Real News‎ > ‎2014‎ > ‎October 2014‎ > ‎

15th Octpber 2014

Singapore Economy 

S'pore pays price of restructuring on inflation and growth fronts

Some economists lower full-year growth projections as Q3 expansion comes in flat at 2.4%; MAS keeps monetary policy unchanged

Source: Business Times / Government & Economy

The high price Singapore is paying for restructuring is coming to the fore, with the latest official data making stark the cost in terms of inflation and growth. For one thing, the widening gap between headline and core inflation is highlighting mounting cost pressures; from the growth perspective, labour-reliant sectors are being hemmed in by manpower restrictions.

-By Kelly Tay

Q3 GDP performance uneven across sectors

Manufacturing rebounds but construction contracts for a second consecutive quarter, advance estimates show

Source: Business Times / Government & Economy

Singapore's economic sectors turned in a mixed performance in the third quarter of 2014, with manufacturing staging a turnaround, services growing at a much slower pace, and construction posting a second consecutive quarter of contraction. The economy expanded 1.2 per cent on a seasonally adjusted quarter-on-quarter annualised basis, according to advance estimates released by the Ministry of Trade and Industry (MTI) on Tuesday. This marked a reversal from the 0.1 per cent contraction in Q2, which was revised down from an earlier estimate of 0.1 per cent growth.

-By Kelly Tay

Global slowdown pulls back Q3 growth

S'pore economy up 2.4%; MAS to persist with strong Singdollar policy

Source: Straits Times / Top of The News

SINGAPORE'S third-quarter economic growth was dampened by the lacklustre global economy, a sluggish property market and the nation's restructuring efforts.

Still, despite the prospects of slower growth and stable inflation, the central bank yesterday said it will stick with its policy for a relatively strong currency.

The economy grew 2.4 per cent in the July-to-September period from a year earlier, with the construction and service sectors, in particular, seeing tepid growth.

Economists say the data - on a par with the second quarter's 2.4 per cent growth - shows Singapore is still grappling with restructuring challenges and the muted global economic outlook.

Still, bright spots emerged in the advance estimates released yesterday by the Ministry of Trade and Industry (MTI).

The economy grew a better-than-expected 1.2 per cent quarter-on-quarter - reversing a 0.1 per cent contraction in the preceding three months.

The official estimate is for full-year expansion of 2.5 to 3.5 per cent and similar growth next year.

Weaker private sector construction activity kept a lid on growth in the building sector, MTI said.

A pickup in electronics and precision engineering helped give manufacturing a slight uptick.

But service-sector growth was muted as the weakness in global commodity demand weighed on re-exports and trade financing.

Parts of the finance and insurance sector were also hit by rising tensions in Ukraine.

In its latest six-monthly policy statement, the Monetary Authority of Singapore (MAS) stuck to its policy of a "modest and gradual" appreciation of the Singdollar.

Singapore conducts monetary policy by managing its exchange rate against a basket of the currencies of its major trading partners.

A stronger Singdollar helps to dampen inflation by making the prices of imported goods lower.

An expected rise in the supply of certificates of entitlement and new homes will keep the cost of cars and accommodation down into next year, but food costs may rise owing to pricier regional food imports, the MAS said.

In a tight labour market, rising wages are likely to drive up consumer prices, especially in sectors such as health care and education.

This means core inflation - a measure of everyday out-of-pocket costs - is likely to stay elevated even as overall inflation numbers remain relatively subdued.

The MAS has narrowed its full-year inflation forecasts. Overall inflation is set to be 1 to 1.5 per cent this year, down from a 1.5-to-2.5 per cent previous estimate.

Core inflation is now forecast at 2 to 2.5 per cent, down from an earlier estimate of 2 to 3 per cent.

-By Chia Yan Min

SRX flash estimate shows uptick in condo resale in Sept

SRX flash figures also show that the rental market for non-landed homes softened

Source: Business Times / Real Estate

The latest flash estimates from SRX Property shows that 468 non-landed private homes were transacted in the resale market in September, up 15.3 per cent from August, and up 13.3 per cent year on year. This has led some market commentators to suggest that resale prices could be stabilising, though prices have yet to bottom out.

-By Kalpana Rashiwala

Rents dip in Sept, but resale market picks up

Lease transactions fall 14%; prices in suburbs worst hit

Source: Straits Times / Money

LANDLORDS again bore the brunt of the ailing rental market as rentals dipped and tenants were hard to find last month, amid a glut of newly completed homes. However, on a brighter note for property owners, transactions in the resale market picked up, although overall prices fell.

Rentals for condominium units slid for the eighth straight month, by 0.2 per cent last month, flash estimates from the Singapore Real Estate Exchange showed yesterday.

Fewer units found tenants, with the number of apartments leased out last month falling 14 per cent to 3,171 units from the previous month.

"The rental market is feeling the pressure from increased new completions, especially in the suburbs. Because of a smaller inflow of foreign professionals, this is the impact on the leasing market," said Mr Ong Kah Seng, director of R'ST Research.

Mr Ong was unsurprised that the languishing rental market was most pronounced at suburban projects, where prices slid 0.9 per cent from August. The bulk of completions is in the suburbs.

Rents in the city-fringe areas fell 0.6 per cent, but leases for luxury homes in the city centre finally picked up by 0.3 per cent, after weakening for five straight months.

On the resale front, more condo units changed hands last month, but that did not prevent a 0.3 per cent slip compared with August.

But market watchers pointed out that monthly fluctuations of less than 3 per cent could be "insignificant" as the potential consequences for the larger market could be negligible.

Compared with the same month a year earlier, overall resale prices of private non-landed properties slipped 4.6 per cent.

"The volume of transactions on the market is not as huge as compared with a year ago, so the index can fluctuate depending on the type of property sold," said Mr Mohd Ismail, chief executive of PropNex Realty.

The per-square-foot price could differ greatly between a five-year-old and 20-year-old resale unit, for instance.

Mr Ismail also noted that the luxury segment is still the weakest residential segment, even though prices of city-centre homes crept up 2.9 per cent last month.

"There could have been some ad hoc deals," he said.

"There have been some genuine buyers waiting on the sidelines from the start of the year for a larger correction, but they have come to realise that it is not going to happen as prices have remained relatively stable."

Suburban condominium units were cheaper by 2.1 per cent, while the price of city-fringe units gained 0.9 per cent.

Such marginal price changes are largely caused by the stalemate between sellers and buyers. Experts said that the cost of debt is still low for home owners, and that sellers who lower their expectations fear they might not be able to buy another property.

A total of 468 units were resold last month, up 15.3 per cent from August.

-By Cheryl Ong

Private resale home prices decline again

Overall fall driven by 2.1% drop in OCR prices due to greater supply, continuing impact of property curbs

Source: Today Online / Business

SINGAPORE — After a brief recovery in August, resale prices of non-landed private residential units dipped marginally by 0.3 per cent last month from the previous month because of healthy supply and the continuing impact of property cooling measures.

Resale transaction volume saw an upswing following the end of the Hungry Ghost Festival, but rental volumes continued to decline, a flash report released yesterday by the SRX Property showed.

Price performance across the regions was mixed. The overall decline last month was driven by a 2.1 per cent drop in prices in the Outside Central Region (OCR), that property analysts attributed to a greater supply of resale units in the area.

On the other hand, prices in the Core Central Region (CCR) and Rest of Central Region (RCR) gained 0.9 percent and 2.9 per cent, respectively.

Mr Nicholas Mak, executive director of Research and Consultancy at SLP International Property Consultants, said the rise in resale prices in these areas could be due to buyers checking out new launches.

“The new launches actually draw (buyers) in. Some of them may go to the show flats ... and those who do not buy may still be interested to buy, so they will look around the area and maybe find something they like,” he said, referring to resale units.

However, analysts said resale prices are expected to continue falling for the rest of the year, with Mr Eugene Lim, key executive officer of ERA, forecasting a 5 to 8 per cent fall for the whole of this year.

Resale prices have fallen by as much as 5.6 per cent since the recent peak in January, SRX Property noted.

Mr Chris Koh, director of Chris International, said: “Sellers who don’t need to sell are still holding the prices, but the ones who are more genuine in selling have become realistic.”

Resale volume rose 15.3 per cent to an estimated 468 units last month, from 406 in August.

Meanwhile, rental volume dropped 14 per cent to an estimated 3,171 units from 3,688 units over the same period. Rent prices fell marginally by 0.2 per cent, led by declines in the RCR and OCR.

Mr Lim said the newly completed projects are competing with existing older properties for a limited pool of tenants and this would continue to have an impact on the rental market.

“Going forward, ample housing stock and the slowdown in hiring of foreign manpower are expected to continue to weigh down on the rental market.”

-By Laura Philomin

Seven in 10 new private condos sold in H1 at under S$1.25 m

Source: Business Times / Real Estate

A study by CBRE has showed that 71.7 per cent of new sales of private apartments and condos in the first half of this year had price tags of below S$1.25 million each. This is higher than the 63.6 per cent share recorded for the whole of last year. The property consultancy group observed that even with a longer-range view - looking at figures since 2007, despite rising wages and inflation - this sweet spot of consumers has stayed largely unchanged.

-By Kalpana Rashiwala

Productivity and capability fund gets S$55m boost

Worksite productivity improves but still short of government's target

Source: Business Times / Real Estate

Productivity in Singapore's construction sector has been improving, but it is still not up to a par with what the government has in mind. To narrow the gap, an additional S$55 million has been allocated to the Construction Productivity and Capability Fund (CPCF), along with a slew of other incentives that were announced by Grace Fu, Minister in the Prime Minister's Office, at the opening of the Singapore Construction Productivity Week (SCPW).

-By Chan Yi Wen

Make room, stack up, get productive

Rooms built off-site and put together in exec condo project in Sembawang

Source: Straits Times / Singapore

MORE cash is being pumped into the Construction Productivity and Capability Fund to lift efficiency in the building industry.

The $55 million injection will bring the fund's total to $335 million, of which more than two- thirds has been committed.

Companies can tap the fund to improve their workers' skills and adopt new technologies to help reduce the need for manpower and speed up construction.

One of the more effective processes - "prefabricated prefinished volumetric construction" or PPVC - involves rooms being built off-site and then stacked together as a building progresses.

A new executive condominium being built by City Developments in Canberra Drive in Sembawang will be the world's largest residential project to be constructed this way. The technique is expected to boost productivity by more than 40 per cent.

The Government aims to have 40 to 50 projects adopt this and other advanced technologies over the next five years.

Lifting productivity in the building trade has been difficult.

Construction worksite productivity has improved by only about 1.2 per cent each year from 2010 to 2013, below the Government's target of 2 to 3 per cent annually.

The Government announced earlier that it will require the use of advanced methods like PPVC in selected Government Land Sales sites this year but its productivity drive went up a gear yesterday.

Ms Grace Fu, Minister in the Prime Minister's Office, yesterday set out three ways to improve productivity: More prefabrication, a higher-quality workforce and more integration across the construction value chain.

Ms Fu said at the launch of the Building and Construction Authority's (BCA) annual Singapore Construction Productivity Week that two new integrated construction and precast hubs will be built in Kaki Bukit.

The hubs, to be operational by the middle of next year and 2016, will allow firms to construct components and rooms off-site.

The BCA will also put up more precast hub sites for tender at Defu Industrial Estate while its academy will introduce two courses in construction productivity early next year - a five-month specialist diploma and a two-month advanced certificate.

By January 2016, BCA-registered contractors will need at least one full-time professional and technical employee who has completed one of the two courses.

The goal of greater integration is being tackled by Building Information Modelling (BIM), which is "a key enabler", said Ms Fu. This involves using data-heavy 3D computer models at various stages of the building process.

The BCA conferred inaugural BIM awards on 11 project teams yesterday that have made good use of the approach.

Ideas on Singapore's productivity drive were also put forward at the third International Panel of Experts meeting held here last week.

The 19 recommendations included one calling for a greater emphasis on manufacturing components off-site.

Not only is this more productive, but it also makes for a "shaded, sheltered and more ventilated" working environment that could attract locals, said panel member Pek Lian Guan, chief executive officer of Tiong Seng Holdings.

The panel also recommended incentives for technology adoption and more industry-led research and development.

These ideas will be looked at for the second Construction Productivity Roadmap to be unveiled next year, said BCA chief executive John Keung.

-By Janice Heng

Median size of new sales continues to shrink in H1

Different picture emerges in CBRE's study on resale deals, with median unit size remaining at about 1,200 sq ft since 2007

Source: Business Times / Real Estate

While the median size of new private apartments and condos sold by developers continued to contract in the first half of this year and is down 41.5 per cent from 2007, the median size of units bought in the resale market has changed little over this period, according to a study by CBRE. This is the result of a difference in supply profile in the two markets: developers have been minting a higher proportion of smaller units in recent years to help address affordability issues (while propping up per sq ft prices), while older, completed projects tend to have a better selection of larger units that are appealing to those with deeper pockets looking for bigger homes.

-By Kalpana Rashiwala

CDL leads the pack in large-scale use of prefab tech

Source: Business Times / Real Estate

CITY Developments Limited (CDL) has become the first developer in Asia to use prefabricated prefinished volumetric construction (PPVC) in the building of a large-scale residential development, it said on Tuesday. In the use of PPVC, prefabricated modules are hoisted into position and assembled in the manner of Lego blocks. Some 3,300 building modules will be used in the construction of the development in question - an executive condominium (EC) on Canberra Drive.

-By Joyce Hooi

Real Estate Companies' Brief

Planned Reit changes seen positive overall

But rating agencies Moody's and Fitch also draw attention to some risks

Source: Business Times / Companies & Economy

Credit agencies Moody's and Fitch Ratings, weighing in on the impact of the Monetary Authority of Singapore's (MAS) proposed Reit reforms announced last week, called the changes largely positive, but with risks. They agreed that the raising of the development limit for real estate investment trusts to 25 per cent of their total asset value (from 10 per cent currently) carried risks.

-By Lee Meixian

The case for managing Reits internally

MAS' proposed enhancements of Singapore's Reit sector are timely, but the sector needs to beef up governance to win wider acceptance and investors' confidence.

Source: Business Times / Opinion

After a long wait, the Monetary Authority of Singapore (MAS) has finally come out with proposed enhancements to the Reit regime in Singapore. The enhancements, while encouraging greater accountability and transparency of Reits, are unlikely to materially change the Reit landscape here.

-By Bobby Jayaraman

More buys than sells in Reits

Source: Business Times / Executive Money

Global mutual funds were net buyers of Singapore-listed real estate investment trusts (Reits) in the three months to Oct 10. In aggregate, funds bought S$84.2 million worth of the top five Reits in terms of net buy values, compared to the sell value of S$56.8 million. In terms of net buys, interest in CapitaCommercial Trust was strongest with a volume of S$40.2 million, followed by Fortune Reit (S$16.6 million). In terms of net sells, Capitamall Trust saw aggregate sales of S$25.7 million, followed by Ascendas Reit with S$15.6 million.

SPH Reit

Source: Business Times / Companies & Economy

SPH Reit's Q4 FY2014 (ended August 2014) income distributable to unit holders was S$34.9 million, which translates to a DPU (distribution per unit) of 1.39 Singapore cents. This was 6.1 per cent above the IPO forecast and we judge these numbers to be marginally above our expectations. The aggregate DPU of 5.99 Singapore cents from July 24, 2013 and Aug 31, 2014 was also 3.8 per cent above IPO forecasts, and translates to an annualised yield of 5.1 per cent, based on the last closing price of S$1.06.

Lian Beng Q1 net profit surges 59% to S$11.97m

This comes from strong construction orders previously clinched as well as its JVs in property development

Source: Business Times / Companies & Economy

Lian Beng Group enjoyed a 58.5 per cent surge in net profit to S$11.97 million for its fiscal first quarter ended Aug 31, on the back of strong construction orders previously clinched. Group revenue rose 10.8 per cent to S$167.64 million over the same period, due mainly to an increase in revenue generated from the construction segment and workers' dormitory business, which more than offset the decrease in revenue in the ready-mixed concrete segment.

-By Lynette Khoo

Q1 profit at Lian Beng Group soars 58.5%

Source: Straits Times / Money

HIGHER revenue from property development and its workers' dormitory business helped lift Lian Beng Group's results for the first quarter.

The construction and development firm's net profit for the three months to Aug 31 soared 58.5 per cent to $12 million year on year.

Revenue for the first quarter was up 10.8 per cent to $167.6 million.

Lian Beng attributed the improvement to profits recognised from joint ventures formed to develop the NEWest mixed-use project, KAP Residences, The Midtown and Midtown Residences.

The better results were in part thanks to lower taxes as a result of claims made under the Government's Productivity and Innovation Credit Scheme.

"The property development projects which we had increasingly participated in through joint ventures are bringing in the results now," said Mr Ong Pang Aik, executive chairman of Lian Beng.

The firm, which adopted new financial reporting standards from June 1, restated its results for the first quarter of last year. Based on the restated figures, its earnings per share came in at 2.26 cents for the three-month period ended Aug 31, up from 1.43 cents recorded a year earlier. Net asset value per share was 75.88 cents as at Aug 31, up from 74.49 cents as at May 31.

Lian Beng's order books stand at $1 billion, which is expected to give the firm a pipeline of activities until the end of its 2017 financial year.

The firm also has cash and cash equivalents of $150.9 million as at Aug 31. This was after $54.6 million had been ploughed into the purchase of an investment property in Leng Kee Road as well as a loan to a partner to purchase Prudential Tower from Keppel Reit.

Lian Beng last month agreed to sell the former Midlink Plaza site in Middle Road to Nanshan Group Singapore for $270 million. It also sold a 5,952 sq ft strata unit at Prudential Tower for $16.4 million.

The firm expects its construction business to continue to drive its revenue, while recognition of profits from development projects under construction should continue to contribute to its earnings.

Lian Beng's shares closed one cent lower at 63 cents yesterday.

-By Cheryl Ong

Global Economy & Global Real Estate

Temasek-Penang project seeks global names as tenants

Source: Business Times / Real Estate

The upcoming mixed-use development in Penang by Temasek and Penang Development Corporation (PDC) is targeting international companies as tenants in a bid to bolster Penang's role as a major business process outsourcing (BPO) hub. The Economic Development Innovations Singapore Pte Ltd (EDIS) said that it hopes to draw international names to set up shop in the 2.7 hectare mixed-use site, which is about seven minutes' drive from the second Penang bridge and the Penang airport.

-By Lynette Khoo

Singapore, Penang step up investment links with new property project

Source: Today Online / Business

SINGAPORE — Penang chief minister Lim Guan Eng today (Oct 14) unveiled a new mixed-use development project led by a joint venture of Singapore’s Temasek Holdings and Penang’s state development agency, Penang Development Corporation.

This comes as both governments take further steps to strengthen their trade and investment links.

Situated near Penang’s Bayan Baru Free Industrial Zone, the S$500 million project, called BPO Prime, will offer some 1.6 million square feet of commercial and residential space, with the former targeting at business process outsourcing.

It will be planned and managed by Economic Development Innovations Singapore, with groundbreaking slated for next year. Construction will take two to three years.

This is one of the two projects that Temasek and PDC agreed to develop in Penang in a memorandum of understanding signed in May. The other project is the Penang International Technology Park, and both will total to S$4.4 billion in development value.

Mr Lim, who was in town today for a Penang investment seminar, said: “Penang’s outsourcing sector saw more than 20 per cent increase in revenue last year. BPO Prime is a priority project that is part of the state government’s plans to transform Penang into an international outsourcing hub.”

The MOU came as Singapore’s investment into Penang grew ten-fold to more than MYR600 million (S$234 million) between 2012 and 2013. Mr Lim said he’s hopeful for that figure to grow much further, as Penang’s skilled labour and manufacturing clusters can complement Singaporean companies’ regional expansion.

-By Wong Wei Han

NYC Developer Embraces Religion in Search for Condo Sites

Source: Bloomberg / News

Extell Development Co., the New York builder that set off a luxury residential construction boom with its One57 project, is expanding its reach on Manhattan’s west side with a pending purchase of a synagogue and a plan to redevelop a Baptist church.

Extell is in advanced talks to buy the Congregation Habonim synagogue at 44 W. 66th St. in a deal valued at $75 million, with plans to build condominiums on the site, according to documents the synagogue filed in New York State Supreme Court seeking permission for a sale. Extell also is negotiating with Calvary Baptist Church for a potential project at its 123 W. 57th St. site, on the same block as One57, the church’s 2014 annual report shows.

Religious institutions across New York are pursuing real estate sales as land prices escalate. Manhattan development sites sold for an average of $657 a square foot in the third quarter, up 29 percent from a year earlier and a record for the period, Massey Knakal Realty Services said this month. Three purchases completed in the quarter were for more than $1,000 a square foot, the firm’s data show.

“The feeling is we’re smashing records every week, the residential market is on fire, which is driving land values,” said Joshua Stein, a New York real estate lawyer who has worked on deals involving religious institutions. “You’re getting prices per square foot that were inconceivable 10 years ago. So the question is, ‘Should I sell now?’”

Gary Barnett, president of Extell, declined to comment when reached by phone yesterday. David Carlos, the Savills Studley Inc. broker representing the synagogue, declined to comment. A phone message left in Calvary Baptist Church’s general mailbox wasn’t returned. The Wall Street Journal reported the talks with the church yesterday.

Costly Maintenance

The Habonim synagogue agreed to the sale after concluding that its building near Lincoln Center, completed in 1958, was increasingly costly to maintain and no longer large enough for the services it sought to provide, according to the court filing.

Under the deal, the congregation would receive $45 million in cash upfront. Extell then would build a new space for the synagogue at the base of its future condo development, valued at $30 million, according to the filing, which names Barnett as the “key principal” of the entity seeking to buy the property.

The Real Deal reported in August that Extell is working in a partnership to build a condo tower at the site.

Calvary Baptist Church has been in talks with Extell since at least March 2012, when the builder submitted a proposal for a “possible redevelopment concept,” according to the church’s annual report.

Architects, Brokers

By February of this year, the Board of Elders and pastoral staff voted to start “serious negotiations” with Extell, and the following month issued a letter of intent to the developer and hired architects and brokers to represent the church on a redevelopment plan. The church’s report didn’t say whether Extell intended to build condos at the site.

Extell was a pioneer when it broke ground on One57 in 2009, after the bankruptcy of Lehman Brothers Holdings Inc. ushered in the real estate rout. The building near the southwest corner of Central Park, planned as Manhattan’s tallest residential tower, reached $1 billion in sales after six months. Bill Ackman, founder of New York hedge-fund firm Pershing Square Capital Management LP, is part of an investment group that agreed to buy one of the upper-floor duplexes for more than $90 million.

Nordstrom Tower

Extell is building about 184 units at 225 W. 57th St., a skyscraper slated to reach 1,488 feet (454 meters) and have Manhattan’s first Nordstrom department store at its base. The company also is building 219 condos at its One Riverside Park project along the West Side Highway, scheduled for completion next year, according to its website.

Extell’s transactions with religious institutions haven’t been without controversy. On the Upper East Side, the developer drew opposition for its initial design for condos on land owned by the Park Avenue Christian Church. The proposed tower would have bent around the church’s spire, blocking light into the century-old building, which was modeled after La Sainte-Chapelle in Paris.

Extell has redesigned the plans and the community board will vote on the appropriateness of the proposal tomorrow night, said George Arzt, a spokesman for the church. The developer’s purchase of the land, which hasn’t closed yet, will provide the church with cash to make about $2 million of repairs to items such as the organ and Tiffany windows, he said. Extell plans to build new offices for the church at the base of the condo tower.

“Religious institutions in this city have long faced a battle in keeping up their buildings, and this is an opportunity,” Arzt said.

-By Oshrat Carmiel

NYU Wins Appeal on $6 Billion Greenwich Village Expansion

Source: Bloomberg / News

New York University won an appeals court ruling allowing a planned $6 billion expansion in Manhattan’s Greenwich Village to move forward, overcoming a challenge by a group seeking to save rare urban parkland.

The city’s approval of the plan was appropriate because the disputed land isn’t park property, a state appeals court ruled today in Manhattan. If the land were a park, the development would have required approval from the state.

“While the city has allowed for the long-term continuous use of parts of the parcels for park-like purposes, such use was not exclusive,” the appeals court said.

NYU, one of the largest private nonprofit universities in the U.S. by enrollment, said it needs more space to accommodate a student body that grew by 25 percent from 1990 to 2005 and is projected to increase by as much as 0.5 percent annually for the next 25 years, according to the lower-court ruling.

Randy Mastro, the lawyer representing the opponents of the plan, said in an e-mail he will appeal the ruling.

Public Parks

A lower-court judge in Manhattan ruled in December that portions of the proposed 2 million-square-foot (186,000-square-meter) expansion would interfere with public parks and consequently require approval by the state legislature, not just city authorities. The school appealed in January.

Neighborhood groups, arguing that the plan would overwhelm a cramped historic area, filed two suits in 2012 to block the expansion. A judge dismissed the first complaint, brought by tenants of a group of high-rise buildings in Greenwich Village. Her March ruling has been appealed.

As originally proposed, the project included 2.4 million gross square feet of development that would take place over about 20 years. A modified version approved by the New York City Council would total 1.9 million square feet of new buildings on two areas described as “superblocks.”

One of the superblocks encompasses Mercer Playground and LaGuardia Park, both deemed public parks by the lower court judge. The other, where the university’s Jerome S. Coles Sports & Recreation Center is located, has one park, LaGuardia Corner Gardens, and a membership-based dog run, which the lower-court judge found didn’t qualify as a public park.

“We are disappointed that the Appellate Division overturned the decision that would keep our precious Village parks -- Mercer Playground, LaGuardia Park, and LaGuardia Corner Gardens -- protected from NYU’s unnecessary and ruinous expansion plan,” a group called NYU Faculty Against the Sexton Plan said today in an e-mailed statement.

The cases are Weinstein v. Harvey, 103844-2012, and WSV Green Neighbors Inc. v. New York University, 15550-2012, New York State Supreme Court, New York County (Manhattan).

-By Erik Larson and Chris Dolmetsch

Foreigners Own Almost 25% of U.K. Commercial Properties

Source: Bloomberg / News

Overseas investors own almost a quarter of income-producing commercial property in the U.K. after more than doubling their holdings in a decade, Property Industry Alliance said.

Buyers from abroad held 24 percent of the shopping malls, warehouses, hotels and office buildings in Britain at the end of 2013, making them the biggest group of owners for the first time, the industry group said today in a statement. U.K. insurers and pension funds are the second-biggest set of landlords with 19 percent.

Britain’s political stability, legal system and infrastructure helped drive a 129 percent increase in foreign-held property to 94 billion pounds ($150 billion) in the 10 years through 2013, the group said. About three-quarters of the foreign-held assets are in London, it said.

“With the political uncertainty caused by an upcoming general election and a possible European Union referendum, it is important that politicians of all parties avoid measures that could dent investor confidence,” said Liz Peace, chief executive of the British Property Federation, which is a member of the lobby group. “Sudden or unexpected changes to our taxation system could make the U.K. lose its competitive edge.”

Last year, a unit of Kuwait’s sovereign wealth fund bought the More London office complex for 2 billion pounds and Singapore’s GIC Pte purchased Blackstone Group LP’s stake in the Broadgate office complex. Blackstone agreed to sell the holding for more than 1.7 billion pounds, Bloomberg News reported in August 2013.

Insurers and pension funds cut their U.K. holdings by 16 percent to 75 billion pounds from 2003 through 2013, according to the report. Managed funds, property unit trusts and limited partnerships are the third-largest owners of the real estate, the report said.

The value of commercial property in Britain stood at 683 billion pounds at the end of the year, the lobby group said. About 385 billion pounds of the assets are income producing.

London accounts for 35 percent of the total value of U.K. commercial property, while it generates 23 percent share of gross domestic product, after values in the capital rose faster than in the rest of the country, according to the report.

Total return on U.K. commercial property, which combines changes in value and rental income, was 19.7 percent in the 12 months through September, Investment Property Databank reported yesterday.

-By Neil Callanan

HK’s New World Wins Tender to Build Homes on Station Site

Source: Bloomberg / Luxury

New World Development Co. (17), the builder controlled by the family of Hong Kong billionaire Cheng Yu-tung, won the tender for a HK$10.4 billion ($1.3 billion) site in the city that can provide at least 2,900 new homes.

New World will pay HK$2.9 billion of the land premium for the site atop a train station while MTR Corp. (66), Hong Kong’s government-owned railway operator, will pay the rest, MTR said in a statement yesterday. New World will fund and build the development, including the commercial portion which will be owned by MTR, according to the filing.

The project at Tai Wai station in the New Territories is part of a push by the government, the city’s largest supplier of land, to ease a housing shortage and contain surging home prices. MTR plans to tender two other sites this year that can provide at least 4,600 flats, Paul Chan, Hong Kong’s development secretary, said earlier.

The project, with a gross floor area of 2.1 million square feet, will become a “transportation hub” when a railway extension connecting to the Central business district is completed, New World Executive Director Adrian Cheng said in a statement. The company plans to invest as much as HK$20 billion, according to a Cable TV report yesterday, which cited Chairman Henry Cheng.

New World shares rose 2.9 percent, the most in 2 1/2 months, to close at HK$9.53. The stock was the biggest gainer today in the Hang Seng Property Index, which advanced 1 percent.

Proceeds from residential sales are to be shared between New World and MTR, according to the statement yesterday, which didn’t specify what the profit-sharing ratio will be.

The land premium is 19 percent lower than the first tender, which was later withdrawn due to low bids, according to Centaline Property Agency Ltd. MTR received nine submissions for this tender, which closed on Oct. 13, according to spokeswoman Angie Choi.

-By Michelle Yun

$20 Billion Property Trusts in India Delayed by Tax Rules

Source: Bloomberg / News

The Indian government has announced rules for setting up real estate investment trusts, vehicles that may spur $20 billion of property development. None of the money will be spent unless the country’s tax code is revised.

“REITs cannot take off in India until changes are made in the tax regime,” Anshuman Magazine, chairman of CBRE South Asia Pvt., said in a telephone interview from New Delhi. “Until these issues are resolved, there isn’t much incentive for developers to take the trust route.”

REITs will provide a new source of funds to debt-laden Indian developers to construct malls and office buildings, bolstering Prime Minister Narendra Modi’s efforts to revive Asia’s No.3 economy. Tax rules that make it unattractive to sell a security in less than three years and concerns about levies to be paid by builders may prolong the wait for greater transparency in a sector where asset pricing often is opaque.

The Securities and Exchange Board of India, the country’s market regulator, released rules for establishing REITs Sept. 26, giving investors the ability to participate in the country’s property market without investing directly. The trusts will have to own assets valued at least 5 billion rupees ($82 million) and investors must put in a minimum of 200,000 rupees, the regulator said.

SEBI doesn’t oversee India’s tax regulations, though, and for now those remain a deterrent to creating or investing in REITs, Magazine said.

Tax Hurdles

The tax bill for starting a REIT would be higher than for raising money through an initial share sale, Bhairav Dalal, associate director for tax and regulatory practice at PricewaterhouseCoopers in Mumbai, said in an e-mail. “Until a finance bill is passed to change certain rules, the tax cost might impact the returns offered to investors.”

Investors are disadvantaged by REITs because under existing rules shares in them must be held for three years before they are exempt from capital gains tax, unlike investments in “listed securities,” which gain the exemption after one year, Dalal said. There is also a lack of clarity on whether the developer setting up the trust would have to pay the so-called minimum alternative tax.

SEBI is in discussions with the finance ministry to resolve tax issues that may be hindering the listing of REITs, SEBI Chairman U.K. Sinha said in Mumbai on Oct. 8. He didn’t give a timeframe for when the code will be changed.

March 2016

Changes to the tax regulations aren’t likely to be announced before the presentation of the next Indian government budget in February, CBRE’s Magazine said.

The first REITs aren’t likely to be listed until late in the Indian fiscal year that ends in March 2016, said Anubhav Gupta, a Mumbai-based real estate analyst at Kim Eng Securities Pvt.

The property trusts pool investor money to buy real estate such as shopping malls, office buildings and rental housing. REIT-funded assets may reach $20 billion by 2020, according to an estimate from property-broker Cushman & Wakefield, of which as much as $12 billion could be raised in the first three to five years.

India has plenty of assets ready to be packaged into trusts. Asia’s third-largest economy has been in the top five global office markets for at least seven years, with average annual net demand of more than 30 million square feet (2.8 million square meters), according to Cushman & Wakefield.

Developer Debts

DLF Ltd. (DLFU), India’s largest developer by value with about 28 million square feet (2.6 million square meters) of operational rental assets; Prestige Estates Projects Ltd., a Bengaluru-based developer; Phoenix Mills Ltd. (PHNX), a Mumbai-based mall operator and Oberoi Realty Ltd. are among developers that will benefit listing REITs, Gupta said by phone on Oct. 7.

DLF yesterday was barred from raising funds in the market for three years by SEBI for failing to disclose information during its initial public offering.

The combined debt of the six largest Indian developers climbed to a record 394 billion rupees in the 12 months through March 31, more than double the 158.8 billion rupees in 2007, according to data compiled by broker IIFL Ltd. India has the highest borrowing costs among major Asian economies.

The S&P BSE India Realty Index lost one percent this year. DLF has lost 37 percent while Prestige has jumped 38 percent and Phoenix Mills 59 percent. The benchmark S&P BSE Sensex index has climbed 24.5 percent.

Foreign institutional investors such as Blackstone Group LP and Brookfield Asset Management Inc. (BAM), have been accumulating Indian rental assets in part with the aim of one day creating REITs, according to a July 10 report from HDFC Securities. Blackstone is the largest private-equity landlord of office assets in India, with about 22 million square feet. Brookfield has about 15 million square feet across the country.

“REITs are a game changer that can bring about more liquidity and transparency into the Indian realty market,” Magazine said. “Domestic and foreign stakeholders have been preparing for this instrument. The question is how long will government take to make amendments to make this product a reality.”

-By Anto Antony

DLF Plunges as Billionaire Founder Barred From Raising Funds

Source: Bloomberg / News

DLF Ltd. (DLFU), India’s largest developer by market value, plunged the most on record after the company and its billionaire Chairman Kushal Pal Singh were barred from raising funds by the regulator for failing to disclose information during its initial public offering.

Shares of the company, which is based in Gurgaon near New Delhi, tumbled 29 percent to 104.95 rupees in Mumbai, to close at the lowest level since they started trading in 2007. DLF has slumped 37 percent this year, compared with a 24 percent gain in the benchmark S&P BSE Sensex. (SENSEX) DLF said it will defend itself against the findings of the Securities and Exchange Board of India that also placed restrictions on Vice Chairman Rajiv Singh and four others.

The regulator’s order may undermine the ability of the developer to cut its net debt, which is almost 50 percent of the combined obligations of India’s six biggest developers. DLF’s total non-bank debt was about 45 percent of its total net debt of 198 billion rupees ($3.2 billion) at the end of March, refinancing of which may come under pressure, according to Edelweiss Securities Ltd.

“We see this development as a negative for DLF,” Mumbai-based analyst Aashiesh Agarwaal at Edelweiss said in a note to clients yesterday after the order. “This prohibits the company from dealing in securities, which we believe will include issue of equities, REITs, debentures and other such marketable instruments.”

Information Suppressed

SEBI, in an order posted on its website yesterday after trading hours, barred the DLF officials from “buying, selling or otherwise dealing in securities, directly or indirectly, in any manner” for three years as the company suppressed information when it sold shares for the first time in 2007.

This is the “third negative legal development” for DLF in the past two months, Agarwaal said. The Punjab and Haryana courts had earlier ordered the canceling of an allotment of 350 acres of land in Gurgaon to DLF. The Supreme Court had ordered DLF to deposit 6.3 billion rupees, the penalty levied by the Competition Commission of India’s, while DLF’s appeal is under way.

Analysts at Barclays Plc and Deutsche Bank AG cut the target price for DLF shares after the SEBI order. DLF would have to “resort to large asset sales to reduce debt in the future,” Abhishek Bhandari, Mumbai-based analyst at Macquarie Capital Securities India Ltd. said in a note today.

DLF raised 91.9 billion rupees, in what was then India’s biggest initial share sale, by selling 175 million shares at 525 rupees apiece. The developer’s IPO garnered orders for 3.5 times shares on offer in the June 2007 sale.

The company failed to disclose financial information and pending litigations about some of its units, according to the SEBI order.

Chairman Singh controls about 75 percent of DLF and has a net worth of $4.1 billion, according to the Bloomberg Billionaires Index.

Guided by Advice

“DLF and its board wish to reassure its investors and all other stakeholders that it has not acted in contravention of law either during its initial public offer or otherwise,” the company said in a statement yesterday. DLF and its board were guided by and acted on the advice of eminent legal advisers, merchant bankers and audit firms while formulating its offer documents, the company said.

In 2012, anti-graft activists demanded a probe into deals DLF struck with the son-in-law of the then ruling Congress party president Sonia Gandhi. They alleged DLF had given as much as 650 million rupees in unsecured, interest-free loans to Robert Vadra, who they said used the funds to buy property from DLF at below-market prices.

DLF called the allegations “completely baseless and untrue” and added that the company has never received any undue benefit from the central or any state government. Vadra, who is married to Gandhi’s daughter Priyanka, said it was an attempt to misrepresent business deals and malign him and his family, according to the Times of India.

-By Pooja Thakur and Anto Antony

Nordstrom Seeking Space for Second Manhattan Store

Source: Bloomberg / Luxury

Nordstrom Inc. (JWN), the retailer planning to open its first New York City store on Midtown’s West 57th Street, is seeking space in lower Manhattan for a second location, brokers from CBRE Group Inc. (CBG) said.

Executives of the Seattle-based department store chain have approached landlords of South Street Seaport and 1 Wall St. “and maybe one or two others,” Richard Hodos, an executive vice president at CBRE, said today at a briefing for reporters on New York’s commercial real estate market.

“They’re looking,” Hodos said. “They’re negotiating economics with a couple of different developers at different sites. Contemporaneous to that, they are doing their area research.”

Luxury department-store chains have been adding Manhattan locations, reversing a trend in which merchants with large, diverse offerings had lost out to smaller specialty stores, CBRE retail executives said at the briefing. Saks Fifth Avenue agreed last month to anchor the retail portion of lower Manhattan’s Brookfield Place, and Neiman Marcus Group Ltd. said it would open its first New York store in the Hudson Yards development on Midtown’s far west side.

Nordstrom, the operator of more than 100 namesake department stores across the U.S., said in June that it would open its first full-line Manhattan location at 225 W. 57th St., at the base of a residential skyscraper to be built by Gary Barnett’s Extell Development Co. Extell also developed the One57 condominium tower one block to the east.

Increased Tourism

Downtown, Nordstrom would be entering a retail market that’s benefiting from residential and commercial development and increased tourism tied to the opening of the 9/11 Memorial at the World Trade Center site, according to CBRE.

Dan Evans, a Nordstrom spokesman in Seattle, said he had no immediate comment on plans for a lower Manhattan location. Women’s Wear Daily reported on Oct. 2 that the retailer is looking for a 250,000-square-foot (23,000-square-meter) space in the area.

Retail rents downtown climbed 37 percent since 2012 to about $130 a square foot on average, according to a report in May by the Real Estate Board of New York, a trade organization representing the city’s property industry.

Westfield Corp. (WFD) is planning to open 350,000 square feet of stores next year at the trade center, and Brookfield Property Partners LP (BPY-U) is in the midst of a $250 million makeover of the retail space at its Brookfield Place office complex. A dining terrace called Hudson Eats opened in June.

-By David M. Levitt