Singapore Real Estate MAS moves to strengthen Singapore's Reit sector Consultation paper seeks to improve corporate governance and align fees with unitholders' interests, among others Source: Business Times / Real Estate http://www.businesstimes.com.sg/real-estate/mas-moves-to-strengthen-singapores-reit-sector Stronger framework to shield Reit investors More disclosure over exec pay, shake-up of fee structure among proposals Source: Straits Times / Money NEW rules proposed for the booming real estate investment trust (Reit) sector will bring more disclosure over executive pay, shake up the fee structure and ensure that the interests of unitholders are paramount. The proposals were unveiled by the Monetary Authority of Singapore (MAS) yesterday in a consultation paper aimed at strengthening what has become an industry with assets of around $61 billion and a large following among retail investors. Reit managers said some of the proposals could benefit the industry and investors, although others might make it tougher for trusts to compete. One key proposal is that managers and directors should have a statutory duty to prioritise investors' interests over those of the Reit manager and sponsor. This could help guard against conflicts of interest, and may prevent Reits from overpaying for assets bought from their sponsors, for instance. It is also proposed that Reits change how a manager's performance fees are structured so that they are aligned with investors' long-term interests. Reits may also be required to disclose more information in their annual reports, including how much income support they get. Income support involves the Reit sponsor stepping in to top up a property's income if it falls short of certain thresholds. But the practice could lead to the property being overvalued. The suggested rule changes would also give Reits more flexibility to develop property. Trusts can now develop a project only if the cost does not exceed 10 per cent of the trust's total asset size, but that limit could be raised to 25 per cent. Ascendas Reit (A-Reit) told The Straits Times yesterday that the move to address any perceived potential conflicts of interest could benefit the market. "The interests of unitholders must rank supreme," an A-Reit spokesman said in an e-mail. A-Reit also welcomed the higher development limits, but pointed out that disclosing certain information about leases "may compromise a Reit's strategy and competitiveness" and therefore may not benefit unitholders. "In the longer term, it may be necessary to consider an independent Reit legislation to govern the industry," A-Reit added. Other Reits said they were still reviewing the consultation paper. There are 33 Reits in Singapore, accounting for around 8 per cent of the Singapore Exchange's total market value. Reit market watchers said the proposals would bring industry practices and requirements closer to those already in place for listed corporate boards. "There will be greater clarity on the duty of Reit managers," said Mr Robson Lee, partner at law firm Shook Lin & Bok. Ms Rachel Eng, who heads the Reits team at law firm WongPartnership, said: "Hopefully, the market and the MAS will identify the right combination of rules that will enhance corporate governance and accountability." The consultation paper is available on the MAS website. Members of the public have till Nov 10 to send their feedback. -By Melissa Tan http://www.straitstimes.com/premium/money/story/stronger-framework-shield-reit-investors-20141010 Debate over Reit governance not over yet Source: Business Times / Real Estate Proposals by the central bank to strengthen the rules governing Singapore real estate investment trusts (S-Reits) and Reit managers will go some way to mitigate the "agency problem" seen in these Reits. But with the Monetary Authority of Singapore (MAS) stopping short of taking a stand on whether Reits should be internally or externally managed, the debate over Reit governance is unlikely to go away soon.
http://www.businesstimes.com.sg/real-estate/debate-over-reit-governance-not-over-yet Singapore Condo Builders Brace as $19 Billion Due: Asean Credit Source: Bloomberg / Luxury Singapore’s listed developers and real-estate investment trusts face their heaviest burden of near-term maturities on record just as home prices drop. The 80 property companies on Singapore’s stock exchange reported a combined S$23.5 billion ($18.5 billion) of borrowings that have to be repaid within a year in their latest filings, Bloomberg-compiled data show. The looming debt wall comes as the vacancy rate for condominiums soared to the highest since 2006, pushing prices to the lowest in almost two years, according to data from the Urban Redevelopment Authority. Savills Plc predicts refinancing for homebuilders and REITs will be more challenging as Singapore’s economy slows, with expansion cooling to 2.4 percent in the second quarter, from 4.8 percent in the previous three months. Population growth on the island is at a 10-year low and Standard & Poor’s expects home prices have further to fall. “We’re at that point in the cycle when every quarter you’re seeing selling prices come down a little bit and secondary market transactions aren’t very active,” Kah Ling Chan, a property analyst at S&P in Singapore said. “I suspect we haven’t seen the bottom yet.” Price PlungeDevelopers of residential homes are suffering not so much from lower selling prices than “collapsed” sales volumes, said Alan Cheong, a senior director of real-estate research at Savills in Singapore. Secondary home sales plunged to the lowest since 2003 in the first quarter, according to URA data, and as business slows, builders with less pre-sales money to finish projects have to rely on loans, boosting short-term borrowings, he said by phone Oct. 2. Despite the weaker demand, the number of new residential dwellings being built remains high. Units under construction reached a record in the second quarter of 2013 and some 65,270 apartments were in the pipeline as of June 30, URA data show. “Appetite to buy is already curbed” and rents could fall further, Chan said. “We haven’t seen the full impact yet.” The 42 listed developers on Singapore’s exchange reported S$13.4 billion of short-term borrowings in their latest filings, 42.5 percent more than a year earlier, data compiled by Bloomberg show. City Developments Ltd. (CIT) posted debt of S$1.66 billion in the second quarter, 48.6 percent more than at the end of 2013. Second-quarter net income fell 33 percent, it said in August, and the company is looking to expand overseas to offset declining demand in Singapore. Borrowing CostsCity Developments’ S$500 million of bonds due next September and sold to investors at par in August 2010 are trading at 101.2 percent of face value, down from 101.25 at the end of last year, DBS Bank Ltd. prices show. It sold S$100 million of 10-year 3.78 percent notes yesterday. A spokeswoman for City Developments said the company has a strong financial position, noting its cash of S$3.4 billion and 33 percent net gearing ratio. The three-month swap offer rate, a measure of borrowing costs in Singapore, touched 0.2561 percent on Sept. 16, the highest since June 2013. REITs are in better shape than listed developers because they started refinancing with longer tenor debt ahead of rising interest rates, according to S&P. “For the REITs, I don’t see a major problem yet,” Chan said. “The bigger players are still getting good rates and valuations haven’t fallen dramatically,” she said. Ringing TillsStarhill Global REIT, which has S$124 million of notes that mature in July, reported S$129.1 million of short-term borrowings as of June 30, more than double the amount it had in December 2013. Retail occupancy rates at the trust’s flagship Wisma Atria mall along Singapore’s Orchard Road slipped to 98.5 percent in June from 99.5 percent at the end of 2012, company data show. Office occupancy rates are 100 percent. Jonathan Kuah, a Singapore-based spokesman for Starhill, said the company has already refinanced its debt due within the coming 12 months. The “leverage situation hasn’t worsened,” he said by e-mail Oct. 7. Retail sales, which affect revenue at some REITs, decreased for four of the past five months, the worst performance in two years, data from Singapore’s Department of Statistics show. Excluding motor vehicles, sales dropped 0.4 percent in July versus the previous corresponding period. Don’t Shop Here“Singaporeans don’t shop here anymore,” Savills’ Cheong said. “Traveling has become so cheap and they buy more stuff on the Internet. The Chinese have also been avoiding Singapore, Malaysia and Thailand since the MH370 tragedy,” he said, referring to the Malaysia Airlines flight missing since March. Arrivals of tourists from North Asia, which typically comprise more than a quarter of visitors, slumped almost 13 percent the first seven months of 2014 from a year earlier, Tourism Board data show. “In 2008, when the refinancing situation was quite bad, the REITs still managed to pull through,” said Danny Tan, a Singapore-based fund manager at Eastspring Investments Ltd., which managed $115 billion of assets as of June 30. “There’s a high probability these REITs will be able to refinance especially because the loan market is also open to them.” While the Singapore dollar has weakened 1.9 percent against the U.S. dollar this half that’s not as much as the Philippine peso, which is down 2.4 percent and Indonesia’s rupiah, down 2.7 percent. Hiap Hoe Ltd. (HIAP), which recently started selling apartments in its prestigious Skyline 360 building, reported short-term borrowings of S$287.6 million for the quarter to June 30, 94 percent more than the S$147.9 million for the three months to December. It raised S$115 million selling three-year 4.75 percent notes at par in September 2013, which now trade at 100.317. A spokesman for Hiap Hoe declined to comment. Developers on the island are changing their business models and reducing exposure to the local market, according to Singapore-based Tim Gibson, who helps run Henderson Global Investors Ltd.’s global property equities fund. “By buying Singapore developers now you’re really buying exposure outside of Singapore and into markets like China,” he said in an interview Oct. 8. It “doesn’t give you a huge amount of confidence that a turnaround in the residential market is coming anytime soon,” he added. -By Christopher Langner, Pooja Thakur and Tanya Angerer SRX: HDB Sept resale prices down again Flash estimates show 8th straight month of falls; but transaction volumes are up Source: Business Times / Real Estate http://www.businesstimes.com.sg/real-estate/srx-hdb-sept-resale-prices-down-again Falling HDB resale flat prices draw in buyersSource: Straits Times / Top of The News HOUSING Board (HDB) resale prices fell for the eighth straight month in September, in line with experts' expectations. But the number of flats changing hands rose to its highest level since April, as buyers moved in to take advantage of the weak market. Prices dipped 0.5 per cent last month compared to August, reaching the lowest level since January 2012, according to SRX Property preliminary figures yesterday. The lacklustre showing was no surprise to experts, who expect this trend to persist as strict loan rules continue to bite. Prices are down 7.5 per cent from a year ago. Five-room flats saw the biggest price fall last month, of 1.6 per cent. Prices of three- and four-roomers dipped 0.2 per cent. Executive flat prices edged up 0.1 per cent. But resale volume improved with 1,469 flats sold last month, the most since April. This was up 10.7 per cent from August and 19.9 per cent from a year ago. "The surge in volume comes after the end of the Hungry Ghost Festival in August, when many Chinese buyers stayed away from the market," said OrangeTee manager for research and consultancy Wong Xian Yang. Softer prices may also have drawn buyers in. Said ERA Realty key executive officer Eugene Lim: "As prices continue to stabilise, buyers are more willing... to buy resale flats." HDB buyers are continuing to pay less than SRX's estimated market value, but to a lesser degree. Last month, buyers paid a median of $2,000 below SRX's X-Value measure of a flat's market value. This was a price improvement from August, when they were paying $3,000 less than X-Value. "It could be a sign that buyers are finding prices are more affordable and are less aggressive in further lowering prices," said R'ST Research director Ong Kah Seng. But he is not expecting resale prices to bottom out unless cooling measures "are at least partially lifted". Demand will still be curbed by stricter loan limits, restrictions on permanent resident buyers, and increased supply and grants for new flats, added Mr Wong. Also remaining weak is the rental market. An estimated 1,483 HDB flats were rented last month, down 6.7 per cent from August and 0.7 per cent from a year ago. Rental prices slipped 0.3 per cent last month, ending up 2.5 per cent lower than a year ago. With cool buyer interest, more upgraders are putting their flats up for subletting instead, meaning greater competition, said Mr Ong. There is also competition from falling private property rentals, said Mr Wong. -By Janice Heng HDB resale prices down for 8th consecutive month: SRXHDB resale prices dipped 0.5 per cent in September compared with August, with three-, four- and five-room flats driving the decline, according to the Singapore Real Estate Exchange.Source: Channel News Asia / Singapore SINGAPORE: The resale prices of Housing and Development Board (HDB) flats continued their downward spiral in September, slipping 0.5 per cent from August – the eighth consecutive month that prices have declined, the Singapore Real Estate Exchange (SRX) said on Thursday (Aug 7). Prices for three- and four-room flats declined by 0.2 per cent, while prices for five-room flats fell 1.6 per cent. In comparison, executive flat prices increased marginally by 0.1 per cent.
On a year-on-year basis, HDB resale prices dropped 7.5 per cent from September 2013. According to the SRX HDB Price Index, prices have declined 8.9 per cent since the peak in April 2013, and are currently at a 20-month low since January 2012. A total of 1,469 HDB resale flats were sold last month, a 10.7 per cent increase from 1,327 transacted units in August. Compared with a year ago, resale volume was up 19.9 per cent, SRX said. RENTAL VOLUME DOWN, PRICES DOWN An estimated 1,483 HDB flats were rented in September, down 6.7 per cent from the 1,590 units rented in the previous month and 0.7 per cent lower than a year ago. According to the SRX HDB Price Index for Rentals, rental prices fell slightly by 0.3 per cent compared with August and were 2.5 per cent lower than a year ago. Three-room, five-room and executive flats posted declines of 0.5 per cent, 0.3 per cent and 0.8 per cent, respectively, while four-room flats saw a marginal increase in rental prices of 0.1 per cent. Real estate agency ERA's Key Executive Officer Eugene Lim said the overall minimal drop is "nothing to be alarmed about". "However, as more new condos obtain their TOPs, there will be a wider selection or properties for tenants with limited budget of below or around S$3,000 a month," he noted. "Coupled with the slowdown in foreign hirings, this could impact demand, and consequently, the transacted rent for the subletting of HDB flats." TOX REMAINS NEGATIVE Overall median Transaction Over X-Value (TOX), which measures whether people are overpaying or underpaying the SRX estimated market value, remained negative last month at -S$2,000 – up from -S$3,000 in August.
For HDB towns with more than 10 resale transactions in September, only Bukit Panjang and Toa Payoh reported positive median TOX of S$5,500 and S$2,500, respectively. Among HDB towns with more than 10 transactions, the lowest median TOX were in Sengkang, Choa Chu Kang, Kallang/Whampoa, and Woodlands, at -S$10,500, -S$9,000, -S$5,000, and -S$5,000, respectively. RESALE VOLUME IMPROVES There were 1,469 resale flats sold last month, a 10.7 per cent increase from 1,327 transacted units in August. Volume had remained flat for four consecutive months. Mr Thomas Tan, Executive Director of real estate firm Remax, attributed the spike to seasonal factors, and that the market is expected to remain in the doldrums. "Sentiments are still not very good, whether for private or HDB flats," he said. "As a whole, we are in a stalemate situation where the buyers are hoping for lower prices but the sellers are very resistant to lowering their prices. That is the reason you see that although there is a drop in prices, it is trickling downwards and not a sudden drop." Mr Tan added that the impact from the change in resale procedure is also more pronounced, as the market enters the second quarter of implementation. The policy was revised in March this year to allow the buyer to obtain the valuation report only after the deal is sealed and the Option to Purchase has been granted to him. "Right now, the only reference point is resale prices, which is probably a true reflection of what the market should be in a first place, rather than a valuation plus a COV price," said Mr Tan. - CNA/cy/xy Public housing resale market continues to softenSource: Today Online / Singapore SINGAPORE — The public housing resale market continued to soften for the eighth consecutive month, with prices hitting a 20-month low as property curbs and a healthy stream of Build-to-Order flats continue to crimp activity. Now that the Hungry Ghost Festival has come to an end, transaction volume has picked up, though not in the rental market, showed a flash report by the Singapore Real Estate Exchange (SRX) for last month, which was released yesterday. HDB resale prices last month dipped 0.5 per cent compared with August and has dropped 8.9 per cent since its peak in April last year. Driving down the overall index were three-, four- and five-room flats, with the biggest price decline of 1.6 per cent registered in five-room units. Prices for three- and four-room flats dipped 0.2 per cent, while prices for executive flats inched up 0.1 per cent, the SRX said. With resale prices down 4.6 per cent so far this year, property analysts were not surprised by the latest softening, adding that the projected total decline this year could fall within the 5 to 8 per cent range. Century 21 chief executive officer Ku Swee Yong expects the downward trend to stretch for three more years, given the “avalanche of supply” in BTO flats, as well as the number of Executive and Private Condominium projects nearing completion. The 1,469 resale flats sold last month marked a 10.7 per cent increase in transaction volume from August. Meanwhile, rental volume saw a 6.7 per cent decrease last month. An estimated 1,483 HDB flats were rented compared with 1,590 units in August. Rental prices also posted a small decrease of 0.3 per cent, mostly due to declines in three-, five-room and executive flats. Manager of research and consultancy at OrangeTee Wong Xian Yang said demand for rental flats have fallen in the wake of tightened foreign worker policies. Mr Ku added that falling rents for private property have led to some “cannibalisation” on HDB units. -By Laura Elizabeth Philomin http://www.channelnewsasia.com/news/singapore/hdb-resale-prices-down/1405362.html
http://www.todayonline.com/singapore/public-housing-resale-market-continues-soften Hub for surface engineering firms opens It has centralised water treatment plant for use by its ecosystem of companies Source: Business Times / Real Estate Redeveloping areas with lower-intensity use is one viable way of achieving higher land productivity, said Minister for Trade and Industry Lim Hng Kiang on Thursday. "As the economy shifts to focus on higher value-added activities, revitalising our estates will provide a boost to industries higher in the value chain, as well as create good jobs for Singaporeans," he said. http://www.businesstimes.com.sg/real-estate/hub-for-surface-engineering-firms-opens Steady demand lifts Q3 rents for business parks Bright spot amid gloom over industrial property: DTZ Source: Straits Times / Money BUSINESS parks remain a bright spot amid the gloom surrounding industrial property, with rents moving up in the third quarter, said consultants DTZ. It noted that average monthly rent was $5 per square foot (psf) in the three months to Sept 30 - up 2 per cent on the second quarter, a rate of growth that has been maintained all year. The demand for business parks was due in part to "the spillover from higher office rents", DTZ reported yesterday. "There are more cases of qualifying office occupiers who are drawn by the lower business park rents relative to office rents," said Ms Cheng Siow Ying, DTZ's executive director of business space. She noted that the difference in rent can be as high as 30 per cent. Ms Cheng cited Galaxis, a business space in one-north slated to be completed by the end of the year. It has already garnered a pre-commitment rate of more than 40 per cent, with signed leases from firms such as Canon, Oracle and Electrolux. "The movement of qualifying office occupiers to business parks is expected to continue as average office rents continue to rise," she added. While business parks are enjoying better times, average monthly rent for some conventional industrial space has stayed flat. First-storey rents came in at $2.20 psf from the second quarter while those for upper floors stayed at $1.80 psf. There were 203 sales of strata-titled industrial property in the third quarter, down about 36 per cent from the second quarter. There have been 842 transactions so far this year, significantly lower than the 1,986 in the same period last year. A report from CBRE, also out yesterday, found that the rent gap between business parks in the city fringe and those in the rest of the island widened to 33 per cent in the third quarter, up from 29 per cent in the second quarter. "Occupiers are more keen on higher specifications and quality developments which (business parks in the) city fringe have been able to provide," said Mr Michael Tay, executive director of office services at CBRE. "Location and connectivity are also important considerations which prompt occupiers to pay the premiums in rent." He added that the difference in rent for business parks in the city fringe and those in the rest of the island is expected to "stabilise". "Rent in new developments will edge up but this increase is likely to be restrained by older assets that offer more competitive rents." -By Jacqueline Woo Industrial property likely to stay mixed in Q4 Factors cited include persistent downside risks and usual year-end lull Source: Business Times / Real Estate Singapore's industrial property market is expected to remain mixed in the fourth-quarter of 2014, given the presence of persistent downside risks, which include uncertainties surrounding the global economic recovery and the traditional year-end holiday lull. Industrial property transactions down sharply in Q3: DTZ Sales of strata-titled industrial properties fell by about 36 per cent quarter-on-quarter during the July-September period to 203 transactions, the real estate services firm says.Source: Channel News Asia / Business SINGAPORE: Demand for Singapore industrial space fell sharply during the third quarter amid a continued patchy performance by the manufacturing sector, real estate services firm DTZ said on Thursday (Oct 9). Citing caveats from the Urban Redevelopment Authority's REALIS, DTZ said sales of strata-titled industrial properties fell by about 36 per cent quarter-on-quarter during the July-September period to 203 transactions. The fall was even more significant compared to the 672 strata-titled units that were sold in the same period last year. Besides the weakness in the manufacturing sector, the drop in transactions was also due to fewer new launches, and government cooling measures such as the imposition of a seller's stamp duty. DTZ said that while both average capital and rental values of conventional industrial space stagnated, business parks remained a bright spot with monthly gross rents rising by 2 per cent quarter-on-quarter to S$5 per square foot. "There are more cases of qualifying office occupiers who are drawn by the lower business park rents relative to office rents. The difference in rents can be as high as 30 per cent compared to the average office rents in the decentralised areas," said DTZ's Executive Director of Business Space Cheng Siow Ying. "Such occupiers can consist of start-up companies looking for lower start-up costs, or office tenants strategically relocating to take advantage of lower rents as well as information technology firms expanding their operations," she added. - CNA/cy http://www.channelnewsasia.com/news/business/singapore/industrial-property/1405682.html Da Vinci building in Upper Bukit Timah sold for S$58m Source: Business Times / Real Estate Sim Lian Holdings Pte Ltd has bought the Da Vinci building at 191 Upper Bukit Timah Road for S$58 million. The seller, a unit of high-end furniture retailer Da Vinci Holdings Pte Ltd, will be vacating the property, which it has been using as its showroom.
http://www.businesstimes.com.sg/real-estate/da-vinci-building-in-upper-bukit-timah-sold-for-s58m Over 200 Marina One units sold, mostly to bulk buyers Source: Business Times / Real Estate Slightly more than 200 of the 242 units released so far at Marina One Residences have been sold. Most of the units sold are one and two-bedders. The developer, Khazanah Nasional and Temasek Holdings tie-up M+S Pte Ltd, began balloting for buyers of three or more units on Oct 3. Balloting for those purchasing two units began on Wednesday.
http://www.businesstimes.com.sg/real-estate/samsung-hubs-19th-floor-sold-at-s3175-psf BuildTech Asia to focus on latest technologies, innovations Source: Business Times / Real Estate Recent urbanisation and economic developments in large Asian markets here and in China, India, Indonesia and Vietnam have spiked quality standards in the built environment sector, driving many industry players to look for innovative ways to refresh building processes and be less reliant on labour.
Views, Reviews & Forum Why bid to register as real estate salesman was rejected Source: Straits Times / Forum Letters WE THANK Mr Winston Cheng Kheng Sen for his feedback (“Time, effort wasted in bid to learn new trade”; Sept 29) following the Council for Estate Agencies’ (CEA) rejection of his application to be registered as a real estate salesperson. Mr Cheng had submitted an application for registration as a salesperson. In his application, he declared that he was working in a public-sector organisation. As public-sector employees need the support of their employers to do part-time work, the CEA advised him to seek approval from his employer for his application to be a salesperson. In the letter submitted by Mr Cheng to the CEA, his employer had allowed him to be registered as a salesperson but did not allow him to conduct estate agency work. To be a competent salesperson, one must be able to practise the skills and knowledge acquired to conduct estate agency work. The CEA rejected Mr Cheng’s application as he would be unable to carry out estate agency work because of the restriction imposed by his employer. Our reasons were communicated to Mr Cheng on several occasions.
Nevertheless, we will update the information on our website to indicate clearly that an applicant’s intent and ability to practise may be taken into consideration as part of the approval process by the CEA. -By Yeap Soon Teck Deputy Director (Licensing) Council for Estate Agencies Global Economy & Global Real Estate S’pore trusts eyed as Asian property deals hit record Beijing, Tokyo and Shanghai popular for commercial property investments in first half of 2014 Source: Today Online / Business SINGAPORE — In Asia’s real estate market, deal-making just reached a record and more is to come, with undervalued Singapore-listed trusts expected to become takeover targets. Property deals in China and its neighbours amounted to US$34 billion (S$43.2 billion) last quarter, Bloomberg data show, a tally that includes the 10.6 trillion won (S$12.6 billion) purchase of a site in Seoul’s Gangnam district by a Hyundai Motor-led group and the A$2.6 billion (S$2.9 billion) takeover by Singapore’s Frasers Centrepoint of the Australand group Down Under. Singapore-listed CapitaRetail China Trust, with 10 malls in eastern China, is among the next possible targets as it trades below the US$1.7 billion estimated value of its assets, said analysts at Standard Chartered. Saizen REIT, another Singapore-listed trust that owns about 5,500 apartments in Japan, is also undervalued by that measure. For a global buyout firm or Hong Kong developer, buying Chinese malls would be a way to profit as Asia’s largest economy becomes more consumer-centric, property consultancy CBRE said. “Being in retail is a natural way to front-run that trend. We see very strong demand in all the key gateway markets for good-quality real estate,” said Mr Marc Giuffrida, CBRE’s Singapore-based executive director for global capital markets in Asia. Representatives for CapitaRetail and the company that manages Saizen, Singapore-based Japan Residential Assets Manager, declined to comment on the prospects for any takeover. Last quarter’s record deals for real estate companies and investment trusts in Asia pushed this year’s total to US$82 billion, Bloomberg data showed. Beijing, Tokyo and Shanghai were the top destinations for commercial property investments in Asia in the first half of 2014, property consultancy Cushman & Wakefield said. China alone attracted 73 per cent of the total. “Asian consumers have continued to expand spending, creating vast incentives for continued investments,” said Mr Priyaranjan Kumar, Singapore-based regional director of capital markets at Cushman. CapitaRetail’s Draw CapitaRetail’s properties draw 73 million shoppers a year, more than three times the population of Beijing, the company’s website says. Almost every square metre of CapitaRetail’s mall floor space is leased, with tenants including global brand names like Wal-Mart and fast-food chain KFC. “Definitely, it could be a target,” said Mr Desmond Chua, an analyst at CMC Markets in Singapore, said of the property trust. “It’s an appealing vehicle” to tap Chinese consumers, he said. Earnings before interest, taxes, depreciation and amortisation at CapitaRetail will jump 52 per cent to about S$147 million in 2016 from last year, according to analysts’ estimates compiled by Bloomberg. Rental revenue at CapitaMall Grand Canyon in Beijing, the company’s biggest shopping centre, may jump 26 per cent between 2014 and 2016 as tenants sign up for more expensive leases, StanChart said. Shares in CapitaRetail have climbed nearly 19 per cent this year after closing 2.3 per cent higher at S$1.58 yesterday, giving the company a market value of S$1.3 billion. That compares with StanChart’s estimate of S$2.1 billion, or S$2.58 a share, for CapitaRetail’s revalued net asset value. Potential acquirers include private equity firms and real estate developers, CBRE said. CapitaLand, CapitaRetail’s largest shareholder with a 19 per cent stake, is also a possible buyer, StanChart said. Saizen’s Appeal Saizen REIT, which owns apartments in cities including Tokyo and Sapporo, also may attract suitors because it’s so undervalued, said Ms Regina Lim, an analyst at StanChart in Singapore. About 91 per cent of Saizen’s units are occupied, its website says. Saizen shares have fallen 2.7 per cent this year after closing 1.1 per cent higher at 90.5 Singapore cents yesterday, compared with its net asset value of S$1.22 a share at the end of June. Real estate prices across Japan have risen about 20 per cent since Prime Minister Shinzo Abe took office about two years ago, according to an estimate by Deutsche Asset & Wealth Management. Property investment in Japan rose 70 per cent to ¥4.6 trillion yen (S$54.2 billion), the highest level since March 2008, in the 12 months ended March, according to the asset manager. Residential prices in Japan’s three largest metropolitan areas increased for the first time in six years, the government said last month. Hesitancy Still, property owners and developers in Japan face the prospect of waning demand from a population that has shrunk every year since 2008, according to data from the International Monetary Fund. More than one in four people in Japan are older than 65, the highest proportion in the world, Bloomberg data show. And in China, some investors are concerned that economic expansion will slow. Growth will probably be 7.3 per cent this year, a Bloomberg survey of economists showed last month. It would be the slowest pace since 1990. However, that may not prevent bids for undervalued property companies such as CapitaRetail and Saizen.
“We could see more deals,” said Mr Terence Wong, head of research at DMG & Partners Securities in Singapore. -By Bloomberg Not expensive to invest in Japanese real estate Source: Today Online / Business Japan has been grossly misunderstood to be a high-cost country. Most Singaporeans have the impression that taxes, food, real estate, and so on, are much more expensive in Japan than at home. At the very top end, the kaiseki ryori might cost more in Japan than in Singapore, but in terms of value, the dinner there beats the one here. However, in the mass-market segment, the same item in a Japanese rice-bowl fast-food chain, served with better quality beef, costs less in Tokyo than in Singapore. Real estate investments in Japan are not expensive compared with Singapore, too. A second-hand, freehold studio unit in a prime location within Shinjuku, Tokyo, costs about S$1,600 per sq ft and comes with a gross rental income of 4.7 per cent per year. The studios are small, with around 230 sq ft of interiors, but there is another 70 sq ft of balcony for exclusive use even though this space is classified as “common area”. Such small sizes are acceptable to the Japanese tenants, who have grown up in a city that has a population density almost twice that of Singapore’s. In Singapore, a comparable freehold studio unit might cost S$2,500 per sq ft and the area would include the balcony, planter boxes and aircon ledges. And the quality of the finished product lags well behind that in Shinjuku. Acquisition costs in Japan total about 4 to 6 per cent of the purchase price of the property. These include a 3 per cent buyer’s commission, stamp duty (which starts from about ¥200 to a maximum of ¥480,000, or S$2.30 to S$5,650, depending on the price of the property), real estate acquisition taxes for land and building, registration taxes, judicial scrivener’s fee and sometimes an upfront, one-off contribution to the building management for newly-built or newly-renovated buildings. For brand-new properties, no commission is paid, so the acquisition costs are lower. While the line items are many and look complex, the total costs at the point of purchase are not higher than those for Singapore’s residential investments, especially if we include the Additional Buyer’s Stamp Duty imposed here. Holding costs in Japan are comparable to Singapore’s levels, too. Maintenance fees payable to the building management may hover around S$0.30 per sq ft per month, or lower for buildings that have no facilities and no attendant building managers. Tenant management fees — for leasing, rental collection, tenant liaison, etc — range from 2.5 to 5 per cent of the monthly rental, with the top end of the range being the most common rate quoted by good property managers. This is similar to what property agents here charge foreign landlords to manage their tenants in Singapore, and well below the 12 to 15 per cent in London. Furthermore, in Japan, when the new tenant signs a contract with the landlord, it is customary for the tenant to pay the landlord “key money” equivalent to one month’s rental. I interpret this as an expression of gratitude for the landlord to accept the tenant into his apartment. The key money is considered a gift to the landlord and is non-refundable. It is paid in addition to the two months of security deposit that the landlord holds per two-year tenancy contract. Most tenants tend to renew their contracts for at least one more two-year term in order to save on the key money and the relocation costs. There is also a small cost for insurance, both fire (compulsory) and earthquake (not compulsory). For a studio unit, these add up to about S$100 to S$200 per year. The final part of holding costs involves taxes. Again, there are many line items: Fixed asset taxes for land and building, city planning taxes for land and building, income taxes net of interest expenses and other allowable deductions, but the overall costs are about 10 to 20 per cent of the monthly rental. Added to the 5 per cent tenant management fee, the holding costs amount to about 15 to 25 per cent of the monthly rental income. Therefore, typically if the gross rental yield — annual rental divided by purchase price — is 5 per cent, the net rental yield may be 4 per cent, a drop of 20 per cent due to tenant management fees and taxes. Divestment costs are simpler: Property agent fees of 3 per cent, stamp duty on the sale of the property (from ¥200 to ¥480,000) and capital gains tax, if any. The capital gains tax rate is 15.3 per cent if the property had been held for five years or longer as of January 1 of the disposition year, and 30.6 per cent if it was held for less than five years. The tax is applied after allowable expenses, such as the sales commission, have been deducted. There are no restrictions for foreigners at the point of divestment: He or she can sell to another foreigner or a foreign company. Investing in Tokyo’s apartments is not any more expensive than buying into Singapore’s residences. Holding costs are reasonable and with the higher rental yield, investors get to enjoy better cash returns on their Tokyo properties than those in Singapore.
Given the higher quality of construction and finishes, real estate investment in Tokyo can be a very satisfying long-term commitment. -By Ku Swee Yong http://www.todayonline.com/business/property/not-expensive-invest-japanese-real-estate GIC sells London property to Norway sovereign fund for $1.2b Source: Straits Times / Money SINGAPORE sovereign wealth fund GIC has sold its entire stake in the Bank of America Merrill Lynch Financial Centre in London for £582.5 million (S$1.2 billion). Norges Bank Investment Management, Norway's sovereign wealth fund, is the buyer of the prime freehold property in London's financial district, said GIC in a statement yesterday. The move follows GIC's full acquisition of the RomaEst Shopping Centre - in which it already had a 50 per cent interest - in Italy on Monday. GIC bought the 585,000 sq ft London office property from Merrill Lynch in 2007 for £480 million, beating investors such as Syrian-born tycoon Simon Halabi and Irish investor Derek Quinlan. Norges Bank said in a statement that the acquisition was not financed by debt. Bank of America Merrill Lynch will continue to manage the property, under the lease agreement. The financial centre has a net lettable area of about 550,000 sq ft. It comprises four buildings on a 1.3ha site, and was first purpose-built by the American bank as its flagship headquarters in London. The complex is also near the historic St Paul's Cathedral. GIC has been on a shopping spree in Europe of late. It bought a stake in RAC, Britain's second-largest roadside assistance firm, from Washington-based private equity firm Carlyle Group two weeks ago. GIC also agreed to buy 30 per cent of Spanish real estate firm Gmp for more than €200 million (S$323 million) last week.
Earlier reports had noted that GIC may be part of a group of investors in talks to buy airports in Aberdeen and Glasgow in Scotland as well as in Southampton in southern England for £1 billion. -By Cheryl Ong GIC sells London property to Norway’s sovereign fundDivestment follows series of investments by Singapore’s sovereign fund in the UK this year Source: Today Online / Business SINGAPORE — The Republic’s sovereign fund GIC has sold a central London office property for £582.5 million (S$1.2 billion) to Norway’s sovereign fund, Norges Bank Investment Management. The Bank of America Merrill Lynch Financial Centre (MLFC) is a 585,000 sqf office complex located at 2 King Edward Street in London, GIC said in a statement yesterday. The real estate is fully let to Bank of America Merrill Lynch, which will continue to manage the property under the terms of the lease. GIC had acquired the asset from Merrill Lynch in 2007 for about £480 million, a joint statement from June 2007 showed. The statement then stated that MLFC would be “leased by Merrill Lynch for a term of 15 years with renewal rights extending significantly beyond the initial term”. The divestment follows a series of investments by GIC in the United Kingdom this year. Last week, Britain’s Sky News reported that GIC was part of a consortium including Spanish infrastructure firm Ferrovial and Australian bank Macquarie that is set to buy three British airports from Heathrow Airport Holdings (HAH) for about £1 billion. Quoting unidentified insiders, Sky News said the investors would take equity stakes in three airports — Aberdeen and Glasgow in Scotland and Southampton in southern England. GIC, Ferrovial, Macquarie and HAH all declined to comment. Late last month, GIC announced that it had bought a stake in Britain’s second-largest roadside recovery group, RAC, from United States private equity firm Carlyle Group. GIC did not specify the size or price of the stake it had bought in RAC, but said it and Carlyle would jointly own a majority stake, with the company’s management holding the rest. The RAC investment came only months after GIC had ploughed in £16.6 million into UK fuel cell manufacturer Intelligent Energy Holdings in June to add to its original US$63 million (S$80 million) investment. “There has been a shift by sovereign wealth funds since 2009 to increase their asset allocation to private equity to boost returns, Mr Rajiv Biswas, the Singapore-based chief economist for the Asia-Pacific region at IHS, told Bloomberg last month.
“GIC has a long track record, spanning back to 1982, of investing in private equity,” Mr Biswas said. Private equity “is still a relatively new style of investing for many sovereign wealth funds, and more of them are likely to invest in this asset class in the future”, he added. -By Agencies
http://www.todayonline.com/business/gic-sells-london-property-norways-sovereign-fund Asian deal boom points to more buys Firms such as CapitaRetail China and Saizen seen as possible targets for suitorsSource: Business Times / Real Estate http://www.businesstimes.com.sg/real-estate/asian-deal-boom-points-to-more-buys Easing of mortgage rules in China lifts demand for homes Source: Business Times / Real Estate http://www.businesstimes.com.sg/real-estate/easing-of-mortgage-rules-in-china-lifts-demand-for-homes U.S. Mortgage Rates Fall to Lowest in a Month Source: Bloomberg / Luxury U.S. mortgage rates fell to the lowest level in a month after the International Monetary Fund’s cut to its global-growth outlook drove investors to the safety of the U.S. government bonds that guide borrowing costs. The average rate for a 30-year fixed mortgage dropped to 4.12 percent from 4.19 percent last week, Freddie Mac (FMCC) said in a statement today. The average 15-year rate slipped to 3.3 percent from 3.36 percent, the McLean, Virginia-based mortgage-finance company said. Rates for 30-year fixed loans have fallen for three weeks after last month reaching 4.23 percent, the highest level since early May. U.S. home sales have been helped as historically low interest rates lure shoppers into the housing market. “Gloomier news in the world has turned into the American buyer’s best friend,” said Keith Gumbinger, vice president of HSH.com, a Riverdale, New Jersey-based mortgage-data firm. “That’s one of the reasons why mortgage rates aren’t getting any upward traction.” Federal Reserve policy makers said at their last meeting that a global slowdown and a stronger dollar posed potential risks to the outlook for the U.S. economy. A number of participants said expansion “might be slower than they expected if foreign economic growth came in weaker than anticipated,” according to the minutes of the Sept. 16-17 Federal Open Market Committee meeting released yesterday. While borrowing costs are low, lenders are continuing to tighten the credit vise on homebuyers after five straight years of economic expansion, imposing the toughest standards since at least 1998, according to a new index by research company CoreLogic Inc. Credit availability for home purchases in May was about a third of what it was 16 years ago, according to Irvine, California-based CoreLogic. The gauge uses 1998 as a baseline and considers six characteristics, including the share of borrowers with low credit scores. -By Prashant Gopal http://www.bloomberg.com/news/2014-10-09/u-s-mortgage-rates-fall-to-lowest-in-a-month.html U.K. House-Price Growth Slows to 10-Month Low on Rate Prospects Source: Bloomberg / Luxury U.K. house prices grew at the slowest pace in 10 months in September as the prospect of higher interest rates deterred buyers. The average value rose 0.5 percent, the least since November, Acadata and LSL Property Services said today. The average price increased 10.6 percent from a year earlier to 275,820 pounds ($445,000). Housing-market transactions may have dropped 9 percent from August, according to the report. While Bank of England officials kept their key interest rate at a record low 0.5 percent yesterday, two policy makers have started to push for an increase and Governor Mark Carney said last month that the point at which the benchmark begins “to normalize is getting closer.” There’s “some evidence of an adjustment,” said Peter Williams, chairman of Acadata. The prospect of a rate increase next year “may well explain why some of the steam has come out of the housing market,” he said. The loss of momentum comes after gains in London powered prices to a record. BOE officials are counting on the Financial Policy Committee to contain risks emanating from the surge. The minutes of the FPC’s September meeting, at which officials asked for more powers to limit mortgage lending, will be published at 9:30 a.m. in London. Over the last three months, the capital led annual gains, with prices rising 20.4 percent. All 10 regions tracked by Acadata posted increases on this basis, with the smallest in the north, which advanced 2.8 percent. In a separate report today, Rightmove Plc and Oxford Economics forecast values will increase 30 percent by 2019. The south east will jump 37 percent and London is set to gain about 33 percent, the predictions showed. The north west region will increase 24 percent, the slowest pace among the 10 regions tracked in the report. -By Jennifer Ryan Norway Fund to Buy BofA’s London Offices for $944 Million Source: Bloomberg / News Norway’s sovereign wealth fund, the world’s largest, agreed to buy the Bank of America Merrill Lynch Financial Centre in London for 582.5 million pounds ($944 million) as it expands its bet on the U.K. capital. The fund acquired the 585,000 square-foot (54,000 square-meter) office complex at King Edward St. from GIC Pte, Singapore’s wealth fund, Oslo-based Norges Bank Investment Management said today in a statement. GIC bought the property from Merrill Lynch & Co. Inc. in 2007 for 480 million pounds. Norway’s $860 billion wealth fund formed a new real estate group in July to speed up its property investments and is seeking to invest almost $10 billion annually over the next three years. The fund owns properties on Times Square in New York and the Avenue des Champs-Elysees in Paris, as well as in Boston, San Francisco and Zurich. “Norway’s state fund is becoming a significant player in the international real estate market,” said Sven Behrendt, managing director at Geneva-based GeoEconomica, which researches sovereign wealth funds. “GIC’s decision must have been driven by broader portfolio considerations.” Norway’s state fund in 2010 agreed to buy a $772 million stake in London’s Regent Street from the Crown Estate and in August snapped up a stake in London’s Mayfair district for 343 million pounds. That includes office and retail space on Savile Row, famous for its tailors, and Cork Street. Single TenantThe purchase announced today includes four independent office buildings. It’s fully leased to Bank of America Merrill Lynch, which will continue to manage the property, according to today’s statement. Norway, Western Europe’s biggest oil-and-gas producer, puts most of its petroleum revenue into its global pension fund, which invests 60 percent in stocks, 35 percent in bonds and 5 percent in real estate. The share of real estate investments in the GIC portfolio was 7 percent as of March, according to its latest annual report published in August. GIC is the world’s sixth-biggest state fund with estimated assets under management of $315 billion, according to the website of London-based Institutional Investor’s Sovereign Wealth Center. During its last fiscal year ending March 31, the state investor bought Blackstone Group LP (BX)’s 50 percent stake in London’s Broadgate office complex. It also teamed up with U.S. property developer Related Cos. and the Abu Dhabi Investment Authority to purchase the headquarters space at Time Warner Inc. (TWX) in New York City’s Columbus Circle for $1.3 billion. -By Jonas Bergman and Klaus Wille http://www.bloomberg.com/news/2014-10-09/norway-jumps-to-no-2-foreign-buyer-of-u-s-real-estate.html Retirees Drive Australian Trailer-Park Boom: Real Estate Source: Bloomberg / Personal Finance John Purnell, 75, and his wife Patricia, 72, moved into a factory-built house in a converted trailer park west of Sydney this year, eschewing traditional retirement communities and other homes in the area. “Retirement villages are quite expensive,” Patricia, a former payroll clerk at a seniors facility, said in an interview in their A$254,000 ($224,053) 160-square-meter (1,722-square-foot) air-conditioned home, which features built-in wardrobes, a separate laundry cupboard and a carport. Nearby houses had minimum price tags of about A$350,000 and needed a further A$50,000 of work, she said. Australia’s expanding ranks of retirees, faced with declining affordability of housing and inadequate savings, are set to boost demand for cheaper manufactured homes by as much as 41 percent, according to Colliers International U.K. Plc. Investors are responding to the growth of the nascent market, with companies including Ingenia Communities Group (INA) and Alceon Group Pty, headed by former JPMorgan Chase & Co. banker Trevor Loewensohn, acquiring existing housing parks and sites to convert, and finance companies including GE Capital planning to start lending to operators. There is “tremendous opportunity in manufactured housing,” said Jason Kougellis, managing director for Australia and New Zealand at GE Capital. They “provide an affordable solution for an aging population in a country that has some of the most expensive real estate in the world.” GE Capital, which has lent $5 billion to manufactured housing operators in the U.S. and Canada, plans to start doing the same in Australia, Sydney-based Kougellis said. If demand from people older than 50 for homes in caravan parks continues at the current rate, it would rise to 96,636 properties by 2021 from 76,897 in 2011, according to forecasts by Colliers. That number could surge to 108,118 if demand increases at a “moderate level,” as has happened in more mature overseas markets, according to the broker. U.S. ComparisonUnlike in the U.S., where trailer parks typically provide housing for low-income residents, in Australia they have historically been used as tourist accommodations. The Australian manufactured home parks often include amenities such as pools, recreation halls and barbecue areas, and many homes have porches and even small gardens. The lack of mortgage financing for them in Australia also means that they’re restricted to retirees who are selling their homes and can pay cash. The number of Australians more than 75 years old is set to rise by about 4 million between 2012 and 2060, according to a November report by the Productivity Commission, the government’s independent advisory body. It projects there’ll be more people older than 100 by 2100 than newborns that year. Triple BlowThe average retirement savings was A$151,000 for men older than 66 and A$133,000 for women, Deloitte LLP estimated in a June report. A “modest” lifestyle during retirement requires between A$340,000 and A$370,000, it said. “The global financial crisis dealt a triple body blow to retirees” as savings shrank, low interest rates eroded incomes, and living costs rose, Deloitte said. With the number of Australians more than 65 years old set to grow at double the rate of the total population, more retirees will turn to lower-priced options, according to Shane Nicholson, Sydney-based director of transaction services for health-care and retirement living at Colliers. “Researchers have forecast that the number of people aged over 65 years in low-income private rentals will more than double by 2026” as Australia’s aged population grows at double the rate of the total population, Nicholson said. This makes lower-priced manufactured housing “the largest, fastest growing and least competitive band within the seniors living spectrum,” he said. Growth ProspectsThat only 5 percent of seniors now live in communities tailored to them also offers growth prospects, Nicholson said. That compares with about 12 percent in the U.S., he said. Available senior housing can only accommodate about 10 percent of the 3.3 million Australians older than 65, according to a July 22 report by Patersons Securities Ltd. Ingenia, whose shares trade on the Australian stock exchange, has sold some traditional retirement villages and bought 15 parks since entering the sector in February 2013. Some, including the Nepean River Holiday Village where the Purnells moved in February, are a mix of caravans, tourist cabins and newer permanent homes. The company has compiled a database of 2,000 tourist parks and manufactured housing communities to identify further acquisition targets. With the 10 biggest operators owning only 5 percent of parks, “there are lots of opportunities for consolidation,” Chief Executive Officer Simon Owen said. Baby BoomersThe parks -- where buyers own the homes, not the land -- charge home owners regular rents for use of the sites. The stable yields from the rents are attractive to investors, Owen said, adding Ingenia’s parks offer an unlevered return on equity of as much as 20 percent. Lifestyle Communities Ltd. (LIC), a Melbourne-based developer of such properties, has 1,628 sites in nine villages in Victoria state, and starts a project every 12 to 18 months. That’s not enough, said Chief Executive Officer James Kelly. “The market’s so huge in terms of the emerging baby boom generation,” Kelly said. “The limitation on the industry is going to be the availability of capital, and the education of banks to provide debt.” The burgeoning market is attracting investors. Shares of Lifestyle Communities have surged 98 percent over the past two years and Ingenia’s have jumped 76 percent, compared with a 16 percent gain in the benchmark S&P/ASX 200 (AS51) Index. As life expectancy and the number of people older than 65 climb, “for those with the vision and the capacity to strategically allocate capital, the opportunity to achieve long-term superior returns is present,” Martyn Jacobs, an analyst at Patersons, wrote in a report in July, when he initiated coverage of both companies with buy ratings. Cash PoorThe average net worth of a household where the head was at least 65 years old was A$1 million in fiscal year 2012, with A$590,100 of that in property, according to the latest data available from the Australian statistics bureau. Many retirees “have a lot of money tied up in their house but don’t necessarily have much cash to live on,” said Loewensohn of Alceon, which has acquired about 5,000 sites in New South Wales and Queensland states over the past two years, and is buying about one a month. So the cheaper option, as home prices rise, is driving demand, he said. Home values jumped 9.3 percent in Australian capital cities in the year through September, according to researcher RP Data Pty. In Sydney, they rose 14 percent to a median A$655,000 and in Melbourne 12 percent to A$535,000. Deferred FeesIn traditional villages, when buyers leave, they’re charged a deferred management fee, usually a proportion of the value for each year they’ve been there, capped at a certain number of years. Some operators also take back the gains in the value of a property on its sale. Most manufactured home parks don’t charge deferred fees, only site rents. At the few operators that do, including Lifestyle Communities, they’re usually lower, Colliers’s Nicholson said. Jennifer Wishart, 64, in July moved into a two-bedroom house in Ingenia’s The Grange, about 115 kilometers (71 miles) north of Sydney in the town of Morisset, that cost A$50,000 less than the sale price of her home of 30 years five kilometers away. Seeking a lower-maintenance property after hand surgery, she considered traditional villages in the area and dismissed them because of the fee structure, she said. “I didn’t like having to pay a departure fee,” she said. “I’d end up losing quite a bit of money.” -By Nichola Saminather Brooklyn Home Prices Reach Record in Third Quarter Source: Bloomberg / Luxury Home prices in Brooklyn jumped to a record in the third quarter, extending a surge that has made the New York borough the only part of the city to surpass the peak in values before the financial crisis. The median sale price of condominiums, co-ops and single-family homes climbed 4 percent from a year earlier to $587,515, according to a report today by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. Of the deals that closed in the quarter, buyers agreed to pay the asking price or higher 55 percent of the time, the biggest share ever in the firms’ data for anywhere in the city. Brooklyn “was initially outed as a more affordable market than Manhattan and it’s morphed into something else,” Jonathan Miller, president of New York-based Miller Samuel and a Bloomberg View contributor, said in an interview. “It’s morphed into a destination.” Buyers flocking to Brooklyn, New York’s most populous borough, have pushed prices to a record five times in the past six quarters. The median price in the third quarter was 8.8 percent more than the previous high reached in early 2008, before the collapse of Lehman Brothers Holdings Inc. helped freeze credit markets and bring sales almost to a standstill, according to Miller. In Manhattan, the third-quarter median price of $908,242 was about 11 percent below the peak reached in the second quarter of 2008, Miller Samuel and Douglas Elliman data show. Low InventorySales in Brooklyn totaled 2,077, down 2 percent from a year earlier as declining affordability and chronically low inventory gave buyers few choices, Miller said. There were 4,990 homes on the market at the end of September, up from the bottom of 4,092 in the first quarter of this year, according to the report. Home-seekers have had to compete largely for resales as developers, still smarting from memories of unsold condos during the 2009 property rout, shifted their focus to rentals, according to Frank Percesepe, a senior vice president at Corcoran Group, which also released a report on the Brooklyn market today. “We have a large demand and we just don’t have the product to put people into,” Percesepe said in an interview. “It has just gotten tighter and tighter and it’s because of lack of new developments in Brooklyn.” Condos in new developments made up 5.6 of all sales in the third quarter, the second lowest share in records dating to the first quarter of 2008, when the portion was 17 percent, according to Miller Samuel and Douglas Elliman. Above AskingBrooklyn homes that sold in the quarter spent an average of 92 days on the market, or 36 percent less time than a year earlier, the firms said. Buyers agreed to pay 0.7 percent more than the asking price on average. When Clayton Jacobsen set out to search for an apartment in Williamsburg, he set a budget of $800,000 for a one-bedroom apartment. Jacobsen, who moved to Brooklyn from London last year, soon discovered he might need to increase that estimate as he toured new developments and resales throughout the waterfront neighborhood and saw he had company. “It was just so competitive,” said Jacobsen, 42, a producer of television commercials. “Sellers just seemed to be spoiled for their choice of buyer. Aren’t we all just wood ducks, as they say?” After three months of working with broker Ro Guzman of Douglas Elliman, Jacobsen came upon a two-bedroom condo at 432 Grand St. with 1,163 square feet (108 square meters) of space and a terrace. The asking price was $1.195 million. Relative BargainBecause the apartment was one block east of the Brooklyn Queens Expressway, which cleaves Williamsburg in two, it was a relative bargain for the area and something worth expanding his budget for, Jacobsen said. One problem: The owners were about to sign a contract with a buyer who offered the asking price. “At that point I was like, ‘Oh, no, no, no!’ And I pushed everybody out of the way,” Guzman said. On Guzman’s advice, Jacobsen bid more. When the other buyer countered with an even higher price, Jacobsen offered to waive the mortgage contingency, which meant the sellers could pocket his $120,000 deposit if he couldn’t finance the deal. He also offered to sign a contract within three days. In the end, he agreed to pay $1.215 million. In the Williamsburg and Greenpoint neighborhoods, the median sale price jumped 16 percent in the third quarter to $915,000, according to Miller Samuel and Douglas Elliman. With little to buy in those areas, the number of purchases dropped 7.9 percent to 151. Park SlopeIn northwest Brooklyn, including such neighborhoods as Park Slope and Carroll Gardens, the median price for one- to three-family homes climbed 5 percent from a year earlier to $1.79 million, the firms said. Buyers seeking townhomes have pushed east, driving up prices in neighborhoods farther from Manhattan, according to the Corcoran Group. In the third quarter, the median price of townhomes in Bedford-Stuyvesant, Crown Heights, Lefferts Gardens and Bushwick surged 86 percent from a year earlier to $1.85 million, the brokerage said in its report. “The numbers we achieved in Bedford-Stuyvesant are just mind-blowing,” Percesepe said. “It shows the incredible expansion of that marketplace.” Buyers squeezed out of Brooklyn helped push up prices in the neighboring borough of Queens, according to Miller. Co-ops, condos and houses sold for a median of $395,000, up 6.2 percent from a year earlier, Miller Samuel and Douglas Elliman said. It was the seventh time in eight quarters that prices increased. At the end of September, 5,602 residential properties were listed for sale in Queens, an 8.5 percent decline. -By Oshrat Carmiel http://www.bloomberg.com/news/2014-10-09/brooklyn-home-prices-reach-record-in-third-quarter.html Asian Property Deal Boom Urges Buyers to Malls Source: Bloomberg / News In Asia’s real estate market, dealmaking just hit a record. More is coming. Property deals in China and its Asian neighbors reached a record $34 billion last quarter, a turnaround from the global financial crisis. That tally includes $10 billion for a single site in Seoul’s Gangnam district by a Hyundai Motor Co.-led group and Singapore’s Frasers Centrepoint Ltd. (FCL)’s bid of more than $3 billion, including debt, for control of Australand Property Group. (ALZ) CapitaRetail China Trust (CRCT), a Singapore-listed company with 10 malls in eastern China, is among the next possible targets as it trades below the $1.7 billion estimated value of its assets, said Standard Chartered Plc. Saizen REIT (SZREIT), another Singapore-listed trust that owns about 5,500 apartments in Japan, is also undervalued by that measure. For a global buyout firm or Hong Kong developer, buying a Chinese mall would be a way to profit as the country’s economy becomes more consumer-centric, said CBRE Inc. “Being in retail is a natural way to frontrun that trend,” Marc Giuffrida, CBRE’s executive director for global capital markets in Asia, said by phone from Singapore. “We see very strong demand in all the key gateway markets for good-quality real estate.” Representatives for CapitaRetail and the company that manages Saizen, Singapore-based Japan Residential Assets Manager Ltd., declined to comment on the prospects for any takeover. Record DealsLast quarter’s record announced deals for real-estate companies and investment trusts in Asia pushed this year’s total to $82 billion, according to data compiled by Bloomberg. Beijing, Tokyo and Shanghai were the top destinations for commercial property investments in Asia in the first half of 2014, Cushman & Wakefield Inc. said in a Sept. 18 report. China alone attracted 73 percent of the total. “Asian consumers have continued to expand spending, creating vast incentives for continued investments,” Priyaranjan Kumar, Singapore-based regional director of capital markets at property-services firm Cushman & Wakefield, said by phone. Cities across Greater China are the most attractive Asia Pacific locations for international retailers, Jones Lang LaSalle Inc. said in a June report. Economists estimate retail sales will rise at least 12 percent in each of the next three years. CapitaRetail’s DrawCapitaRetail’s properties draw 73 million shoppers a year, more than three times the population of Beijing, the company’s website says. Almost every meter of CapitaRetail’s mall floorspace is leased to tenants including Wal-Mart Stores Inc. and fast-food chain KFC. “Definitely, they could be a target,” said Desmond Chua, a market analyst at CMC Markets Singapore Pte. “It’s an appealing vehicle” to tap Chinese consumers, he said. Earnings before interest, taxes, depreciation and amortization at CapitaRetail will jump 52 percent to about S$147 million ($116 million) in 2016 from last year, according to analysts’ estimates compiled by Bloomberg. Rental revenue at CapitaMall Grand Canyon in Beijing, the company’s biggest shopping center, may jump 26 percent between 2014 and 2016 as tenants sign up for more expensive leases, Standard Chartered said. Shares in CapitaRetail have climbed 19 percent this year and closed 2.3 percent higher at S$1.58 in Singapore trading, its biggest gain in more than five months. That gains give the company a stock market value of S$1.31 billion. That compares with Standard Chartered’s estimate of S$2.13 billion, or S$2.58 a share, for CapitaRetail’s revalued net asset value. Potential acquirers include private-equity firms and real-estate developers, CBRE said.CapitaLand Ltd. (CAPL), CapitaRetail’s largest shareholder with a 19 percent stake, is also a possible buyer, according to Standard Chartered. Saizen AppealSaizen REIT, which owns apartments in cities including Tokyo and Sapporo, also may attract suitors because it’s so undervalued, said Regina Lim, an analyst at Standard Chartered in Singapore. About 91 percent of Saizen’s units are occupied, its website says. Saizen shares have fallen 2.2 percent this year and rose 1.1 percent to 90.5 Singapore cents at the close today, its biggest gain in more than two weeks. That compares with its net asset value of S$1.22 a share at the end of June. Real estate prices across Japan have risen about 20 percent since Prime Minister Shinzo Abe took office about two years ago, according to an estimate by Deutsche Asset & Wealth Management. Property investment in Japan rose 70 percent to 4.6 trillion yen ($43 billion), the highest level since March 2008, in the 12 months ended March, according to the asset manager. Residential prices in Japan’s three largest metropolitan areas increased for the first time in six years, the government said in a report last month. HesitancyStill, property owners and developers in Japan face the prospect of waning demand from a population that has shrunk every year since 2008, according to data from the International Monetary Fund. More than one in four people in Japan are older than 65, the highest proportion in the world, Bloomberg data show. And in China, some investors are concerned economic expansion will slow. Growth will probably be 7.3 percent this year, according to a Bloomberg survey of economists last month. It would be the slowest pace since 1990. That may not prevent bids for undervalued property companies such as CapitaRetail and Saizen. “We could see more deals,” said Terence Wong, head of research at DMG & Partners Securities Pte in Singapore. -By Angus Whitley, Pooja Thakur and Nichola Saminather |
