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4th November 2014

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HDB resale flats a third more expensive than new BTO flats in suburbs: Khaw

National Development Minister Khaw Boon Wan also revealed about 3,500 applicants have been barred from buying new Built-to-Order flats for a year after they cancelled their bookings with HDB.

Source: Channel News Asia / Singapore

SINGAPORE: Housing Development Board (HDB) resale flats are about 31 per cent more expensive than new Build-to-Order (BTO) ones in the suburbs, or the Outside Central Region (OCR), National Development Minister Khaw Boon Wan revealed in a written reply to Parliament on Monday (Nov 3).

He added that the price difference between the two flat types was 18 per cent in 2004.

Mr Khaw also noted that prices of private homes in the suburbs are 158 per cent higher than that of HDB resale flats in the same area. The figure was 118 per cent in 2004.

But Mr Khaw said the numbers should be interpreted with care, as the industry's grouping of private property is different from HDB's classification.

"OCR and RCR (Rest of Central Region) are terms used by the industry to group private properties in Singapore. They do not coincide with the HDB classification of mature and non-mature estates," he said.

"Moreover, given the wide range of housing types in the private housing market, from shoe-box units to luxurious penthouses, price comparison between the public and the private housing markets should therefore be interpreted with care," Mr Khaw said.


In response to another question by Pasir Ris-Punggol GRC MP Gan Thiam Poh, Mr Khaw also said about 3,500 applicants have been barred from buying new BTO flats for a year after they cancelled their booking of units with HDB. This is since the implementation of the rule in March 2012, Mr Khaw said.

He noted that the measure to impose this one-year debarment is to discourage frivolous bookings. "Such behaviour is unfair to genuine flat buyers who may otherwise be crowded out," Mr Khaw said.

"HDB prefers to accumulate its balance flats and sell them under a Sale of Balance Flats exercise when there is a sufficiently large supply. This allows applicants more choices of flat types in various locations."

- CNA/dl

No shorter leases for first-time flat buyers

Source: Straits Times / Singapore

THE Housing Board (HDB) is not going to introduce an option of shorter leases of 70 years for first-time buyers of its flats.

First-timers who want such flats can turn to the resale market, where they are still eligible for housing grants, National Development Minister Khaw Boon Wan said in Parliament yesterday.

He also did not think demand for such flats would be strong.

Mr Khaw was replying to Mr Seah Kian Peng (Marine Parade GRC), who asked the ministry to consider offering new flats of 70-year lease, alongside the existing 99-year lease.

Mr Seah argued that home prices would be more affordable with shorter leases.

Disagreeing, Mr Khaw gave two reasons why demand would be weak.

First, the upfront cost the HDB would incur for a 70-year lease would be the same as that for a 99-year lease.

Second, owing to the time value of money and the fact that flats with shorter leases tend to depreciate faster, the reduced price of a flat would not be directly proportional to the shortened lease.

"In fact, it is significantly higher," Mr Khaw said.

"The fact is that we price new flats on a 99-year lease to be highly affordable for first-time buyers."

With significant housing grants, first-timers with a monthly household income of $1,000 can afford a new two-room flat in a non-mature estate, while those who earn $4,000 a month should be able to afford a four-room home.

"They can do so with little or no out-of-pocket cash," he said.

The HDB buys land from the Singapore Land Authority on a 105-year lease, enabling the authority to build and sell new flats with a 99-year lease.

It, however, offers flats with shorter leases to serve the needs of specific buyers, Mr Khaw said, citing studio apartments, which are sold on a 30-year lease to senior citizens as their retirement homes.

He also assured Mr Seah that he would "keep (his) options open", by perhaps offering an entire block of flats with 70-year lease, should the need arise.

"But at the moment, I doubt it," he said.

-By Rachel Au-Yong

HDB flats with 70-year lease unlikely to have strong demand: Khaw

Ministry of National Development price new flats on a 99-year lease to be "highly affordable" for first-time buyers, although there are exceptions where it serves specific buyers' needs such as for senior citizens, says Minister Khaw Boon Wan.

Source: Channel News Asia / Singapore

SINGAPORE: It is not necessary for the Housing and Development Board (HDB) to sell new flats with a 70-year lease alongside 99-year flats, as there is unlikely to be "strong demand" for the proposed option, said National Development Minister Khaw Boon Wan on Monday (Nov 3).

Mr Khaw said there are two reasons for this assessment: Firstly, the upfront cost HDB has to incur to offer a 70-year lease option is the same as that of a 99-year lease; and secondly, while a 70-year lease flat should be cheaper than a 99-year lease, the "cost reduction is not directly proportionate to the reduction in lease".

"Buyers who prefer flats on 70-year leases can buy them from the resale market, and still be eligible for housing grants if they are first-time buyers," the minister said, in response to the proposal mentioned by MP Seah Kian Peng in Parliament.

He added that HDB prices new flats on a 99-year lease to be "highly affordable for first-time buyers".

"With significant housing grants, first-timer families who today earn S$1,000 per month can afford a 2-room Build-To-Order (BTO) flat in a non-mature estate. Those who earn S$2,000 per month can afford a 3-room BTO flat, and those who earn S$4,000 per month, a 4-room BTO flat. They can do so with little or no out-of-pocket cash," Mr Khaw stated.

He did note there are exceptions, such as Studio Apartments which are sold on a 30-year lease to senior citizens as their retirement homes.

- CNA/kk

Singapore Economy

Restructuring not just about productivity: MAS

Exercise aims to align economy with capabilities, resources; raising productivity is for increasing real wages

Source: Business Times / Government & Economy

AS it becomes clearer that it will be extremely challenging for Singapore to hit its ambitious 2-3 per cent productivity growth target, the Monetary Authority of Singapore (MAS) has said restructuring should not be measured solely against productivity performance, and that productivity is not an end in itself.

In response to queries from The Business Times, MAS chief economist and assistant managing director (Economic Policy) Edward Robinson said: "Restructuring is about making the shifts necessary to align the structure of the economy with our capabilities and endowments, in other words, to produce what we are good at and have the resources for. The ultimate objective of raising productivity is to increase real wages for Singaporeans, which in turn is a means to increase economic welfare through consumption of a variety of goods and services. Hence, productivity is not an end in itself; neither is production, exports, or competitiveness per se."

Mr Robinson's comments come as Singapore nears the halfway mark of its 10-year economic restructuring drive - and with little to show for it, at least by way of labour productivity growth. This averaged just 0.1 per cent from 2011 to Q2 2014, and only 0.4 per cent if construction - often cited as a productivity laggard - is excluded. But Mr Robinson told BT that in the short term, "there are limitations in relying on simple productivity indicators" since they are "not a good guide" to the country's ability to sustain and enhance the population's standard of living. This is not only because productivity growth can see-saw from quarter to quarter - it is, after all, dependent on GDP performance - but also because productivity can be affected by sector-specific developments, based on the needs of society.

An increasingly ageing and affluent population, for instance, has meant greater demand for health and education services, as well as recreational activities - all of which require more workers. With a ramp-up in the number of infrastructure projects of late, additional labour has also been necessary in the construction sector.

Because of the increase in labour inputs, a direct measure of productivity - conventionally calculated as output over input - may not necessarily yield favourable results. In fact, mathematically, productivity is likely to fall. "But in both these instances, it is clearly the case that Singaporeans' welfare is enhanced by the production and availability of such infrastructure and services," said Mr Robinson, stressing that short-term fluctuations in productivity growth "do not mean that the welfare of Singaporeans has suddenly deteriorated or improved".

Just as the MAS is hesitant to assess restructuring by a single metric, it is also loathe to judge Singapore's competitiveness solely by its real exchange rate, unit labour cost, export performance or market share.

Private-sector economists have highlighted how Singapore's real effective exchange rate (REER) has been climbing steadily against the average REER of regional economies. They argue that this has made the Republic's exports even more uncompetitive, leading to a decline in export performance.

But Mr Robinson said that it can be "misleading" to infer that Singapore has lost overall export competitiveness just because its real exchange rate has strengthened over time.

For one thing, the product mix of Singapore's export basket continues to evolve, to include higher value-added goods which command higher unit prices. And while Singapore may have lost competitiveness in one market or industry (such as disk drives), it has also gained competitiveness in other areas (including semiconductors and storage devices).

Said Mr Robinson: "Similarly, if our export growth is slowing or if we are not gaining market share, it does not necessarily mean that we are no longer competitive."

While other ministries and government agencies have a more direct bearing on the restructuring process - by providing businesses with incentives and support to transform - Mr Robinson says the MAS's role in restructuring is a different one.

"Monetary policy in Singapore is not the driver of the restructuring process, but rather the handmaiden to keep inflation low and stable during the transitory period. As MAS has repeatedly emphasised, an orchestrated weakening of the domestic currency will not enhance competitiveness, and will only lead to higher inflation."

As such, even though restructuring could entail higher costs and slower growth, Mr Robinson says the MAS seeks to instill confidence that prices are stable over the medium term.

"This would provide the certainty and assurance for firms to make longer-term investment decisions, initiate changes in business processes, and spur new lines of activity. The returns from such investments will more likely be higher in an environment with macroeconomic stability," he added.

In a statement on Monday, the Ministry of Trade and Industry (MTI) maintained its productivity growth target of 2-3 per cent per year, which was adopted in February 2010 for the 10-year period to 2019.

MTI said: "While it was ambitious, it reflected the room for improvement after just 1 per cent growth on average in the decade up to 2009. Productivity is now expected to grow by slightly over 2 per cent per year on average in the first five years of the target period, but with almost all the gains being achieved in 2010 when the economy recovered strongly."

-By Kelly Tay

More tools to measure productivity growth soon

Source: Business Times / Government & Economy

INCREASINGLY, the government is coming up with more indicators to better measure productivity growth in the different sectors.

Senior Minister of State for Trade and Industry Lee Yi Shyan on Monday said in parliament that the Ministry of Trade and Industry is working with various trade associations and industry bodies to roll out productivity improvement plans that are tailored to the needs of the individual sectors.

This, as sectors including food and beverage (F&B), retail and construction face rising cost pressures, particularly against the backdrop of a labour crunch.

Mr Lee made this point in his response to MP Foo Mee Har's question on whether the government needs to implement "finer measurements of productivity", given that topline numbers do not seem to reflect the progress made since Singapore's economic restructuring efforts began in 2010.

Citing the example of the construction sector, Mr Lee said that productivity growth is measured in terms of value-add per worker, but it does not reflect productivity growth.

Instead, another measurement - square metre constructed per man day - indicated that the sector has made progress over the last three years. "If this increase is not reflected in the prices of their contracts, then the net effect may be a reduction in productivity."

Another example raised was the retail sector, where specific indicators of productivity growth include sales per square foot of retail space and the turn of inventory.

Mr Lee said Singapore's long-term target for gross domestic product growth is between 3 and 5 per cent, while the target productivity growth is between one and 3 per cent.

Given the macroeconomic conditions, he said that the most realistic productivity growth target for this decade is between 2 and 3 per cent.

The earlier version of this article stated, based on the speech made in parliament, that realistic productivity growth target for this decade is between 2 and 4 per cent. The Ministry for Trade and Industry has since clarified this to be 2 to 3 per cent. The article above has been revised to reflect this.

Changes in senior civil service roles

Source: Straits Times / Top of The News

THE Ministry of Home Affairs (MHA) and Ministry of Law will have new permanent secretaries come Dec 1.

Different chiefs will also take the helm at the Inland Revenue Authority of Singapore (Iras) and the Economic Development Board (EDB) on the same day.

The Public Service Division announced these movements yesterday, in a reshuffling that will see five senior civil servants changing roles.

Mr Leo Yip, 50, will relinquish his post as EDB chairman to become Permanent Secretary for Home Affairs. It will be familiar ground for Mr Yip, who was formerly director of police operations and Permanent Secretary for Manpower.

He succeeds Mr Tan Tee How, 55, who will be appointed Commissioner of Inland Revenue and chief executive officer of Iras. Mr Tan replaces Dr Tan Kim Siew, who will be stepping down.

Mr Tan, the founding CEO of National Healthcare Group, was named Permanent Secretary for National Development in 2004 and for Home Affairs in 2011.

In an internal message to MHA officers, Deputy Prime Minister and Home Affairs Minister Teo Chee Hean thanked Mr Tan for his contributions to the ministry, including restructuring its headquarters.

Filling Mr Yip's shoes at the EDB will be Dr Beh Swan Gin, 47, now Permanent Secretary for Law. A medical doctor by training, Dr Beh started his career in the EDB and was its managing director from 2008 until becoming a permanent secretary in 2012.

Mr Ng How Yue, 44, will take over Dr Beh's role as Permanent Secretary for Law, giving up his position as Second Permanent Secretary for Trade and Industry, which he has been holding since 2011.

Mr Ng, who is married to Ms Tin Pei Ling, an MP for Marine Parade GRC, was principal private secretary to Prime Minister Lee Hsien Loong in 2008.

His current role will in turn be filled by Mr Chee Hong Tat, 41, who has been CEO of the Energy Market Authority since 2011. Mr Chee's successor at the statutory board will be announced at a later date.

Both Mr Yip and Mr Chee have been principal private secretaries to former prime minister Lee Kuan Yew, when Mr Lee was senior minister and minister mentor, respectively.

Mr Tan was appointed principal private secretary to former PM Goh Chok Tong in 1997.

-By Rachel Au-Yong

Singapore Real Estate

GIC makes first real estate move into NZ

Source: Business Times / Government & Economy

AFTER clocking in an ultra-busy month in October, Singapore's sovereign wealth fund GIC could be keeping up the shopping pace this month.

On Monday, the state-linked fund with over US$100 billion of assets under management, revealed its maiden property foray into New Zealand by tying up with Goodman Property Trust (GMT) to co-invest in Auckland's rapidly developing Viaduct Quarter.

The pact, with one of New Zealand's largest listed property investor by market value, includes GMT's existing viaduct property interests. GMT is managed by Goodman (NZ) Ltd.

The joint venture will initially own a portfolio of assets worth NZ$313 million (S$312.6 million) and has a mandate to grow to NZ$500 million over time, said Goodman and GIC in a joint statement. GIC will acquire a 49 per cent interest in these assets while GMT will retain a 51 per cent share with all future investments to be carried out on the same basis.

"The benefits of GMT's close relationship with Goodman Group, one of the world's largest integrated property groups, have facilitated the introduction of GIC into the New Zealand market and a broadening of GMT's investment strategy in the Viaduct," said Goodman chairman Keith Smith.

The Viaduct Quarter was identified by GMT as a strategic investment location eight years ago; in 2006, GMT acquired the Air New Zealand building and a 50 per cent interest in Viaduct Corporate Centre. It later upped the ante on its investment in the area and bought the new Fonterra building which is currently being developed by Goodman Group and Fletcher Building.

The GMT-GIC tie up will continue this commercial focus, building a portfolio of high-quality, campus-style office properties, leased to major customers on long-term leases, said the firms. The pact will also allow GMT to expand its investment in the area without requiring any significant new funding, said Goodman chief executive John Dakin.

Investment opportunities in the Viaduct Quarter have risen, thanks to the local government's initiatives and private development which are transforming the former marine and industrial areas into a mixed-use waterfront project.

"As a long-term investor, GIC looks to establish strategic partnerships with leading market players. Goodman has strong asset management expertise and has a good pulse on the New Zealand market. We believe there will be good investment opportunities," said Goh Kok Huat, president of GIC Real Estate.

GIC had a cracking time in October with lots of deals in the property space in Turkey, Japan, Spain and Italy. Less than a week ago, the fund made its first corporate real estate investment in Turkey by forking out 250 million euros (S$402.6 million) for a rights issue which will result in a 20 per cent stake in Turkish firm Ronesans Gayrimenkul Yatyrym (RGY) - the real estate arm of Turkey's Rönesans Group and an affiliate of GIC.

It also scooped up a prime property in Tokyo's business district for reportedly US$1.7 billion. Europe has been in its cross hairs with the state-linked fund announcing plans to buy 30 per cent of Spanish real estate firm Gmp for over 200 million euros and the remaining half it doesn't own in one of Italy's largest malls RomaEst Shopping Centre.

-By Anita Gabriel

GIC taking 49% stake in NZ project

Its Auckland venture the latest in string of global property investments

Source: Straits Times / Money

SINGAPORE sovereign wealth fund GIC is making its foray into the New Zealand real estate sector with an investment in a major Auckland waterfront precinct.

GIC is taking a 49 per cent stake in a joint venture with New Zealand-listed Goodman Property Trust (GMT), which holds the other 51 per cent of the partnership.

The joint venture will invest in Auckland's Viaduct area with an initial portfolio of assets worth NZ$313 million (S$313 million), said GIC and GMT's manager Goodman (NZ) in a joint statement yesterday.

GMT's assets in the precinct, including the Air New Zealand building and the upcoming Fonterra HQ building, will be included in the portfolio.

Other investments in the Viaduct area are likely as the partnership has a mandate to grow the portfolio size to NZ$500 million.

The joint venture aims to continue its investment strategy of maintaining a commercial focus, where it will build a portfolio of high-quality, campus-style office properties. The assets will then be leased to major customers on long-term leases.

Future investments will see GIC keeping to its 49 per cent share of assets and GMT holding 51 per cent.

Mr Goh Kok Huat, president of GIC Real Estate, said: "As a long- term investor, GIC looks to establish strategic partnerships with leading market players. Goodman has strong asset management expertise and has a good pulse on the New Zealand market.

"We believe there will be good investment opportunities that allow the joint venture to grow further, particularly in the Viaduct quarter."

The Viaduct area is a fast-developing, waterfront mixed-use precinct earmarked for growth by the local authorities.

The former marine and industrial zone is being transformed into an upmarket residential, commercial and entertainment area.

GIC has been busy investing in the real estate sector in recent weeks, adding assets in both Europe and Asia.

Just last week, it took a 20 per cent stake in Turkish real estate company Ronesans Gayrimenkul Yatyrym for €250 million (S$402 million).

Earlier last month, it paid about €200 million for a 30 per cent stake in Spanish real estate firm Gmp.

GIC also became the sole owner of one of Italy's largest malls, RomaEst Shopping Centre, after acquiring the remaining 50 per cent stake it did not already own in the property early last month.

The sovereign wealth fund also acquired a prime office property in Tokyo's business district last month.

-By Mok Fei Fei

Blackstone said to be in due diligence for bulk residential purchases

Paterson Suites and 21 Anderson bulk purchases expected to be effected through the sale of shares

Source: Business Times / Real Estate

Global investment and advisory giant Blackstone is said to be keen on bulk purchases of high-end residential units in Singapore. It is understood to be doing due diligence for a potential acquisition of 18 four-bedroom apartments at Paterson Suites as well as an en bloc purchase of 21 Anderson Royal Oak Residence. Both are completed freehold developments.

-By Kalpana Rashiwala

Nov 28 opening for The Seletar Mall

Developed by a JV firm of SPH and UE, it has already achieved 99.6% occupancy

Source: Business Times / Real Estate

The Seletar Mall has obtained the Temporary Occupation Permit (TOP) on Oct 28 and will open its doors to shoppers on Nov 28. The mall - developed by The Seletar Mall Pte Ltd, a joint-venture company between Singapore Press Holdings (70 per cent) and United Engineers Limited (30 per cent) - has already achieved 99.6 per cent occupancy.

The Seletar Mall to open on Nov 28

Source: Straits Times / Money

SINGAPORE'S newest shopping centre, The Seletar Mall, will open its doors to the public on Friday, Nov 28, Singapore Press Holdings (SPH) said yesterday.

The mall, which obtained its Temporary Occupation Permit last Tuesday, was developed by a joint venture between SPH and United Engineers (UE).

SPH has a 70 per cent stake in the joint venture and UE has 30 per cent.

The mall, at 33 Sengkang West Avenue, has already achieved an occupancy rate of 99.6 per cent.

The four-storey complex with two basement retail levels will house more than 130 brands over a net lettable area of 188,000 sq ft. There are about 380 carpark spaces at basements 3, 4 and 5.

The mall at the junction of Sengkang West Avenue and Fernvale Road has a diverse mix of tenants, including supermarket FairPrice Finest, cineplex Shaw Theatres, foodcourt Foodfare, Japanese casual clothing company Uniqlo, women-only fitness centre Amore Fitness & Boutique Spa, and department store BHG. Eateries include Din Tai Fung, Fish & Co, Paradise Inn and Shokudo, while lifestyle and apparel retailers include Challenger Mini, City Chain, Giordano and Popular Bookstore.

The mall also features a wide range of children's enrichment centres, such as Aspire Hub Education, Han Language Centre and The Ballet and Music Company.

BB Spa, Early Learning Centre, Ergo Factors, Hokey Pokey, Lamkins, Mothercare and Poney round up the retail offerings for parents and children.

The mall will celebrate Christmas with a series of promotions, performances and activities, such as special treats for children, including airbrush tattoos and craft activities.

Companies' Brief

OUE H-Trust's Q3 DPS higher than forecast

Source: Business Times / Companies & Markets

OUE Hospitality Trust (OUE H-Trust) on Monday reported distribution per share of 1.64 Singapore cents in the third quarter, up 2.5 per cent from its forecast, on higher distributable income. Income available for distribution was stronger than expected for the three months ended September, as a result of higher net property income of S$25.4 million, which rose 1.6 per cent.

-By Jamie Lee

OUE Hospitality Trust posts distributable income of $21.7m

Source: Straits Times / Money

FEWER tourists and lower retail spending failed to dent the numbers at OUE Hospitality Trust in the third quarter.

It posted distribution per stapled security (DPS) of 1.64 cents, 2.5 per cent more than expected, on the back of a lift in distributable income to $21.7 million, which is 2.7 per cent higher than forecast.

Net property income for the three months to Sept 30 was $25.4 million, 1.6 per cent higher than predicted due to lower expenses, it announced yesterday.

Gross revenue was $28.5 million, 0.7 per cent above expectations. Higher room revenue and food and beverage patronage at Mandarin Orchard hotel helped revenue, as well as non-shop leasing like advertising space at Mandarin Gallery mall.

The properties, both in Orchard Road, are the only two in the trust's portfolio.

The trust, which listed in July last year, comprises stapled securities from the OUE Hospitality Real Estate Investment Trust (Reit) and OUE Hospitality Business Trust.

Mr Chong Kee Hiong, chief executive of the Reit manager, yesterday said the hotel's 160 newly renovated rooms have enabled it to achieve higher revenue per available room of $252, compared with the $248 forecast.

Mandarin Gallery should "continue to enjoy stable income as more than 98 per cent of the mall's rental income comprises fixed rent", the trust said in a statement.

The results were announced after the market closed. Unitholders can expect to receive their payout on Dec 3. OUE's stapled securities closed 0.5 cent higher at 91.5 cents yesterday .

-By Marissa Lee

Chip Eng Seng wins S$233m contract

Source: Business Times / Companies & Markets

Chip Eng Seng Corporation was among the companies that announced contract wins on Monday. The construction firm said that it has won a S$232.8 million contract through its wholly owned subsidiary.

-By Jamie Lee

Chip Eng Seng wins S$232.8m HDB contract to build residences in Woodlands

The contract will see a unit of the Singapore Exchange-listed organisation, Chip Eng Seng Contractors, undertake the construction of nine residential blocks at Woodlands.

Source: Channel News Asia / Business

SINGAPORE: A unit of mainboard-listed Chip Eng Seng Corporation won a S$232.8 million contract from the Housing and Development Board (HDB).

This agreement would see Chip Eng Seng Contractors construct nine residential blocks at Woodlands Neighbourhood 1, according to the press release on Monday (Nov 3). Works for this contract are expected to be completed in mid-2018.

In a filing to the Singapore Exchange (SGX), Chip Eng Seng said the group's order book stood at S$548 million as at Jun 30, 2014.

The company also stated that it is involved in other HDB projects, including those at Jurong West Neighbourhood 6, Bukit Panjang Neighbourhood 4 and Bukit Batok Neighbourhood 1.

- CNA/kk

S$30m fund to help Singaporeans master skills

Ho Bee donates S$5m to the SkillsFuture Jubilee Fund at The Metropolis inauguration ceremony

Source: Business Times / Real Estate

“Mr Lee thanked Ho Bee Land for its S$5 million donation to the fund to mark the official inauguration of its office project in Buona Vista, The Metropolis. Since its completion a year ago, The Metropolis located next to Buona Vista MRT Station is close to 96 per cent occupied, boosting Ho Bee's quarterly earnings with strong rental contributions. Current asking rents hover around S$7.50-S$8.00 per square foot per month (psf pm).”

-By Lynette Khoo

SPH buys 60% stake in property data group

Source: Straits Times / Top of The News

SINGAPORE Press Holdings (SPH) has bought a 60 per cent stake in privately held Cosine Holdings in a bid to boost its offerings in property information services.

The $30 million all-cash deal was done via SPH unit SPH Interactive.

Cosine is the holding company for the StreetSine Technology Group, which consists of StreetSine Singapore, StreetSine Hong Kong and the digital platforms Singapore Real Estate Exchange (SRX) and Hong Kong Real Estate Exchange (HRX).

StreetSine Singapore will integrate SRX and SPH's existing STProperty portal onto one digital platform that will offer consumers and real estate professionals end-to-end real-time information, property applications and other services for transacting real estate here, SPH said in a statement yesterday.

STProperty will retain its brand but will be completely integrated with SRX, HRX,, and professional mobile applications, including Agent Connect, New Project Marketing and SRX Analyzer.

StreetSine co-founders Sam Baker and Jeremy Lee will maintain a combined stake of 40 per cent and will continue to run the company as chief executive and chief technology officer respectively.

"The best thing about this deal is that we're going to be integrating digital technology with traditional media channels and that will provide more transparency and efficiency on the real estate market to consumers and real estate advisers," said Mr Baker.

"For example, we have some pricing techniques, pricing indices and X-Value, a computer- generated appraisal system. Working with reporters across SPH, we can support them so they can better provide information to their readers and consumers."

SPH's senior executive vice- president of marketing, Mr Leslie Fong, called the deal a "win-win- win".

By combining SRX and STProperty, the firm can offer consumers and real estate professionals a one-stop shop for all the information they will need for property- related transactions, Mr Fong said.

The integration of StreetSine with STProperty and various SPH digital and print offerings will also create "the most far-reaching digital property listing platform in Singapore", SPH said.

It will also bring about greater return on investment to advertisers, as StreetSine and SPH can now offer shared services and marketing platforms for advertisers that enhance agent productivity and marketing of property-related services.

Furthermore, SPH noted, StreetSine brings independent and advanced software engineering capabilities to the company.

-By Yasmine Yahya

Global Economy & Global Real Estate

Asian investors eye property beyond region for next year

They prefer UK and US, says survey; S'pore office sector also popular among Asian and global investors

Source: Business Times / Real Estate

Asian investors appear to be more keen to acquire properties outside the region next year, in contrast to their global counterparts who prefer to invest within their own region, a new study has found. In a survey by Colliers International, more than half of the Asian investors singled out the UK as their key outbound destination in Europe next year, while 40 per cent indicated the US as their preferred destination.

-By Lynettet Khoo

Home prices in Johor slide in second quarter

Prices of newer projects falling, but resale market stays strong

Source: Business Times / Money

HOME prices in Johor state, which takes in the huge Iskandar development zone, dipped in the second quarter for the first time in more than two years.

Prices of high-rise units - which have sprung up in large numbers recently in Iskandar - tumbled 13.5 per cent from the first quarter.

The figures are from Johor's House Price Index (HPI) in a recent Maybank IB Research report.

It showed that the overall index fell 1.6 per cent quarter on quarter - though it was still up 4.6 per cent from the second quarter last year.

The slide has been caused by the Malaysian government's cooling measures from January, said analyst Wong Wei Sum of Maybank IB Research.

The raising of the minimum price of property that can be bought by foreigners - from RM500,000 (S$195,000) to RM1 million - since May has hit demand as well, Ms Wong told The Straits Times.

Still, property consultants noted that while prices of newer projects are falling, secondary market prices remain robust.

Prices in newer developed estates have run up to an unsustainable level, leading to a large price difference between older and newer areas, they said.

"Prices of properties launched up till 10 years ago have been gradually rising over the past 10 years," said Mr V. Sivadas, executive director of PA International Property Consultants.

"But in Iskandar in the last five to 10 years, developers' pricing has shot through the roof."

Developers have been hiking prices "indiscriminately" in response to changes in the minimum value for property purchases by foreigners, Mr Sivadas added.

"The developers' market will eventually find its own level. If developers can't sell, they will have to be more innovative in marketing strategies or adjust pricing."

Demand for recent property launches has been softer than from the second half of 2012 to the first half of 2013, Ms Wong noted.

For example, by the end of September, the first phase of Guangzhou R&F's Princess Cove received about 46 per cent bookings for its 1,488 apartment units which were launched at the end of July. Half of its 79 retail lots were booked. The take-up rate for UEM Sunrise's Almas condominium in Puteri Harbour was 25 to 30 per cent as at the end of September, while Tropicana has yet to launch its high-rise units in Danga Bay.

Property prices are expected to stay weak or flat, especially for mixed-use and high-rise residential projects over the medium term, given the "more than ample" incoming supply by the end of next year, said Ms Wong.

A study by property consultancy Landserve says 18,718 high-rise residential units are set to be added by the end of next year, with 40,374 units more by the end of 2017.

Iskandar Waterfront Holdings is also said to be in talks with several foreign developers to sell some of its land in Danga Bay or Permas Jaya, which could raise fears of a housing glut in Iskandar, said Ms Wong.

Still, despite the gloom in the high-rise residential sector, the industrial and commercial property sector is still doing well in Iskandar, said Mr Wee Soon Chit, executive director of Landserve in Johor.

About two weeks ago, all 52 semi-detached and detached factory units in Phase 1 of the iBP@Nusajaya in the Southern Industrial and Logistics Clusters (SiLC) were sold on launch day - from RM3 million per unit on average. A week earlier, developer AME had sold all 52 three- and four-storey shop offices in Nusajaya Square 2, also in SiLC, from RM1.4 million per unit.

Said Mr Wee: "The perception that the property market has softened in Iskandar is mainly influenced by the performance of the high-rise residential sector, which is rather misleading as other sectors are still doing well."

-By Rennie Whang

Australia's tale of 3 cities highlights RBA loan curbs dilemma

Prices along the east coast are surging, while the rest of the country fell in Oct

Source: Business Times / Real Estate

Chinese dominate auction of Portugal govt properties

They account for almost 1 in 5 foreign property purchases in the country during the first 9 months

Source: Business Times / Real Estate

Norway investor urges Hyundai to improve corporate governance

Source: Business Times / Real Estate

American Realty Falls After RCS Drops Cole Purchase

Source: Bloomberg / Personal Finance

American Realty Capital Properties Inc. (ARCP) extended a share plunge after the sale of its Cole Capital private-capital management unit was terminated amid an FBI investigation into accounting errors announced last week.

The move to cancel the transaction sets up a battle between two companies with the same chairman, Nicholas Schorsch. RCS Capital Corp. (RCAP) said in a statement today that it dropped a plan to buy Cole Capital, without giving a reason. American Realty said separately that there is no basis for RCS to end the deal.

American Realty, the largest U.S. owner of single-tenant buildings, is facing an investigation by the FBI and federal prosecutors after saying accounting errors were intentionally concealed, a person familiar with the matter said last week. RCS may have broken off the deal because the scandal at American Realty could spill over to Cole, tainting efforts to sell shares of its nontraded real estate investment trusts, said Paul Adornato, an analyst with BMO Capital Markets.

“Most of the independent broker-dealers that sell nontraded REITs have some due-diligence effort in order to vet the sponsors of the nontraded REITs,” he said in a telephone interview from New York. “It would be difficult if not impossible for any broker to sell shares in any Cole product until the investigation into ARCP/Cole’s financial controls is satisfactorily completed.”

American Realty fell 12 percent to $7.85, bringing its four-day decline to 37 percent. Shares of RCS dropped 17 percent today to $13.69.

Agreement ‘Breach’

On Oct. 29, New York-based American Realty lost almost a fifth of its market value after reporting the errors that led to the resignations of Chief Financial Officer Brian Block and Chief Accounting Officer Lisa McAlister. At the time, the REIT said it didn’t expect the sale of Cole Capital to be affected.

“RCS has no right and there is absolutely no basis for RCS to terminate the agreement,” American Realty said in a statement today. “Therefore, RCS’s attempt to terminate the agreement constitutes a breach of the agreement.”

Independent members of American Realty’s board and the company’s management are evaluating alternatives, according to the statement.

Since it began trading three years ago, American Realty has expanded through an acquisition spree. Schorsch, the founder, stepped down as chief executive officer at the end of September under a plan announced in June. He remains chairman of American Realty and is also chairman of RCS.

Schorsch couldn’t immediately be reached for comment, according to Tony DeFazio, a spokesman.

‘Cut Ties’

As part of the agreement with RCS, American Realty would have acted as an adviser to Cole Capital’s nontraded REITs, sharing fees with RCS, according to the Oct. 1 statement. That agreement has been terminated, RCS said today.

“It’s odd that two companies chaired by the same individual have a serious disagreement,” Adornato said. “These events could be the catalyst for Nick Schorsch to choose a side and cut ties to one entity.”

Schorsch wasn’t involved in the process of calling off the sale, a decision that was made in light of American Realty’s disclosure of the accounting errors, according to Andrew Backman, managing director for investor relations at RCS. The companies are separate, with non-overlapping management teams and different independent accounting auditors and board oversight, he said in an e-mail.

‘Moved Swiftly’

“After appropriate deliberation” and consulting with legal counsel, the board of RCS decided to terminate the agreement “based upon their review of the facts and circumstances and on their understanding of their fiduciary duties” owed to shareholders, Backman said in an e-mail.

By doing so, RCS “has moved swiftly and decisively to protect its franchise, the interests of its shareholders and the ongoing prospects and continuing enterprise value of the company and its subsidiaries,” he said.

The accounting errors reported by American Realty resulted in an overstatement of adjusted funds from operations and understated the company’s net loss for the first quarter and first half of the year, the REIT said. The company said its reports for the first half of 2014 and all of last year weren’t reliable.

-By Oshrat Carmiel and Prashant Gopal

Vornado to Sell Manhattan Office Tower for $605 Million

Source: Bloomberg / News

Vornado Realty Trust (VNO) agreed to sell a midtown Manhattan office building for $605 million and separately completed the purchase of retail space in New York’s most expensive shopping corridor.

The real estate investment trust will sell 1740 Broadway, a 601,000-square-foot (56,000-square-meter) tower near 56th Street, for a price that amounts to about $1,000 per square foot, New York-based Vornado said today in a statement. The gain recorded on financial statements would be about $443 million.

Vornado, which didn’t disclose the buyer, expects the sale to close in the fourth quarter.

In a separate deal, the company said it completed the purchase of retail space along Fifth Avenue for $700 million. A joint venture in which Vornado owns a 75 percent stake bought the retail condominium of the St. Regis Hotel as well as an adjacent townhouse, according to the statement.

The purchase of the retail space, with 100 feet of frontage along Fifth Avenue at 55th Street, allows Vornado to defer taxes on the $483 million taxable gain from the sale of the office tower, the company said.

Vornado is among the biggest owners of Manhattan street retail, with 2.8 million square feet in 63 properties. Those include 689 Fifth Ave., on the same block as the St. Regis.

-By Oshrat Carmiel

London Luxury-Home Values Stall for First Time Since 2010

Source: Bloomberg / Luxury

Home values in London’s most-expensive districts stagnated on a monthly basis for the first time in four years as the threat of a new tax on luxury properties deters buyers.

Prices in the 13 neighborhoods that Knight Frank LLP defines as prime central London were unchanged in October from September, the first month without an increase since November 2010, the broker said in a report today. Values were up 6.5 percent in the 12 months through October.

The opposition Labour party plans to raise 1.2 billion pounds from an annual tax on homes valued at more than 2 million pounds, with overseas-based owners of second homes paying more than those in the U.K. Buyers who live abroad are already being squeezed by a rising U.K. pound as well as series of levies imposed by Prime Minister David Cameron’s government.

London luxury-home value increases trail the average for properties in the city. Residential prices in the entire city rose 18.4 percent in the 12 months through September, the Land Registry said Oct. 28.

Homes in London’s best districts will not appreciate next year unless the “mansion tax” plan is shelved after the election in May, Knight Frank said. It’s forecasting 22 percent home-price growth in prime central London from 2015 through 2019.

Rents rose 2.6 percent in the 12 months through October, the highest rate since December 2011, the broker said. That increased rental yields to 2.9 percent, the biggest monthly gain in more than three years, as the number of leases agreed to rose by a quarter from a year earlier.

-By Neil Callanan

Dallas Police Pension Ditches Bubble-Era Properties: Muni Credit

Source: Bloomberg / U.S. Politics

The Dallas police and firefighters’ retirement plan has soured on luxury real estate.

The $3.4 billion Dallas Police & Fire Pension System is selling houses in Hawaii, a Napa Valley vineyard and a patch of Arizona desert after losing about $200 million on the deals, according to city council members who serve as board members for the fund. The system plans to put the cash into traditional assets such as stocks and bonds.

The sales mark a shift from an approach that by 2011 left more than 60 percent of the system’s money in real estate, private equity and other alternative investments, only to see returns suffer. The fund’s 4.4 percent gain in 2013 compared with the 16.1 percent average advance for U.S. public pensions as stocks rallied, according to research firm Wilshire.

“It’s a terrible indictment of our strategy,” said Councilman Philip Kingston, who sits on the pension’s board. “Losses have been caused by our exposure to luxury real estate.”

State and local-government pensions, which oversee about $3.7 trillion, have been moving money into hedge funds and other non-traditional investments to keep up with growing obligations to retirees. The tactic has drawn scrutiny, as some officials question whether promised returns are worth the risk to taxpayers if the investments falter.

Dallas Harbinger

The California Public Employees’ Retirement System in September decided to pull $4 billion in hedge funds because of the risk and complexity. The Teacher Retirement System of Texas cut its allocation three days later. South Carolina Treasurer Curtis Loftis Jr. criticized the state’s retirement system last year for posting lagging returns after it put more than half its money into alternative investments. The $26.6 billion fund has since trimmed that to 44 percent.

The Dallas fund could be a “harbinger of things to come,” said Martin Fridson, a New York-based money manager with Lehmann Livian Fridson Advisors, which oversees about $200 million.

“There are probably others out there that will run into similar problems,” Fridson said. “Some face a downside exposure they hadn’t realized they had.”

Neither George Tomasovic, a fireman who chairs the Dallas fund’s board, nor interim administrator Donald Rohan responded to calls seeking comment on the allocation.

Alternative Increase

Public pensions’ investments in alternative assets have risen by about two-thirds since 2009 to 10.5 percent of holdings, according to Santa Monica, California-based Wilshire Trust Universe Comparison Service.

The Dallas fund faces a growing liability for promised retirement benefits. Its pension deficit stood at about $1.25 billion as of Jan. 1, up from $885 million in 2011, according to financial statements. The shortfall may raise financial pressure on the city, which pays about $100 million a year into the pension system. Plan members have already agreed to lower benefits.

In the middle of the last decade, the Dallas plan under administrator Richard Tettamant expanded real estate and other investments in a bid to beat stocks and bonds to achieve a targeted 8.5 percent return.

2010 Recognition

In 2010 the fund was named “plan of the year” for its asset size by Money Management Letter, a pension trade journal. The publication noted investments in the “American Idol” production company and a highway through north Dallas. The article, which also cited investments in Australian agriculture and Uruguayan timber, called the system “one of the best-diversified funds in the U.S.”

At the end of 2011 the fund had 62 percent of assets in private equity, natural resources, hedge funds and global real estate. The latter accounted for about a fourth of holdings.

By then the assets were being carried on the pension’s books at the purchase price rather than market value, even though the real estate market had crashed, said Lee Kleinman, another city council member on the fund’s board.

Most of the property had been bought “at the top of the real estate bubble,” Kleinman said. The fund also needed to maintain homes it had built in Hawaii while it waited for prices to recover.

Arizona Loss

Land it bought for a golf-course development in Pima County, Arizona, couldn’t be developed because the fund hadn’t secured water rights, Kleinman said. The land later sold for $7.5 million, a fraction of the $34 million invested, the Dallas Morning News reported in September.

Tettamant, who was at the fund for more than 20 years, resigned in June after board members questioned how the real estate investments affected returns. He didn’t respond to a phone call to his home seeking comment on his role.

The city, which has four council members on the fund’s 12-member board, has been exercising more control and has asked the fund to list properties based on market value, Kleinman said. That led to audits that reduced values, depressing returns for 2013.

The fund may face other liabilities from an investment in a $200 million apartment tower in downtown Dallas. The nearby Nasher Sculpture Center says light reflected from the building is damaging art work and plants in its garden. The dispute is unresolved and the pension may be stuck with the expense of reducing the glare.

“We were throwing good money after bad,” Kleinman said. “The board is going to take a more critical look at its investments going forward. We have no business investing directly in real estate.”

-By Darrell Preston

Additional Articles of Interests - Local & Overseas Real Estate