability.

Values of apartments and houses soared 22 percent compared with a year earlier, the biggest increase since August 2006, and gained 4.2 percent from April of this year, according to the Central Statistics Office. Nationally, prices rose an annual 10.6 percent in May, or 1.8 percent if Dublin is excluded.

Ireland is recovering from the worst real-estate crash in western Europe, which forced the state to inject 64 billion euros ($87 billion) into its banks and caused homebuilding to sink to historic lows. The Central Bank of Ireland warned this month that lawmakers need to address the lack of supply in Dublin to avoid property causing renewed financial volatility in a country that needed an international rescue in 2010.

“Today’s house price data could raise alarm bells at the central bank that first-time-buyers are increasingly stretching their finances in Dublin,” said Conall Mac Coille, chief economist at Davy, Ireland’s biggest securities firm. “The capital is showing the same frothy price inflation as London.”

Home prices in Dublin remain 46 percent lower than their peak in February 2007, the CSO said. Outside Dublin, prices are 47 percent below their previous high.

Supply Shortage

Supply shortages are an “important factor in recent house-price increases,” the central bank wrote this month in a report. This should be a “priority for policy,” it said.

While a lack of supply is driving the surge in prices, an improving economy is also a factor, according to Cantor Fitzgerald LP, a primary dealer in Irish sovereign debt. The unemployment rate fell to 11.8 percent in May from 13.6 percent a year earlier and a peak of 15.1 percent in February 2012.

“The improving employment and domestic demand outlook and improved affordability should keep the house-price recovery firmly underpinned in the near-term,” Fiona Hayes, an analyst with Cantor Fitzgerald in Dublin, wrote in a note today.

Cash buyers are helping to drive Dublin property demand, according to the central bank, which said that “much of the purchasing activity is driven by non-mortgage buyers.”

Irish mortgage lending amounted to 568 million euros in the first quarter, taking the total over the past year to 2.73 billion euros, according to the Irish Banking Federation. That compares with lending of almost 40 billion euros in 2006, before the market collapsed.

While home prices in the capital are increasing, average earnings growth in the Irish economy is “close to zero,” Davy’s Mac Coille said. He said regulatory authorities may take steps ensure house-price inflation and mortgage lending are “anchored by earnings growth and affordability.”

-By Donal Griffin and Joe Brennan