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12th November 2014

Singapore Real Estate

Condo resale prices flattish in October: SRX

But analysts do not think it is a sign that prices are recovering

Source: Business Times / Real Estate

Resale prices of non-landed private homes stabilised in October, leading some in the industry to wonder if the total debt servicing ratio (TDSR) framework has exhausted its effectiveness in bringing prices down. Resale prices rose a slight 0.4 per cent in October, compared to September. Prices in the city fringe and suburbs each climbed 0.6 per cent, while prices of city apartments fell 0.3 per cent, according to flash figures released by SRX on Tuesday.

-By Lee Meixian

Slight rise in prices of resale condo units

Source: Straits Times / Money

PRICES of resale condominium units picked up slightly last month after generally trending lower over recent months.

But consultants are reluctant to herald the latest data as a sign of recovery in the ailing market since sales volume was low.

Prices of non-landed private residential units inched up 0.4 per cent last month compared with September, according to flash estimates from the Singapore Real Estate Exchange (SRX) yesterday.

This was backed by a 0.6 per cent price rise in the suburbs and the "rest of central" region, which includes Bishan, Toa Payoh, Little India, Queenstown and Geylang.

Prices in prime districts, however, fell for the second straight month by 0.3 per cent.

Mr Wong Xian Yang, manager of research and consultancy at OrangeTee, noted the low sales volume. Only 451 private condo resale transactions were sealed in October, against 461 in September. This 2.2 per cent slide in monthly volume still points to a "downward trend".

He added: "For a better sense of the future price direction of the market, it is better to use quarterly data where more transaction data is available."

Overall, prices have fallen 5.2 per cent since the most recent peak in January, said SRX.

Among districts with increased resale activity, District 14, which includes Geylang and Paya Lebar, exerted the most downward pressure on prices in October. Buyers paid a median of $41,000 below past transacted prices of comparable units, the highest level of this widely used indicator.

This was followed by Districts 12 and 11, which logged transactions that were $40,000 and $31,000 lower than the market value, respectively. District 12 includes Balestier and District 11 covers the Newton area.

Executive director of research and consultancy at SLP International Nicholas Mak believes the start of a price recovery in the private residential market is still some way off.

"There is no change in the market fundamentals that have resulted in the market weakness. The cooling measures and TDSR framework are still in place and the Government had mentioned that it would not remove these curbs any time soon."

Still, Mr Mak noted that prices and resale volumes "have not seen much volatility" in the last six months, but instead declined at a slower and steadier rate.

"There haven't been any new policy changes which would evoke a big movement in prices and volumes," he said. "It's also likely that the market is getting accustomed to the cooling measures that have been put in place."

And Mr Wong said: "Barring any changes in housing policies, a rebound in prices is not expected ... in the short term. We expect prices to continue to edge lower."

-By Jacqueline Woo

Private-home resale prices rebound slightly, but downward trend remains

Analysts say rebound does not signal recovery, as weak market fundamentals due to property curbs persist

Source: Today Online / Business

SINGAPORE — Resale prices of non-landed private homes inched up last month on the back of price improvements in the city fringes and suburban areas, but analysts said the slight rebound did not signal a recovery as weak market fundamentals persist as a result of various property curbs imposed in recent years.

Non-landed private residential resale prices rose 0.4 per cent last month from September, after a 0.6 per cent drop the previous month, a flash report by Singapore Real Estate Exchange (SRX) showed yesterday. However, prices are still 4.5 per cent lower than in the same period last year and 5.2 per cent off the recent peak in January this year.

The gains last month were led by a 0.6 per cent increase in resale prices in both the Rest of Central Region (RCR), or city fringes, and the Outside Central Region (OCR), or suburbs, the SRX data showed. Resale prices in the Core Central Region (CCR), or city centre, suffered a 0.3 per cent drop last month, extending the 1.5 per cent fall in the previous month.

Mr Nicholas Mak, executive director of SLP International Property Consultants, said: “This is not the start of a price recovery … there is no change in the market fundamentals that resulted in the current market weakness. The cooling measures and the Total Debt Servicing Ratio framework are still in place and the Government has mentioned that it will not remove these curbs any time soon.

“Furthermore, by all indications, the other price indices prepared by other organisations … show that overall private residential property prices are still declining as well.”

Amid the small price gains, resale transaction volume in the non-landed private residential segment continued to be low, with an estimated 451 units changing hands last month. This is 2.2 per cent lower than in September and 4.7 per cent lower than in October last year, the SRX data showed. Of these units, 232, or more than half the total volume, were located in the OCR.

OrangeTee manager of research and consultancy, Mr Wong Xian Yang, said comparing the quarterly price performance would give a better sense of the market direction. He expects prices to continue trending downwards, though the pace of decline may slow.

“Though monthly data do give us hints on the future price direction of the market, for a better sense, it is better to use quarterly data where there is more transaction data available … Barring any changes in current housing policies, a rebound in prices is not expected to happen in the short term. We expect prices to continue to edge lower,” he said.

Data published last month by the Urban Redevelopment Authority showed that in the third quarter this year, prices of private homes fell 0.7 per cent, narrowing from the 1 per cent decline in the March-to-June quarter.

-By Lee Yen Nee

Companies' Brief

Metro Q2 profit doubles with one-off boost

Source: Business Times / Companies & Markets

One-Off gains from a recently recognised associate bumped Metro Holdings from an operating loss into a doubling of net profit in the second fiscal quarter. Metro said net earnings for the three months ended Sept 30 surged 100.4 per cent to S$61.2 million, or 7.4 Singapore cents per share, as it enjoyed an initial gain of S$59.3 million from Hong Kong-listed developer Top Spring.

-By Kenneth Lim

Fortune Reit's Q3 DPU up 24.4%

Source: Business Times / Companies & Markets

The recent "occupy activities", a distinct slackening in tourist spending, and the slowdown in domestic demand have emerged as new sources of uncertainty affecting the overall economic outlook and retail scene, Fortune Reit said in its financial statement on Tuesday.

-By Lee Mexian

Koh Brothers' Q3 profit up 3% at S$7.1m

Mixed financial results from builders

Source: Business Times / Companies & Markets

Builders posted mixed results for the three months ended September. Koh Brothers saw its net profit for the third quarter ended September rise 3 per cent, from S$6.9 million to S$7.1 million. This is even as revenue slid 7 per cent, from S$88.2 million to S$82.2 million. The increase in profit was largely due to general improvement in margins for the real estate and construction and building materials divisions.

-By Mindy Tan

UOL rings in 10% rise in third-quarter profit

Source: Straits Times / Money

DEVELOPER and hotelier UOL Group has turned in a 10 per cent rise in third-quarter profit to $102.6 million, thanks to higher gains from its associated and joint venture companies.

Revenue rose 66 per cent to $433.5 million for the three months ended Sept 30, following the completion of The Esplanade in Tianjin, China.

The increase was also backed by higher contributions from three Singapore developments - Parkroyal on Beach Road, Parkroyal on Pickering and Pan Pacific Serviced Suites Beach Road. 

Share of profit from associated firms rose 29 per cent to $30.7 million due largely to United Industrial Corp (UIC). It registered higher gains from Pan Pacific Singapore and the Archipelago and Thomson Three projects, as well as an increased 99.5 per cent interest in unit Singapore Land (SingLand).

In February, UIC made an unconditional voluntary cash offer to buy all the shares it does not already own in SingLand.

Share of profit from joint venture firms jumped 88 per cent to $9.1 million, with contributions from the Archipelago and Thomson Three projects.

Earnings per share for the quarter came in at 13.23 cents, up from the 12.14 cents in the same period last year, while net asset value stood at $9.29 as at Sept 30, from $8.77 as at Dec 31.

-By Jacqueline Woo

Fortune Reit lifted by mall income

Source: Straits Times / Money

STRONG growth in rents at its Hong Kong shopping malls gave a boost to Fortune Reit's third-quarter earnings.

Distribution per unit (DPU) for the three months to Sept 30 climbed to 10.3 HK cents, the real estate investment trust (Reit) said yesterday.

This was a 24.4 per cent jump from 8.28 HK cents the previous year.

The Reit said tourist spending in Hong Kong has slackened and democracy protests that paralysed the downtown area in late September have had an "adverse impact" on the city's economic outlook.

However, its portfolio of retail properties in private housing estates "caters mainly to day-to-day shopping needs". So it could "benefit from the resilient nature of the non-discretionary retail sector" and be less affected by a slowdown in consumer demand, it said.

Income available for distribution in the third quarter shot up 25.9 per cent to HK$193.1 million (S$32.2 million) on the back of a 33 per cent jump in net property income to HK$286.7 million.

Revenue also climbed 32 per cent to HK$416.6 million.

The trust said the strong performance was due mainly to extra income from one of its malls, Fortune Kingswood, as well as strong rental growth across its portfolio.

The Reit also said its manager, ARA Asset Management, would "closely monitor operating expenses" in the light of rising minimum wages and electricity tariffs.

The Reit owns 17 retail properties in Hong Kong, adding up to about 3.11 million sq ft of retail space.

Its net asset value per unit was HK$10.99 as at Sept 30, up slightly from HK$10.26 as at Dec 31 last year.

Its units rose two HK cents to end at HK$7.25 yesterday.

-By Melissa Tan

Views, Reviews & Forum

Prefab construction not so productive

Source: Straits Times / Forum Letters

PREFABRICATION construction of Build-to-Order flats eliminates or reduces the need for skilled workers such as bricklayers and plasterers ("Push to raise skills, productivity in construction sector"; Oct 31).

Most workers in prefab construction are unskilled general workers whose primary role is to coordinate the setting of prefab walls and slabs as the tower crane hoists them and sets them in place.

A bricklayer can erect a brick wall in a couple of hours, depending on the size of the wall. And the cost of erecting walls on-site can be a fraction of that for prefabricating walls in a factory and installing them.

Prefab requires large land and factory space, large amounts of electricity, automation, production engineers, electrical and mechanical engineers and production workers, and large-truck transportation. Also, more crane operators are needed as well as large on-site storage holding space for the prefab components.

Prefab construction may require five unskilled workers and a tower crane to coordinate the setting of a small wall in position, and up to an hour to install it. So, productivity in prefab construction is lower than that when building walls and slabs on-site.

-By Aaron Ang Chin Guan

Why Singapore lags behind in productivity

Source: Straits Times / Forum Letters

THE report ("New handler bagged Jetstar deal, but lost its workers"; Oct 31) shows there is high demand for workers in labour-intensive industries, and is a wake-up call for firms to improve staff welfare to retain their employees.

This trend is more apparent in the construction industry, where at least 10 per cent of work permit holders in each firm must be higher-skilled, with effect from 2017 ("Push to raise skills, productivity in construction sector"; Oct 31).

The Manpower Ministry can incentivise construction firms to upgrade their foreign workers' skills, by requiring firms to send them for continual skills training, and awarding points to these companies. The points quantum would depend on the course content and duration, and could be used to renew work permits and qualify the workers as higher-skilled.

Singapore's productivity has lagged behind that of Hong Kong, Taiwan and South Korea. Our growing affluence and tight labour market make workers more likely to job-hop and less inclined to work hard.

Part-time and contract workers also affect overall productivity as these staff see little or no need to raise their productivity.

Productivity is also affected when workers resign, as firms would need time to train their replacements.

Unless bosses see the urgent need to invest in labour-saving technology and automation, low productivity and hiring difficulties will remain.

-By Francis Cheng

Global Economy & Global Real Estate

Economic, strategic gains of free trade area 'worth pursuing': PM Lee 

Source: Straits Times / Top of The News

A FREE Trade Area of the Asia-Pacific (FTAAP) will not only be an economic boon but also have the strategic function of giving regional economies "a stake in each other's success", thereby fostering peace, Prime Minister Lee Hsien Loong said yesterday.

While acknowledging that "watertight proof" of its benefits has not yet been marshalled - and that it would be challenging to realise a vast free trade area in the face of political sensitivities among some Asia-Pacific economies - he said at a meeting with 20 other Asia-Pacific Economic Cooperation (Apec) leaders that it was a goal worth pursuing.

And speaking to the Singapore media after leaders endorsed a road map towards the FTAAP at the end of their annual summit, Mr Lee said that host China had done the 21-member Apec a favour by pushing the initiative.

"I think the Chinese naturally see this as beneficial to themselves, otherwise they would not consider it. But it's also beneficial to other countries. Otherwise it would not be resonant, it would not be picked up and we would not be able to move ahead.

"The FTAAP is not a Chinese idea. This is an idea which was there at the beginning. It was the reason why we created Apec back in 1989."

Beijing originally hoped to set a date of 2025 for FTAAP's realisation, but reportedly backed down from a concrete target in the face of United States reluctance to shift focus away from the 12-nation Trans-Pacific Partnership (TPP) trade deal.

Asked about Singapore's considerations given its involvement in the TPP and FTAAP - seen as arenas for rivalry between the US and China - Mr Lee said Singapore is a good friend of both.

He dismissed talk of rivalry between the TPP and FTAAP, noting that TPP nations do not rule out China joining in the future. Nor does China rule out joining them.

It is not political rivalry that prevents China from joining the TPP, but that its economy will need some time to develop to the stage where it can meet the pact's high standards, he explained.

US President Barack Obama has clearly stated Washington's support for the FTAAP to other Apec leaders, he added.

Mr Lee said bilateral sensitivities between countries like China and Japan are an argument in favour of having the FTAAP.

He had, during the meeting of Apec leaders, said that "a regional FTA (free trade agreement) like the FTAAP may well offer a more neutral framework within which to foster free trade and win-win cooperation than bilateral FTAs".

While it is at least 10 years in the making, he said the FTAAP is the "next logical step" for the grouping after regional trade pacts like the TPP and the Regional Comprehensive Economic Partnership are completed.

Singapore and other regional economies want to participate in China's rise and benefit from it, Mr Lee said, adding that he welcomes China's efforts to show it can "be helpful" to the region, such as by establishing the Asian Infrastructure Investment Bank to lend to developing countries for their infrastructure needs.

Such moves will help Beijing extend its influence and soft power.

But China must also manage and contain its territorial disputes in the South China Sea with Japan and some Asean countries and prevent this from souring its overall ties or affecting security and confidence in the region, he told reporters. "Then all the infinite possibilities will be realised," he said, echoing a phrase Chinese President Xi Jinping used at the summit to illustrate the "Asia-Pacific Dream".

-By Rachel Cheng in Beijing

McKinsey identifies 3 catalysts for further growth of Asean

Asean must ride on the waves of globalisation, urbanisation and digital technology to lift growth

Source: Business Times / Government & Economy

ASEAN must double its productivity growth to make the most of globalisation, urbanisation and digital technology to lift its growth to a new level, said a study issued on the eve of the meeting of the leaders of the economic grouping here.

The study, released on Tuesday by the McKinsey Global Institute and titled "South-east Asia at the Crossroads: Three Paths to Prosperity", noted that economic development in the 10-member grouping has so far been backed largely by an expanding labour force, in particular, the shift of workers from agriculture to industry.

But the drying up of Asean's pool of workers will expose the economic grouping's underlying weakness in productivity, an issue which needs to be dealt with urgently.

The McKinsey study predicts that when the Asean Economic Community becomes a reality next year, Asean's productivity would get a boost with greater integration; the removal of inefficiencies related to export and improved logistics networks should shorten time to market and produce productivity gains of up to 20 per cent of the cost base in many sectors.

However, tangled custom procedures, differing standards of regulation and issues of investment and ownership remain big hurdles to greater integration, it said.

Asean stands to capture a bigger share of trade and investment flows, especially by providing an alternative manufacturing hub, now that multi-national corporations have been hit by rising labour costs in China.

But turning Asean into a unified powerhouse of manufacturing and trade will require both public and private efforts.

The first step is to raise awareness of Asean and the Asean Economic Community among the business community and members of the public.

The study said: "If the region hopes to maximise the benefits of integration by expanding manufacturing, it will need to maintain macroeconomic and political stability, build world-class infrastructure and intensify its focus on workforce skills."

Tapping fully the opportunities from globalisation could yield US$280 billion to US$615 billion more in annual economic value for Asean by 2030.

Increasing urbanisation will also drive Asean's economic growth. "No country has ever climbed from low-income to middle-income status without a significant population shift into cities," the study said. "As people leave behind farms for urban jobs, they become more productive."

However, to reap the benefits of urbanisation, Asean will have to invest US$7 trillion in infrastructure, housing and community space, and beef up its education system to facilitate that shift of people to the cities.

The study has calculated that urbanisation could add US$520 billion to US$930 billion to Asean's annual Gross Domestic Product by 2030.

Then there is technology. The study noted that many Asean nations are starting from a relatively low base in terms of digital infrastructure, adoption and innovation, though the number of Internet users is growing fast.

"If the region can put the necessary backbone infrastructure in place, it could harness the power of technology to drive productivity improvements," said the study.

Asean's starting point suggests it has a bigger chance of making quick progress than more developed regions, "with possibilities for digital leapfrogging in multiple areas".

The study identified five related digital technologies poised to create substantial economic growth for Asean: the mobile Internet, big data, the Internet of Things, the automation of knowledge work and cloud technology. These disruptive technologies can unleash US$220 billion to US$625 billion in annual economic impact by 2030, the study said.

The study identified five related digital technologies poised to create substantial economic growth for Asean: the mobile Internet, big data, the Internet of Things, the automation of knowledge work and cloud technology. These disruptive technologies can unleash US$220 billion to US$625 billion in annual economic impact by 2030.

-From Naypyitaw, Myanmar

ASEAN economies need to double productivity rate to sustain economic growth: Report

Labour productivity in Singapore needs to grow at an annual compound rate of 5.8 per cent by 2030, compared to 2.2 per cent in the last decade, according to a report by McKinsey Global Institute.

Source: Channel News Asia / Business

SINGAPORE: Many ASEAN economies will have to double their rate of productivity by 2030 in order to sustain economic growth, according to the latest research report from McKinsey Global Institute.

The Institute is the business and economics research arm of McKinsey & Company, a global management consulting firm.

For Singapore, this means that labour productivity needs to grow at an annual compound rate of 5.8 per cent, compared to 2.2 per cent from 2000 to 2013.

Productivity is already gaining traction as a buzzword in Singapore as a growing number of Singapore businesses are embracing new technology for what is traditionally time-consuming and labour-intensive work. 

McKinsey & Company said it is something the rest of Southeast Asia should look at as well.

Oliver Tonby, managing partner at McKinsey & Company (Southeast Asia), said: "Historically, the GDP growth rate in ASEAN has been a little bit over 5 per cent on average per year; 40 per cent of that has come from an increase in workforce, what we call demographic dividend, and going forward, that is going to reduce. In order to sustained historical growth rate, the productivity growth rate has to double.”

In its report, McKinsey said some countries need to see a sharp boost in productivity to sustain their economic growth rate.

Singapore leads the pack - requiring an annual compound growth rate of 5.8 per cent by 2030.

Brunei and Thailand are close behind, with both needing to more than double their pace of productivity gains. Malaysia, meanwhile, needs a growth rate of 4.1 per cent, compared to the historical growth rate of 2 per cent.


The McKinsey report also highlighted three forces that could drive productivity in the region, including capturing more trade flows and tapping opportunities from rapid urbanisation.

Another big trend that will spur growth in ASEAN is technology, such as big data, cloud computing, automation and mobile internet. But the region will need to invest in infrastructure development in order to capitalise on opportunities arising from disruptive technologies.

Together, McKinsey said the three megatrends could potentially contribute over US$1 trillion (S$1.3 trillion) in economic impact across ASEAN by 2030. Spurring productivity growth and cost efficiency will also help in attracting multinational corporations to operate in the region.

Observers said this is where Singapore can share its experiences with its ASEAN neighbours.

Francis Tan, an economist at United Overseas Bank, elaborated: "They can look at how Singapore actually provides important infrastructure such as healthcare, education to the population, what kind of industries that we attract at the starting phase of our economic development, and what are the different schemes we implemented to promote industrialisation and to educate the labour force and improve labour productivity.”

The regional bloc aims to set up the ASEAN Economic Community by the end of 2015, which will see freer movement of goods, services and investment.

- CNA/dl

Asean back on investors' radar; draws US$122b FDI in 2013

Inflows led by MNCs expanding in the region

Source: Business Times / Government & Economy

Prices in 'hot' areas holding up even in soft market

Source: Business Times / Real Estate

SENTIMENT in Malaysia's real estate market may be soft, but even ponying up a generous premium may not be enough to tempt owners to sell their prized assets if these are in popular areas.

Take the upmarket suburb of Bangsar. An owner of a two-storey shop lot in the main Telawi area there had asked for RM7.7 million (S$2.9 million) for the property, which had been valued at between RM5.5 million and RM6 million. The prospective buyer agreed to pay the 40 per cent premium, but the Singapore owner of the unit then changed his mind, recalled Nixon Paul, the immediate past president of the Malaysian Institute of Estate Agents (MIEA).

Another property, a 5,500 sq ft bungalow, was valued at RM7 million, but even an offer of RM10 million could not persuade the owner to sell it.

Mr Nixon, speaking at the MIEA's Property Market Outlook 2015 in Kuala Lumpur on Tuesday, said: "So yes, the market is slow, but not in all areas. It is selective."

In essence, there are hardly any sellers in the Klang Valley's older established suburbs such as the commercial hotspots of Damansara Utama, SS2, Taman Tun Dr Ismail and Sri Hartamas; in the Bukit Bintang tourism belt, the same is true.

"These prime locations are doing well in rental and sales. There is strong pent-up demand, but supply is scarce."

Sales are moving slowly in up-and-coming but less established areas such as Kota Damansara, where several new shop houses are on the market. Mr Paul said he expects prices to grow by 5 to 10 per cent annually in prime locations, but remain flattish - at least this year and maybe the next - in less popular spots.

However, the MIEA generally expects prices to continue heading north because there is so little development land left in the Klang Valley.

MIEA deputy president Erick Kho said that land prices are projected to breach RM4,000 per sq ft (psf) soon in Kuala Lumpur's prime KLCC area. Prominent land deals there have gone from RM1,385 psf in 2010 to more than RM2,000 in 2012 and to around RM3,300 last year.

Because supply is limited, land owners are taking their time to make land available. "If you are waiting for prices to come down, you will have to wait a very long time," MIEA president Siva Shanker declared.

But the gap between sellers' asking price and what buyers are willing to pay is narrowing, he said, adding that buyers might get a break if speculators who purchased on easy financing schemes in the last few years decide to offload their soon-to-be-delivered units at prices that are only slightly more than they paid for them, or perhaps even slightly less.

For now, most owners appear to be keeping to their loan schedule.

-By Pauline Ng

Sydney house sellers' asking price tops A$1m

Record low interest rates fuelling surge in demand from investors

Source: Business Times / Real Estate

D.R. Horton Reports Bigger Profit as Home Orders Jump

Source: Bloomberg / Personal Finance

D.R. Horton Inc. (DHI), the largest U.S. homebuilder by revenue, reported a bigger profit and a 38 percent jump in orders for its fiscal fourth quarter.

Net income was $166.3 million, or 45 cents a share, for the three months ended Sept. 30, compared with $139.5 million, or 40 cents, a year earlier, the Fort Worth, Texas-based company said today in a statement.

Under Donald Tomnitz, who stepped down at the end of the quarter after 16 years as chief executive officer, and his successor, David Auld, D.R. Horton has increased buyer incentives to boost sales. Orders for the quarter rose to 7,135 homes with a value of $2 billion, compared with 5,160 houses valued at $1.4 billion a year earlier. The builder completed 8,612 sales, up 25 percent from the same period in 2013.

“We feel pretty good about kind of where we are in the market and what’s taking place out there,” Auld, 58, said during his first earnings call as CEO. “If we just execute and do what we can do on a day-to-day basis, we should have a great three-year to five-year run.”

While earnings missed the average analyst estimate of 48 cents a share, the company’s pricing, order growth and profitability exceeded expectations, said Jay McCanless, an analyst with Sterne, Agee & Leach Inc. in Nashville, Tennessee.

“It appears DHI’s strategy shift to higher unit volumes worked” in the quarter, McCanless wrote in a note today.

Homebuilding Revenue

The company’s homebuilding revenue in the quarter rose to $2.4 billion from $1.8 billion a year earlier.

For fiscal 2015, D.R. Horton said it expects to complete sales on 34,500 to 37,500 homes for $9.5 billion to $10.5 billion, up from this year’s 28,670 houses for $7.8 billion. The gross sales margin will be 19.5 percent to 20 percent in the first quarter of 2015, compared with 20.5 percent in the latest quarter, the company said in an investor presentation.

U.S. new houses sold at an annual rate of 467,000 in September, the fastest in six years. That’s still 29 percent below the U.S. average pace since 1963, according to Commerce Department data.

D.R. Horton rose 2.2 percent today to close at $23.95, the highest since July 23. The shares are up 7.3 percent this year, compared with a 2.7 percent increase for the 11-company Standard & Poor’s Supercomposite Homebuilding Index.

While serving as the company’s front man is a new experience, Auld said he doesn’t expect to deviate from the course set by his predecessor.

“I’ve always been a behind-the-curtain kind of guy, and being pushed out front is different for me,” he said on the call. “Three years to five years down the road, I think my goal is just to continue the excellence the company’s had.”

-By John Gittelsohn

Extell One57 Executive Leaves for Chinese Property Firm

Source: Bloomberg / Luxury

Jeffrey Dvorett, who helped oversee the construction of New York’s One57 for Extell Development Co., has left the firm after nine years to join a Chinese real estate investment group seeking to expand in the U.S.

Dvorett is now head of development for Kuafu Properties LLC, a New York-based firm started last year “with the vision of being the ultimate bridge between Chinese investors and the United States real estate market,” he said today in an e-mail addressed to friends and colleagues.

“We are actively seeking additional investment opportunities to deploy our in-house capabilities and access to capital,” Dvorett wrote.

This year, Kuafu, with partner Siras Development, acquired a development site on Manhattan’s 11th Avenue and 38th Street, directly across from the Jacob Javits Convention Center, for about $62 million, the companies said in a July statement. The firms announced plans for a 47-story tower that will include a 400-room hotel, 50 luxury condos on the top 15 floors and “an exclusive membership club for an anticipated international demographic.”

The 380,000-square-foot (35,000-square-meter) project also will include offices and ground-floor retail, the firms said.

In September, Kuafu made another “significant investment” in a mixed-use site on Manhattan’s Upper East Side, Dvorett said in his e-mail.

Dvorett was vice president of development for Extell, builder of the ultra-luxury One57 condominium tower in Midtown, where two penthouses are under contract for more than $90 million each. He didn’t immediately return a phone message seeking further comment on his new job.

-By Oshrat Carmiel

BlackRock Hires Yegenaga From Moody’s for European CMBS Research

Source: Bloomberg / News

BlackRock Inc. (BLK) said it hired Deniz Yegenaga from Moody’s Investors Service for its European asset-backed securities business.

Yegenaga joins the world’s largest money manager as a London-based researcher with a focus on commercial mortgage-backed securities, according to Paul Young, a spokesman for BlackRock.

Yegenaga spent eight years at Moody’s where she rated newly-issued and restructured CMBS transactions as an analyst in the company’s structured finance group.

-By Alastair Marsh

Legoland Developer Dubai Parks Plans $690 Million IPO

Source: Bloomberg / News

Dubai Parks & Resorts, a company set up by state-owned Meraas Holding to develop a theme park in the emirate, will seek 2.53 billion dirhams ($690 million) in an initial public offering that starts on Nov. 17.

The offer will run until Nov. 27 with shares priced at 1.01 dirhams each, the company said today in a statement. It expects the stock to start trading on the Dubai Financial Market on Dec. 10.

Dubai’s benchmark share index is among the best performing globally after rising 36 percent this year, prompting share sales by companies such as Emaar Properties PJSC (EMAAR), which offered stock in a malls unit that operates one of the largest shopping centers in the world. Emaar is also planning to sell stock in its hotels arm, Chairman Mohamed Alabbar said in September. Al Habtoor Group LLC, owned by billionaire Khalef Al Habtoor, has hired banks to manage an IPO, two people familiar with the matter told Bloomberg yesterday.

“With the early stages of development already underway, we are aiming to provide investors with access to a high-growth, high-return, family entertainment business which will become one of the cornerstones of the Dubai entertainment landscape,” Raed Al Nuaimi, chief executive officer of Dubai Parks & Resorts, said in the statement.

Goldman Sachs Group Inc, HSBC Holdings Plc and Emirates Financial Services PJSC are joint global coordinators on the deal and EFG Hermes is joint bookrunner, the statement shows. Shuaa Capital PSC is co-manager with the joint bookrunners.

The first phase of Dubai Parks & Resorts project comprises three theme parks: Motiongate Dubai, Bollywood Parks Dubai, and Legoland Dubai. The project is due to be completed before the end of the third quarter of 2016, with 6.7 million visitors expected the following year, the company said. Dubai Parks & Resorts has arranged debt to cover the entire project cost and Meraas has agreed to fund any cost overruns, it said.

-By Matthew Martin and Arif Sharif

Sydney House-Sellers Demand Record A$1 Million Median Price

Source: Bloomberg / Luxury

Sydney’s median asking price for detached houses topped A$1 million ($864,300) this week for the first time as sellers raised expectations in a booming market.

The asking price rose A$10,600 over the past seven days, according to Sydney-based data company SQM Research Pty. That’s the highest since the firm began reporting the data in April 2009. Across Australian state and territory capitals, the median asking price for detached homes jumped A$6,400 over the week to A$755,100, the figures show.

Record-low central bank interest rates are fueling a surge in demand from investors, which has regulators concerned that speculative buying is creating an unbalanced housing market. SQM forecasts values in the nation’s most populous city could rise as much as 12 percent in 2015.

“Right now it would be impossible to purchase a free standing house in Sydney’s inner ring for under A$1 million,” SQM Managing Director Louis Christopher said. “I don’t see any change in the immediate future. It’s going to remain a pretty strong sellers’ market.”

Sydney asking prices soared 23 percent for houses and 21 percent for apartments over the past three years. Across the country’s major cities, they’ve climbed 12 percent for houses and 13 percent for apartments in the period. Canberra was the worst performer, with asking prices plunging 12 percent for houses and 13 percent for apartments.

Slowing Growth

Sydney house prices rose 14 percent in October from a year earlier, according to the RP Data CoreLogic Home Value Index. The pace of growth is slowing: the 4.5 percent gain in the three months through October compared with 5.8 percent a year earlier.

“Price growth has moderated in the last few months,” said David Cannington, senior property analyst at Australia & New Zealand Banking Group Ltd. “The Reserve Bank is talking about increasing interest rates, so that will add some downward pressure on price growth.”

Cannington forecasts a 5 percent increase in Sydney dwelling prices in 2015. ANZ Bank forecasts a rate increase in mid-2015, he said.

The housing market has been underpinned by the Reserve Bank of Australia keeping its benchmark interest rate at a record-low 2.5 percent for 15 months. Investors now account for more than half of all new home loans.

The RBA has indicated that regulators plan measures to target speculation by people buying residential property as investments.

-By Nichola Saminather

‘Haunted Apartments’ Go for Cheap in Hong Kong

Source: Bloomberg / Luxury

There’s a grim phenomenon in Hong Kong’s real estate market: discounts of as much as 50 percent for home-seekers willing to live in an apartment where a murder has occurred.

Unnatural deaths typically result in rental discounts of 10 percent to 20 percent and can be more than double that for sinister killings, according to Sammy Po, head of the residential department of realtor Midland Holdings Ltd. (1200)Chinese believe such places, known as “hung jaak,” the Cantonese term for “haunted apartments,” are unlucky, he said.

“The Chinese really do care” about living in these places, Po said.

The rent for a Wan Chai district apartment where police found two women’s bodies on Nov. 1, HK$29,000 ($3,740) a month at the time of the murders, will probably drop by half when it’s released from being a crime scene, cleaned and rented again, according to a director of the company that owns the unit, who didn’t want his name or firm identified because he isn’t permitted to speak publicly. The sales value of the unit in the luxury J Residence would decline from HK$9 million to HK$6 million if it were sold immediately, the person said.

Hong Kong had almost 190 sites where an unnatural death took place, including murders and suicides, this year, according to a database compiled by

Suicide Listings

Squarefoot lists the date of the incident, the address, the district and a brief description of the death. Among recent listings were an apartment where an 18-year-old male student slipped a plastic bag over his head last month and jumped to his death; one where a middle-aged couple, plagued by financial troubles, committed suicide by inhaling burning coal smoke; and another where a mother was hacked to death by a mentally unstable neighbor while protecting her two daughters.

Hong Kong is certainly not the only place where home-seekers can be wary of a residence marred by tragedy. Nevertheless, in a comparably high-demand market like New York City, the stigma is less marked, according to Jonathan Miller, president of real estate appraiser Miller Samuel Inc. in Manhattan. Where sales inventory in the city is scarce and rents are near records, a crime or other negative event wouldn’t have much effect on price, he said.

Hong Kong property agents aren’t required by law to disclose if a death occurred in a unit, but they should provide information when asked under the industry’s code of ethics, according to the Estate Agents Authority, a government agency. Potential tenants or buyers should ask whether a suicide or homicide took place because there’s no legal definition of a “haunted property,” the agency said in an e-mailed response.

Priciest Market

Hong Kong is otherwise Asia’s priciest real estate market. Private residential rents hit a record high in August, reaching almost HK$25 a square foot, or HK$12,500 for a 500-square-foot apartment, according to Midland. Residential sales prices, which have more than doubled since the start of 2009, hit a record last month despite government measures to curb demand.

The city is the world’s most-expensive after London for multinational companies to base staff because of its real estate, according to property brokerage Savills Plc.

C S Group, a Hong Kong property-services firm, is auctioning a 550-square-foot “hung jaak” on Nov. 18 with a starting price of HK$3.18 million ($410,120), according to its website. An apartment of the same size in the same complex sold last month for almost 27 percent more, or HK$4.33 million, according to data from Midland.

“The demand is there, whether from investors seeking rent or for self use,” said Alger Cheng, general manager of the group’s auction department.

First-time homebuyers are also drawn to these cheaper properties, Midland’s Po said.

Feng Shui

Superstition and geomancy beliefs run deep. Hong Kong people also shun sites close to cemeteries, hospitals and churches, which can be considered unlucky. Buildings typically omit the fourth floor because the number is a homonym for the Chinese word for death. Property developers rely on feng shui, which translates as “wind and water,” the Chinese practice of arranging the physical environment in harmony according to beliefs about energy and design.

“For those growing up in Hong Kong, feng shui is hammered into your mind, even if you don’t believe or understand it,” said Ng Wai-pok, a former lecturer of feng shui at the University of Hong Kong. “A large part of it is psychological, but there is also the metaphysical.”

Expatriates tend to be less concerned with living in “haunted apartments,” said Asif Ghafoor, founder of property-listing website

For them, “location is by far the most important thing,” he said.

-By Michelle Yun

Sinking Jakarta Starts Building Giant Wall as Sea Rises: Cities

Source: Bloomberg / News

If you worry that rising sea levels may one day flood your city, spare a thought for Michelle Darmawan. Her house in Jakarta is inundated several times a year -- and it’s 3 kilometers (1.9 miles) from the coast.

Whenever there’s a particularly high tide or heavy rain, the Ciliwung River and its network of canals overflow, swamping thousands of homes in Indonesia’s capital. In January, a muddy deluge washed over Darmawan’s raised porch, contaminating her fresh-water tank and cutting off electricity for three days.

“We were sitting on the second floor, looking down at the floods, calling out to neighbors to make sure they’re OK,” said Darmawan, 27, a marketing executive whose family had to store drinking water in buckets.

Jakarta, a former Dutch trading port, is one of the world’s megacities most at risk from rising sea levels. That’s because parts of the metropolis of almost 30 million people are sinking by as much as 6 inches a year, more than 10 times faster than the sea is rising.

The Indonesian capital ranks eighth among the 30 biggest cities in the 2015 Climate Change Vulnerability Index compiled by Bath, England-based risk-assessment company Maplecroft. The index is led by Dhaka, Lahore in Pakistan, and Delhi.

$40 Billion

The government’s solution: a $40 billion land-reclamation project unveiled last month. It includes a 32-kilometer (20-mile) sea wall, a chain of artificial islands, a lagoon about the size of Manhattan -- and a giant offshore barrier island in the shape of the national symbol, the mythical bird Garuda.

The first pile for the initial stage of the program -- a barrier to strengthen existing sea defenses along 32 kilometers -- was sunk at the Oct. 9 opening ceremony.

“The whole city is sinking like Atlantis,” said Christophe Girot, principal investigator of the Jakarta Study at the Future Cities Laboratory research group in Singapore. “You see the absolute most miserable and poorest population living right by the river, and they know they’re going to get flooded and may be killed three or four more times a year.”

The central and municipal governments will split the 3.2 trillion rupiah ($263 million) cost for the first 8 kilometers of the wall. Developers would put up the remaining 24 kilometers by 2030 in exchange for the right to build on reclaimed land.

Breached Defenses

Drenched by tropical downpours in the October-to-March rainy season, Jakarta is no stranger to flooding from its rivers, which flow into the coastal plain from the mountains of Bogor to the south. A new urgency arose in 2007 when, for the first time, the sea flowed over the embankments and levees in the north.

Records of a settlement at the mouth of the Ciliwung date to the 4th century. The area rose to prominence when the Dutch East India Company developed the city of Batavia in the early 17th century. As the port expanded, a Flemish military engineer, Simon Stevin, designed a walled city modeled on a traditional Dutch town, including canals to drain the Ciliwung delta into the sea. Today, the metropolis is home to almost 30 million people, making it the second-most-populous urban area in the world, after Tokyo-Yokohama, according to urban-policy research company Demographia in Belleville, Illinois.

Now the Dutch are back to help, with the new master plan drawn up by engineering and consultancy companies Witteveen+Bos and Grontmij. (GRONT)

Below Sea Level

“When a third of the city is under sea level and there’s nowhere else to put people, the only option is to go the Netherlands route,” said Paul Rowland, a Jakarta-based political consultant. “It’s just going to get worse.”

The works can’t come too soon. In October 2013, the sea rose to just 10 centimeters below the top of the defenses, threatening 4 million people, according to Deventer-based Witteveen+Bos. Global sea levels may increase by as much as 82 centimeters this century, according to the United Nations Intergovernmental Panel on Climate Change.

Meanwhile, North Jakarta is sinking by between 7.5 and 17 centimeters a year because of decades of pumping out groundwater to supply homes and businesses.

Coastal cities have been building barriers against the waves since Herod the Great sank barges full of concrete to protect the harbor of Caesarea Maritima in modern Israel before the birth of Jesus Christ. With the rise of sea levels accelerating, ocean defenses have become more popular -- from London’s Thames Barrier, opened in 1982, to Venice’s 5.5 billion-euro ($6.9 billion)MOSE project, scheduled for completion in 2016.

New Business

For local companies such as PT Agung Podomoro Land (APLN), Indonesia’s seventh-largest property developer, the Garuda project opens up a whole new area that has traditionally been blighted with run-down colonial structures and shanties, sandwiched between an airport and the nation’s largest port.

Podomoro is marketing a planned 160-hectare (395-acre) man-made island called Pluit City with apartments, a shopping mall, offices, an international school and a “floating” opera house.

“The sea level keeps rising while Jakarta is sinking, so without a wall the flooding will get worse,” said Wibisono, Podomoro’s head of investor relations, who, like some Indonesians, uses one name. “Development is happening across Jakarta, from East, West and South, but in the North it’s constrained by lack of land.”

15 Years

The company is awaiting a license to begin reclaiming the land, he said. The island city would take 10 to 15 years to complete.

The sleek images of the future contrast with the patchwork of slums, docks and walled compounds today. The first piles for the new sea wall are being erected in Muara Baru, near the sprawling Dunia Fantasi amusement park. On the shore, fishermen work on their boats next to a 3-meter sluice gate with pumps that keep the land from submerging.

Nearby, antique cars are parked in the driveway of a mansion in a walled compound and an Azimut motor yacht is tethered to its private dock.

In the narrow streets of Muara Angke to the west, the evening air is filled with the smell of salted fish, laid out to dry in front of crowded concrete houses. These streets have sunk more than 4 meters -- the height of the houses -- since records began in 1975, according to a report for the Jakarta Coastal Defence Strategy study in 2012. They wind down to the sea where Warkin, a fisherman sits in his wooden boat, mending his net before heading out for the night’s catch.

Fishermen’s Worries

He’s worried the project will disrupt fishing grounds and block the boats. “How will small people like us go out to sea if they build a wall?” said Warkin, who made almost a week’s wages in a single day during a flood last year by ferrying fresh fruit and vegetables to the rich neighborhoods. “How will we be able to keep fishing?”

That’s not the only potential problem. Skeptics are concerned about the amount of garbage and silt the city’s rivers would spew into the proposed lagoon, the corruption such a large project would attract and the danger posed by the fact that Indonesia is one of the most earthquake-prone countries in the world.

The city’s acting governor, Basuki “Ahok” Tjahaja Purnama, said the first stage -- strengthening the existing defenses -- will go ahead, while further studies need to be done before proceeding with the plan for the land reclamation and Garuda island. Purnama took over running the city in June from Indonesia’s new President Joko Widodo.

Better Drainage

Darmawan, the marketing executive whose house is near a canal that joins the Ciliwung, is doubtful about the benefit.

“I’m not going to get my hopes up that it will get better, knowing how Jakarta is,” she said. “I’m not that optimistic about the sea wall. I think they should improve the drainage system.”

She said the government brought in dredging equipment after the January floods to remove garbage from the canals, but it hasn’t made much difference.

“The difficulty in widening and improving drainage along the Ciliwung River lies in entrenched practices of pumping ground water and dumping of human and industrial waste,” said Girot, who is also a professor at the Swiss Federal Institute of Technology in Zurich. “Building the wall of course would guard against the rising seas very well, but we should first take care of the river.”

Residents caught between the rising sea and the flooding Ciliwung aren’t holding their breath.

“The giant sea wall is only a project to earn more money for government officials and give more land for real-estate developers,” said Charli Soegono, 38, who lost his red Honda Civic and whose prized Arowana fish swam away when water flooded his house up to the second floor last year. “It was like in that movie Titanic, where the ship is sinking and you have to rush to get all your valuables out of the water.”

-By Yudith Ho and Rieka Rahadiana

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