Real News‎ > ‎2014‎ > ‎May 2014‎ > ‎

6th May 2014

Singapore Real Estate

Seeking talent, social media firms take up prime locations in CBD

Source: Today Online / Business 

SINGAPORE — Social media companies such as LinkedIn and Facebook are taking office space in the central business district here because they want to attract the best talent, said Mr Chris Archibold, international director and head of markets at property agency Jones Lang LaSalle in Singapore, as the tech giants displace large banks in some prime locations.

Barclays, the second-largest United Kingdom bank by assets, has given up two storeys of prime office space at Tower 2 of the Marina Bay Financial Centre that has been leased to LinkedIn, people familiar with the matter said.

The bank has surrendered about 60,000sqf of office space to the landlord, one of the people said.

Barclays declined to comment. A LinkedIn spokesman declined to comment on the move but said the company has one million users in Singapore and 50 million in the Asia-Pacific region.

Monthly rents at the property are now between S$11 and S$12 per square foot, compared with S$10 and S$11 per square foot when Barclays moved into the building in 2011, said Mr Donald Han, managing director of Chesterton Singapore, a real estate consulting company.

“Social media companies like Facebook and LinkedIn are taking office space in the central business district in Singapore, whereas in other cities, you won’t find them in the CBD,” said Mr Archibold.

The Singapore office of social networking site Twitter is also in the central business district.

LinkedIn, the biggest online professional networking service with more than 300 million members, opened its Asia-Pacific headquarters in Singapore in 2011. The company’s office is currently in AXA Tower, in an older part of the central business district.

LinkedIn last week gave a second-quarter sales forecast that missed analysts’ estimates. Its revenue in the quarter will be US$500 million (S$624 million) to US$505 million, the United States firm said. Analysts on average had been projecting sales of US$505.5 million, data compiled by Bloomberg showed.

Office rents in Singapore — which is ranked by Cushman & Wakefield as the most affordable of the top five major financial centres, which also include London, Hong Kong, Tokyo and New York — are rebounding as robust demand and high occupancy rates reinforce the bargaining power of landlords.

Rents in Singapore’s central business district are expected to rise as much as 15 per cent this year, DTZ Holdings said.

Barclays will terminate its lease on about 15,500sqf of office space in a building in Tampines and relocate the employees to Marina Bay Financial Centre by July, people familiar with the matter said last month. This follows a similar move earlier this year when the bank exited Changi Business Park.

It occupies about 290,000sqf at Marina Bay Financial Centre and has another 96,000sqf at One Raffles Quay. 

-By Bloomberg

Parkway Centre office units up for sale

With 3% early-bird discount, they cost $1,649-$1,746 psf

Source: Business Times / Singapore

TWENTY-TWO strata office units at Parkway Centre in the Marine Parade Central area have been put on the market at $1,700-$1,800 per square foot. Inclusive of a 3 per cent early-bird discount for this month, the price range works out to $1,649-$1,746 psf.

Ranging from 732 sq ft to 1,356 sq ft, the units are located on various floors from the third to the top level of the 13-storey retail and office complex, which is on a site with a balance lease term of about 66 years.

Some of the units are adjoining, presenting the potential for amalgamation into a larger contiguous area.

The biggest such space is on the fifth floor, where six adjoining units adding up to 5,748 sq ft are available at $9.933 million or $1,728 psf after the early- bird discount.

-By Kalpana Rashiwala

Lack of an urban planner a blessing for Ayala Land

Biggest Philippine developer could buy big plots, have own plan and design

Source: Business Times / Property

ANOTHER real estate developer might have viewed it as an obstacle, but Ayala Land says that it has worked the Philippines' political instability, frequent leadership changes, and government's lack of an urban planning or development agency to its advantage.

Not having to adhere to a regulatory body's land use blueprint has enabled it to acquire large plots of land and develop them according to its own plan and design. And as long as the developer is paying its property taxes, building financial districts to attract multinational corporations and foreign investment, and providing infrastructure and services that benefit the city, the government has no complaints.

President of Ayala Land, international sales, Thomas Mirasol, on a recent visit to Singapore, said: "The fact that there is nobody in the Philippines who regulates urban planning has been great for Ayala Land, because we are probably the only company there that has the scale financially to take on large plots of land."

Ayala Land is the largest real estate developer in the Philippines, with a market capitalisation of about US$10 billion, much larger than the next five biggest Philippine developers combined.

-By Lee Meixian

Filipino developer launching sale of Manila condo here

Source: Business Times / Property

UNITS at Ayala Land Premier's upscale freehold condominium, Arbor Lanes, located in Metro Manila's Taguig City, will be launched for sale in Singapore this Saturday at the Four Seasons Hotel.

Arbor Lanes will be the first residential anchor at Arca South, a township that Ayala Land is investing US$1.8 billion in over the next five years to develop it into a new business district.

The Filipino developer recently unveiled their master plan for the 74-hectare Arca South, which will comprise prime residential projects, three retail areas, office buildings, a hotel as well as a hospital. Arbor Lanes is the first property there to be launched.

Arbor Lanes' units are priced from S$300,000 for a one-bedroom 667 square foot classic unit, to S$1.2 million for a three-bedroom 2,700 sq ft garden villa. This translates to about S$450 psf - a fraction of the four-digit psf prices of Singapore condominiums. Each of its five blocks of 13 to 15-storey condominiums comes with 208 units. The development will be built in phases, with the first block to be turned over in the first quarter of 2018.

-By Lee Meixian

Local firms eye foreign commercial property

Source: Straits Times 

Local developers and investors are turning to commercial property abroad, drawn to the higher yields on offer, according to a report yesterday. Singapore was the fifth-biggest investor in foreign commercial property in the first quarter of this year, said property consultancy JLL. That is one place above its sixth rank in the same period last year. The amount spent was not available.

Real Estate Companies' Brief

Productivity council gets 12 new faces

Members cover wider spectrum of industries

Source: Business Times / Singapore

The National Productivity and Continuing Education Council will have 12 new faces as it moves to broaden the platforms for productivity growth and worker engagement.

Together with 16 others who have just completed a two-year term, the 28-member team reflects the council's focus in the years ahead as it steers the push for higher productivity into its next phase.

"We must develop the broader ecosystem to support actions by individual firms to transform whole industries," Deputy Prime Minister Tharman Shanmugaratnam, who is the council's chairman, said in a statement yesterday. "Critically, we also need to enhance the workplace culture by strengthening management quality and engaging employees better."

The council's members are made up of representatives from the labour movement, the private sector and government. The new members, who will also serve a two-year term along with those who have been re-appointed, bring to the table expertise in the new areas of focus identified by the council.

-By Chuang Peck Ming

OKP Q1 profit tumbles 55% on high costs

Source: Business Times / Companies

OKP Holdings posted a 55.1 per cent decline in net profit to $1.07 million for the first quarter ended March 31, 2014, despite a 13.7 per cent increase in turnover.

Turnover at the infrastructure and civil engineering company rose to $30.21 million from a year ago.

However, cost of works jumped 24.9 per cent to $27.6 million. Gross profit margin fell to 8.7 per cent from 16.8 per cent a year earlier, largely due to lower profit margins for new and existing construction and maintenance projects as a result of industry competition and the rising cost of works.

OKP said the increase in cost of works stemmed from rising labour costs due to levy adjustments and an increase in manpower, an increase in subcontracting costs incurred for specialised works and higher cost of construction materials due to fluctuation of raw material prices.

-By Carine Lee

Oxley to launch project in Phnom Penh

Source: Business Times / Companies

OXLEY Holdings and its Cambodian partner will be launching a 45-storey freehold mixed development in Phnom Penh by the end of the month, with prices starting from US$150,000.

The Bridge, a residential and commercial project, occupies a land area of 10,090 sq m, and will be managed by the joint-venture company Oxley-Worldbridge Co. Two skybridges will link its two tower blocks, which will offer 2,317 units.

These comprise 762 residential apartment and penthouse units and 963 small office units. The remaining 592 retail and food and beverage units are in The Bridge's five-storey retail podium.

"When completed, The Bridge will be a tall, iconic and beautiful landmark, offering the signature lifestyle amenities that our Singapore developments are known for," said Oxley Holdings' chief executive officer Ching Chiat Kwong.

-By Jaira Koh

OUE Hospitality Trust DPU beats forecast

Q1 distribution of 1.68 cents is 4.3% higher than projected 1.61 cents

Source: Business Times / Companies

OUE Hospitality Trust posted a distribution of 1.68 cents per unit for the first quarter ended March 31.

This is 4.3 per cent higher than the forecast of 1.61 cents for the three-month period, the trust said in its financial statement.

The trust was listed in July last year. No comparative first-quarter results for 2013 were available as a result.

A unit of OUE Hospitality Trust is a stapled security from the OUE Hospitality Real Estate Investment Trust and OUE Hospitality Business Trust.

-By Jamie Lee

Views, Reviews & Forum

HDB should explain restrictive rules for studio apartments

Source: Today Online / Voices

I would be the first to agree that no one can doubt the Housing and Development Board’s (HDB) sincerity and objective to help seniors monetise their assets (“Buying studio unit one of several ways for seniors to monetise flats”; May 5).

My point, though, in “Studios for seniors are too restrictive” (April 30) is that the rules for studio apartments are particularly restrictive, which the HDB did not address in its reply.

Why a lease of only 30 years? Why must a flat be returned to the HDB on a pro-rata basis and not at market prices? Why must the full sum be paid without any loan?

The HDB stated that “the studio apartment has been a well-received housing option” and that “only a small proportion of ... applicants have been invited to select a unit thus far” for the three recent projects.

It should give us the numbers. New flats would be oversubscribed, but this is different from the actual take-up. How many have been invited so far? How long is the selection exercise and how many have accepted and chosen a unit?

-By Jack Koh Chin Guan

A home is not a 'hotel'

Source: Straits Times 

I am shocked by the hands-off approach of accommodation websites, such as travelmob, Roomorama and Airbnb, towards ensuring that all their listings comply with the rules on rental of residential properties ("More renting out homes as 'hotels' "; last Tuesday).

Global Economy & Global Real Estate

UAE asset bubble unlikely as credit growth is modest: IIF

Source: Business Times / Property

[DUBAI] A surge in United Arab Emirates (UAE) property values probably won't lead to an asset-price bubble because credit growth remains relatively modest, according to the Institute of International Finance (IIF). Loan growth in the second-biggest Arab economy may slow to 11 per cent in 2014 from 13 per cent last year, the IIF said yesterday in a report.

Property prices in Dubai climbed 35 per cent in 2013, according to broker Knight Frank LLP, fuelling concern that the UAE's second-biggest sheikhdom is at risk of another bust after the 2008 property crash that almost pushed it to default.

"There are major differences between the current boom and the previous, which was more driven by speculative excesses," Garbis Iradian, deputy director for Africa and the Middle East at the Washington-based IIF, said. "The strong rebound in housing prices has been driven by a significant improvement in the underlying economic fundamentals."

The UAE's non-oil economic growth may accelerate to 5.2 per cent from 4.9 per cent, the IIF estimated. Home prices relative to income in Dubai and the capital Abu Dhabi, remain below their 2008 peak and "much lower" than major cities in emerging markets and advanced economies, according to the report.

-From Dubai, UAE

U.A.E. Asset Bubble Unlikely as Credit Growth Slows, IIF Says

Source: Bloomberg / News

A surge in United Arab Emirates property values probably won’t lead to an asset-price bubble because credit growth remains relatively modest, according to the Institute of International Finance.

Loan growth in the second-biggest Arab economy may slow to 11 percent in 2014 from 13 percent last year, the IIF said today in a report.

Property prices in Dubai climbed 35 percent in 2013, according to broker Knight Frank LLP, fueling concern that the U.A.E.’s second-biggest sheikhdom is at risk of another bust after the 2008 property crash that almost pushed it to default.

“There are major differences between the current boom and the previous, which was more driven by speculative excesses,” Garbis Iradian, deputy director for Africa and the Middle East at the Washington-based IIF, said in the statement. “The strong rebound in housing prices has been driven by a significant improvement in the underlying economic fundamentals.”

The U.A.E.’s non-oil economic growth may accelerate to 5.2 percent from 4.9 percent, the IIF estimated. Home prices relative to income in Dubai and the capital Abu Dhabi, remain below their 2008 peak and “much lower” than major cities in emerging markets and advanced economies, according to the report.

The probability of a asset-price plunge “large enough to generate major macroeconomic and financial consequences seems fairly low in the near term,” Iradian wrote. Still, he urged U.A.E. authorities to ensure that policies address economic and financial risks from the housing and equity markets.

-By Alaa Shahine

Emaar unit looking to raise 1b riyals for Saudi project

The King Abdullah Economic City will include a business district, port, resorts

Source: Business Times / Property

[DUBAI] Emaar Economic City plans to raise one billion riyals (S$333.2 million) to help finance construction of the King Abdullah Economic City and will spend 13 billion riyals developing the Saudi Arabian project over the next four years.

The company, a unit of Dubai-based Emaar Properties PJSC, expects to arrange the loans from two or three banks before the end of 2016, Fahd Al Rasheed, chief executive officer of Emaar Economic City, said in an interview in Dubai on Sunday.

"Our business plan doesn't call for more than a billion riyals," he said.

"We're spending about 13 billion riyals over the next four years, which is a significant amount but we are doing a lot of it through sales. Our cashflow is healthy."

-From Dubai, UAE

De Blasio Unveils $41 Billion Plan for Affordable Housing

Source: Bloomberg / U.S. Politics

New York Mayor Bill de Blasio presented plans to build and preserve 200,000 units of affordable housing in the next decade by increasing rent protections for the poor and requiring developers to include below-market apartments in newly zoned areas.

The $41.1 billion program, paid for with city, state, federal and private funds, would focus 60 percent on preservation and 40 percent on new construction. About $8.2 billion of the cost would be borne by the city, according to a 116-page report detailing the plan, which de Blasio called the “largest, fastest” affordable-housing program ever attempted at the local level.

De Blasio, 52, a self-described progressive and the city’s first Democratic mayor in 20 years, took office in January after describing income inequality as the most serious issue facing the most populous U.S. city. He turned his attention to housing today after pushing the state legislature in March to grant the city $300 million to institute universal all-day pre-kindergarten.

“In a progressive city, everyone should have the opportunity for affordable housing, and that’s what this plan sets out to achieve,” de Blasio said today at a Brooklyn news conference. “It’s a housing plan, yes, but it’s also a plan to address income inequality.”

Inclusionary Zoning

The 10-year plan was drafted under the supervision of Alicia Glen, de Blasio’s deputy mayor for housing and economic development, and a former executive at Goldman Sachs Group Inc. (GS) Goals include a 200 percent increase in “very-low income” housing, defined as serving a four-person household earning $25,151 to $41,950 a year, and a 50 percent increase in “moderate-income” units for households with $67,121 to $100,680 a year.

The mayor’s proposals include “mandatory inclusionary zoning,” in which developers would be required to build a certain percentage of low- and moderate-income housing in buildings that benefit from zoning changes that lift height restrictions.

De Blasio’s plan “identifies the problems and provides a realistic road map for solutions,” said Steven Spinola, president of the Real Estate Board of New York, a trade association. He said the board would work with the mayor to implement the plan.

Tenant Protection

City planners will embark on a citywide effort to identify locations near mass transit access that may be appropriate for high-rise development that would include affordable units. Developers required to restrict the cost of some of those units would benefit from new rules aimed at reducing costly delays by streamlining regulatory procedures, according to the report.

It would also double the city’s capital funding for housing to about $6.7 billion over the next 10 years. About $30 billion in private capital would be sought from banks, pension funds and bond investors, according to the plan.

To protect tenants, city officials will “use every tool at its disposal” to prevent landlord harassment in rent-regulated buildings, according to the report. Landlords would also receive incentives to hold off on rent increases.

Koch Legacy

Former Mayor Edward Koch, who served three terms from 1978 through 1989, created a program that built at least 190,000 units over 16 years, according to Wiley Norvell, a de Blasio spokesman. The Koch plan used $5.1 billion on housing subsidies for poor and working families, said George Arzt, who was Koch’s press secretary. De Blasio’s plan would eclipse Koch’s program in number of units and speed of execution, according to de Blasio’s office.

De Blasio’s plan for mandatory inclusionary zoning would build on a similar but voluntary program instituted by his predecessor, former Mayor Michael Bloomberg, founder and majority owner of Bloomberg News parent Bloomberg LP, who built and renovated about 165,000 affordable-housing units, spending $5.3 billion in city funds to leverage another $18.3 billion in private and other government investment.

De Blasio, a regional director for the U.S. Housing and Urban Development department in the late 1990s under then-Secretary Andrew Cuomo, now New York’s governor, also visited the Bronx today to dramatize the city’s housing shortage and promote his program.

The report accompanying the plan credited housing advocates, the city’s five borough presidents, city council members, labor leaders, 13 city agency heads, real estate developers and nonprofits for helping to create the set of more than 50 initiatives, many of which will require council and state legislative approval.

Homeless Shelters

Other goals include preventing and reducing homelessness, increasing supportive housing for the disabled and ill and providing more choices for senior citizens, according to the report.

More than 50,000 sleep in homeless shelters, according to the city’s Department of Homeless Services. About a third of the city’s 8.4 million residents spend at least half of their income on rent, according to the city’s Rent Guidelines Board. De Blasio has called for more rent subsidies to tenants as a homeless prevention strategy.

Pension Investment

About 360,000 apartments that rented for $400 to $1,000 a month disappeared during a 12-year period beginning in 2000, as the median rents jumped 31 percent, to $1,100 from $830, in the same period, city Comptroller Scott Stringer said in an April 23 report.

As comptroller, Stringer acts as investment adviser to the city’s five pension funds, which control a total of about $150 billion in assets. De Blasio has advocated investing about $1 billion in affordable housing. New York’s pensions for police officers, firefighters, teachers, school administrators and civil employees have been investing in affordable housing and economic development since 1981.

As of Dec. 30, the funds had placed about $1.2 billion in similar investments, with a 10-year annualized return of 5.85 percent after fees, compared with a 4.52 percent return for its benchmark, the Barclays U.S. Aggregate Bond Index, according to city records.

-By Henry Goldman

E-House Falls as Property Concern Mounts: China Overnight

Source: Bloomberg / Luxury

Chinese stocks trading in the U.S. snapped a four-day gain as E-House China Holdings Ltd. (EJ) led a drop in real-estate companies amid mounting concern that home sales in the world’s second-largest economy are slowing.

The Bloomberg index of the most-traded Chinese stocks in the U.S. fell 0.5 percent to 99.65 yesterday, while a gauge of Shanghai property stocks was little changed today. The American depositary receipts of E-House, a real-estate agent, dropped as much as 6.1 percent. SouFun Holdings Ltd. (SFUN), which operates a real estate website, sank for the first time in three days. New Oriental Education & Technology Group Inc. (EDU) tumbled the most on the ADR gauge as Deutsche Bank AG cut it to hold from buy.

Sales of new homes in 54 cities during the May 1 to May 3 holiday fell 47 percent from the same period in 2013 to the lowest level in four years, Centaline Group, parent of China’s biggest real-estate brokerage, said May 4. The report comes two weeks after the National Bureau of Statistics said the value of residential sales slumped 7.7 percent in the first quarter.

“I am cautious toward the Chinese property market,” Elena Ogram, a Zurich-based investor at Bank Bellevue AG, who oversees $50 million in emerging-market assets including Chinese stocks, said by phone. “The government may take steps to support the market, but we are not expecting any rosy news.”

The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., dropped 0.9 percent to $34.70. The Standard & Poor’s 500 Index gained 0.2 percent as an expansion in U.S. service industries outweighed concern over growth in China and political tension in Ukraine.

The Shanghai property stock index dropped 0.1 percent today, extending a four-day, 5.2 percent decline. Markets in Hong Kong are closed today for a holiday.

Cities Loosen

E-House fell 3.3 percent to $8.91. SouFun retreated 2.7 percent to $12.25.

Developers including China Vanke Co. and Greentown China Holdings Ltd. have cut prices, and discounts have spread from smaller cities with “a massive” oversupply to big cities including Shanghai and Guangzhou where demand remains strong, according to an April 28 report by China Real Estate Information Corp., a property data and consulting firm.

Tongling city in the eastern province of Anhui will give tax breaks to buyers of homes that are 144 square meters or less if they are the family’s only home, according to a statement from the city’s government yesterday.

Attractive Valuations

E-House has declined 41 percent in New York this this year and trades at 9.3 times estimated earnings for the next 12 months, the lowest since December 2012, according to data compiled by Bloomberg. The valuation already reflects the impact of tightened consumer lending standards, according to Ella Ji, an analyst at Oppenheimer & Co.

“At this price, E-House looks attractive,” Ji, who has a buy rating on the ADRs, said in a telephone interview.

SouFun’s ADRs have lost 26 percent this year and trade at 13.3 times estimated 12-month earnings.

New Oriental, China’s largest private education company, tumbled 6 percent to $23.98. Deutsche Bank lowered the price target on the ADRs to $27 from $37, saying its move to expand into the K-12 education market will have a “negative impact” on growth and profit margins.

New Oriental sank 8.6 percent on April 28 after it posted first-quarter revenue that trailed analysts’ estimates.

-By Ye Xie

DoubleLine’s Gundlach Recommends Betting Against Housing

Source: Bloomberg / Luxury

Jeffrey Gundlach, manager of the DoubleLine Total Return Bond Fund, recommended betting against an exchange-traded fund that tracks an index of homebuilders because declining affordability will reduce housing demand.

Gundlach, chief executive officer of Los Angeles-based DoubleLine Capital LP, recommended shorting the SPDR S&P Homebuilders ETF (XHB), he said today at the 19th Annual Sohn Investment Conference in New York.

“Single-family housing is overrated,” he said, citing younger people living with their parents. “Renting is more appealing across all age groups, all parts of the U.S., city, suburb, small town and rural. This is a generational preference; all young people are scarred by the housing crash” and they don’t think current interest rates are low.

Gundlach joins Sam Zell, chairman of landlord Equity Residential, in predicting a decline in owning homes. The homeownership rate in the U.S. has already dropped to the lowest level in almost 19 years as rising property prices and mortgage rates hold back demand. The share of Americans who own their homes was 64.8 percent in the first quarter, down from 65.2 percent in the previous three months, according to a Census Bureau report last month.

Gundlach, 54, started DoubleLine Capital after being ousted as chief investment officer of TCW Group Inc. in December 2009 following a dispute. Since his first mutual fund was opened in 2010, his firm has attracted about $47 billion in assets of Dec. 31. Gundlach’s $32 billion Total Return Fund (DBLTX), which specializes in mortgage bonds, has advanced an annualized 6.1 percent over the past three years, beating 97 percent of similarly managed funds, according to data compiled by Bloomberg.

Short Interest

The SPDR S&P Homebuilders ETF fell 1.5 percent to $31.27 at 1:39 p.m. in New York. The number of shares in the ETF sold short by investors expecting the price to drop almost doubled from April 25 to 2.9 million as of May 2, according to data compiled by Markit Ltd. That represents 5.5 percent of the fund’s outstanding shares.

Gundlach said there will be more supply of housing when investment firms, who together with cash buyers have supported the property market, liquidate their holdings. Baby boomers selling their houses will also add to supply, he said.

“The argument of pent-up demand is wrong,” Gundlach said.

Younger people don’t have good job prospects and face difficulties in saving for deposits because of rising rents, he said.

Zell, at the Milken Institute Global Conference in Beverly Hills, California, last week said the homeownership rate in the U.S. may fall to as low as 55 percent as Americans postpone getting married and having children.

-By Saijel Kishan

Realogy Falls Most on Record as U.S. Home Sales Decline

Source: Bloomberg / Luxury

Realogy Holdings Corp. (RLGY), owner of brokerage brands Coldwell Banker and Century 21, fell the most on record after reporting a slowdown in sales that it expects to persist this year as the U.S. housing recovery cools.

The shares dropped 8.5 percent, the most since the Madison, New Jersey-based company’s October 2012 initial public offering, to close at $39.04. Realogy today said the number of transaction customers for its franchise group declined 3 percent in the first quarter from a year earlier and fell 2 percent for the NRT brokerage unit.

An inventory shortage, tight lending standards and higher prices and mortgage rates have caused some would-be homebuyers to hold back as the key spring selling season begins. While purchases costing $1 million or more rose 7.8 percent in March from a year earlier, deals for $250,000 or less, which represent almost two-thirds of the market, plunged 12 percent, according to the National Association of Realtors.

This “could be a challenging year, especially if transaction volume growth continues to slow throughout the prime selling season,” Chief Executive Officer Richard Smith said on a conference call with analysts. “The challenges of low inventory at the first-time homebuyer and move-up buyer levels are compounded by tough credit underwriting and the effects of a sluggish economy, which we believe has slowed demand.”

The company said it expects transaction customers to decline 5 percent to 7 percent in the second quarter from a year earlier for the franchise and NRT units combined.

Delayed Spring

Smith said Realogy isn’t counting on a bounce after harsh winter weather suppressed sales in some parts of the country.

“There are those who believe that this is going to be a delayed spring, especially in the Northeast and major parts of the Midwest,” he said on the call. “We’re assuming that’s not going to happen. If it does happen, it’s upside.”

For the first quarter, the company reported a net loss of $46 million, compared with a net loss of $74 million a year earlier. The average price of home sales increased 12 percent for the franchise business and 14 percent for NRT, as higher-priced properties made up a greater share of the mix.

-By Prashant Gopal