Real News‎ > ‎2014‎ > ‎November 2014‎ > ‎

20th November 2014

Singapore Economy

Singapore's ultra-rich make money quicker than global and Asian peers

Wealth of Republic's UHNW individuals totals US$180b, up 12.5% from a year ago: report

Source: Business Times / Companies & Markets

Singapore's ultra high net worth (UHNW) population boosted their total net worth faster than the global average over the year, and also control more of the country's total wealth than most of the richest individuals elsewhere, a joint report by Wealth-X and UBS showed on Wednesday.

-By Jamie Lee

Singapore Real Estate

New property zone in the making

JTC seen piloting project to test demand from firms in manufacturing-related services that have no production here

Source: Business Times / Real Estate

In what could be a precursor to the creation of a new class of space - between office and light industrial - JTC Corporation is understood to be spearheading the development of a building, expected to be in Woodlands, that will provide affordable space for rental to companies that provide manufacturing-related services but do not have industrial production in Singapore.

-By Kalpana Rashiwala

50 workers crammed into two condo units

Many sleep on the floor amid filth; some say they have not been paid

Source: Straits Times / Singapore

ONE unit is the size of a typical two-bedroom condominium apartment and could house a family of about four comfortably.

But two of these units in a condo along Selegie Road were, instead, housing about 50 construction workers from Bangladesh and India, a spot check by the Migrant Workers' Centre (MWC) and The Straits Times found yesterday.

Rotting food, soiled clothes and bags were strewn on the grimy floors of the units located in Selegie Centre near Little India.

The men slept shoulder to shoulder on the floor or on wooden boards along the corridors outside the apartments. The walls were stained brown and cabinets were broken, while a damp stench permeated the hallways.

When asked if they thought the conditions were bad or unbearable, the men, nervous from the spot check, could only reply: "I don't know."

According to Urban Redevelopment Authority guidelines, rented residential properties can house a maximum of eight people, regardless of size.

Yesterday's spot check came after the MWC received a call on its hotline on Tuesday afternoon from a worker.

He said that his company, Harri Construction & Maintenance, and some of the company's sub-contractors were putting workers up in poor housing and owed them several months of salaries.

MWC executive director Bernard Menon said: "Our staff who answered the call sensed that there was an urgent need to look into the case. Our chairman, Mr Yeo Guat Kwang, directed us to do a spot check later in the night."

Mr Menon added: "Upon our inspection, we found that the living conditions of the workers are unacceptable. We urge MOM (Ministry of Manpower) to take serious action against the employer. This kind of behaviour cannot be condoned."

MOM officers went down to the scene later and took down the particulars of all the workers there.

An MOM spokesman said: "Our initial assessment is that the units are overcrowded and we are investigating several employers for failing to ensure that their foreign employees have acceptable accommodation."

The spokesman added that the ministry is also looking into the claims of some workers who said they were owed salaries.

Employers found guilty of failing to provide acceptable accommodation can be fined up to $10,000, and/or jailed for up to 12 months.

The MWC team also visited a makeshift hut in Geylang Lorong 8, where some 16 Indian national workers from Harri Construction & Maintenance are living.

The zinc-roof hut is located at the backyard of an apartment block, built above an underground sewage tank.

Some of the firm's workers say they are Employment Pass (EP) and S Pass holders but are paid only $900 a month. The salary requirement for S Pass holders is at least $2,200 and at least $3,300 for EP holders.

"My agent promised me a salary of $4,800 a month. But I get only $900 and my boss hasn't paid me for many months. I have been cheated," said a worker who has a degree in engineering from India.

Harri Construction & Maintenance manager Nallusamy Narayanan dismissed the workers' claims when contacted by The Straits Times.

Mr Nallusamy said the workers are unhappy because they want three days off a week but he offered them only a weekly rest day.

He added: "I want them to stay in proper dormitories. But they want to stay in Selegie because it is near Little India. They like Geylang, because you know, there are girls there and they can drink."

Mr Nallusamy, a Singapore permanent resident and Indian national, said he moved 14 workers temporarily to the apartments in Selegie Centre this week. He insisted there are usually only 15 workers in each apartment.

"They were living in a shophouse in Tanjong Katong but they drank and caused trouble for residents. So I moved them to Selegie for a few days only," he said.

He confirmed that some of his workers had complained to MOM that he owed them salaries. "But later, I paid them their salaries. I don't owe them any money now."

-By Amelia Tan

Can revamped Shaw Centre bring buzz back to Scotts Road?

The 'heartbeat' of the Orchard shopping district has shifted to the Bideford Road area in recent years. But Shaw Centre's S$80 million revamp may just be the start of a retail renaissance for the Scotts Road area. 

Source: Channel News Asia / Business

SINGAPORE: Twenty months and S$80 million later, Shaw Centre is all decked out in time to welcome shoppers this festive season. The 42-year-old mall was given a facelift to improve its appeal and pull in a younger crowd, and property consultancy Chestertons say the makeover could also give Scotts Road a much-needed lift.

The new Shaw Centre now has a wider sidewalk and a glass facade. It also has a new Urban Plaza, built over the former terrace public concourse, where red-carpet events can be held.

Inside the mall, the look and feel has also been modernised. The new Shaw Centre has over 11,000 square metres of retail space, and it has achieved leasing commitment for 80 per cent of the space. Polo Ralph Lauren, Nike and SK II Boutique Spa are among the retailers who have set up their flagship stores at the mall.

In order to drive up shopper traffic, more space has been dedicated to F&B. There is a new food court, as well as more upmarket dining options such as the outlets operated by the Les Amis Group. F&B now accounts for 35 per cent of the total space in the mall, compared to 15 per cent before the revamp.

Mr Mark Shaw, executive vice-president of operations at Shaw Organisation, said: "It is really important to have a lot of F&B, particularly because Singaporeans are very food-obsessed, and you know, you cannot eat online. So a good way to combat e-commerce is to have a lot of restaurants and services which require the presence of the consumer."

Shaw Organisation said three floors were demolished to realign the building with the adjacent Shaw House, to provide a more seamless shopping experience.

Shaw Theatres Lido, which houses Singapore's largest Digital IMAX Theatre, is one of the key competitive advantages of the mall, said Mr Shaw.

"The renovation has allowed us to bring our rentals more up to current Orchard Road market rates, that has definitely helped a lot," said Mr Shaw. "In terms of footfall, I think the cinema is really the main driver, as well as Isetan and the unique F&B offerings."


According to real estate consultancy Colliers International, the average monthly gross rent for prime retail space in Orchard Road was S$36.25 per square foot in Q3 2014.

Analysts said the renovation will go some way to help Shaw Centre stay competitive in an ever-changing Orchard Road retail scene.

Mr Donald Han, managing director of Chestertons, said: "In terms of positioning, they have got it right. They have been there, they are at one of the busiest intersections. It is now about harnessing the traffic into the building, keeping them there to spend.'"

Mr Han added that in the last 10 years or so, the 'heartbeat' of the retail district has shifted from the intersection of Orchard Road and Scotts Road to the Bideford Road and Orchard Road junction further down the shopping strip.

However, upcoming developments could jazz things up in the Scotts Road area. "We have now seen the completion of Shaw Centre, Shaw House. Another mall which was the former Orchard Hotel shopping annex, now called Claymore Link, is undergoing a S$30 million retrofitting uplift as well - that should transform the streetscape between Tanglin right up to the Orchard Road-Patterson Road area," Mr Han said.

- CNA/ac

SME One Asia Awards 2014

Source: Business Times (Pg 29 – 60)

Companies' Brief

CitySpring, Keppel Infra merger sends trusts up

Source: Business Times / Companies & Markets

Cityspring Infrastructure Trust (CIT) was one of the top 20 traded counters by volume at the close of trading on Wednesday, with its counter rising three cents, or 5.8 per cent, to end trading at 54.5 Singapore cents. A total of 25.2 million shares changed hands.

-By Mindy Tan

Oxley Holdings

Source: Business Times / Companies & Markets

A slow start, but solid earnings visibility ahead. During the quarter, the group booked contributions from its Singapore projects, most of which were substantially sold. We expect these projects to deliver more than S$700 million of profits in the course of the next two years.

Wife of Lafe chairman seeks to buy Emerald units

Source: Business Times / Companies & Markets

The property investment and development company revealed on Wednesday that it will be seeking approval from its shareholders at a special general meeting on Dec 5 for the approval of the grant of the options for and the proposed sale of four of its residential units at Emerald Hill to Rosy Yu Lo Si.

-By Malminderjit Singh

Global Economy & Global Real Estate

S'pore leads Asia-Pac's prime office rental growth

Tenants demanding good-quality space, now in limited supply. Average CBD rent in Singapore was at S$10.30 psf in Q3

Source: Business Times / Real Estate

SINGAPORE recorded Asia-Pacific's highest growth in prime office rentals of 19 per cent over the 12 months to end-September 2014. This was boosted by tenants' demand for good-quality space, which remains in limited supply as vacancy tightens.

-By Lee Meixian

Portal for firms with interests in Iskandar

Source: Business Times / Money

BUSINESSES looking to tap the growing Iskandar development region across the border will now have the benefit of an interactive portal to guide them.

It has been created by the Singapore Chinese Chamber of Commerce and Industry (SCCCI).

The portal, Iskandar Network@SCCCI, aims to bring together local businesses and foreign businesses based here that already have a business presence in Iskandar, and those looking to set up shop there.

These firms can share their experiences while generating business opportunities, said SCCCI president Thomas Chua at its official launch yesterday.

"This network can also be a channel to provide constructive feedback to government authorities," he said.

For example, one major challenge faced by investors has to do with manpower. While Johor has a large land size, its population is relatively small, which means companies must rely on foreign labour, said Mr Chua. "Fortunately, the levy on foreign workers is more affordable... Nevertheless, getting a consistent and stable workforce is a critical concern for Singaporean companies."

Another worry is toll fees. The chamber has raised this with the relevant authorities, he said.

Still, Iskandar presents a particularly good opportunity for manufacturers that may require more land space - those in heavier industries - and those that face staff woes here due to restrictions on foreign labour, he said.

The portal would be an ideal platform to give feedback and learn from the experiences of others, said Mr Kuah Boon Wee, group chief executive officer of MTQ Corporation.

The SCCCI yesterday also held a seminar, the first to be organised as part of Iskandar Network@SCCCI, where information on Iskandar's investments and the impending goods and services tax were discussed.

From 2006 to last month, the region had attracted about RM156.51 billion (S$60.43 billion) in committed investments, an official from the Iskandar Regional Development Authority said.

Manufacturing was No. 1 at RM50.97 billion, with residential properties accounting for RM38.59 billion, retail or mixed developments RM24.01 billion and utilities RM12.64 billion.

-By Rennie Whang

HK home property prices continue to defy gravity

Surge fuelled by thriving economy, as well as strong demand from mainland Chinese and limited land supply

Source: Business Times / Real Estate

Paris may get first skyscraper in 40 years

Residents torn between disfiguring 19th-century skyline and new office space that may rejuvenate neighbourhood

Source: Business Times / Real Estate

Irish politicians, bankers against tighter credit limits

They warn that proposed caps on mortgage loans, meant to prevent another credit bubble, will hurt young buyers

Source: Business Times / Real Estate

Paramount Group raises US$2.3b in IPO

Source: Business Times / Real Estate

Paramount Group Rises After Record IPO for a U.S. REIT

Source: Bloomberg / Personal Finance

Paramount Group Inc., an office landlord, climbed in its trading debut after raising $2.3 billion in the largest ever initial public offering for a U.S. real estate investment trust.

The shares climbed 3.9 percent to $18.18 after the company sold them for $17.50 each. The shares are listed on the New York Stock Exchange under PGRE.

Investor demand for property trusts is soaring partly because they offer higher yields than some other securities, such as U.S. Treasury notes. The Bloomberg REIT Index has gained more than 20 percent this year, nearing its highest level since March 2007. The offering by Paramount, which plans to qualify as a REIT, surpasses Douglas Emmett Inc. (DEI)’s IPO in 2006, which raised $1.6 billion including an overallotment, as the biggest in the U.S.

“Pricing at the midpoint of the proposed range appears to reflect confidence in the company’s high-quality gateway portfolio, established track record and legitimate operating platform,” Green Street Advisors Inc. analysts led by Jed Reagan wrote in a report late yesterday.

Paramount owns or has stakes in 12 office buildings, including One Market Plaza in San Francisco and 1301 Avenue of the Americas in New York. Office rents in the two coastal cities are growing faster than in many other parts of the country as the economy grows and technology companies expand. Tenants include Bank of America Corp. and Barclays Plc.

Possible Acquisitions

The company plans to use proceeds from the offering for debt repayment, capital expenditures and possible acquisitions, regulatory filings show. Paramount has acquired 28 properties with a value of about $11.5 billion since 1995.

In 20 years, the market capitalization of REITs has surged to about $816 billion from $44 billion, and will probably continue rising, according to PricewaterhouseCoopers LLP.

The REIT industry has grown over the years as investor interest in real estate has increased. Investors seeking to diversify their portfolios have included property companies to broaden their holdings.

REITs are required to pay at least 90 percent of their taxable income to shareholders as dividends, and don’t have to pay federal income taxes on those earnings in exchange. Most REITs distribute all of their earnings to get the full deduction.

Paramount’s predecessor company was founded by Werner Otto, who started Germany’s largest mail-order company from a shoe factory in Hamburg. He died in 2011 at the age of 102.

Concurrent with the IPO, Paramount will sell shares in private placements to certain investors, including $51 million to some family members and affiliates of Otto, according to Paramount’s prospectus.

Paramount is led by Albert Behler, its chief executive officer since 1991.

Bank of America, Morgan Stanley and Wells Fargo & Co. managed the sale.

-By Sonali Basak and Brian Louis

AIG wants US$450m for Korean hotel

Source: Business Times / Real Estate

Hilton said to be seeking to sell Sydney hotel

Source: Business Times / Real Estate

US freshman lawmakers draw lots for office space

Many want to avoid spots that are hard for lawmakers and constituents to reach

Source: Business Times / Real Estate

Mexican first lady to sell mansion

Source: Business Times / Real Estate

Housing starts in surprise October drop

But jump in permits to near 6-1/2-year high is an indication housing market is regaining strength

Source: Business Times / Government & Economy

Simon Property Discloses Stake in Mall Owner Macerich

Source: Bloomberg / News

Simon Property Group Inc. (SPG), the biggest U.S. mall owner, said it has accumulated a 3.6 percent stake in rival Macerich Co. (MAC) and may seek to buy more. Macerich jumped to a seven-year high on speculation it may be taken over.

Simon bought 5.71 million shares of Macerich this year and may request that Macerich waive a provision that restricts ownership to 5 percent, the real estate investment trust said in a statement today. Simon cited the recent acquisition of a 10.9 percent interest in Santa Monica, California-based Macerich by an investor it didn’t name.

The transaction puts Macerich, with its high concentration of West Coast properties, “in play” as a potential takeover candidate, JPMorgan Chase & Co. analysts led by Michael Mueller and Anthony Paolone said in a note to clients today. The malls would be a good geographic fit for Indianapolis-based Simon, which has “been quite acquisitive over the years,” they wrote.

“We find it hard to believe that SPG’s move is because it wants to be a passive investor” in Macerich, they wrote, referring to Simon’s ticker symbol.

Macerich climbed 9.6 percent in New York trading today to close at $76.58, the highest since November 2007. Simon slipped 1.6 percent to $176.37.

A phone message left for Thomas O’Hern, Macerich’s chief financial officer, wasn’t immediately returned.

Ontario Pension

Macerich said two days ago that it 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 included $1.22 billion of stock issued to the pension plan, or an ownership of almost 11 percent.

Simon has been developing outlet malls around the world while refurbishing and expanding some of its biggest U.S. properties to boost growth. In 2012, Simon acquired an interest in European mall owner Klepierre. The REIT owns 29 percent of the Paris-based landlord, data compiled by Bloomberg Intelligence show.

Earlier this year, Simon spun off some of its smaller enclosed malls and strip shopping centers into a separate REIT, Washington Prime Group Inc. That company agreed in September to buy Glimcher Realty Trust for about $2 billion to create a diversified retail property owner.

-By Brian Louis

Colony Financial Agrees $1.6 Billion Cobalt Capital Purchase

Source: Bloomberg / News

Colony Financial Inc. (CLNY) agreed to buy Cobalt Capital Partners, owner of 256 industrial properties across the U.S., for about $1.6 billion.

Cobalt’s management team, led by Lewis D. Friedland, will continue the day-to-day operation of the business, Colony Financial said today in a statement. The deal is expected to close next month, the Santa Monica, California-based company said.

Private-equity investors to sovereign-wealth funds have been buying industrial properties because the yields are higher than for stores and office buildings. Blackstone Group LP is close to a deal to sell industrial real estate owner IndCor Properties Inc. to investors led by Singapore’s GIC Pte for more than $8 billion, Bloomberg News reported Nov. 4, citing two people with knowledge of the matter.

Colony Financial is a real estate investment trust founded by Thomas Barrack Jr. On Nov. 4, the company agreed to combine management with Colony Capital LLC, an investment firm also started by the billionaire.

-By Andrew Blackman

Fannie-Freddie Overseer Urged to Seek Conservatorships Exit

Source: Bloomberg / Luxury

The U.S. Treasury and the federal overseer for Fannie Mae and Freddie Mac (FMCC) should consider ending government control of the two companies if Congress fails to reform the housing-finance system, Senator Tim Johnson said.

“Everyone agrees that conservatorship cannot continue forever, so I hope my colleagues will keep working towards a more certain future for the housing market,” Johnson said today at a Senate Banking Committee hearing with Federal Housing Finance Agency Director Melvin L. Watt. “If Congress cannot agree on a smooth, more certain path forward, I urge you, Director Watt, to engage the Treasury Department in talks to end the conservatorship.”

Fannie Mae and Freddie Mac, which buy mortgages from lenders and package them into securities, have been under U.S. control since they were seized by regulators in 2008 amid loan losses that pushed them toward insolvency. The comments by Johnson, the South Dakota Democrat who leads the banking panel, marked the first time a lawmaker has called for regulators to restore Fannie Mae and Freddie Mac to independence if Congress fails to advance an overhaul of the housing-finance system.

Talks on ending the conservatorship could be a possibility if Congressional efforts fail, though Treasury would have to begin the discussions, Watt said.

“It wouldn’t be initiated by me,” he told reporters after the hearing. “I’m involved in the things that we’re involved in now, operating these enterprises. We’ve got to see what the dynamic of future reform is in the committee. Short- term, I would rule it out. Long-term, I might not rule it out.”

Stock Prices

Common shares of both companies surged on the comments by Johnson, who co-wrote a wind-down bill that stalled in the Senate. Fannie Mae rose as much as 12 percent to $2.45; Freddie Mac increased as much as 10 percent to $2.38.

After a $187.5 billion taxpayer bailout, Fannie Mae and Freddie Mac rebounded and are now required to send the Treasury all of their profits. They’ve paid a combined $225.5 billion, which is counted as a return on the U.S. investment and not as repayment, leaving the government-sponsored enterprises without a legal avenue to exit conservatorship on their own.

“The Enterprises remain trapped in conservatorship,” Johnson said. “FHFA continues to perform the dual role of both regulating and running the businesses of the largest entities in the mortgage market. This is not sustainable, and there is no consensus in Congress regarding how to move forward.”

Republican Opposition

Republicans including Mike Crapo of Idaho, the top member of his party on the banking panel, said they still belive Fannie Mae and Freddie Mac should be put out of business. Crapo, who co-wrote the bill with Johnson, said Congress wouldn’t act this year. Still, he said, it is up to Congress, not regulators, to determine the future of the companies.

Watt, in response to a question from Crapo, agreed.

“Conservatorship should not be a permanent state, and it is the role of Congress to define what the future state is,” Watt said.

He also detailed actions FHFA is considering to aid troubled borrowers and ease tight credit.

Reductions of mortgage debt for borrowers whose homes have lost value aren’t off the table, he said. Fannie Mae and Freddie Mac are currently barred from making debt cuts.

FHFA is analyzing ways to reduce mortgage balances for borrowers without causing losses to Fannie Mae and Freddie Mac, and will come to a decision soon, he said.

“It’s the most difficult issue I have faced as director of the agency,” he said.

Watt also said he was “hopeful” the agency would reach a decision by the first quarter of next year on whether to raise or lower fees Fannie Mae and Freddie Mac charge to guarantee loans and on new requirements for private mortgage insurers.

Details of a new program allowing the companies to back mortgages with down payments as low as 3 percent will be released in early December, he said.

-By Clea Benson

Lowe’s Gains After Closing Sales Growth Gap on Home Depot

Source: Bloomberg / Luxury

Lowe’s Cos. (LOW) is finally closing in on larger rival Home Depot Inc. (HD) in same-store sales growth, one of the most closely watched yardsticks of success in retail.

Lowe’s said today that sales at stores open longer than 13 months rose 5.1 percent in the quarter through October. That almost matched Home Depot’s 5.2 percent gain and is the closest Lowe’s has come to its competitor on that measure in more than four years. Lowe’s also raised its annual profit and sales forecast, while Home Depot maintained its outlook yesterday.

Chief Executive Officer Robert Niblock has taken advantage of years of rebounding home values by adding workers in Lowe’s stores to help customers with projects. The company’s strategy to revamp its product mix with new items and invest more in catering to professional contractors also has paid off, said David Schick, an analyst at Stifel Financial Corp.

“Lowe’s has been working on a number of initiatives over time, and you are seeing some of that play out,” Schick said in an interview. “They’ve entered a different gear.”

Lowe’s, based in Mooresville, North Carolina, rose 6.4 percent to a record close of $62.26 in New York. The gain also marked the biggest advance since May 2009. The shares have increased 26 percent this year, while Home Depot advanced 17 percent. That compares with an 11 percent gain for the Standard & Poor’s 500 Index.

Retail Battle

The battle between Home Depot, the largest U.S. home-improvement chain, and No. 2 Lowe’s has favored both sides over the years. Lowe’s frequently posted better results before and during the last decade’s recession, then Home Depot went on its latest run after improving customer service.

Being able to match Home Depot’s results is “exactly what we’re striving for,” Niblock said in an interview. “We want to be known as the best home-improvement company in the business.”

Profit in the year through Jan. 30 will be about $2.68 a share, Lowe’s said today in a statement. Analysts estimated $2.63, matching Lowe’s previous projection. Same-store sales may rise 3.5 percent to 4 percent, up from an earlier forecast for a 3.5 percent gain.

Net income advanced 17 percent to $585 million, or 59 cents a share, in the third quarter. The average of 25 analysts’ estimates compiled by Bloomberg was 58 cents a share.

Revenue rose 5.6 percent to $13.7 billion, topping the average projection. The 5.1 percent gain in same-store sales also surpassed the average estimate for an increase of 4.1 percent.

Big Purchases

Big-ticket items such as appliances drove sales, helping purchases over $500 gain 9 percent, executives said on a conference call. The company will buy back $300 million more in stock this year than originally planned, Chief Financial Officer Robert Hull said on the call.

Both Lowe’s and Atlanta-based Home Depot view real estate prices and sales of existing homes as key indicators for growth because rising values prompt consumers to spend more on their homes.

Lowe’s said on the conference call that an internal survey showed homeowners’ interest in investing in their properties is the highest since 2006.

“That to-do list has been on the refrigerator all along, they just weren’t willing to invest until they felt better about home values,” Niblock said in the interview. “Now they have more confidence.”

Home Prices

The median price for a single-family home in the U.S. rose 4.9 percent from a year earlier in the three months through September, according to a report from the National Association of Realtors. That came after gains of 4.4 percent in the second quarter and 8.3 percent in the first quarter. Price appreciation, however, is moderating as more properties are listed for sale and buyer demand slows, the group said.

The number of contracts to buy existing homes also rose less than forecast in September, signaling demand may plateau heading into the end of 2014. The pending home sales index increased 0.3 percent after dropping 1 percent in August, the group said last month. The median projection in a Bloomberg survey of economists called for a 1 percent gain.

-By Matt Townsend

Single-Family Housing Starts in U.S. Rise Along With Permits

Source: Bloomberg / Personal Finance

Groundbreaking for single-family homes climbed in October and permits for all future projects reached a six-year high to signal construction will add to U.S. economic growth in early 2015.

Starts of one-family houses advanced 4.2 percent to a 696,000 annualized rate last month, the most since November 2013, Commerce Department figures showed today in Washington. A drop in the construction of apartments pushed total starts down 2.8 percent to a 1.01 million pace.

Builders were granted 4.8 percent more permits last month to begin construction as faster job growth this year and cheaper borrowing costs help revive residential real estate. Companies including Hovnanian Enterprises Inc. are counting on faster wage growth to help ease the burden of tighter lending standards and provide a bigger tailwind for industry.

“Conditions in the housing market are at least stable, and on the margin they appear to be improving a bit,” said Ryan Wang, an economist with HSBC Securities USA Inc. in New York and the top forecaster of building permits over the past two years, according to data compiled by Bloomberg. “We should expect continued gradual growth heading into next year.”

Authorizations to begin work on new housing projects increased to a 1.08 million annualized rate, reflecting increasing demand for single-family and multifamily dwellings. They were projected to advance to 1.04 million, according to a Bloomberg survey of economists.

More homes were under construction in October than at any time since the end of 2008, today’s figures showed.

Lowe’s Profit

Sustained growth in the housing market has encouraged homeowners to spend on renovations, sales figures from Lowe’s Cos. show. The second-largest U.S. home-improvement retailer reported today that receipts climbed 5.6 percent in the three months through Oct. 31 from a year earlier. Profit at the Mooresville, North Carolina-based company increased 17 percent.

Stocks fell after benchmark gauges extended records yesterday. The Standard & Poor’s 500 Index dropped 0.4 percent to 2,043.58 at 10:16 a.m. in New York.

The median estimate of 82 economists surveyed by Bloomberg called for starts to increase to a 1.03 million rate. Estimates ranged from 979,000 to 1.1 million. The pace of starts averaged 930,000 last year.

Work on multifamily projects such as condominiums and apartments, which is often volatile, dropped 15.4 percent to an annual rate of 313,000.

Hovnanian Homes

Hovnanian, based in Red Bank, New Jersey, slowly is beginning to build on some of its 6,000 undeveloped lots. Prices will need to appreciate more before it breaks ground on most of them, Chief Financial Officer Larry Sorsby said.

“We need to have some home price appreciation before we’re going to be willing to put the streets in and build houses,” Sorsby said at a Nov. 13 conference.

“I think we have a ways to go before the economy is hitting on all four cylinders strong enough to really power forward more demand for housing,” Sorsby said. “I think there’s a lot of underemployed people. They may have a job, but it’s not a great job, and it doesn’t give them enough income to go out and buy a home.”

The housing market has been supported by borrowing costs near historic lows. The average 30-year, fixed-rate mortgage was 4.01 percent in the week ended Nov. 13, down from 4.35 percent a year earlier, according to Freddie Mac, based in McLean, Virginia.

Today’s figures follow a report yesterday showing builder confidence rebounded this month. The National Association of Home Builders/Wells Fargo sentiment gauge advanced to 58, matching the second-highest level since 2005, from 54 in October.

While the market recovers, demand is outpacing construction. The U.S. requires between 1.6 million and 1.9 million new units a year just to accommodate population growth and household formation, according to the Harvard Joint Center for Housing.

-By Lorraine Woellert

New York Overtakes Hong Kong for Most Expensive Retail

Source: Bloomberg / News

New York’s Upper Fifth Avenue has overtaken Hong Kong’s Causeway Bay as the most expensive area to lease retail space as an improving U.S. economy boosted prime shopping streets across the country.

Rents on the Manhattan street rose 13.3 percent to a record $3,500 a square foot a year in the 12 months through August, broker Cushman & Wakefield Inc. said in a report today. Causeway Bay rents fell 6.8 percent to $2,735.

“The arrival of brands such as Microsoft, which recently announced its first flagship store in New York’s Upper Fifth Avenue, further underlined the importance of these premier shopping destinations,” said Matt Winn, global retail chief operating officer at Cushman & Wakefield.

U.S. luxury-shopping areas showed the strongest growth in the global survey as retailers sought space on streets like Rodeo Drive in California’s Beverly Hills and New York’s Madison Avenue. Prime rents across the U.S. increased 10.6 percent during the first nine months compared with a year earlier, Winn said. Rents on San Francisco’s Union Square rose 30 percent to $650 a square foot a year, the biggest gain in the world.

The report compares the rents on the most expensive shopping streets in each country. Paris’s avenue des Champs-Elysees remained in third place even though rents were unchanged, following a 40 percent gain last year. London’s New Bond Street, where rents rose 4.2 percent, was fourth.

-By Neil Callanan

Lawsky Leaving After $3 Billion in Fines Makes a Mark

Source: Bloomberg / Personal Finance

When Ocwen Financial Corp. (OCN)shares soared on the news that regulator Benjamin Lawsky, who’s probing the company, will step down, Bill Miller shrugged.

The next head of New York’s Department of Financial Services will probably be as aggressive as Lawsky, continuing the uncertainty for Ocwen, said Miller, who runs the $2.2 billion Legg Mason Opportunity Trust. (LMOPX) Lawsky’s investigations of nonbank mortgage servicers such as Ocwen have caused their shares to plunge.

“Ocwen has been rallying on the view that with him gone that will lift the burden, but I would be surprised if the next person didn’t at least follow through in the way Lawsky was going to,” said Miller, whose fund, which invests in Nationstar Mortgage Holdings Inc., has gained an annual 38 percent since 2011.

In three years as New York’s financial watchdog, Lawsky extracted more than $3 billion in fines from global banks, called for the firing of executives and questioned whether the lightly regulated nonbank servicers are properly handling modifications and defaults. As the department’s first superintendent, Lawsky hired experienced lawyers from the New York Attorney General’s office, creating a strong enforcement culture that will continue after he’s gone, said Kathryn Judge, an associate professor focusing on financial institutions at Columbia University Law School.

“Similar to what we saw Eliot Spitzer doing as attorney general, being in New York allowed Lawsky to step in where federal regulators hadn’t,” Judge said. “By stepping into this role at a formative stage for the regulator, he created a footprint. That legacy will survive.”

Stepping Down

The superintendent probably will depart next year to take a job in the private sector, a person familiar with the matter who asked not to be identified said last week.

“He loves his job and is very busy doing it to the best of his ability each day,” Matthew Anderson, a department spokesman, said of Lawsky. “He hasn’t decided on his plans for the future.”

Lawsky, 44, started looking at Atlanta-based Ocwen in June 2011, two weeks into his new job, after the firm announced its intention to acquire Litton Loan Servicing from Goldman Sachs Group Inc. Nonbank mortgage firms were growing quickly as large banks retreated from the $9.4 trillion market for collecting loan payments because of new capital requirements.

Regulators had been inundated with complaints from borrowers about Litton, such as the improper charging of penalties in foreclosure cases, according to the Consumer Financial Protection Bureau. Ocwen agreed to improve Litton’s internal controls.

Ocwen’s Shares

In June 2012, Lawsky sent a team of examiners to Ocwen’s offices to pore over records. Since then, he installed a monitor at the firm, blocked its purchase of some mortgage servicing rights, and sent five public letters to the company, raising issues such as possible conflicts of interest.

Last month, the New York watchdog revealed that the company had backdated thousands of loan modification denial notices. That left borrowers with no time to appeal the decisions. Ocwen apologized for backdating letters, which it blamed on a software error, and has said it’s cooperating with Lawsky’s probes.

David Millar, a spokesman for Ocwen at Sard Verbinnen & Co., declined to comment.

Shares of the firm have plummeted about 62 percent this year while Lawsky has scrutinized it. Omega Advisors Inc., founded by Leon Cooperman, sold all of its 2.6 million shares of Ocwen during the third quarter.

So when the superintendent’s plan to leave the department was reported on Nov. 10, investors cheered. The stock jumped 5 percent.

Deal Killer

Paul Miller, a bank analyst at FBR Capital Markets Corp., wrote that the news is likely “headline positive” for an industry that’s faced delayed transfers of servicing rights and increased oversight. Big banks may resume selling servicing rights if the existing environment eases, Miller wrote on Nov. 10.

Three days later, Ocwen announced it was no longer pursuing the purchase of $39 billion in servicing rights from Wells Fargo & Co. -- a deal that Lawsky had earlier blocked. A department settlement with Ocwen could include a large monetary fine and a cessation of some business for a period of time, said Ed Mills, a policy analyst at FBR.

“Lawsky wanted prudential regulatory oversight and I think he was correct that these companies have grown very, very rapidly,” said LMM LLC’s Miller, who is based in Baltimore.

In an April 2013 speech in New York, Lawsky spoke about the freedom he has had to set the regulatory agenda.

Charging Ahead

“As a newly created regulator, DFS isn’t necessarily wedded to existing ways of doing business,” he said. “Sometimes that means DFS may be out in the lead on a particular issue.”

The New York regulator has used his leverage over licensing in the country’s financial hub to dictate business practices to global banks, consulting firms and nonbank lenders. He censured Deloitte Financial Advisory Services LLP, led opposition to an insurance industry effort to allow firms to shift reserves to special purpose entities, and refused to join a group settlement over Barclays Plc’s currency-trading practices. He’s also called for senior executives to be held responsible rather than their corporations, and pushed for individuals to be dismissed from BNP Paribas SA over sanctions violations.

Disruptive Approach

“With Lawsky as the first superintendent, it truly elevated the role of DFS to a national level to the point where DFS is basically another national regulator for banks and insurance companies,” said Mills at FBR.

The regulator’s go-it-alone approach could be counterproductive, said Judge, the Columbia professor. He broke ranks with other authorities by issuing a public letter in August 2012 outlining problematic transactions by Standard Chartered Plc (STAN) and demanding to know why he shouldn’t revoke its license.

Officials at the Manhattan District Attorney’s office, Federal Reserve, Treasury and Justice Department fumed over the New York regulator’s action, which had upstaged and embarrassed them, according to people briefed on the matter at the time.

“Someone proceeding unilaterally can have disruptive effects,” Judge said.

Governor Andrew Cuomo appointed Lawsky, who worked as a special assistant for him in 2007 when he was attorney general. Lawsky, a Democrat, became Cuomo’s chief of staff after he became governor.

Cuomo’s Appointment

The superintendent’s work has reflected favorably on the governor, said David Reiss, a professor who specializes in real estate and consumer protection at Brooklyn Law School. That will encourage Cuomo to select a successor who’s equally dynamic, Reiss said.

Cuomo will want to build on Lawsky’s record of protecting homeowners from improper foreclosures and holding mortgage servicers accountable, said Reiss.

Chief of staff Anthony Albanese, general counsel Daniel Alter, and capital markets division head Maria Filipakis are among the top people that Lawsky brought to the department. One of them may be in a position to replace him, according to a lawyer who has had extensive dealings with the superintendent. The lawyer asked not to be named because he’s not authorized to speak publicly about the matter.

The successor will have to focus more on regulation and finding answers to the issues the department uncovered with nonbank servicers and insurers, said Eric Dinallo, who served as New York’s superintendent of insurance from 2007 to 2009.

“Each superintendent or commissioner wants to put their unique stamp on the agency,” he said.

-By Alexis Leondis

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