Real News‎ > ‎2014‎ > ‎November 2014‎ > ‎

18th November 2014

Singapore Real Estate

Singapore private home sales up 18% in October

Property developers sold 765 new private homes last month, up from the 648 units sold in September, according to the Urban Redevelopment Authority.

Source: Channel News Asia / Singapore

SINGAPORE: The private housing market picked up pace in October, with sales of new homes rising 18 per cent from the previous month.

Excluding executive condominiums (ECs), developers sold 765 new units last month, up from the 648 units sold in September, data from the Urban Redevelopment Authority (URA) showed on Monday (Nov 17). Including ECs, 855 units were sold in October, up from 707 units in September.

The improved sales came as more units were launched for sale. A total of 649 units were launched in October, up from the 514 units launched in the previous month.

Sales in October were driven by the newly-launched Marina One Residences. The project sold about 330 units - about half of October's sales volume - at a median price of S$2,228 per square foot (psf).


Older projects Coco Palms and Lakeville also managed to clear units without developers having to offer discounts. Coco Palms cleared 34 units at a median price of S$1,039 psf, while Lakeville sold 32 units at a median price of S$1,340 psf.

Marina One Residences was the only new project launched last month, and property watchers said this is a sign that developers are focusing on clearing old stock.

According to URA, there were 19,270 unsold units in the market.

ERA Realty's key executive officer, Eugene Lim, said: "The loan curbs and ABSD (Additional Buyer's Stamp Duty) framework have somewhat dried up buying momentum in the market and developers would prefer to focus on clearing existing stock rather than introduce more new stock into the market."

Developers were also launching their projects in phases, noted Desmond Sim, head of research at CBRE Singapore. He added: "Going forward, developers will be eye-balling each other, timing themselves accordingly by putting slow launches into the market so that it will be slowly absorbed and not overcrowd the market."

However, a further spike in buying activity is expected in November as ECs make a comeback after almost a year. Already, all 546 units at the Lake Life EC have been sold.

- CNA/cy/ac

October’s private home sales at five-month high

Source: Today Online / Business

SINGAPORE — The private housing market continued its slow climb out of the doldrums last month as new home sales hit a five-month high, but analysts warned that the increase does not signal a recovery and that annual sales volume could come in at only about half of last year’s tally.

Developers sold 765 units last month, 18 per cent higher than the 648 deals in September, the Urban Redevelopment Authority (URA) said yesterday. The number of units launched also increased to 649 from September’s 514 homes.

This represents the second consecutive month of increase for new home sales since a lull in August, when home buyers held off buying and developers held back new offerings to avoid the Hungry Ghost Festival.

However, the transaction volume last month is still 31 per cent lower than the 1,104 units sold in October last year, and 40 per cent lower than the average monthly sales of 1,286 units in the past five years.

The improvement in October’s figures was driven primarily by the month’s only new project launch at Marina One Residences — a joint venture development between Temasek Holdings and Malaysia’s sovereign wealth fund Khazanah Nasional — where 334 of the 400 units launched were sold at a median price of S$2,228 per square foot (psf).

“If Marina One Residences was taken out of the equation, the sales volume in October would be the lowest for the whole of 2014 … Therefore, there is still a long way to go for the local real estate market to be on the path of a firm and steady recovery,” said Mr Nicholas Mak, executive director at SLP International Property Consultants.

The project accounted for most of the 381 transactions registered in the city centre, or Core Central Region (CCR). The city fringes, or Rest of Central Region (RCR), saw 123 homes sold, while 261 units in the suburbs, or Outside Central Region (OCR), were snapped up. In terms of launches, CCR welcomed 438 units, while RCR and OCR saw 16 and 195 new offerings, respectively.

“The lack of new launches in October, despite this period being considered as a window of opportunity to secure some sales, shows developers are not confident that there is sufficient demand to achieve a decent take-up,” said Mr Ong Teck Hui, national director for research and consultancy at JLL.

Meanwhile, the executive condominium (EC) segment registered 90 new sales, the highest volume this year, despite there being no new launches last month. Forestville at Woodlands Drive 16 was the best-selling project with 30 units transacted at a median price of S$737 psf.

Analysts said the EC market will drive activity in the next few months as new projects such as Lake Life, Bellewoods and Bellewaters make their appearances in URA data. For private residences, the subdued buying sentiment is expected to continue.

Colliers International’s director of research and advisory Chia Siew Chuin is projecting a total sales tally of 7,500 to 7,900 units for the entire 2014, much lower than the roughly 15,000 deals last year.

“While the improvement in sales over the past two consecutive months indicates that home buyers are still keen on well-located projects despite the prevailing soft market sentiments, home buyers remain highly selective and price-sensitive given the multitude of projects available for their picking,” she said.

-By Lee Yen Nee

Marina One saves developers' sales from hitting year's trough in October

334 transactions there lifts total sales to 765 units, up 18% from 648 in September

Source: Business Times / Real Estate

DEVELOPERS may have sold more units in October than in September, but take away just one project and the picture is decidedly less rosy.

In all, developers sold 765 private homes in October, 18 per cent higher than the 648 units sold in September, according to data released by Urban Redevelopment Authority on Monday. But this was mostly boosted by brisk sales at a single large-scale launch, Marina One Residences, which sold 334 of its total 400 launched units.

As SLP International executive director Nicholas Mak put it: "If Marina One Residences was taken out of the equation, the sales volume in October would be the lowest for the whole of 2014.

"Other than Marina One Residences, the sales in the other top sellers were all less than 50 units each in October. Therefore, there is still a long way to go for the local real estate market before a firm and steady recovery is in sight."

Year-on-year, sales have fallen 31 per cent from the 1,104 units sold in October last year. These figures exclude executive condos (ECs). If ECs are included, developers sold 855 units in October, above September's 707 units.

Marina One Residences is part of a mega mixed-use project by Temasek Holdings and Khazanah Nasional, located just behind the Marina Bay Financial Centre. Its units were sold at a median price of S$2,228 per square foot in October. Consultants credited its appeal to its attractive pricing, prime inner city location and proximity to MRT stations.

It was also the only new residential project launch in October. Mr Mak noted, too, that out of the 334 units sold, more than 300 units were bought through private sales, rather than a public launch.

Besides the Marina development, buying activity was supported by Coco Palms in Pasir Ris, Lakeville at Lakeside, and The Skywoods along Dairy Farm Heights.

"Buying demand was not totally absent in the market, but it had to be drawn out by attractive pricing," said Mohamed Ismail, chief executive of PropNex.

The higher sales volume in October was also a result of the higher launch volume, again skewed by Marina One Residences. New launches rose 26 per cent to 649 units. Again, taking away Marina One Residences, the launch volume would have tanked.

Ong Teck Hui, national research director at JLL, said: "The lack of new launches in October, despite this period being considered a window of opportunity to secure some sales (before the year-end festivities begin), shows that developers are not confident that there is sufficient demand to achieve a decent take-up.

"Due to the challenging market conditions, developers seem to prefer to let the year slip by and tackle the challenges afresh in 2015. It is unlikely that the market will see any significant resurgence in launches and sales for the rest of 2014, and it looks set to close as the most dismal year since 2008 when the market was hit by the global financial crisis."

Eugene Lim, key executive officer of ERA Realty Network, too, expects that developers may hold back launches and focus on clearing units from their existing projects in the last two months of the year. He expects primary market sales of 400-700 units for November and December each.

Year-to-date, 6,705 new units have been sold, compared to nearly 15,000 sold for the whole of 2013.

The last two months of 2014 could round this figure up to 7,500, say the more bearish analysts, or 9,000, say the optimists.

Already, Lake Life EC has sold 534 out of 546 units this month. TRE Residences in Geylang has sold about 50 of its 250 units. Sophia Hills at Mount Sophia has not released its sales figures but according to a source, its showflat was quiet over its launch weekend.

-By Lee Meixian

Marina Bay project props up private home sales

Pickup 'not sign of recovery', sales for other projects remain sluggish

Source: Straits Times / Top of The News

SALES of new homes in Singapore were shored up last month by the launch of a large city-centre project, offering relief from months of lacklustre activity in the luxury home segment.

Half of October's sales came from the only project launched: a 1,042-unit integrated development in the Marina Bay precinct, Marina One Residences, where 334 units were sold at a median $2,228 per sq ft (psf).

However, the solid improvement in overall sales from September was likely to be an anomaly and could hardly be regarded as a hint of recovery in the ailing market, experts said.

This was because sales for the other projects on the market paled in comparison.

Buyers picked up a total of 765 private condo units last month, an 18 per cent jump on September's 648 units, data from the Urban Redevelopment Authority showed yesterday.

But when compared with October last year, sales last month fell 31 per cent.

Marina One developer M+S, a joint venture between Singapore's Temasek Holdings and Malaysia's Khazanah Nasional, gave early buyers a 10 per cent discount, bringing prices down to between $1,960 and $3,100 psf.

"Buying demand was not totally absent in the market but it had to be drawn out by attractive pricing," said Mr Mohd Ismail, chief executive of PropNex Realty.

Demand in the central region, where Marina One is located, has languished since rules that restrict the size of a mortgage kicked in last June. Additional taxes for foreign buyers have hit the luxury market hard too.

But last month, this region accounted for the largest slice of the primary home sales pie for the first time since November last year, said Ms Chia Siew Chuin, director of research and advisory at Colliers International.

In that month, DUO Residences, another city-centre project developed by M+S, sold 600 units at a median price of $1,999 psf. Prices of the 660-unit upscale development in Kampong Glam were seen as attractive by analysts as they had expected it to be launched with an average price above $2,000 psf.

These recent exceptions to the moribund market underscore a trend of increasing buyer sensitivity to attributes such as the quality of a project, noted Mr Desmond Sim, head of research at CBRE, South-east Asia.

Without Marina One, October's sales would have been the lowest this year, as the other developments moved fewer than 50 units each, said Mr Nicholas Mak, research head at SLP International.

Developers focused on selling units at projects that have been launched for a while, with City Developments' Coco Palms in Pasir Ris selling 34 units at a median price of $1,039 psf.

MCL Land's Lakeville condo, in Lakeside, sold 32 units at a median price of $1,340 psf.

In all, 261 units were sold in the suburbs and 123 units shifted in the city-fringe projects.

Analysts expect developers to continue holding back on new launches and to focus on marketing the sizeable number of unsold units in older developments this quarter.

Including executive condos, which are a hybrid of public and private housing, 855 units were sold last month - a 21 per cent rise from September's figure.

-By Cheryl Ong

Reit association ropes in 42 members

Half of S-Reit managers are in; smaller Reits could be in wait-and-see mode while reviewing fees

Source: Business Times / Real Estate

The newly minted Reit Association of Singapore (Reitas) has rounded up 42 members. They include about half the 33 Singapore Reit (S-Reit) managers, who manage more than 70 per cent of the market capitalisation of Reits here. The figures came from association president Chua Tiow Chye at the official launch of the association on Monday. Mr Chua is also Mapletree Investments group chief investment officer.

-By Lee Meixian

REITAS aims for members to cover 90% of market capitalisation

Activities such as monthly seminars and courses are on the cards for the newly-launched Real Estate Investment Trust Association of Singapore to reach out more to investors and industry professionals.

Source: Channel News Asia / Business

SINGAPORE: The newly-launched Real Estate Investment Trust Association of Singapore (REITAS) is gunning for its membership to cover around 90 per cent of market capitalisation in six months.

REITAS, which aims to be the representative voice of industry players, currently has about half of the 33 Singapore REITs (S-REITs) managers on board after a two-and-a-half-month recruitment drive. They represent 70 per cent of the S-REIT industry's market capitalisation. As of September 2014, S-REITs are worth S$61 billion.

Membership for a year costs S$20,000 and it is open to other industry players like law firms, property consultancies and academic institutions. Counting those, membership currently stands at around 40.

Chua Tiow Chye, president of REITAS, said: "We certainly welcome other REIT promoters or REIT managers from Europe, Australia and Japan - anyone who wants to have a presence in the S-REIT market here.

"That is because we believe we have a very efficient, good regulatory environment, and our idea is to work with the regulators to make it even more conducive and even more attractive for new listings to come to Singapore."

REITAS' priority for its first year is to reach out more to investors and industry professionals. It will organise a string of programmes like monthly seminars to educate retail investors about REITs as an alternative investment. REITAS also plans to run courses on REIT financial analysis.

Another area of focus is to represent the industry well in discussions and consultations with regulators like the Monetary Authority of Singapore (MAS). REITAS was set up partly in response to the lack of a single organisation to aggregate the concerns and interests of the industry.

Recently, MAS proposed changes to the REITs regime, including adjusting borrowing limits to enhance corporate governance. REITAS' position is that while it welcomes good governance, there should not be over-regulation as it may stifle industry growth. Singapore's REIT market is already facing stiff competition from overseas.

Magnus Bocker, CEO of the Singapore Exchange, said: "We are the third-largest in the Asia-Pacific. We need to admit that both Australia and Japan are a little bit ahead of us. But there is no doubt that I regard us as far more international than the two of them."

- CNA/kk/ac

Crucial time for Reit industry: SGX chief

Source: Straits Times / Money

SINGAPORE is at a "critical juncture" in its race to become Asia's leading market for real estate investment trusts (Reits) and must stay ahead of the pack, the local bourse's chief has warned.

"We need to admit that both Australia and Japan are a little bit ahead of us, but there is no doubt that I regard us as far more international than the two," Mr Magnus Bocker, chief executive of the Singapore Exchange (SGX), said yesterday.

"We are a cross-border market and we need to continue to be an attractive such market."

Mr Bocker noted that about three-quarters of the Reits and business trusts listed on the SGX hold property outside Singapore.

He was speaking at the official launch of the Reit Association of Singapore (Reitas), a Reit industry body, at the Suntec Convention & Exhibition Centre.

The association is in the midst of formulating its response to recent proposals by the Monetary Authority of Singapore aimed at strengthening the sector.

Mr Bocker told the audience of Reit managers, bankers and other industry players that Reit managers could tap Singapore's growing wealth management sector.

He estimated there is $2.5 trillion to $3 trillion worth of assets under management here.

Reits are a "very attractive product" for Asia's booming middle class, he said.

He added that "high standards of corporate governance" were one reason for the local Reit industry's success, and suggested that the SGX may push for even greater governance.

"Where we have been successful with governance, the expectation is that we need to continue on that road," he said.

Reitas president Chua Tiow Chye, who is also Mapletree's group chief investment officer, told the ceremony yesterday that the association has 42 members.

That includes 16 Reit managers who together manage more than 70 per cent of the Singapore Reit industry's total market value, he said.

There are 33 Reits in Singapore with a total market capitalisation of about $63 billion.

Mr Bocker noted that, including business trusts, there are about 40 Reits and trusts listed here with about $77 billion in assets.

Business trusts are a more flexible instrument than Reits, which must invest only in property and distribute at least 90 per cent of their taxable income to get tax breaks.

Business trusts may hold any asset class and do not have restrictions on how much of their profits they must distribute to their unit holders.

Reitas' chief executive is Mr Sonny Tan, who is a former general manager at Fraser & Neave.

-By Melissa Tan

CapitaLand in JV to develop Jakarta integrated project

Source: Business Times / Companies & Markets

Property giant CapitaLand has entered into a 50-50 joint venture with a subsidiary of Indonesian real estate, auto and mining group Credo Group to develop an integrated development in Central Jakarta.

The development is not expected to have a material impact on net tangible assets or earnings per share for its current financial year.

-By Cao Haoxiang

CapitaLand inks joint venture for integrated development at the heart of Jakarta

The integrated development comprising office, residential, serviced residence and supporting retail components will sit on a 1-hectare site located in a prime area in Central Jakarta.

Source: Channel News Asia / Business

SINGAPORE: CapitaLand has entered into a joint venture agreement (JV) with a subsidiary of Credo Group (CG) to develop an integrated development in Central Jakarta, with both companies each holding a 50 per cent stake in the venture.

The integrated development, CapitaLand’s first in Indonesia, will comprise a Grade A office tower, mid- to high-end residential units, serviced residences and supporting retail space, spanning a total gross floor area of more than 40,000 sqm. Construction is expected to commence in 2015 and end in 2018, and the total development cost is estimated at S$220 million, CapitaLand said on Monday (Nov 17).

Under the agreement, the JV will acquire from CG a 1-hectare site located within the central business district of Jakarta.

Said Mr Lim Ming Yan, President and Group CEO of CapitaLand: “The Indonesian property market is bolstered by sound social and economic fundamentals and we see significant room for growth. In fact, Jakarta was one of the fastest growing cities in the world for office and prime residential sectors in 2013, and this uptrend is expected to continue with a rising middle-class population.

"With a strategically located site, positive market demand and a reputable local partner, we are confident this project will be well-received by the market.”

The JV is not expected to have any material impact on the company’s net tangible assets or earnings per share for the financial year ending Dec 31, 2014, CapitaLand said.

- CNA/cy

CapitaLand inks JV for Jakarta project

Source: Straits Times / Money

CAPITALAND is to build its first integrated office, shops and residential project in Indonesia's fast-growing capital Jakarta.

The Singapore-listed developer is tying up with a subsidiary of Indonesia's Credo Group in a 50:50 joint venture to build the $220 million project.

The joint venture will acquire from Credo Group a 1ha site in the city's central business district, close to affluent residential neighbourhoods and civic buildings, said CapitaLand in a statement to the Singapore Exchange.

The development will comprise a Grade A office tower, mid- to high-end residential units, serviced residences and supporting retail space spanning a total gross floor area of more than 40,000 sq m.

Construction is expected to commence next year and finish in 2018.

"The Indonesian property market is bolstered by sound social and economic fundamentals, and we see significant room for growth," said Mr Lim Ming Yan, president and group chief executive of CapitaLand Limited.

"Jakarta was one of the  fastest-growing cities in the world for office and prime residential sectors in 2013, and this uptrend is expected to continue with a rising middle-class population," he added.

Last week, Mr Lim announced plans to develop 12 integrated projects across Asia over the next three years, half of them in China.

The largest listed property developer in South-east Asia, CapitaLand operates eight serviced residences in Indonesia through its wholly-owned business unit, The Ascott. Three more are under development in Jakarta and Surabaya and will open over the next two years.

The project is not expected to have any material impact on the net tangible assets or earnings per share of CapitaLand for this financial year.

-By Marissa Lee

Warehouse retailer Big Box opens in 2 months

Source: Business Times / Real Estate

Big Box, Singapore's largest mega warehouse retail store, has obtained its temporary occupation permit (TOP) for its complex next to Jurong East MRT, and will open its doors in two months. For Singapore-listed consumer electronics supplier TT International (TTI), which owns a 51 per cent in the project and is banking on Big Box to turn its fortunes around, it is a milestone.

-By Lynette Khoo

Freeze on temporary dorms in 12 estates

Part of bid to house workers in purpose-built quarters with facilities

Source: Straits Times / Singapore

IN A bid to move workers from temporary housing to proper dormitories, the Government has stopped the building of temporary dormitories in a dozen industrial estates.

Workers from the marine and process sectors, which include the chemicals and pharmaceutical sectors, will also not be allowed to live in public housing from next year.

These moves come as the Government ramps up the building of purpose-built dorms with proper facilities over the next two years.

Last week, in a circular to building owners and developers, the Urban Redevelopment Authority (URA) said it will no longer allow new temporary dorms to be built in 12 industrial estates.

This was because several temporary dorms within some industrial estates have "caused a significant strain on existing infrastructure". Limiting the number of dorms will prevent the overloading of infrastructure such as road and sewerage systems, said URA.

Factory-converted dorms in areas such as Changi, Jurong and Tuas have been increasing to meet rising demand from employers looking to house their foreign workers.

There are about 700 temporary dorms housing some 100,000 foreign workers - a quarter of the 385,000 low-skilled foreign workers who need accommodation here.

But such dorms have drawn criticism from migrant workers' groups for their cramped and dirty conditions.

Another 200,000 foreign workers live in purpose-built dormitories.

The rest live in other places such as shophouses and temporary quarters at construction sites.

Nine new purpose-built dorms, with facilities such as foodcourts and basketball courts, will be constructed over the next two years.

They will add about 100,000 beds.

Separately, the Manpower Ministry (MOM) and Housing Board also told employers of workers in the marine and process sectors and flat owners housing them that they will no longer be allowed to house these workers in HDB flats from May 1 next year.

"This change is in line with the longer-term plan to house marine and process non-Malaysian work permit holders in purpose-built dormitories and approved workers' quarters with facilities which better cater to the workers' needs," said MOM and HDB in a letter circulated earlier this month.

There are no official figures on how many workers in these sectors will be affected, although industry estimates put the number at about 4,000.

Industry players said the biggest impact from these moves will be on the bottom line.

It costs about $250 a month to house a worker in a factory-converted dorm, less than the $300 for purpose-built dorms.

"Some purpose-built dorms are far from worksites and cost more," said Dr Ho Nyok Yong, president of the Singapore Contractors Association.

"Operating costs will go up for employers."

-By Amelia Tan

HDB wins international award for Punggol Master Plan

The 2014 Excellence on the Waterfront Awards is the first time the Punggol Master Plan has been honoured with an international accolade, says the Housing and Development Board.

Source: Channel News Asia / Singapore

SINGAPORE: The Housing and Development Board (HDB) was honoured with the 2014 Excellence on the Waterfront Awards for its work in transforming Punggol into a sustainable waterfront town.

This is the first time the Punggol Master Plan has been honoured with an international accolade, HDB said in a press release on Monday (Nov 17). HDB was recognised with the award at a ceremony at the Waterfront Centre 2014 Conference in Washington DC on Nov 8. 

The Excellence on the Waterfront Awards is given out by the Waterfront Centre in recognition of top quality design and development work on waterfronts. Entries were received and judged in four categories: Projects, Plans, Student and Clearwater, Eleven were ultimately honoured with awards; HDB was one of two recipients for the Honour Award in the Plans category.

Said HDB CEO Cheong Koon Hean: "It is a privilege for us to be recognised on the global stage with this award. HDB will continue to apply our knowledge of sustainable urban planning as a guiding principle for other HDB towns."

- CNA/kk

Two buildings in Singapore recognised in global awards

The Council on Tall Buildings and Urban Habitat handed out the Urban Habitat Award to CapitaLand's The Interlace. It was also shortlisted for the Best Tall Building award along with Pontiac Land Group's Ardmore Residence.

Source: Channel News Asia / Singapore

SINGAPORE: The Council on Tall Buildings and Urban Habitat (CTBUH) recognised two local developments - The Interlace and Ardmore Residence  - during its 13th annual CTBUH Awards Ceremony this month.

CapitaLand Singapore's The Interlace won the inauguaral Urban Habitat Award, and was also one of nine buildings from Asia and Australasia shortlisted for the Best Tall Building award for the region, according to the council's press release on Nov 7. The other Singapore building that was in the running was the Pontiac Land Group's Ardmore Residence (pictured below).

The winner for Best Tall Building Asia and Australasia went to Sydney's One Central Park, which also clinched the Best Tall Building Worldwide award.

“Seeing this project for the first time stopped me dead,” said Executive Director of CTBUH Antony Wood, who was on the judging panel. “There have been major advances in the incorporation of greenery in high-rise buildings over the past few years – but nothing on the scale of this building has been attempted or achieved.

"One Central Park strongly points the way forward, not only for an essential naturalisation of our built environment, but for a new aesthetic for our cities – an aesthetic entirely appropriate to the environmental challenges of our age,” Mr Wood added.

- CNA/kk

As old buildings age, re-think rules on en bloc sales

Current rules hold back the redevelopment of ageing buildings. Should they be changed?

Source: Straits Times / Opinion

BUILT in the 1960s, Cairnhill Mansions is one of several properties in the Orchard Road area that has seen better days. Age and rising maintenance costs are taking their toll on the apartment block: a resident was recently trapped in the lift for four hours due to a malfunctioning lift motor.

Many of the development's 61 owners are keen to sell their units and move on. They would prefer to do so in a collective sale, where the whole building and the land it sits on are bought by a single buyer for more than the sum of the individual units.

But going en bloc has proven difficult for such old properties.

Last month, Cairnhill Mansions started its fourth collective sale bid, after earlier attempts in 2005, 2007 and 2011 fell through.

In August, another ageing building, the 44-year-old Tanglin Shopping Centre, failed in its second try to go en bloc.

While the current dismal state of the property market is one problem, there is also the issue of gathering enough sell votes from each building's myriad owners.

Many of Singapore's oldest properties, including offices and malls, are strata-titled, which means their individual units are owned by different people.

Tanglin Shopping Centre, for instance, has 173 owners. Only 70 per cent of them agreed to go en bloc in August, far below the 80 per cent minimum threshold.

Mr Charles Ho, the sale committee chairman of Cairnhill Mansions, said it is "not a major hurdle" to obtain 70 per cent of owner agreements but tough to reach the 80 per cent consent level.

Other old buildings that have tried but failed to be sold en bloc include Ming Arcade and Far East Shopping Centre in the west Orchard Road area.

On the one hand, this shows that some owners still see value in their ageing properties.

But others argue that the peeling facades and outdated infrastructure in these old buildings make them eyesores and even health hazards.

Given their escalating maintenance costs and underutilised land area, often in central locations, they are prime targets for refurbishment and redevelopment. However, majority consensus among the owners of a strata-titled property can be difficult to obtain because of the collective action problem: when a large group of people have to act together, it becomes tougher to agree.

Some strata-titled property owners and property consultants have called for consent thresholds to be lowered for older buildings.

They say this would aid urban rejuvenation - a priority in land-scarce Singapore - and breathe new life into ageing properties that face escalating maintenance costs and, especially for malls and offices, struggle to compete with their glitzier counterparts.

Making it easier for commercial buildings to go en bloc could also spur the redevelopment of the sleepy western end of Orchard Road, which has dwindled in popularity as shoppers flock to newer malls further down the shopping belt.

Weighing tradeoffs

THE benefits of urban renewal, however, must be balanced against the interests of the owners of older buildings who are reluctant to sell their units.

Ms Elaine Chow, the executive director and head of research at Chestertons Singapore, said the current consensus levels "act as a necessary balance check".

"The interests and the rights of the minority shareholders need to be looked after and to be protected... This is especially so when it comes to matters of great importance, like having a roof over one's head," she added.

The Singapore Land Authority (SLA), which governs collective sales, agrees.

A spokesman told The Straits Times that the current consent rules strike "a balance between protecting the interests of minority strata-property home owners and facilitating urban renewal".

The regulations for collective sales "must balance the interests of all strata-property owners, be they pro-sale or anti-sale", the spokesman added.

Associate Professor Sing Tien Foo, deputy head of the real estate department at the National University of Singapore, said there are a whole host of reasons - both monetary and otherwise - why some owners might not want ageing properties to go en bloc.

While more property owners are likely to consent to a collective sale when the market is booming and developers are willing to pay top dollar for a site, "there are always people not motivated by monetary incentives".

Some might feel emotionally attached to a home they have lived in for decades, while others might worry about not being able to afford a comparable home or commercial unit in the same area, he said. Prof Sing also said rules "need to protect minority owners from being drawn into collective sales started by speculators, who buy older properties and then try to launch a collective sale".

Mr Ong Kah Seng, director of R'ST Research, said not all urban renewal is unequivocally good. He said collective sales can have a "double-edged" impact on society and the cityscape.

While redevelopment results in "newer and fresher" environs, it also means "destroying our past".

"By now, even buildings built in the 1980s and 1990s are nostalgic, as each decade has its own architecture," he said. Too much collective sale activity and redevelopment might "create homogeneous building forms".

Tweaking consent levels

STILL, the quiet collective sale market might offer a good opportunity for policymakers to refine consent rules for ageing properties, if they want to spur redevelopment.

Of the 181 buildings sold en bloc since 2004, only 35 per cent were aged above 30 years old, the SLA told The Straits Times.

It also said that while the current rules are working well, the agency will "continue to monitor the situation".

One possible solution, raised by Mr Terence Tang, the managing director of Asia capital markets and investment services at Colliers International, could be to add more tiers of consent levels based on the age of the property.

Currently, developments less than 10 years old require 90 per cent of owners by share value to agree to the collective sale, while those 10 years and older require 80 per cent.

Mr Tang suggested that the consent level could be lowered to 75 per cent for buildings older than 30 years old and to 70 per cent for buildings aged above 40 years. Making the requirements less stringent would aid urban redevelopment and rejuvenation, he said. Of course, this should be balanced against the interests of the minority owners, who may be hesitant about or unwilling to take part in the sale, he noted.

One way to avoid turning elderly folk out of their lifelong homes could be to apply the lower consent rules only to commercial buildings and not residential ones.

Living in a decades-old home with ageing infrastructure might be inconvenient and expensive, but the alternative - purchasing a new property and moving out - could end up being even costlier for some owners.

On top of that, the value of a home cannot be measured in dollars and cents - homes are a repository of memories and sentiment can frequently outweigh monetary considerations.

Alternatively, in lieu of lowering the threshold, a rule mandating renovations at regular intervals might be viable.

Owners of shop or office units in commercial buildings might have similar reasons as homeowners for holding back on agreeing to a collective sale: higher rents at a new location, or the difficulty of finding suitable alternative space.

This would eliminate the collective action problem altogether, instead of merely making it easier to overcome. However, some owners might argue that they should have free rein to renovate their properties as they see fit.

The tussle between redevelopment and the protection of minority owners will continue to intensify as Singapore's strata-titled buildings continue ageing. It is timely to re-evaluate existing rules, to guard against old buildings sliding further into decline.

-By Chia Yan Min

Wyndham to launch timeshare business in SEA

Company to open S'pore HQ for SEA businesses this year, expects to buy at least 1 property in region by Christmas

Source: Business Times / Real Estate

Soaring home prices in London push buyers to the sidelines

Source: Business Times / Real Estate

Buyers of distressed loans eye China developers as debt rises

Number of publicly traded developers with liabilities above equity up to 136 out of 334, from 57 in 2007, Bloomberg data shows

Source: Business Times / Real Estate

Niche developer Matrix Concepts posts 24.5% rise in Q3 earnings

Source: Business Times / Real Estate

Macerich Buys Rest of Five U.S. Malls for $1.89 Billion

Source: Bloomberg / News

Macerich Co. (MAC) bought the share of five U.S. shopping malls it didn’t already own from a subsidiary of the Ontario Teachers’ Pension Plan Board for $1.89 billion, including the assumption of debt.

The purchase price encompasses $673 million in assumed debt and $1.22 billion of stock issued to the Ontario pension plan, or an ownership stake of almost 11 percent in Macerich, Santa Monica, California-based company said today in a statement. The landlord gained a 49 percent stake in malls in New York, Oregon and California, including Queens Center in Elmhurst, New York.

“The opportunity to consolidate our ownership in these highly productive, market-dominant centers through a stock-for-asset exchange represents a real opportunity to increase our overall portfolio quality and growth prospects,” Macerich Chief Executive Officer Art Coppola said in the statement.

Regional malls with high tenant sales are in demand from investors because they rarely come on the market. The scarcity of those opportunities has helped push some mall owners to expand into urban retail real estate and outlet-center development.

The transaction was announced after the close of regular U.S. trading. Macerich was little changed at $68.55 today. The shares have gained 16 percent in the past year.

-By Brian Louis

Google Takes Times Square Crown With Half-Acre Billboard

Source: Bloomberg / Tech

As corporate office towers were planned on Times Square in the 1980s, preservationists who were worried the Great White Way might go dark turned off all lights except one with a message to Ed Koch: “Hey Mr. Mayor, it’s dark out there. Please keep the lights on in Times Square.”

Thanks in part to the protest, Times Square landlords have been required since the late 1980s to have advertising on their buildings, said Carol Willis, director of the Skyscraper Museum.

Almost 30 years later, Times Square signage has become an arms race between real estate developers, with ever-bigger, ever-brighter displays. Tomorrow, Vornado Realty Trust (VNO) will fire the latest shot when it switches on a 330-foot (100-meter) digital billboard wrapped around the front of the Marriott Marquis Hotel on Broadway between 45th and 46th streets. The eight-story tall sign, which will be leased by Google Inc. (GOOGL) from Nov. 24 into January, is more than half an acre in area.

“What’s occurred over the last few years is the price of signage has come down, the technology has become better, and the ability to curve signs has occurred,” said Leo Kivijarv, vice president of research for PQ Media LLC of Stamford, Connecticut, which tracks the digital-advertising market. “The real estate market in Times Square has changed hands quite a bit, and to justify some of the high prices, they want to have digital signage.”

Extra Layer

Ads on the screen are being marketed for at least $2.5 million for four weeks, according to a person familiar with the sales effort, who asked not to be identified because the figures are private. A Google spokeswoman, who confirmed the company will advertise on the sign through New Year’s, declined to comment on the price it is paying, as did a spokeswoman for Vornado.

The New York Times reported the deal with Google, and the pricing of more than $2.5 million, earlier today, citing unnamed marketing executives.

For developers, LED signage can add an extra layer of income by selling space for moving images to multiple advertisers. That can yield six to 12 times the revenue of a static sign, Kivijarv said.

The 26,300-square-foot (2,440-square-meter) sign supplants the multipanel, 15,000-square-foot display on American Eagle Outfitters’ Times Square store as the biggest, according to Tim Tompkins, president of the Times Square Alliance. The American Eagle sign, developed by SL Green Realty Corp. (SLG), New York’s biggest owner of office buildings, is just north of the Marriott Marquis, and dominates Duffy Square, where the TKTS booth that sells discount Broadway show tickets sits.

Stamp Collection

SL Green also owns 1515 Broadway, the home of the Viacom Inc. network of media brands like MTV and Paramount Pictures, which has a pair of digital signs at either end.

The massive displays are “a very different thing than having this kind of ad-hoc collage of miscellaneous signs, like a stamp collection,” Willis said in a phone interview. “That was the essential character of Times Square, that was written into law.”

Times Square has inspired cities around the world to use a concentration of brightly lit advertising to draw tourists. In September, the Indian government proposed creating a hub for culture and entertainment in Mumbai’s Kala Ghoda district, modeled on Times Square. In Piccadilly Circus, a London crossroads with a similar cluster of electric billboards, a full-motion screen which had promoted Japanese electronics company TDK Corp. for 24 years was offered for lease last week.

Edition Hotel

The developers of the Marriott Edition Hotel at 701 Seventh Ave., two blocks north and on the other side of the square from the Vornado sign, plan an 18,000 to 20,000-square-foot sign that will wrap around the corner of the 39-story tower. The project is a joint venture of a group that includes developer Steven Witkoff, Winthrop Realty Trust, and Miami investor Howard Lorber, with lending from Barry Sternlicht’s Starwood Property Trust and iStar Financial Inc. (STAR)

The sign it is planning “will be a game-changer,” Witkoff said in an interview. Their sign will enable them to broadcast a National Football League game or a concert, with bands of advertising running across the screen, he said.

Regarding Vornado’s sign, he said, “what’s good for them is good for us.”

‘Highly Coveted’

In June, SL Green paid $41 million for 719 Seventh Ave., on the same block as the Edition project. The company plans to demolish the existing building, which contains a smattering of souvenir shops and a deli, and “take full advantage” of its potential for as much as 28,000 square feet of retail and “highly coveted LED signage towers,” it said in a statement at the time.

Rick Matthews, a spokesman for SL Green, declined to comment on the company’s plan for the site.

Demand for the most sophisticated signage may take Times Square beyond its traditional boundaries. Developer Sharif El-Gamal is “exploring options to extend the special signage zoning” to the site of the former Parsons art and design school at 560 Seventh Ave., at West 40th Street. He is planning to tear down the building and construct a Dream Hotel, a boutique luxury brand.

The border of the zone that requires Times Square-style signage stops just north of the property.

Another Pocket

“It’s a very exciting time to be a developer and a landlord in the center of the universe,” El-Gamal said in a phone interview. “Tourists are piling in left and right. It’s so logical to say why don’t we try to expand Seventh Avenue all the way down to 34th Street, and create that as another pocket of visibility that will remove the bottleneck that exists in Times Square?”

For Vornado, one of New York’s largest commercial landlords, with 2.4 million square feet of stores and almost 20 million feet of offices, the mega-sign is the centerpiece of what it has described as a $140 million, 50,700 square-foot makeover of the Marquis hotel’s retail space.

The New York-based real estate investment trust leased the hotel’s retail portion in 2012, part of an effort to “dramatically improve the hotel’s presence on Times Square” Marriott parent Host Hotels & Resorts Inc. said in a statement at the time.

Interactive Signs

Advertisers also are exploring ways for visitors to interact with the boards through their smartphones, Kivijarv said. The square attracts about 300,000 pedestrians a day, rising as high as 460,000 on its busiest days, according to the Times Square Alliance, an organization of area businesses.

Vornado controls almost 160,000 square feet of retail space across the street from the Marquis at 1540 Broadway, whose tenants include the Disney Store and Forever 21, which has a mix of animated and static signs. According to its most recent annual report, its signage revenue rose to $32.9 million in 2013, from $19.8 million two years earlier.

Kivijarv said he’s not convinced the trend toward bigger, more expensive signs raking in ever more revenue will continue. There’s no clear connection between more pricey digital advertising and sales, he said.

Once, when he was about to give a presentation on digital signage at a Times Square hotel, he said he did a slow 360-degree turn while standing on the sidewalk, then another in reverse. Then he closed his eyes, and tried to recall which sign really stood out to him.

“And the thing I remembered was the Naked Cowboy,” he said, referring to an entertainer who plays the guitar on the square, clad only in underwear, cowboy boots and hat.

-By David M. Levitt

Essent Offering of Shares Poised to Raise $285 Million

Source: Bloomberg / News

Essent Group Ltd. (ESNT), the mortgage insurer that went public last year, plans to sell 6 million shares in a stock offering.

Some of Essent’s investors will sell an additional 6 million shares at the same time, according to a statement today from the Bermuda-based company. At today’s closing price in New York, the 12 million shares would be valued at about $285 million.

The money raised may be used for “capital contributions to support the growth of the company’s insurance subsidiaries,” the insurer said in the statement. “The company will not receive any proceeds from the sale of common shares by the selling shareholders.”

Among holders selling stock are George Soros’s Valorina LLC, which would offer as many as 1.21 million shares, according to a prospectus issued today. Goldman Sachs Group Inc. would sell as many as 563,000 shares. Essent has climbed about 40 percent since it went public in October 2013.

Essent was started during the U.S. housing bust and has benefited from a revival of interest in real estate-related investments. Mortgage insurers cover losses when homeowners default and foreclosures fail to recoup costs.

Goldman Sachs, JPMorgan Chase & Co., Bank of America Corp., Barclays Plc, Credit Suisse Group AG and Macquarie Group Ltd. are leading the offering, according to the statement.

-By Noah Buhayar

Greenland Turns to Queensland as China Home Sales Slow

Source: Bloomberg / Luxury

Greenland Holding Group Co. is looking to Queensland state to drive growth in Australia as demand in China slows, and Sydney and Melbourne prices become too expensive.

The Chinese state-owned developer is focusing on the Gold Coast, a city about 80 kilometers (50 miles) south of the state capital Brisbane, Sherwood Luo, managing director of the company’s Sydney-based subsidiary, said in an e-mailed response to questions. It’s mostly interested in residential and hotel development, he said.

Closely held Greenland, one of China’s most active global developers, is on track to hit A$20 billion ($17 billion) of investments around the world this year, as the property market at home falters and the nation allows freer movement of funds in and out of the country. The company has put A$1.6 billion into Sydney and Melbourne since it entered Australia last year.

“Prices are becoming more expensive in Sydney and Melbourne and thus people are looking at new markets such as southeast Queensland,” Luo said. “Gold Coast is attractive as the median unit and house prices are far lower than in Sydney and Melbourne.”

The median dwelling price for the Brisbane-Gold Coast area is A$440,000, compared with A$680,000 in Sydney and A$555,000 in Melbourne, according to RP Data Pty.

Dwelling prices in the Brisbane-Gold Coast market have risen 9.6 percent since a May 2012 trough, compared with a 30 percent increase in Sydney and a 21 percent jump in Melbourne, according to RP Data figures.

Falling Sales

Greenland is expanding offshore as conditions at home worsen. The number of publicly traded Chinese developers with liabilities exceeding equity climbed to 136 out of 334 from 57 in 2007, according to data compiled by Bloomberg. Home sales shrank 10 percent in the first nine months of this year.

Standard & Poor’s in September revised Greenland’s outlook to negative from stable, citing unfavorable market conditions and the company’s “considerable” capital needs.

“Greenland Group’s aggressive growth appetite and debt-funded expansion will constrain its financial risk profile in 2014 and 2015,” according to the S&P report. The developer “will continue to make significant land acquisitions and incur substantial construction costs over the next 12-18 months to support its growth plans, including in overseas markets.”

Luo declined to comment on the report.

Greenland is partnering with billionaire James Packer’s Crown Resorts Ltd. to bid for the Queensland state government’s Queen’s Wharf venture in Brisbane, which would include a six-star hotel and casino.

“We value Queensland as an essential area of great strategic significance for building up our business throughout Australia,” Luo said.

For Related News and Information: Greenland Sees A$80 Billion 2014 Revenue as Overseas Sales Jump Chow Tai Fook, Far East Join Echo for Brisbane Casino Venture Australia’s Gold Coast Homes at 50% Off 2010 Lure Buyers

-By Nichola Saminather

Lennar, Macerich Plan $1 Billion San Francisco Project

Source: Bloomberg / Luxury

Lennar Corp. (LEN), the largest U.S. homebuilder by market value, and shopping-center developer Macerich Co. (MAC) will invest $1 billion in the first phase of a San Francisco community with more than 6,000 homes.

The companies will be equal partners in a 500,000-square-foot (46,500-square-meter) outlet mall at Candlestick Point, a mixed-use community on the city’s southeastern waterfront, with groundbreaking planned for the first quarter of next year, according to a statement today.

“It was important for us to get the right partner where we could kick off, in the appropriate manner, the Candlestick piece of our development,” Kofi Bonner, president of Lennar’s San Francisco division, said in a telephone interview today.

Candlestick Point, along with Lennar’s neighboring San Francisco Shipyard, will add as many as 12,500 residences to the heart of one of the most expensive U.S. housing markets. The $1 billion investment will cover infrastructure work and the demolition of Candlestick Park, the former home of the National Football League’s San Francisco 49ers, as well as the first 600 of a planned 6,225 homes at Candlestick Point.

The development’s first homes are scheduled to be ready for occupants in 2017.

“We fully expect that the Candlestick Point project will be a magnet for economic activity and community-building,” Randy Brant, executive vice president at Macerich, a Santa Monica, California-based real estate investment trust, said in today’s statement.

Luxury Retailers

Lennar Commercial, a unit of the Miami-based homebuilder, will develop retail and entertainment space in Candlestick Point outside the Macerich mall, which will include ground-level outlet stores for luxury retailers and residences on higher floors, Bonner said.

The Candlestick Point development plan includes 500 low-and moderate-income units to replace the nearby Alice Griffith affordable-housing community.

The median-priced San Francisco home cost $929,790 in the third quarter and was affordable to about 15 percent of residents, according to the California Association of Realtors. The median price in the city rose 18 percent in October from a year earlier, CoreLogic DataQuick reported last week.

Lennar’s first homes at the Shipyard began selling this year at about 15 percent to 25 percent below the city’s market rate on a per-square-foot basis, Bonner said. He expects prices to rise as the community grows more populated.

“As we build the neighborhood, build the amenities, get more people there, we certainly expect to rise to the more typical San Francisco levels,” he said.

-By John Gittelsohn

Diller, Von Furstenberg to Build $130 Million New York Park

Source: Bloomberg / Luxury

Billionaire Barry Diller and his wife, Diane von Furstenberg, are helping New York build a public park and performance venue in the Hudson River off Manhattan’s west side that will cost more than $130 million.

The family’s nonprofit foundation will primarily fund the Pier55 park and build and operate it under a 20-year lease, according to an e-mailed statement today. Construction on the 2.7-acre island-like project will start in 2016 north of a sanitation garage near 13th Street and it is to open in 2019.

“I know a good deal when I see one,” Mayor Bill de Blasio said at a press briefing today at the Brooklyn Navy Yard. “If someone offers us a lot of resources to create something we need and with minimal investment by the city, I think that’s great.”

The city will contribute $17 million to the project, and New York state will provide $18 million for the construction of an expanded promenade. The Diller-von Furstenberg contribution is on par with billionaire hedge fund manager John Paulson’s $100 million donation to the Central Park Conservancy in 2012.

Some park advocates said the size of that gift heightened inequities between parks frequented by the wealthy and those in less affluent neighborhoods. De Blasio said last month that New York will invest more than $173 million to refurbish parks in some of the city’s poorest neighborhoods.

Island Retreat

The Pier55 project will replace the deteriorating Pier 54. The park, built on supports and accessible by two walkways, will feature “undulating topography,” and include a space for music, dance, theater, public art and community events.

The project continues the development of downtown Manhattan along the Hudson River, following the construction of the High Line. That decade-long endeavor, completed this year, transformed an elevated railroad track into a public park, which extends from Gansevoort Street to West 34th Street near the water. Diller and von Furstenberg contributed $35 million to the High Line.

“New York has always reminded me of Venice, so I am happy the time has come to properly honor its waterways,” von Furstenberg said. “What better than a park on the city’s western bank to rest, watch a sunset or a performance?”

The Hudson River Park Trust will maintain the park and work with the nonprofit on building and operating the pier. The trust, which receives no public funding, will focus its money and fundraising on four-mile (6.4 kilometer) Hudson River Park, which attracts more than 17 million visits annually.

Scott Rudin, a theater and movie producer, has been named vice chairman of Pier55 Inc., Diller’s nonprofit, and has been working with him to imagine the project.

-By Alex Barinka and Allyson Versprille

TD Bank to Anchor SL Green’s Grand Central Tower Project

Source: Bloomberg / Luxury

Toronto-Dominion Bank (TD)’s TD Bank unit agreed to be the first tenant at One Vanderbilt, a skyscraper next to Grand Central Terminal that will be one of New York’s tallest when the project is completed in 2020.

TD Bank, based in Cherry Hill, New Jersey, will occupy about 200,000 square feet (18,600 square meters) of the 1.6 million square feet of offices planned for the tower, developer SL Green Realty Corp. (SLG) said in a statement today. Terms of the agreement weren’t disclosed.

The move “will allow us to consolidate our New York City offices into one regional headquarters,” Christopher Giamo, regional president for TD Bank’s New York metropolitan market, said in the statement.

The lease will help New York-based SL Green, the city’s largest owner of office buildings, build the tower, which is to soar 1,514 feet (461 meters), according to property-information website That’s more than 400 feet taller than the nearby Chrysler Building.

One Vanderbilt is going through the city’s permitting process, which should be complete by mid-2015, SL Green said. The plan includes $210 million of public transportation improvements, including connections to the Metro-North Railroad and subway platforms across Vanderbilt Avenue at Grand Central, the company said.

-By David M. Levitt

FHA Loan Insurance Fund Is Back in the Black, Report Shows

Source: Bloomberg / News

The U.S. government’s mortgage insurance fund posted its first positive balance in two years after boosting premiums and cutting losses on loans.

The Federal Housing Administration projects a value of $4.8 billion for fiscal 2014, according to an independent analysis released today. The total, which leaves the fund below it’s congressionally mandated level for a sixth straight year, will mean the FHA won’t need aid to balance its books.

“It’s certainly good news that the fund is back in the black,” Julian Castro, secretary of the Department of Housing and Urban Development, which oversees the FHA, said during a briefing with reporters. “It means that the FHA can fulfill its traditional role of providing access to credit.”

The agency is required to keep enough cash on hand to cover all projected losses in its $1.1 trillion portfolio. The fund must also maintain a cushion of 2 percent of its value, a level it isn’t projected to reach until fiscal 2016.

The fund required a $1.7 billion cash infusion from the Treasury in 2013 amid losses on loans it backed after the housing bubble, the first draw in the agency’s 80-year history.

The improvement in the FHA’s circumstances raises questions about whether the agency will attempt to reach more borrowers by cutting the prices it charges to guarantee loans. The FHA, created in the wake of the Great Depression to aid first-time and lower-income homebuyers, raised fees and premiums as it attempted to reverse losses.

Increased Premiums

Castro declined to say whether the agency would now consider reducing up-front fees or annual premiums, which have increased to 1.35 percent from 0.55 percent in 2011.

“That analysis has not yet been done,” he said.

Consumer advocates and industry groups including the National Association of Realtors and the Mortgage Bankers Association have been urging the FHA to consider cutting its costs because many first-time buyers and families with modest incomes are priced out of the market.

The agency might need to cut its prices to prevent itself from being left with a pool of lower-credit borrowers as those with better credit turn to cheaper loans backed by Fannie Mae (FNMA) and Freddie Mac, MBA President and Chief Executive Officer David H. Stevens said in a telephone interview.

The actuarial report “clearly seems to highlight the possibility that there are some excess fees being charged, at a time when perhaps they should be more focused on ensuring relatively fair access to credit,” said Stevens, who was FHA commissioner from 2009 until 2011.

Republican Criticism

Republican lawmakers who have been critical of the fund’s performance said they are concerned that its reserves are still below mandated levels.

“Failure to meet this requirement leaves hardworking American taxpayers vulnerable to another government bailout,” Representative Randy Neugebauer, a Texas Republican who serves on the House Financial Services Committee, said in an e-mailed statement. “FHA is not just broke, it is broken and in need of long-term structural reform.”

The fund faced headwinds last year: Reverse mortgages, which allow homeowners 62 or older to borrow against their equity and repay the balance when their properties are sold, caused $7 billion in losses last year.

Increases in premiums and a decline in refinancing also drove down FHA’s volume, cutting into the revenue it counts on to shore up its fund. Loan endorsements in the first three quarters of fiscal 2014 were 47 percent lower than in the same period a year earlier. The agency now backs about 22 percent of loans for home purchases.

Last year’s actuarial report projected that the insurance fund had a $1.3 billion shortfall, down from a $16.3 billion shortfall in 2012.

-By Clea Benson

Paris Rejects $650 Million Tower Project; Mayor Objects

Source: Bloomberg / News

A plan by Unibail-Rodamco SE (UL) to build a 520-million-euro ($650-million) skyscraper at the southern edge of Paris was rejected by the city council.

Mayor Anne Hidalgo, who’s backing the project, contested the 83-to-78 outcome, saying some council members didn’t keep their vote secret.

“The vote is null and void,” she said today at city hall.

An administrative court will decide on the next step for the proposed 43-story building to be known as the Tour Triangle, Hidalgo said. The project was opposed by some of Hidalgo’s allies in the Green Party because they’re concerned about traffic congestion. Hidalgo is a Socialist.

The property would have 80,000 square meters (860,000 square feet) of offices as well as shops, child-care facilities and a restaurant. Paris has lagged behind cities including London in building office towers because some residents oppose them on aesthetic grounds. The Montparnasse office tower, built in 1973, remains one of the few Paris skyscrapers outside the La Defense financial district.

-By Francois de Beaupuy

Saudi Arabia’s Alhokair Follows Emaar With Mall Unit IPO

Source: Bloomberg / News

Saudi Arabia’s Fawaz Alhokair Group plans to raise $2 billion from the initial public offering of its Arabian Centres malls unit, surpassing a similar sale by rival Dubai operator Emaar Properties PJSC (EMAAR) earlier this year.

A financial adviser for the sale of the 30 percent stake will be hired before the end of the year, Muhanad Awad, chief executive officer of FAS Capital, the financial and investment arm of Fawaz Alhokair Group, said yesterday by phone. The IPO will probably take place on the Saudi Stock Exchange in 2016, he said. Arabian Centres owns 15 malls in Saudi Arabia with nine more under construction. It also has one outlet in Egypt.

“We’re still in the early stages of working on this and discussing with potential financial advisers,” Awad said. “The offering will be similar to what Emaar Malls did, maybe a bit bigger. We’ll raise about $2 billion or a little more.”

At $2 billion, the IPO would surpass the $1.6 billion raised in September by Dubai’s Emaar Malls Group PJSC, operator of the world’s largest shopping center by area. Emaar, which sold 15 percent of its unit, attracted 104 million visitors to its malls in 2013, compared with more than 140 million shoppers at Arabian Centres developments such as Jeddah’s Mall of Arabia.

Market Opening

Saudi Arabia is preparing to open up its $548 billion stock exchange to foreign investors in the first half of next year, spurring investor interest in the largest Arab economy. The Capital Market Authority in August proposed rules that would allow foreign investors to hold as much as 10 percent of the value of the stock exchange.

The exchange has gained 12 percent this year, encouraging companies to consider share sales. National Commercial Bank raised $6 billion from retail investors earlier this month in the second biggest IPO of the year, behind Chinese e-commerce business Alibaba’s $25 billion IPO in September. ACWA Power International is also considering a $1.1 billion IPO, people with knowledge of the matter said earlier this year.

Fawaz Alhokair Group listed its Alhokair Fashion Retail unit on the Saudi Stock Exchange in 2006. It’s also known as Fawaz Abdulaziz Alhokair & Co.

Companies in Saudi Arabia have raised $7.1 billion from the equity markets this year, according to data compiled by Bloomberg, with the $6 billion National Commercial Bank offering accounting for the bulk of that activity. Last year, they raised $216 million.

-By Matthew Martin and Dinesh Nair

Additional Articles of Interest - Local & Overseas Real Estate