Real News‎ > ‎2014‎ > ‎October 2014‎ > ‎

1st October 2014

Singapore Real Estate

Just two bids for Sembawang Road EC site, but top bid bullish

Qingjian's S$353 psf ppr close to January bid for adjacent site

Source: Business Times / Singapore

A TENDER for an executive condominium (EC) site along Sembawang Road/Canberra Link drew just two bids - one of the poorest participation rates ever for an EC site tender. 

However, the top bid of S$353 per square foot per plot ratio (psf ppr) by Qingjian Realty is considered on the high side.

It was close to the S$350 psf ppr fetched for an adjacent site in January this year - despite the worsening property market sentiment since then.

What is noteworthy is that a tie-up between City Developments Ltd (CDL) and TID that had clinched the January site, placed a bid of only S$320.88 psf ppr at Tuesday's tender for the latest site.

This reflects the current cautious sentiment in the EC market, factoring in significant supply of some 2,000 units in the vicinity from projects to be launched including the latest plot as well as unsold units in Skypark Residences, said JLL national director Ong Teck Hui. Based on monthly developer sales data released by URA, as at end-August, there were 199 unsold units in the 506-unit development.

-By Kalpana Rashiwala

Tender for Sembawang EC site draws just two bids

Source: Straits Times / Money

THE tender for an executive condominium (EC) site in Sembawang limped to a close yesterday with just two bids - a stark sign of the cooling property market, said analysts.

Qingjian Realty (Residential) lodged the higher bid at $229.38 million or $353 per sq ft (psf) per plot ratio (ppr).

That easily topped the joint offer of $208.5 million or $320.88 psf ppr from City Developments unit Verwood Holdings and TID Residential. 

The 2.8ha site at the junction of Sembawang Road and Canberra Link could yield an estimated 605 homes.

Mr Ong Teck Hui, national director of research and consultancy at Jones Lang LaSalle, noted that the poor interest in the 99-year leasehold plot suggests "caution on the part of most developers (who are) abstaining from bidding".

The steady supply of new EC projects to be launched in the northern part of Singapore from next year could have held developers back from participating, said Mr Nicholas Mak, executive director of research and consultancy at SLP International.

R'ST Research director Ong Kah Seng noted that the top bid was "fairly high", given the sluggish movement in land bids after the range of cooling measures.

Qingjian is positioned to price the units at below $1 million, added Mr Eugene Lim, key executive officer of ERA Realty.

Qingjian general manager Li Jun said in a statement yesterday that the site is well-situated near the upcoming Canberra MRT station, which is expected to start operating in 2019.

Citing "overwhelming response" to its other EC launches, such as Bellewoods at Woodlands, Mr Li added that the company remains "confident of the continual demand of the EC market".

-By Jacqueline Woo

Two bids for Sembawang EC site

Analysts say this is the lowest number of bidders for a land site since 2001. Qingjian Realty (Residential) placed the highest bid of S$229.38 million, which works out to be about S$353 per square foot per plot ratio

Source: Channel News Asia / Business

SINGAPORE: A land parcel at Sembawang Road and Canberra Link for an executive condominium (EC) development has received only two bids at the close of tender on Tuesday (Sep 30).

The Housing and Development Board (HDB) said Qingjian Realty (Residential) placed the highest bid of S$229.38 million, equivalent to about S$353 per square foot per plot ratio, while the other offer came from the combined bid of S$208.5 million by Verwood Holdings and TID Residential. 

Analysts say this is the lowest number of bidders for a land site since 2001. The 28,745.9 square metre site is the 10th EC site sold this year and the third in Sembawang in 2014. 

ERA's Key Executive Officer Eugene Lim pointed out in a note several factors that may have contributed to the cautious view in the EC market. Among them is a recent EC project called Skypark Residences which still has 199 units out of the 506 units unsold. 

ECs can only be launched 15 months after being awarded the site or upon the completion of foundation, whichever comes earlier. HDB second timers that are upgrading to EC projects are also subject to a resale levy.

Two other EC projects in the area were also awarded a site recently, which may have contributed to a supply glut for EC units. They are City Development's Canberra Drive site awarded in January and Fraser Centrepoint's Sembawang Avenue site, awarded in July.

Mr Lim added in his note that Qingjian Realty is well-positioned to price the upcoming units below S$1 million. Qingjian has plans for 600 units at the site, which is 400 metres from the new Canberra station. HDB says the award of the tender will be decided at a later date.

- CNA/ek

Only two bids for Sembawang EC site, but top price bullish

Steady supply of new EC projects reason for developers’ low participation rate: Analyst

Source: Today Online / Business

SINGAPORE — The build-up in executive condominium (EC) supply in the north of Singapore has taken its toll on developers’ interest in the hybrid public-private home segment, with the latest tender for a plot in Sembawang attracting just two bids.

However, property analysts noted that the highest bid of S$229.4 million was bullish, signalling confidence by top bidder Qingjian Realty in the tender that closed yesterday.

The site, located at the junction of Sembawang Road and Canberra Link, sits on about 309,418 sqf of land with a plot ratio of 2.1 and Qingjian’s bid works out to around S$353 per square foot per plot ratio, the Housing and Development Board (HDB) said. It was well above the S$300-to-S$330 range that the analysts had expected.

The other bid was placed by City Developments unit Verwood Holdings and TID Residential, who put in S$208.5 million, or around S$321 psfppr, the HDB said.

Mr Nicholas Mak, executive director of SLP International Property Consultants, said: “I believe the main reason for the low participation rate from developers in this land tender is the steady supply of new EC project launches from 2015 onwards.

“Excluding Bellewoods EC, which had launched its e-application exercise last weekend and the subject site, there are four other unlaunched EC projects with a total of 2,230 units in the north region presently,” he noted.

Qingjian, a seasoned EC developer, will build around 600 units of the hybrid homes on the 99-year leasehold site that has a maximum gross floor area of 649,778 sqf. It will be Qingjian’s sixth EC project.

“The EC land at Sembawang Road/Canberra Link is about 400m from the proposed new Canberra MRT station and we are planning to develop about 600 units in that location … We remain confident of the continual demand in the EC market,” Qingjian’s general manager Li Jun said yesterday.

The developer had just launched Bellewoods EC over the weekend. At the end of Sunday, it received around 400 e-applications for the Woodlands project, which is the first new EC launch after a hiatus of almost a year.

The break was the result from a rule introduced last year that requires developers to launch EC units for sale only 15 months after securing the land or upon completion of foundation work.

Analysts said while demand for ECs is still healthy, the upcoming supply will allow buyers to be selective. This follows changes to the EC scheme late last year that included the introduction of a mortgage servicing ratio and resale levies for second-time applicants, which are expected to hit demand.

“Demand is still there, but buyers are more selective, so the pace of sales is also slower now. But this doesn’t mean ECs have lost the appeal. I think developers would still want to venture into this segment because the market for upgraders is there,” said Mr Eugene Lim, key executive officer of property agency ERA.

Mr Lim said that with its top bid, Qingjian is well positioned to price the units below S$1 million.

-By Lee Yen Nee

Hiap Hoe to sell 39 shop units

Most of them are in Parklane; JLL has launched expression of interest exercise

Source: Business Times / Companies

MAINBOARD-LISTED Hiap Hoe plans to sell 39 shop units, most of which are strata-titled units in Parklane Shopping Mall, in line with its plan to divest non-core assets even as it capitalises on healthy investor demand for retail space.

The property developer has hired consultancy firm JLL, which on Tuesday launched an expression-of-interest (EOI) exercise to sell the shops.

Of the 39 units, 33 - all in the basement of Parklane Shopping Mall in Selegie Road - are being offered in a single portfolio to a single buyer, said JLL.

Hiap Hoe is expecting offers of around S$55.6 million for this single portfolio, which takes up a combined strata floor area of 25,317 sq ft - more than 94 per cent of the total strata floor area in the basement.

-By Anita Gabriel

Developer Hiap Hoe to sell 39 strata-titled shops

Source: Straits Times / Money

LOCAL property group Hiap Hoe is selling 39 strata-titled shops for about $85 million, as part of moves to divest non-core assets.

The units are in three commercial buildings across the island.

The biggest tranche is in the basement of Parklane Shopping Mall in Selegie Road where a suite of 33 shops is on offer for about $55.6 million.

Hiap Hoe wants to sell the units, which have 59 years left on their lease, to a single buyer, said Mr Karamjit Singh, head of investments and residential at Jones Lang LaSalle, yesterday.

The selling price works out to about $2,200 per sq ft (psf), based on the units' strata floor area of 25,317 sq ft.

They represent 17 per cent of the entire building's share value.

"This offering poses an attractive play to investors as it offers an almost exclusive use of the basement level, which would allow scope for repositioning and improving the tenant eco-system, such as introducing a new crowd-pulling anchor," said Mr Singh.

"Some investors may also find it attractive to acquire the units in bulk, with a view to selling down the units individually at a later stage."

Hiap Hoe is also selling two units on the fourth floor of Parklane with a total price of about $4.75 million - or $1,300 per sq ft - expected.

The units, which house a karaoke lounge, have a combined floor area of about 3,660 sq ft.

Parklane tried unsuccessfully for a collective sale in 2007.

Owners at the neighbouring Peace Centre and Peace Mansion shopping centres tried to sell en bloc in 2011 for $700 million but that also fell through.

Mr Singh thinks buying interest in the units would still be strong as investors are increasingly looking at commercial property - especially retail units.

He noted that as well as the rental income, investors will not have to stump up the additional buyers' stamp duty levied on residential property.

"There's an upside because once the tenants do well and develop goodwill, they can afford to pay higher rentals," he said.

Last year, a basement unit at Parklane changed hands for $2,192 psf.

Based on the indicative price of $55.6 million, annual yields at the units are estimated to be 3.5 per cent, said Mr Singh.

Three shops at Bukit Timah Plaza with 61 years left on their leases are also up for sale.

Two of the units on the basement level have a combined floor area of 1,206 sq ft and a price tag of $3.86 million, said Jones Lang LaSalle.

A larger unit of 4,930 sq ft is on the ground floor, with a selling price of $11.83 million.

At Balestier Point, a freehold unit of 5,608 sq ft being used as a nightclub is going on the market for $8.4 million.

The expression of interest for the shops will close at 2.30pm on Oct 29.

-By Cheryl Ong

CityDev in tie-up to acquire Tokyo site for 30.5b yen

Source: Business Times / Companies

CITY Developments Limited (CDL) has stepped up its overseas expansion with a maiden acquisition of a residential site in Japan.

The group announced on Tuesday that it has tied up with a US-based investment firm to acquire a prime freehold land site in Tokyo for 30.5 billion yen (S$355.5 million) from Seiko Holdings Corporation.

"This acquisition is in line with CDL's strategy to accelerate overseas expansion to supplement our existing operations," said CDL executive chairman Kwek Leng Beng.

"We see potential to develop luxurious, high-end condominiums on this site," he added.

-By Lynette Khoo

CDL bets on Japan's future with $356m historical site

Land bought together with US firm is its first residential investment there

Source: Straits Times / Money

CITY Developments (CDL) has acquired a 30.5 billion yen ($355.5 million) historical site in Tokyo as it steps up expansion plans overseas.

The property giant yesterday said it had bought the land together with a United States investment firm.

It joins other property players which have placed bets overseas after cooling measures and strict mortgage rules dulled market sentiment in Singapore.

The Fragrance Group, for example, forked out A$120.3 million (S$134 million) this year to develop two mixed-use projects in Melbourne, Australia.

CDL's latest deal is its first residential investment in Japan. Earlier this year, it snapped up The Chelsea Harbour Hotel in London for £67.9 million (S$140 million) and the Novotel Times Square hotel in New York for US$275.8 million (S$351 million).

Executive chairman Kwek Leng Beng said the "acquisition is in line with CDL's strategy to accelerate overseas expansion".

He added in his statement: "In land-scarce Japan, this is an extremely rare opportunity to acquire a sought-after property that is situated on substantial prime freehold land.

"Often, such a sizeable piece of real estate would take years or even decades to assemble and amalgamate."

There is a mansion on the 16,815 sq m parcel that was the home of Mr Kintaro Hattori, the founder of watch maker Seiko Holdings Corporation.

The mansion is in the high-end Shirokane area in Tokyo's Minato ward, where many foreign embassies are situated.

CDL said it has plans to develop several luxury condominiums on the sprawling site but it will conserve the mansion for its historical significance.

The 1,340 sq m home was built in 1933, and is also reputedly the place where Japan's Constitution was drafted.

The land parcel's history dates back to the Edo and Meiji periods.

CDL also developed the Spring Grove condominium in Singapore which includes a conserved Victorian-style bungalow that served as the former residence of the US ambassador.

Elsewhere in Japan, CDL's hospitality arm, the Millennium & Copthorne Hotels, is developing the Millennium Mitsui Garden Hotel Tokyo in the Ginza district. The property is expected to open by the end of the year.

"Japan is the world's third-largest economy and is rebounding due to the positive impact of monetary easing, fiscal stimulus and reforms under Abenomics," said Mr Kwek.

"The 2020 Olympic Games in Tokyo and various economic measures under the growth strategy led by (Prime Minister Abe Shinzo's) Cabinet are expected to boost the Japanese economy."

-By Cheryl Ong

Concerns over oversupply of strata-titled retail shops

Source: Channel News Asia / Business

SINGAPORE: More than 1,000 strata-titled retail shops are estimated to be completed in Singapore over the next 12 months. According to consultancy Chestertons, this will account for 42 per cent of the supply pipeline between now and 2019.

The concern is whether there is enough retail demand to absorb the supply, particularly units that are not well located.

In recent years, there have been more mixed-development projects being built - with residential and retail components. A good number of these shops are strata-titled or independently-owned. One key issue with such properties is that there is no control over tenancy mix.

Chestertons said that according to estimates, strata-titled retail shops will account for about 15 per cent of the total retail space available by 2019. Of these, 345,000 square feet or about 1,300 strata units are expected to be completed in the next 12 months.

SLP International Property Consultants said some upcoming projects with strata shops include Alexandra Central, City Gate, Eon Shenton, NeWest, Junction Nine/Nine Residences and The Promenade@Pelikat.


Many investors started buying strata shops in the last two to three years after the Government implemented more cooling measures on the residential property segment.

Analysts said some of these investors may not fully understand what they are buying into, as the considerations are quite different from buying an apartment. Considerations include location, accessibility via public transport, size of the population catchment, unit mix and location of unit within the mall, as well as the type of tenants there.

Mr Donald Han, Chesterton's managing director, noted that most of the buyers are not owner-occupiers and have purchased properties with the sole purpose of renting them out.

"And if they have bought a development that is not close to any amenities or any employment hubs or not near the MRT, for instance, they will probably be caught between a rock and a hard place. Some of the smaller malls may not be able to compete with the larger malls. Another reason why smaller malls may not do well is lack of car parking," Mr Han said.


Still, some analysts said that over time, the collection of shops could evolve to offer niche services or products, much like successful strata-titled mixed developments like Far East Plaza and Queensway Shopping Centre, for example.

Said Mr Desmond Sim, head of Research Singapore at CBRE Research: "These shops available in the market could present some opportunities for SMEs (small and medium enterprises) or smaller entrepreneurs who might think that the bigger malls present a very high occupancy cost. They might take advantage of presumably lower rentals offered by the huge supply that is coming up, to take up space there and create a niche of their own."

But others suggest that the Government could look at new restrictions for developers on strata-titled sale for certain sites in its land tender.

"They may have to stipulate conditions like, for example in the first 10 years after the project is completed, they are not allowed to be strata-titled and sold. So in this way, the single company has to own and manage the development. Most likely, this company would be an experienced shopping centre operator and we could see a better quality shopping mall," said Mr Nicholas Mak, executive director for research and consultancy at SLP International Property Consultants.

SLP suggests that, for example, it could perhaps be applied on an upcoming mixed-use site at Holland Village under the Government Land Sales programme.

In 2013, the Urban Redevelopment Authority introduced measures to curb the proliferation of tiny shops. Its guidelines ruled that the average retail unit size should not be less than 50 square metres and also stipulated minimum corridor widths for retail component of new commercial and mixed-use projects.

- CNA/dl

Two-time win for Paragon mall in retailers awards

Source: Straits Times / Money

FOR the second year in a row, Paragon has been voted by its tenants as a shopping mall with outstanding management.

It scored the highest average rating for efforts in centre management in the annual Singapore Retailers Association (SRA) Shopping Centre Scorecard this year.

Votes were cast by tenants who are members of the association. Another mall, VivoCity, was also recognised for its outstanding efforts in advertising and promotions.

Said Mrs Sng Ngoi May, the executive director of Paragon and executive vice-president of retail property management for Singapore Press Holdings: "We are delighted to receive the award again this year.

"Besides the team's dedication and hard work to consistently establish Paragon's luxury mall positioning, we are also thankful to all our tenants for their support and full confidence in us.

"It is this close partnership that we value, and we will continue to work together to promote Paragon as a premier shopping mall."

Six other awards were also given out yesterday.

Among the winners were Dairy Farm Singapore, which scored for its environmentally friendly initiatives and programmes to help the less fortunate.

Tangs Orchard won the Best Retail Concept of the Year award for its new home and market concepts, which included live demonstrations by celebrity chefs and craft workshops.

Several individuals also won awards. Mr Kenneth Lee, an area manager at Guardian Health & Beauty, was named Best Manager of the Year, and Mr Chia Jingwei, a senior executive at a FairPrice Finest outlet in Woodgrove, was named Young Executive of the Year.

The awards were given out by Minister of State for Trade and Industry Teo Ser Luck, as well as by SRA president Jannie Chan and its vice-president, Mrs Wong Sioe Hong.

-By Cheryl Faith Wee

BTO exercise: No surge in demand after scheme launch

Source: Today Online / Singapore

SINGAPORE — Despite being the first Build-to-Order (BTO) exercise where flat owners buying a two- or three-room flat in a non-mature estate can opt to pay half the required down payment, the latest BTO exercise closed yesterday without any general surge in applications for these units.

The Staggered Downpayment Scheme announced last week helps existing flat owners who want to move to smaller flats, especially the elderly facing cash flow difficulties.

Commenting on the application rates, property analysts noted that there is no pent-up demand from this group and that it would take time for the public to be aware of the scheme.

As of 5pm yesterday, the application rates for second-timers for two- or three-room flats in a BTO project in Bukit Batok were 0.3 and 2.9, respectively.

The application rates for second-timers for two- and three-room units in a Jurong West project were 0.3 and 1.6, respectively.

Mr Chris Koh, director of Chris International, noted that the new scheme is meant to offer another form of assistance to the elderly and was not a response to demand.

“We are just opening up a lot more options for the elderly to right-size and monetise. The challenge we have now is to educate them on these options,” he said.

Mr Ku Swee Yong, Century 21 Singapore’s chief executive, added that, it is often not a straightforward decision for elders to move into smaller flats in retirement. They would want to look for a place that it is near to their friends, for instance.

Since the scheme was recently launched, a surge in applications from this group was unlikely, he added.

Meanwhile, demand from singles for two-room flats continued to be strong. For example, there were about nine singles vying for each two-room unit in the Bukit Batok project.

On the overall application rate of 2.9, analysts said prospective buyers are holding out for next month’s joint BTO and Sale of Balance Flats (SBF) exercise. SBF units have a shorter waiting time than newly-launched BTO flats.

Demand for the Buangkok Square project in Hougang was exceptionally high. There were a total of 400 applicants — comprising both first-timers and second-timers — for 116 three-room units and about 23 singles were vying for each two-room unit.

Analysts attributed the popularity of this project to its good location and proximity to a MRT station.

Mr Ku said Hougang is also a relatively mature estate with several flats aged 35 to 40, so there is a significant number of flat-hunters who wish to live near their parents staying there.

-By Joy Fang

Kallang-Whampoa most popular in September BTO exercise

More than 463 four-room flats are on offer in Kallang-Whampoa, and as of 5pm on Tuesday (Sep 30), there were approximately 7.9 applicants vying for each flat.

Source: Channel News Asia / Singapore

SINGAPORE: The HDB's latest Build-To-Order exercise will close at midnight on Wednesday (Oct 1), and the project in the mature town of Kallang-Whampoa has seen the highest demand.

ERA Realty's Key Executive Officer Eugene Lim said the site's city fringe location and its short walking distance to Boon Keng MRT station are key reasons for its popularity.

More than 463 four-room flats are on offer in Kallang-Whampoa, and as of 5pm on Tuesday, there were approximately 7.9 applicants vying for each flat. As for about 124 three-room flats also on offer in the town, there were more than three applicants per unit. Over 4,630 new flats were put up for sale in this month's sales exercise.

Overall, excluding studio apartments, there were close to two first-time applicants per flat, and just over three second-timers applying for each unit. Demand from singles still remains strong - with about 11 applicants applying for each two-room flat available.

HDB also introduced a new staggered downpayment scheme in the BTO exercise. Starting this month, existing HDB flat owners who buy a 2-room or 3-room flat in a non-mature town will be allowed to pay a lower downpayment for their new flat.

One analyst has said that while this new policy is helpful, most second-time applicants this time round are unlikely to be those downsizing. Century 21 Singapore CEO Ku Swee Yong explained: “This scheme was only announced last week, and it would take time for us to explain this new scheme, as well as to persuade the retirees.

“In this BTO exercise, there are new flats that are available in the non-mature estates, which may be relatively near to their current living locations. Some of them are against moving too far away from their existing pool of friends and relatives, as they want to be in the neighbourhood they are familiar with.

“So, this is an ageing-in-place concept that HDB has been trying to push. In the next two or three BTO exercises, when the range of non-mature estates widens up for them to apply, and with the given time for the grassroots and HDB officers to explain this new scheme, I think the take-up rate will be much better. I think in this round of the BTO exercise, most of the second time applicants would still be those who are not downsizing their flats."

- CNA/xk

Total bank loans up 1.2% in August

Sentiment rises on positive data in US but worries remain over interest rates

Source: Straits Times / Money

BUSINESSES and consumers borrowed more from banks in August as confidence in the economy began to lift.

Total bank loans came in at $604.6 billion, a 1.2 per cent increase over July, according to preliminary data from the Monetary Authority of Singapore yesterday.

That reversed the slight dip in the amount of overall bank loans in July, which fell from the level in June - the first month-on-month decline since October 2009.

Overall bank loans - business and consumer lending - grew 11.8 per cent compared with August last year.

That was an improvement on July, when lending rose 10.8 per cent over the same month last year, but trailed June, which recorded year-on-year growth of 12.3 per cent.

Business and consumer lending both contributed to the better showing.

Business loans rose 1.6 per cent over July to $372.2 billion as lending to all sectors, except business services and financial institutions, went up.

Robust demand from manufacturing, transport and construction firms enabled August's business lending to rise 15.9 per cent over the amount lent in the same month last year.

Mizuho economist Vishnu Varathan said business sentiment was lifted by positive economic data elsewhere: "In August, we saw a bit of light at the end of the tunnel with the United States showing sustained recovery.

"But China and Japan are seeing slowing growth and on that basis things are going to be patchy going forward."

Consumer loans rose 0.5 per cent in August over July to $232.3 billion, better than July's 0.3 per cent growth.

Lending to consumers grew by 5.8 per cent in August over the same month last year, down from July's year-on-year's 6 per cent growth.

Housing and bridging loans, which make up the single largest type of loan, came in at $173.5 billion in August, up by 0.5 per cent over July.

They were also up by 5.8 per cent over August last year but down from July's year-on-year's 7 per cent growth.

Car loans continued to fall, dropping 1.6 per cent from July to $9.2 billion.

Mr Varathan warned that the consumer loan segment could be further hit by higher global interest rates, on top of the softening property and automobile markets.

He added that the broader picture showed average monthly credit growth slowing to about 12 per cent this year, down from 17 per cent last year.

-By Mok Fei Fei

Real Estate Companies' Brief

Sime Darby's exit from PNG palm oil deal allows FGV to enter fray

Industry official says Sime unhappy with lack of guarantees from PNG govt

Source: Business Times / Malaysia

MALAYSIAN multinational Sime Darby on Tuesday pulled out of a deal to acquire 49 per cent of Papua New Guinea-based New Britain Palm Oil Ltd (NBPOL) from Malaysian plantation firm Kulim, paving the way for state-owned Felda Global Ventures (FGV) to enter the fray.

In a filing to the Kuala Lumpur stock exchange on Tuesday, Sime was terse but gave no reasons for its withdrawal: "Following the expiry of the exclusivity period under the Exclusivity Agreement between Kulim and Sime Darby on 28 September 2014, Sime Darby has decided not to proceed further at this time on the proposed acquisition of Kulim's shares in New Britain Palm Oil Ltd." 

According to an industry official familiar with the matter, Sime had done its due diligence and other background checks but wasn't happy with the lack of guarantees it received from the PNG government which regards NBPOL as a strategic asset.

 "It was quite happy with NBPOL's management which it regarded as good but could get no assurance except that it would, like Kulim, receive two board seats," the official told BT. "One minister said we couldn't increase our interest, others said it was ok. There wasn't any certainty."   

-By S Jayasankaran in Kuala Lumpur

Global Economy & Global Real Estate

World needs to manage urbanisation: Shanmugam

The challenge is to manage urbanisation well to prevent spiralling poverty and overcrowding, Foreign Affairs Minister K Shanmugam said during his speech at the United Nations General Assembly.

Source: Channel News Asia / World

NEW YORK: Singapore's Minister of Foreign Affairs K Shanmugam has called for the sustainable development of cities during his speech to the United Nations General Assembly (UNGA) Monday (Sep 29).

With 70 per cent of the world's population likely to be living in cities by 2050, he stressed that urbanisation needs to be managed to prevent spiralling poverty and overcrowding.

"By 2030, two billion could live in urban poverty. They will be at risk from overcrowding, epidemics, crime and pollution," said Mr Shanmugam. "The challenge is therefore really to manage urbanisation well."

Singapore was an active participant in last week's UN Climate Summit - a subject Mr Shanmugam said is of vital importance. Climate change is a "big topic" and a "pressing issue", he stated, and noted that the impact of climate change is particularly felt by small island states ­like Singapore.

He has also been pushing the message that Singapore can help on a global scale.

"A stable international order ... is in the interest of all countries, particularly small countries," said Mr Shanmugam. "We emphasise international law and international order. That's why we became a member of the United Nations the moment we became independent." 

- CNA/av

China Eases Property Restrictions Amid Growth Concern

Source: Bloomberg / Luxury

Chinese policy makers eased property restrictions for the first time since the global financial crisis as a real-estate slump’s threat to economic growth overtakes worries about housing affordability.

People applying for a loan to buy a second home may get lower down payments and mortgage rates that were previously only available to first-time home buyers so long as they have paid off their initial mortgage, the People’s Bank of China said in a statement on its website yesterday. The central bank also eased a ban on mortgages for people buying a third home.

The action marks a reversal in a four-year tightening campaign, as slowing property investment and industrial production raise risks that 2014 economic growth will drift too far below Premier Li Keqiang’s target of about 7.5 percent. The government’s factory gauge was unchanged in September from the previous month, suggesting manufacturing remains subdued, a report showed today.

“Economic growth remains weak on sluggish domestic demand,” said Chang Jian, chief China economist at Barclays Plc in Hong Kong. The property easing will take a few months to show positive effects on manufacturing, where momentum “may start to see a slight increase at the end of this year,” she said.

The Purchasing Managers’ Index from the National Bureau of Statistics and China Federation of Logistics and Purchasing was at 51.1 in September, the same reading as in August. A similar gauge from HSBC Holdings Plc and Markit Economics was unchanged at 50.2, a report yesterday showed. Readings above 50 signal expansion.

Stock Markets

The Australian dollar extended a drop after the PMI, while the MSCI Asia Pacific Index (CPMINDX) of stocks was down 0.3 percent. Hong Kong’s markets are shut today and tomorrow, while China’s are closed from today through Oct. 7 for holidays.

Under existing rules, first-home buyers need to pay a 30 percent down payment, rather than at least 60 percent required for a second home. They can also get as much as a 30 percent discount on mortgage rates from the central bank benchmark.

Banks should decide “prudently” on the down payment and interest rates for loans to applicants buying a third home, the central bank said in the statement.

The policy “clearly shows that there’s a bottom line in tolerating an economic slowdown,” said Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in Hong Kong. “The move greatly reduced risks of a hard landing.”

Over a four-year campaign to curb property speculation that had driven up housing prices, China had raised the minimum down payment for second homes to 60 percent, and suspended third-home mortgages.

First Tier

Beijing, Shanghai, Guangzhou and Shenzhen, known as China’s first-tier cities, increased second-home down-payment requirements further to 70 percent last year after prices jumped.

“The nature of this relaxation is to drill extra demand outside the pool of first home purchasers,” Venant Chiang, Hong Kong-based property analyst at Jefferies Group LLC, wrote in a note. “We expect most China property stocks will rebound.”

Xinyuan Real Estate Co. (XIN), a Chinese developer listed in New York, rose 1.4 percent, the most in almost a month, to close at $2.94 yesterday. Leju Holdings Ltd. (LEJU), a Chinese home-listing website, jumped 6 percent, the most since Sept. 3, to $12.85.

Home Sales

Home sales plunged 11 percent in the first eight months from a year earlier, according to government data. Home prices dropped in August from July in 68 of 70 cities tracked by the government, including in Beijing and Shanghai. That was the most since January 2011, when the statistics bureau changed the way it compiles the data.

October home-sales volume will probably be “significantly higher” than September’s in major cities, Jinsong Du, a Hong Kong-based property analyst at Credit Suisse Group AG, said in a note. “However, I don’t expect a sudden housing-inventory drop, or housing-price increase in the near term.”

All but five of the 46 cities that imposed limits on home ownership since 2010 have removed or eased such restrictions, according to China real-estate agency Centaline Group.

Chinese residents had been becoming more pessimistic about housing-price gains in the third quarter compared with the previous two quarters, according to a survey of 5,000 households conducted by the Survey and Research Center for China Household Finance, released this week.

Water Cup

Policies had been ineffective in boosting housing prices, the center said in a statement, likening them to “a cup of water trying to extinguish a wooden cart on fire.”

The announcement comes two weeks after news that the PBOC injected 500 billion yuan ($81 billion) of three-month funds into the nation’s five largest banks, a government official familiar with the matter said at the time. The latest action suggests that the funds are earmarked for property-related loans, said Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in Hong Kong.

Nomura Holdings Inc. estimated in a report last week that in a baseline scenario, property investment growth will slow by 8.5 percentage points in 2014 and reduce gross domestic product growth by 1.4 percentage points. Hua Changchun, the China economist for Nomura in Hong Kong, said by phone that yesterday’s policy action is “within expectations” and still falls into the baseline scenario.

Today’s PMI report showed positive signs in demand for exports and a wider gap between new orders and finished-goods inventory, and industrial-production growth probably improved in September, according to Tommy Xie, a Singapore-based economist at Oversea-Chinese Banking Corp. At the same time, the drop in a subindex points to “rising deflationary pressure in China’s producer prices,” he said in a note.

-By Bloomberg News

News Corp. to Buy Owner of for $950 Million

Source: Bloomberg / Tech

News Corp., the newspaper publisher controlled by Rupert Murdoch, agreed to buy the owner of for $950 million, expanding its digital real-estate listings to compete with sites such as

Shareholders of the U.S. online real-estate business Move Inc. (MOVE) will get $21 a share in cash, New York-based News Corp. said yesterday in a statement. That’s 37 percent more than Move’s closing price on Sept. 29, and the total purchase price is net of the target’s cash, the company said.

Adding websites such as and will allow News Corp. to expand in real-estate listings as advertising revenue sputters. The publisher, completing its first full year as a stand-alone company, in August reported quarterly earnings that missed analysts’ estimates as it struggled in its transition from print to digital.

With a major marketing push from News Corp. (NWSA)’s Wall Street Journal and other digital assets, Move could become the largest U.S. online real estate seller, said Chief Executive Officer Robert Thomson.

“We believe Move is in a unique position to be the major player and expect its growth to be turbo-charged by News Corp. given our powerful content platforms in the U.S.,” Thomson said on a conference call yesterday. “There is an enormous opportunity for value creation in the U.S. given the early stages of the shift to online advertising in real estate and the overall size of the market.”

Zillow, Trulia

Companies likes Zillow Inc., owner of the namesake listing site, have expanded as more people move their home searches online. The Seattle-based company in July said it would acquire rival Trulia Inc. in a transaction that would make the combined company the largest in online real estate advertising. Move can distinguish itself from these firms by focusing on its relationship with realtors, Thomson said.

“Our strategy is quite different to that of Trulia and Zillow,” Thomson said. “We see tangible and enduring value in the role of realtors.”

The deal is News Corp.’s largest since it split from 21st Century Fox Inc. in June 2013. In May, News Corp. agreed to buy Harlequin Enterprises for $415 million, bolstering its book publishing business with the romance imprint.

News Corp. plans to hold 80 percent of Move, with Australia’s REA Group Ltd. (REA), which is 61.6 percent owned by News Corp., owning the rest.

There are tax advantages to News Corp. and REA completing the buyout together, Bedi Singh, News Corp.’s chief financial officer, said on the conference call. The deal is expected to close in 10 business days.

Revenue Boost

The purchase of Move will boost the company’s revenue from digital real-estate services by more than 50 percent.

Move reported $29 million in adjusted earnings before interest, taxes, depreciation and amortization on revenue of $227 million for 2013. News Corp.’s digital real estate services -- made of the stake in REA Group -- reported $214 million of Ebitda on $408 million of revenue for the fiscal year ended June 30, according to a regulatory filing.

Move shares rose 37 percent to $20.96 at the close in New York yesterday. The stock had lost 4.4 percent this year through Sept. 29.

News Corp. fell 2.7 percent to $16.35, the biggest drop since May, reducing the company’s market value to about $9.4 billion. The publisher had about $3.1 billion of cash and equivalents as of Sept. 30.

-By Doni Bloomfield

NYC’s Queens to Get 2,404 Apartments in Durst Project

Source: Bloomberg / Luxury

A partnership including Durst Organization plans to build 2,404 apartments on the East River waterfront in the Astoria section of Queens, New York.

Douglas Durst’s company said it will invest $1.5 billion in a 2.5 million square-foot (232,000-square-meter) residential and retail development on Hallets Point, a peninsula just southwest of the Robert F. Kennedy Bridge, according to an e-mailed statement. Durst is teaming with Lincoln Equities Group LLC, an East Rutherford, New Jersey-based builder and operator of commercial properties.

“This project will transform an isolated and neglected stretch of the Queens waterfront into a vibrant community,” Jonathan “Jody” Durst, president of Durst Organization and cousin of Chairman Douglas Durst, said in the statement. It will be the company’s first major development outside Manhattan, he said.

Apartment leasing in Brooklyn and Queens surged last month, with signings more than quadrupling in Queens, where about a third of the market consists of new development, according to appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. The median rent in Queens was $2,788 a month, compared with $3,175 in Manhattan.

Plans for Hallets Point call for eight residential buildings, four of which will have market-rate apartments. Two more buildings will offer 20 percent of their units at below-market rents, while another two properties will be entirely affordable housing, according to Durst. Of the 2,404 units, 483 will be affordable, the company said.

The administration of Mayor Bill de Blasio, who took office in January, has stressed the development of more affordable housing to address shrinking options for low- and moderate-income residents.

The Astoria project also will have 65,000 square feet of retail space and a site reserved for a school.

-By David M. Levitt

Home Prices in U.S. Rise at Slowest Pace in Almost Two Years

Source: Bloomberg / Luxury

Home prices in 20 U.S. cities rose in the year ended in July at the slowest pace in almost two years as still-tight credit and limited wage gains weigh on demand.

The S&P/Case-Shiller index of property values increased 6.7 percent from July 2013, the smallest 12-month gain since November 2012, a report from the group showed today in New York. Nationally, prices rose 5.6 percent after a 6.3 percent gain in the year ended June.

Property values have shown more subdued appreciation as investors step back from the market and first-time buyers remain a historically smaller share. Easing price increases and strides in the labor market may help more Americans consider homeownership even as wage growth has shown little acceleration.

“In order to support further gains in home prices, you would need stronger housing demand, an improvement in the rate of household formation, and inventory levels to remain lean,” said Michael Gapen, a senior U.S. economist for Barclays Capital Inc. in New York. “You will get all of this, it will just be at a moderate pace” since owners shouldn’t anticipate “8 to 10 percent out of your home forever,” Gapen said.

Stock-index futures trimmed earlier gains after the report. The contract on the Standard & Poor’s 500 Index maturing in December rose 0.1 percent to 1,972 at 9:22 a.m. in New York.

The median projection of 28 economists surveyed by Bloomberg called for a 7.4 percent advance in the 20-city index. Estimates ranged from gains of 5.6 percent to 7.8 percent. The S&P/Case-Shiller index is based on a three-month average, which means the July figure was also influenced by transactions in May and June.

Monthly Decrease

Home prices in the 20-city index adjusted for seasonal variations decreased 0.5 percent in July from the prior month, the worst performance since November 2011. The Bloomberg survey median called for unchanged. Unadjusted prices rose 0.6 percent.

The year-over-year gauge, based on records dating back to 2001, provides better indications of trends in prices, the group has said. The panel includes Karl Case and Robert Shiller, the economists who created the index.

Nineteen of the 20 cities in the index showed smaller year-over-year gains, according to the report.San Francisco experienced the biggest deceleration, cooling to 10.3 percent in the year ended July from 13.2 percent the prior month. Cleveland was the only city to maintain its year-over-year gain at 0.9 percent, the smallest advance among the group.

Today’s report included national figures that are now being reported on a monthly basis. The gain covering the entire U.S. was also the smallest since November 2012.

Sales, Construction

August data on purchases and construction have showed mixed results as the housing industry recoups lost ground from an unusually cold and wet winter that held back buyers and sellers.

New home purchases surged 18 percent in August to a 504,000 annualized pace, the highest level in more than six years.

At the same time, sales of existing homes unexpectedly fell last month to a 5.05 million annual pace from 5.14 million in July as fewer investors made purchases, NAR data showed last week. Construction fell last month, with housing starts dropping 14.4 percent to a 956,000 annualized rate from July’s pace that was the strongest in almost seven years.

Borrowing costs have eased since their climb in the second half of last year. The average rate on a 30-year, fixed mortgage was at 4.20 percent in the week ended Sept. 25, down from 4.53 percent at the start of 2014, according to Freddie Mac in McLean, Virginia.

Job Market

Progress in the labor market may help boost demand for big-ticket purchases including homes, providing support for property values. Employers have added an average 215,380 to payrolls a month so far this year, the strongest pace since 1999. Economists project job gains to average 216,000 for all of 2014, according to the median in a Bloomberg survey conducted Sept. 5-10. The Labor Department will release September figures Oct. 3.

So far, the rates of jobs and income gains are keeping homebuilders such as Los Angeles-based KB Home from counting on acceleration in the housing rebound.

“The biggest obstacle to a full recovery is the lack of real job and income growth,” Chief Executive Officer Jeffrey Mezger said on a Sept. 24 earnings call. “With this limited income growth, there is also no advancement in buying power. Both job and income growth are essential to a fulsome housing recovery.”

-By Michelle Jamrisko

RBS’s Ulster Leads Releasing Reserves as Prices Rise

Source: Bloomberg / Luxury

Royal Bank of Scotland Group Plc’s Ulster Bank unit is taking a more optimistic view than other Irish lenders that a house-price rebound will stick as it prepares to free up money set aside to absorb bad-loan losses.

“Rising Irish residential property prices combined with pro-active debt management has resulted in lower arrears in Ulster,” Edinburgh-based RBS said in a statement today. “As a result, we expect Ulster to record net provision releases in the region of 300 million pounds” ($487 million) in the third quarter, it said, adding that there’s potential for further releases if the market continues to improve.

A 15 percent rebound in Irish home prices in the year through August has left values 41 percent below their 2007 peak, according to the Central Statistics Office. While Ireland’s three surviving bailed-out banks assume a 52 percent to 55 percent fall in assessing loan losses, giving them a buffer before European stress tests next month, Ulster Bank bases its figures on market prices, Dublin-based securities firm Davy said today. It cited Ulster Bank executives’ comments during a recent presentation at the brokerage firm.

An Ulster Bank spokeswoman in Dublin declined to comment.

Basing owner-occupier mortgage loan-loss provisions on market values at the end of August would free up 525 million euros ($663 million) at Bank of Ireland Plc and 440 million euros at Allied Irish Banks (ALBK), Davy estimated.

‘Hinted Heavily’

While RBS said this year it is weighing options for Ulster Bank, including combining with another Irish lender or selling a stake to private-equity investors, Chief Executive Officer Ross McEwan “hinted heavily” in July that the bank plans to keep its Irish unit, according to Eamonn Hughes, an analyst with Dublin-based Goodbody Stockbrokers.

McEwan said on July 25 that RBS was “buoyed by a very good economy” in Ireland during an visit by executives to the country that month.

“We’ve supported this business through some pretty tough times,” McEwan said. “We want to create a really strong franchise. We should be able to turn this into a profitable bank.”

Ulster Bank returned to operating profit in the first half for the first time since 2008.

“I’m sure that Ulster Bank executives saw improvements in the Irish property market and broader economy coming through last year, even before RBS flagged that they were reviewing the operations here, but it probably took a bit longer for RBS to buy into that story,” Hughes said. “The pendulum looked like it was swinging in the direction of keeping Ulster when RBS reported interim figures.”

-By Joe Brennan