Top Stories Pledge to keep flats affordable for all Source: Straits Times Housing will remain affordable for Singaporeans, Prime Minister Lee Hsien Loong pledged yesterday, as he gave a recap of the progress made on that hot-button issue since 2011. In the last three years, 52,000 flats have been built, the equivalent of two Clementi new towns.
Use HDB flats model for healthcare facility: Fatimah Lateef The cost and efficiency of such a model would be more reasonable than building a nursing home from scratch, said the Member of Parliament. Source: Channel News Asia / Special Report SINGAPORE: Member of Parliament Dr Fatimah Lateef called for more long-term, intermediate healthcare facilities on Wednesday (May 28), and suggested using the HDB flats model for a "vertical step down care facility". "One block of HDB flats has got between 100 to 150 units that could house at least a similar number of residents, seniors or patients," she suggested. "There are lifts that stop on every floor. It is elderly-friendly, it is disabled-friendly. There are toilet facilities in every unit, which is excellent for hygiene and accessibility." The cost, she said, "will be very reasonable", so would the timing, compared to building a nursing home from scratch. "We talk about productivity and innovation, well this is indeed about being productive and innovative," she said.
- CNA/xy Mixed reactions to helping families live close together Source: Straits Times In an effort to strengthen family bonds, National Development Minister Khaw Boon Wan suggested measures to help more Singaporeans live with or near their parents - but they have drawn mixed reactions from property analysts, agents and buyers. His most controversial suggestion was giving "absolute priority" to those applying for Build-To-Order (BTO) flats in the same estate as their parents - which would do away with balloting for these applicants.
Singapore Economy Over $2b projects shelved to ease labour shortage HDB homes, rail network, other urgent developments not affected Source: Business Times / Top Stories [SINGAPORE] More than $2 billion worth of government projects will be shelved to help ease the shortage of construction workers as the government continues to tighten the inflow of foreign workers. Disclosing this in Parliament yesterday, Prime Minister Lee Hsien Loong described these projects - which include the extensions to Gardens by the Bay and a new Science Centre - as "less urgent". "When it comes to HDB houses and trains, projects which are urgent, we're going full speed ahead," he said during the debate on the President's Address. Deferring the projects will save Singapore 20,000 or 30,000 foreign workers, he said. Mr Lee said imposing higher levies and smaller quotas have helped the government to manage the number of workers needed to do the jobs; it also helps if the government reviews projects in the pipeline. "They are a significant part of the construction business - and we asked ourselves which government projects need to be built, which can be deferred," Mr Lee said. While public housing and railways are needed quickly to meet demand, he said other projects "can wait one or two years, we can study them a bit more, or we can phase them out". This way "we can spread out the demand for construction workers and then we will be able to manage the total number of construction workers in Singapore", Mr Lee added. Tightening the tap on foreign-worker inflow is part of the government's move to restructure the economy and bump up productivity. The numbers coming in have slowed to almost half since 2011. Excluding construction, the pace of foreign-worker inflow is a quarter of the level three years ago. Mr Lee said this has hurt companies, especially small and medium-sized enterprises which are in need of workers. Many are struggling and some have moved operations to Malaysia. "If we squeeze them too hard, they may not survive - and that will mean that many jobs will be at risk." Apart from foreign construction workers, the government is keeping a close watch on foreign professionals, managers and executives (PMEs). "The issue is less about numbers, because the numbers are not huge, but about the quality of foreign PMEs and also about fair treatment for Singaporean PMEs," Mr Lee said. The government has been managing both the size and profile of foreign PMEs, raising the requirements for Employment Passes and S-Passes for these workers. In his 90-minute speech, Mr Lee noted the steady progress the government has made over the past three years in providing affordable public housing and expanding public transport services. "The situation is under control," he said, referring to the housing issue. There will also be "significant improvements" in public transport from next year as more new trains come in. The speech focused on how the government aims to achieve its vision of a "fair and inclusive society, where every citizen has a rightful place and the opportunity to fulfil his or her aspirations". Mr Lee's answer: sharing the fruits of progress and boosting social safety nets; keeping pathways upwards open to all; firing up the human spirit; and getting Singapore politics right. He said the government will go even further and break new ground in social policies, especially in healthcare and retirement adequacy. This will ensure a good education for all in schools, provide them continuing education after school and maintain an ethos of openness and informality in society, he added. Firing up the human spirit, Mr Lee said, is important to keep the economy humming. To get its politics right, he said, Singapore must "maintain constructive politics that puts our nation and our people first". By constructive politics, Mr Lee meant developing effective policies for Singaporeans; putting forward good people to lead; having a robust and open debate; keeping high standards of integrity; and rallying people together around a common cause. -By Chuang Peck Ming
Singapore Real Estate Consultants expect further paring of confirmed list supply Slowdown in private home sales, substantial supply pipeline cited Source: Business Times / Top Stories [SINGAPORE] An overwhelming majority of property consultants predict that the government will further trim land supply for private housing development in the confirmed list for the second half of this year, citing the sharp slowdown in home sales and the substantial supply pipeline. They also expect the authorities to offer commercial sites on the confirmed list and/or reserve list in locations such as Paya Lebar and Woodlands to speed up their development as commercial hubs. Despite Chesterton Singapore recently urging the authorities to release more hotel sites, citing a looming shortage of hotel rooms, most other property consultants think that there is sufficient supply and hence no pressing need to release land for hotel development. No hotel sites are on offer in the H1 list.
Most consultants reckon that the reserve list - where sites are launched for tender only upon successful application by a developer - will continue to make up the bulk of private housing land supply in the upcoming H2 2014 Government Land Sales (GLS) Programme. In the H1 slate, the Ministry of National Development (MND) is releasing land for nearly 7,000 homes, including 605 executive condominium (EC) units, through the reserve list. -By Kalpana Rashiwala Aon nears 70,000 sq ft lease at SGX Centre Vodafone's 30,000 sq ft at Asia Square Tower 2 among other deals Source: Business Times / Property [SINGAPORE] The buzz in the Singapore office leasing market continues, with a string of deals either sealed or in advanced stages of negotiations. Vodafone has leased a 30,000 square foot floor at Asia Square Tower 2. Jardine Lloyd Thompson is said to be nearing an agreement to lease 40,000 sq ft at CapitaGreen, which will be completed on the former Market Street Car Park site by year-end. At SGX Centre 1 along Shenton Way, insurance broker Willis (Singapore) has signed a lease for 20,000 sq ft, while discussions are in an advanced stage for Aon to occupy about 70,000 sq ft, BT understands.
Despite the wave of office leasing activity, industry observers caution landlords against getting carried away in jacking up asking rents, as not all occupiers are on the expansion trail. -By Kalpana Rashiwala http://www.businesstimes.com.sg/specials/property/aon-nears-70000-sq-ft-lease-sgx-centre-20140529 One Raffles Place reopens today after major makeover OUE shares rise 3.8% ahead of the mall's soft relaunch Source: Business Times / Property [SINGAPORE] One Raffles Place shopping mall will reopen its doors today in a soft relaunch, after completing a major refurbishment exercise that gave it a new facade. The mall, located just above Raffles Place MRT Station and with a net lettable area of about 98,500 square feet spread over six levels, has a committed occupancy of more than 90 per cent. Its tenants will progressively open for business, with Swedish clothing retailer H&M being the first to welcome shoppers today. The mall will also be introducing other new brands, such as Uniqlo, Victoria's Secret, Melissa and Paris Baguette. "These brands, which are making their first foray in the area, bring a dose of Orchard Road into the heart of Raffles Place," said Letty Lee, retail services director of CBRE Singapore, the project's sole marketing agency. Other tenants include brands such as The Hour Glass, Tumi, Pandora, Swatch and Owndays.
One Raffles Place, formerly known as OUB Centre, is developed and managed by OUB Centre Limited. Overseas Union Enterprise (OUE) has a 40.8 per cent stake in One Raffles Place through its 50 per cent interest in OUB Centre Limited. Besides the retail mall, One Raffles Place has two Grade-A office towers. The 62-storey Tower One, at 280 metres, is among the world's 100 tallest buildings. The humbler 38-storey Tower Two office building opened in late 2012. -By Lee Meixian BTO exercise: Fewer first-time applicants than flats offered Source: Straits Times There were fewer first-timer applicants than flats available to them in the latest Build-To-Order (BTO) exercise offering units in Woodlands and Bukit Batok. That means that most applicants looking for their first flat should be guaranteed one and will not have to ballot. At 5pm yesterday, there were overall 0.9 first-timers vying for each flat in the BTO exercise, which was set to close at midnight. Demand from first-time buyers down in BTO exerciseAnalysts attribute fall to clearing of backlog and strong demand in the concurrent Sale of Balance Flats exercise.Source: Channel News Asia / Singapore SINGAPORE: For the first time since May last year, there were more than enough new units to go around for first-time buyers in the latest Build-to-Order (BTO) exercise. The drop in first-timer application rates from 1.4 in the previous exercise to 0.9 in the bidding that closed on Wednesday (May 28) suggested the backlog for BTO units among this group has been cleared, said analysts, who also noted that some of these buyers might have turned to units under the Sale of Balance Flats (SBF). The trend led one analyst to suggest that more flats could be allocated to second-timers and singles, although the bulk can be reserved for first-time buyers. The latest BTO exercise is the third since National Development Minister Khaw Boon Wan announced in December that the Government would slow down the supply of new public flats from this year as supply and demand for public housing return to equilibrium. Of the 3,071 BTO flats that went on sale in four projects in Bukit Batok and Woodlands for the latest exercise, demand for two- and three-room flats in Bukit Batok was lukewarm. In comparison, four- and five-room units in the same estate were more popular, seeing 1.1 and 1.9 applicants per unit respectively. Over in Woodlands, only four-room flats were vied for by more than one applicant. Demand for two-room flats from unmarried buyers remained strong, although the overall application rate fell from 19.4 to 14.9. Units in Woodlands proved more popular than those in Bukit Batok – application rates were 17.5 and 13 respectively. As for second-timers, demand eased to 1.7, from 3.3 in the previous exercise. Meanwhile, the 3,383 leftover units on offer in 11 non-mature and 13 mature estates attracted 14,153 applicants. In particular, one S2 Apartment at Pinnacle@Duxton was vied for by 223 house hunters. Five-room and executive flats in Tampines were also in hot demand, with 39 applications for each unit. Analysts TODAY spoke to attributed the fall in first-timer BTO application rates to strong demand in the concurrent SBF exercise, as well as the clearing of the BTO queue for first-time buyers due to the ramped-up supply. “Without the SBF exercise, we expect the application rates would revert to similar levels observed in the March 2014 BTO exercise,” said Mr Nicholas Mak, executive director of research and consultancy department at SLP International Property Consultants. Describing the application rate of singles as dauntingly high, Mr Mak suggested that the Government carve out more units for this group, as well as for second-timers. ERA key executive officer Eugene Lim also expects demand from singles to remain strong “for many more BTO exercises”. On SBF flats, buyers are spoilt for choice as the flats are in a variety of locations and also in mature estates, said Mr Lim. Mr Mak said the allocation ratio for SBF units – 95 per cent for first-timers – favours this group of buyers very generously and suggested that more can be made available to second-timers. The latest exercise brings the total number of flats launched by the Housing and Development Board in the first half of the year to 13,091. The next BTO launch will be held in July with 3,810 flats in Punggol, Sembawang, Toa Payoh, Woodlands and Yishun up for sale. -TODAY/cy Demand from first-time buyers down in BTO exerciseAnalysts attribute fall to clearing of backlog and strong demand in concurrent SBF exercise Source: Today Online / Singapore SINGAPORE — For the first time since May last year, there were more than enough new units to go around for first-time buyers in the latest Build-to-Order (BTO) exercise. The drop in first-timer application rates from 1.4 in the previous exercise to 0.9 in the bidding that closed yesterday suggested the backlog for BTO units among this group has been cleared, said analysts, who also noted that some of these buyers might have turned to units under the Sale of Balance Flats (SBF). The trend led one analyst to suggest that more flats could be allocated to second-timers and singles, although the bulk can be reserved for first-time buyers. The latest BTO exercise is the third since National Development Minister Khaw Boon Wan announced in December that the Government would slow down the supply of new public flats from this year as supply and demand for public housing return to equilibrium. Of the 3,071 BTO flats that went on sale in four projects in Bukit Batok and Woodlands for the latest exercise, demand for two- and three-room flats in Bukit Batok was lukewarm. In comparison, four- and five-room units in the same estate were more popular, seeing 1.1 and 1.9 applicants per unit respectively. Over in Woodlands, only four-room flats were vied for by more than one applicant. Demand for two-room flats from unmarried buyers remained strong, although the overall application rate fell from 19.4 to 14.9. Units in Woodlands proved more popular than those in Bukit Batok — application rates were 17.5 and 13 respectively. As for second-timers, demand eased to 1.7, from 3.3 in the previous exercise. Meanwhile, the 3,383 leftover units on offer in 11 non-mature and 13 mature estates attracted 14,153 applicants. In particular, one S2 Apartment at Pinnacle@Duxton was vied for by 223 house hunters. Five-room and executive flats in Tampines were also in hot demand, with 39 applications for each unit. Analysts TODAY spoke to attributed the fall in first-timer BTO application rates to strong demand in the concurrent SBF exercise, as well as the clearing of the BTO queue for first-time buyers due to the ramped-up supply. “Without the SBF exercise, we expect the application rates would revert to similar levels observed in the March 2014 BTO exercise,” said Mr Nicholas Mak, executive director of research and consultancy department at SLP International Property Consultants. Describing the application rate of singles as dauntingly high, Mr Mak suggested that the Government carve out more units for this group, as well as for second-timers. ERA key executive officer Eugene Lim also expects demand from singles to remain strong “for many more BTO exercises”. On SBF flats, buyers are spoilt for choice as the flats are in a variety of locations and also in mature estates, said Mr Lim. Mr Mak said the allocation ratio for SBF units — 95 per cent for first-timers — favours this group of buyers very generously and suggested that more can be made available to second-timers. The latest exercise brings the total number of flats launched by the Housing and Development Board in the first half of the year to 13,091.
The next BTO launch will be held in July with 3,810 flats in Punggol, Sembawang, Toa Payoh, Woodlands and Yishun up for sale. -By Xue Jianyue http://www.channelnewsasia.com/news/singapore/demand-from-first-time/1126564.html
http://www.todayonline.com/singapore/demand-first-time-buyers-down-bto-exercise High rents in hot spots due to competition Source: Straits Times Soaring rents have forced retail executive Anil Konidena to shut two of his firm's stores in Singapore with more to soon follow. "Rent escalation in Singapore is completely disproportionate to sales growth," Mr Konidena, chief operating officer of RSH Limited, told The Straits Times in a recent interview.
Ground-breaking for new State Courts complex Source: Business Times / Singapore PLANS for the new State Courts complex were unveiled yesterday at its ground-breaking ceremony officiated by Chief Justice Sundaresh Menon. Scheduled for completion in 2019, the complex will sit on what is now an Urban Redevelopment Authority public carpark in front of the current State Courts building widely known as "the octagon". The new complex will have twin towers about 150m high, which will create 110,000 sq m of space. The towers will be linked by a series of sky bridges. The complex will be eco-friendly, featuring naturally ventilated corridors and high-rise gardens. When completed, it is expected to accommodate more than 60 courtrooms and over 50 hearings chambers, compared with the 40 courtrooms and 28 hearings chambers in the existing complex.
A landmark associated with justice for nearly 40 years, "the octagon" is slated for conservation. -By Lisabelle Tan http://www.businesstimes.com.sg/premium/singapore/ground-breaking-new-state-courts-complex-20140529 Japanese giant buys a slice of OrangeTee Source: Straits Times Japanese conglomerate is snapping up a slice of real estate agency OrangeTee - the latest in a string of investments by foreign players in Singapore property services firms. The Tokyu group, which runs railways in Japan and owns the Tokyu Hands department stores, has picked up a 22.5 per cent stake for an undisclosed sum, OrangeTee told The Straits Times.
Home resale prices continue slide Source: Straits Times Resale prices fell last month as cheaper units at property launches tempted buyers to look for new homes. Prices overall fell 1 per cent in April from March and followed a revised 1.4 per cent dip in March from February, according to Singapore Residential Price Index flash estimates yesterday.
Property: CEO Conversations http://epaper.businesstimes.com.sg/jr/jrpc.php?param=2014-05-29 (Page 15 to 27) Real Estate Companies' Brief CCM Group revises rights issue terms Source: Business Times / Companies CONSTRUCTION and property firm CCM Group has revised terms for a proposed rights and bonus issue that would raise up to $129.1 million in net proceeds. It now plans to issue 12 rights shares at $0.003 each for every existing share, instead of eight rights shares at $0.005 each announced previously. CCM also said it would expand the scope of its investment activities beyond construction and property. http://www.businesstimes.com.sg/premium/companies/others/company-briefs-20140529 A-Reit to be part of STI stocks from June 4 Source: Business Times / Companies Ascendas Real Estate Investment Trust (A-Reit) will become one of the 30 Straits Times Index (STI) constituents from June 4. With its move to the STI, A-Reit will be deleted from the FTSE ST Mid Cap Index on the same date.
http://www.businesstimes.com.sg/premium/companies/others/company-briefs-20140529 Enviro-Hub, Soilbuild in construction JV Source: Business Times / Companies Environmental management company Enviro-Hub Holdings and Soilbuild Construction Group are partnering to undertake a $179.5 million contract for construction, completion and maintenance for a proposed seven-storey multi-user general industrial development at 60 Jalan Lam Huat in Singapore.
http://www.businesstimes.com.sg/premium/companies/others/company-briefs-20140529 Views, Reviews & Forum Sharing solutions city-to-city Source: Today Online / Singapore Urbanisation is occurring at an accelerating pace. The United Nations Population Fund (UNFPA) said five billion people will live in cities by 2030. This means about six out of 10 of the world’s population will live in cities. But urbanisation also comes with challenges such as overcrowding, rising social and income inequalities as well as pollution, and overstretched public infrastructure. This proliferation of common urban challenges necessitates greater policy learning and cooperation among cities to facilitate the cross-pollination and sharing of solutions and best practices. This need for cooperation will feature heavily in next week’s World Cities Summit 2014, which is organised around the unifying theme of “Liveable and Sustainable — Common Challenges, Shared Solutions”. HOW CITIES COOPERATE Given that many of the world’s cities face similar challenges, there is a strong impetus for mutual learning and collaborative problem-solving among mayors. Yet, it is also important to note that city-to-city cooperation (C2C) as a concept is not new. As early as 1994, Singapore and China established the China-Singapore Suzhou Industrial Park to foster innovation and entrepreneurship. This was followed by more Sino-Singapore cooperation at the city level, such as the Sino-Singapore Tianjin Eco-city. More recently, Singapore and Guangdong have signed 18 memorandums of understanding (MOU) to encourage trade and economic collaboration. These MOUs are also expected to contribute to the development of the Sino-Singapore Guangzhou Knowledge City. C2C also takes place at the multilateral level. For instance, the C40 Cities Climate Leadership Group provides a forum through which city mayors can collaborate and share knowledge on potential solutions to climate change issues. Other networks of cities and local governments that are working towards shared urban solutions are the International Council for Local Environmental Initiatives and the United Cities and Local Governments. The work of such city and local government networks has culminated in real tangible policy impacts. In its recently published report titled Climate Action in Megacities, the C40 notes that there has been a marked increase in action taken to reduce greenhouse gas emissions and share climate change best practices among its members over the past three years. The World Cities Summit similarly presents a useful forum through which participants can “stimulate ideas and discussion towards the objective of finding practical, implementable solutions”, in the process providing an invaluable opportunity for mayors to evaluate past policies and brainstorm for new policy ideas. Singapore has actively participated in both bilateral and multilateral C2Cs. As a small city-state that constantly faces economic, geopolitical and urban challenges, Singapore has much to gain from such cooperation. As existing instances of Sino-Singapore city-level cooperation have shown, C2C allows the Republic access to the markets of burgeoning economies such as China, and continues to provide it with an ‘external wing’ to its economy. Furthermore, C2C exchanges allow for the fostering of diplomatic relations at the city-level. This allows for the bottom-up establishment of a web of city-to-city relations that may persist even during disagreements between countries at the national level. As a small and increasingly dense city, Singapore also stands to gain by learning from the best practices and policy initiatives of other cities. More importantly, Singapore has an important role to play in sharing its own success with other cities, particularly in areas such as water management. However, there are limits to such lessons, given Singapore’s unique position as a city-state and its consequent conflation of national and local level policymaking. This simplifies urban governance considerably, in contrast to other cities, where mayors straddle different levels of government. DO MAYORS RULE THE WORLD? In an increasingly urbanised world, the need for shared solutions to common urban problems mean that the role of mayors in urban governance has gained prominence. One of the World Cities Summit’s thematic tracks is Will Mayors Rule the World. The answer to that question, said political scientist Benjamin R Barber in his 2013 book If Mayors Ruled the World, is a resounding yes. This is a view predicated upon the fact that state-to-state cooperation at the national level has of late proven far from effective. For example, parliamentary opposition has delayed Indonesia’s plan to ratify the ASEAN Agreement on Transboundary Haze Pollution for more than a decade. In contrast, C2C networks have proven more effective in stimulating policy action — the C40 Climate Action in Megacities report released this year showed that climate change action by C40 member cities have doubled over the past two years to 8,000. However, mayors remain largely subordinate to national leaders. Although mayors play an important role in implementing policies at the local level, national leaders continue to set broad policy agenda and, more importantly, determine the financing of local level policies.
In other words, mayors do not rule the world. However, the effective and efficient provision of public services to urban dwellers reveals the integral the role they play in “running” the world. -By Woo Jun Jie & Debbie Loo http://www.todayonline.com/singapore/sharing-solutions-city-city?singlepage=true Offer for CMA is still undervalued Minorities need to speak up for their rights Source: Business Times / Editorial & Opinion CAPITALAND (CL) has revised upward its offer for CapitaMalls Asia (CMA) to S$2.35 in the hope that this will allow CL to acquire 90 per cent and delist CMA. Game over, right? Well not quite yet. CMA minority investors were smart enough to see through the fact that the original price was too low, leaving CL in an untenable situation of having only 2.6 per cent acceptances. But the revised offer is also questionable. It is my hope this misguided situation and others ongoing will serve as a wake-up call for regulators (Monetary Authority of Singapore, Singapore Exchange, Securities Industry Council) and third-party groups (Securities Investors Association (Singapore), Singapore Institute of Directors) over governance lapses and loopholes which disadvantage minority investors, thus leading to significant reforms in the protection of minority investors. In the meantime, investors are taking matters into their own hands. First, the price, in my view, is still too low to sell CMA and the market seems to agree. CL and its advocates pushed hard that the initial offer was more than fair, being at a premium to book value and a premium to the market price. However, the initial reaction to the S$2.22 offer was dismal and the market clearly and resoundingly voted thumbs down. CL and its advisers saw the writing on the wall and quickly revised the offer up a little bit, made the offer unconditional, extended the offer and now are likely trying to buy as many shares as possible in the market. However, shares have traded slightly above the S$2.35 offer price.
The speed with which CL raised its offer says clearly the initial offer was a lowball price and the improved offer still provides plenty of value to CL. It likely has more room to pay more to minority shareholders, even if it says it won't. It is worth keeping in mind that CL's shares are currently trading at well below book value and yet CL still believes there is more value in raising its bid for CMA rather than buying its own shares. Why? CL shareholders should ponder this fact as it says a great deal that CL sees it as more advantageous to pay a premium to book for CMA yet will not buy its own shares even at their substantial discount. This is why SIAS' argument advocating the offer by CL because it is paying a premium to book value has fallen flat. If SIAS believes that paying a premium to book value is such a great thing, why is it not as aggressively advocating for minorities not to sell in the other transactions at a discount to book or arguing for CL to invest in its own discounted shares? And what does CL want to do with CMA that it could not do when it owned 65 per cent of the company in mid-April when it launched the cash offer for CMA? Why won't CL fully share its plans for CMA? CMA minorities would be good partners to enhance value and the CL and CMA interests are then aligned again. -By Michael Dee Global Economy & Global Real Estate Wheelock Beats Cheung Kong, China Overseas to Win Kai Tak Site Source: Bloomberg / Luxury Wheelock & Co. (20), controlled by the family of billionaire Peter Woo, beat 11 rival developers to win a Hong Kong site for residential development as the government speeds up land sales to boost housing supply. Wheelock won the 7,674 square-meter (82,600 square-feet) plot in Kai Tak district for HK$2.5 billion ($322 million), the government said yesterday in a statement. Other bidders included China Overseas Land & Investment Ltd. (688), Sun Hung Kai Properties Ltd. (16) and Cheung Kong Holdings Ltd. (1), it said. Hong Kong’s government is targeting to build 470,000 new homes over the next decade as Chief Executive Leung Chun-ying seeks to resolve the city’s housing shortage. The Kai Tak site, part of the area that used to house the former airport, will have no less than 630 residential units, the government said. “The price achieved is within market expectation, reflecting high-quality urban sites are still sought-after,” James Cheung, a surveyor at Centaline Property Agency Ltd., said in a statement yesterday. “The bids by the developers were also relatively aggressive.” Great EagleThe government yesterday also awarded a 19,400 square-meter residential plot in Tai Po in the New Territories to Great Eagle Holdings Ltd. (41) for HK$2.4 billion, which translates to a record-low price in the district of HK$3,300 per square foot based on gross floor area, according to Centaline’s Cheung. The developer, which owns offices, shopping malls, and hotels in Hong Kong, plans to invest HK$7 billion to build a luxury development on the site with 500 to 700 units, it said in an e-mailed statement. Great Eagle rose as much as 4.6 percent, the most in more two weeks, before trading 3.3 percent higher at HK$28.05 as of 11:34 a.m. local time. Wheelock advanced 0.2 percent to HK$31.40, compared with the 0.3 percent gain in the benchmark Hang Seng Index. “While urban land prices continue to hold value, suburban land prices continue to trend lower,” Paul Louie, an analyst at Barclays Plc, said in a note today. “With ever lower replacement costs, developers have little incentive to ration their inventory.” The government rejected seven bids for another residential site in Tai Po in March because they didn’t meet the reserved price, according to the government. Bidders for that plot included Great Eagle, Wheelock, and Cheung Kong. -By Michelle Yun Signs of London market cooling: Nationwide Home prices may start to fall this summer, says UK mortgage lender Source: Business Times / Property [LONDON] Nationwide, Britain's third-biggest mortgage lender, has warned that the price of homes in London may start to fall this summer, saying there are signs that the red-hot property market in the capital is cooling. House prices are soaring in London as the economic recovery, record-low interest rates and government schemes to help home buyers tempt purchasers into one of the world's most expensive property markets. Bank of England (BOE) governor Mark Carney has warned that a housing bubble poses the biggest risk to the financial stability of Britain's US$2.5 trillion economy. He said the BOE is looking at new measures to control mortgage lending amid a shortage of home-building.
Yesterday, Nationwide chief executive Graham Beale said: "My view is that in London we will see a natural correction through the summer months. That intense heat does seem to be dissipating a bit. We could be seeing the early signs of a natural correction." -From London, UK http://www.businesstimes.com.sg/specials/property/signs-london-market-cooling-nationwide-20140529 Port Authority Seeks Private Money for Trade Center Tower Source: Bloomberg / News The Port Authority of New York and New Jersey is seeking to bring more private money into a financing package to help Larry Silverstein build 3 World Trade Center in lower Manhattan after commissioners balked at providing a $1.2 billion loan guarantee. The agency is working toward a public-private partnership on the tower that would reduce its risk, Vice Chairman Scott Rechler said at a Port Authority meeting in New York. The agency yesterday canceled a vote on a financing package that included the loan guarantee. “We spent the last three months looking at private-sector alternatives and we’ve had some interest, from reinsurers or others, from some of the largest financial-services players in the world,” Rechler said. “Recent developments have given us confidence this can be achieved.” Silverstein sought help from the Port Authority in financing the 80-story tower, which is stalled at eight floors. In the past several months, private capital providers have become more open to considering investing in the project because of continued economic improvement and evidence of “robust” office leasing in lower Manhattan, Port Authority Director Patrick Foye said at a press conference after the meeting. “This whole discussion and negotiation began in the context of a belief that the private sector was not able several months ago to provide financing,” he said. “It is now the case, and we discussed this in public in April, that there were discussions with multiple private-sector parties for a significant private-sector role” in addition to investment from Silverstein’s company. ‘Hands Up’Last month, when the board said it wanted a deal that better protected the authority’s finances, Silverstein and outside investors were encouraged “to put their hands up,” Foye said. Neither he nor Rechler named any potential investors for the $2.3 billion project. In an e-mailed statement yesterday, Silverstein said his company, Silverstein Properties Inc., was “surprised that the discussions did not yield a successful resolution. We remain committed to working with the Port Authority to reach an agreement that accomplishes our shared mission” of building 3 World Trade Center. The authority and Silverstein are looking beyond the banks that traditionally have funded office construction for “someone who was willing to be somewhat more creative in structure,” Rechler said. “The traditional financial market for construction loans of this nature still doesn’t exist,” Rechler said at the press conference. Downtown LeasingOffice leasing in lower Manhattan has exceeded the five-year average in each of the past 12 quarters, CBRE Group Inc. said in an April report. Deals announced since the end of March include Time Inc.’s 700,000-square-foot lease for a new headquarters at Brookfield Place, across the street from the World Trade Center. Port Authority Commissioner Kenneth Lipper said he was pleased with the plan to bring in private investment and that Silverstein is interested in the process. He pronounced the $1.2 billion loan guarantee dead. “I always believed the private market would take care of this,” Lipper said yesterday. “The private sector has money available for it if the developer will give up a portion of his equity, as his peer group does.” He cited as an example Stephen Ross’s Related Cos., which sold a portion of its interest in its $20 billion Hudson Yards development on Manhattan’s far west side to Oxford Properties Group, an arm of the Ontario Municipal Employees Retirement System. Authority’s MissionSilverstein’s bid for financing help from the Port Authority, which owns the Trade Center site, put pressure on the commissioners to demonstrate fiscal responsibility after a scandal involving lane closures at the George Washington Bridge exposed the agency’s dysfunction. Lipper argued that committing public money to the real estate project would divert the agency further from its primary mission of operating tunnels, bridges, airports, bus stations and shipping terminals in New York and New Jersey. Plans for 3 World Trade Center call for 2.5 million square feet (230,000 square meters) of offices. About 20 percent of the building is leased to advertising firm Group M. -By David M. Levitt Pimco Says U.K. Housing Market Doesn’t Present a ‘Major Problem’ Source: Bloomberg / Luxury The U.K. property market doesn’t pose a significant risk to the economy because low transactions will support prices, said Mike Amey, a fund manager at Pacific Investment Management Co. “We would view housing as one of the risks, we don’t think it’s going to be a major problem,” he said at a press briefing in London today. “To decree a bubble you have to believe that there’s going to be a sharp reversal in prices and that’s hard to see” in the absence of large Bank of England interest-rateincreases. The housing market has evolved into BOE Governor Mark Carney’s biggest challenge, as record-high prices raise concerns among economists and officials that a bubble with London at its core is forming. The BOE’s Financial Policy Committee is widely expected to take action to cool activity next month. Officials will publish their assessment of the risks on June 26. Carney said last week that weak housing supply has created “deep, deep” structural problems in the property market. Until banks are fully recapitalized they won’t be able to finance the new housebuilding needed to lift transactions, and that will support values, Amey said. “This should be a warning to us all,” he said. “It remains likely that prices will continue to take the lion’s share of the improvement in U.K. housing sentiment.” More than four-fifths of 28 economists in a Bloomberg survey published last week said the property market is at risk of overheating. Prices are surging about 10 percent a year, driven by gains in London. Affordability MeasuresThe average first-time buyer in the capital borrowed 3.83 times their gross income in the first quarter, more than the 3.42 U.K. average, the Council of Mortgage Lenders said today. Mortgage advances in London fell 13 percent from the final three months of 2013, though are still up 22 percent from a year earlier. Data yesterday showed mortgage approvals fell in April to an eight-month low. Amey said today there’s evidence new rules requiring borrowers to prove they can keep up their payments even when interest rates rise may have slowed transactions. He said it would be “odd” if the BOE were to refrain from taking measures to tame the property market either next month or in September. Once interest-rate increases start, house-price growth will cool to about 3 percent to 5 percent, he said. Restraint PleasA government incentive program, record-low benchmark borrowing costs and an economic recovery are stoking the property market. The BOE has pledged to keep the key rate at 0.5 percent until spare capacity has been used up, and increases, when they come, will happen gradually. Nationwide Building Society, the U.K.’s biggest customer-owned lender, today reported a 31 percent jump in gross mortgage lending in the year through April 4. Chief Executive Officer Graham Bealesaid that while the London housing market is surging, prices outside the capital are still below pre-crisis levels. “All regions are now experiencing some growth, but the big increases are mainly centered on London and the southeast and there are few signs of affordability being stretched in other U.K. regions,” he said in a statement. “We expect the U.K. economy to continue to improve over the coming year. Despite this improvement, we do not expect the Bank of England base rate to rise imminently.” His call for restraint from the BOE was echoed by the CML, whose members represent 95 percent of all residential mortgage lending in the U.K. “We are increasingly looking at not one overall U.K. housing market, but many smaller regional markets with different characteristics, and Greater London has particular challenges,” said Director General Paul Smee. “Affordability remains a crucial factor, and policymakers need to be aware that any measures they implement may have different effects in different locations.” -By Emma Charlton and Jennifer Ryan Silicon Valley Waiters to Teachers Left Behind in Housing Source: Bloomberg / Personal Finance California’s Santa Clara County, the heart of Silicon Valley and home to two of the three most valuable companies in the world, has a shortage of almost 54,000 affordable housing units to shelter its lowest-income workers. The affordable-housing deficit totals almost 669,000 units throughout California as surging rents outpace wage growth for the lowest-level jobs, according to a study to be released today by California Housing Partnership Corp. Six in 10 low-income households in Santa Clara County, where Apple Inc. and Google Inc. are headquartered, spend more than half their take-home pay on rent, according to the San Francisco-based nonprofit. “Securing an affordable place to live in Silicon Valley has become a burden in the last 15 years,” Kevin Zwick, chief executive officer of Silicon Valley Housing Trust, a San Jose, California-based community lender that helped author the report, said in a telephone interview. “Anybody working in the lower end of the service economy, earning $20 an hour or less, has virtually no options.” Silicon Valley’s widening income gap is being driven by explosive wealth creation at firms such as Cupertino-based Apple, the biggest company by market capitalization, and Mountain View-based Google, ranked third, behind ExxonMobil Corp. Hiring at technology companies is drawing thousands of skilled workers to the valley, fueling home-price gains in tony enclaves such as Palo Alto and Los Altos as funding shrinks for housing needed by retail clerks, security guards and medical assistants, the report said. Funding FallsFederal and state funds for Santa Clara County affordable-housing projects last year plunged 82 percent to $19.7 million from $107.7 million in 2008, according to the report. Only about 34,000 affordable residences exist for almost 88,000 low-income households that need them. Apartment rents in San Jose, the county’s biggest city, jumped 6.5 percent in the first quarter from a year earlier, more than gains in San Francisco and Seattle, to lead all U.S. cities, according to Reis Inc. “The economy needs all these types of service jobs, but the only way to stay is to double up or triple up in an apartment,” Zwick said. Low-income workers were defined as earners making up to 50 percent of the county’s median $91,425 household income in 2012, and would include restaurant servers making as little as $19,040 to substitute teachers taking home $41,810, said James Pappas, policy associate at the San Francisco-based housing partnership. -By Dan Levy N.Z. Home-Sales Plunge May Cap RBNZ Rate Moves: Chart of the Day Source: Bloomberg / Luxury Slumping New Zealand home sales pose a “significant risk” to the economic outlook and may prompt the central bank to slow the pace of interest-rate increases even as house prices soar, the New Zealand Institute of Economic Research has warned. The CHART OF THE DAY illustrates how changes in home-sales trends typically presage shifts in New Zealand’s economic growth by about six months. Sales plunged 20.2 percent in April from a year earlier, according to data published by the Real Estate Institute of New Zealand on May 12. The lower panel shows the nation’s house prices are above the peak reached before the global financial crisis, unlike those in the U.S, based upon the S&P/Case-Shiller 20 City Home Price Index. “A sudden stop in house sales could make banks more careful in lending,” said NZIER principal economist Shamubeel Eaqub. “That would put the brakes on broader economic growth.” The institute predicts economic expansion of 3.5 percent in 2014. The Reserve Bank of New Zealand imposed mortgage lending limits in October last year and raised borrowing costs twice this year to curb mounting inflation pressures. House prices in Auckland, home to a third of New Zealand’s 4.5 million people, rose 15 percent in April from a year earlier. “In an investor-driven market, sales and prices can turn rapidly,” Eaqub said. “The RBNZ will be wary of causing a housing bust in the provinces and sectors outside of Auckland housing, which are not overheating. A pause in hikes is possible after June if the economy slows too quickly.” -By Matthew Brockett and Daniel Petrie Repeal of Australia mining, carbon taxes likely: Labor Pro-tax Greens party loses power in upper house from July Source: Business Times / World [CANBERRA] Australia's opposition Labor Party yesterday said that two contentious taxes on mining and carbon emissions introduced during its years in power would likely be repealed this year. Before being elected prime minister last September, Tony Abbott made abolishing the taxes a centrepiece of his campaign. But there have been questions over Mr Abbott's ability to meet his promises, given signs of opposition from independent lawmakers including billionaire Clive Palmer's party, which will hold the balance of power in the upper house from July. "The mining tax, I suspect will be repealed despite Labor's position," opposition leader Bill Shorten said in response to questions at a meeting of mining executives in Canberra.
Mr Shorten also said that he believed the carbon tax would go this year, after a new upper house senate is sworn in July. -From Canberra, Australia Spanish property stabilises, mortgage approvals rise Source: Business Times / Property [MADRID] Spanish home mortgage approvals rose in March for the first time in almost four years, adding to signs that the property market is stabilising six years after triggering the worst recession in the country's democratic history. The number of residential loan approvals rose 2 per cent from a year earlier, the first increase since April 2010, the Madrid-based National Statistics Institute said yesterday. The total amount lent rose by 16 per cent, its first gain since 2007. House prices in the country fell 3.5 per cent from a year ago in the first quarter, the smallest decline in over three years, separate data from the Public Works Ministry showed. As a recovery in the fourth-largest economy in the euro area extends and its record unemployment subsides, the property market whose downfall locked the country into a six-year economic slump is showing signs of life. While home-price data isn't yet signalling a turnaround, improvements in sales and lending indicate that values may be starting to stabilise.
"Everything indicates that mortgage approvals will evolve positively this year," said Fernando Encinar, co-founder of Spain's largest property website Idealista, in an e-mailed comment. "Banks are showing more and more interest in granting more loans for home purchases." -From Madrid, Spain Mitsui Fudosan share issue to raise 324b yen Source: Business Times / Property JAPANESE property developer Mitsui Fudosan yesterday announced plans to raise 324.5 billion yen (S$4 billion) through an international issue of new shares, to finance the building of office and commercial buildings in Tokyo. It was a further sign that Japan's property market is taking off again after two decades of stagnation. The fact that the major funding exercise is being undertaken to fund new developments rather than to buy existing properties, plus the fact that Mitsui is turning to global equity markets rather than banks for finance, are seen as highly significant. Jesper Koll, the head of equity research at JP Morgan in Tokyo, told The Business Times after the announcement of the share issue: "The macro impact and message is clear: Japan Inc is ready to re-invest in Japan."
Referring to Tokyo's plans to finance a lavish summer Olympic Games in 2020, he added: "Japanese investors and developers do not just want to construct the best-ever Olympic stadium. They want to build a true lifestyle superpower here in Tokyo." -By Anthony Rowley in Tokyo http://www.businesstimes.com.sg/specials/property/mitsui-fudosan-share-issue-raise-324b-yen-20140529 Union Properties plans to build cheaper hotels Dubai developer plans 1,000 rooms in next five years Source: Business Times / Property [DUBAI] In Dubai, a city known for some of the world's most luxurious hotels and penthouses, developer Union Properties PJSC is looking to tap demand from people who want to visit the sheikhdom without breaking the bank. The company plans to build around 1,000 hotel rooms in the next five years to address a shortage in the middle and lower end of the market, managing director Ahmad Al Marri said in an interview. "Most of the demand is at the three and four-star level, because the majority of existing affordable hotels tend to be located in the older part of Dubai," Mr Al Marri said. "We can't invite people to visit the city just to have them come and find it very expensive."
About 42 per cent of the existing supply and at least 56 per cent of the rooms to be built in Dubai by 2017 are five-star, which can cost 2,000 dirhams (S$684) or more per night, said Matthew Green, head of United Arab Emirates research at CBRE Group Inc. Three and four-star hotels command nightly rates of 300 dirhams to 625 dirhams, he said. -From Dubai, UAE Urban drive offers hope for China property Source: Business Times / Property [DONGGUAN, China] The days of rapid growth in China's real estate sector are over, but the government's urbanisation drive will continue to drive demand for the next 15 years, the country's biggest residential property developer China Vanke Co Ltd said. After climbing at double-digit rates through most of last year, home prices in China started cooling in late 2013, with the annual growth in average new home prices slowing to an 11-month low in April as a sustained campaign to clamp down on speculative investment and easy credit gained traction. Vanke president Yu Liang said the slowdown heralded the end of the golden era for Chinese real estate, but said the outlook remained healthy thanks in part to urbanisation.
"The white silver era has just begun," Mr Yu said. "The industry is now after quality and service and back to real demand . . . The industry was worth 8.1 trillion yuan (S$1.60 trillion) last year, even growing at a single-digit rate, it's still large enough for us." -From Dongguan, China http://www.businesstimes.com.sg/specials/property/urban-drive-offers-hope-china-property-20140529 |