Singapore Economy Services inflation set to persist despite overall moderation: Economists Source: Today Online / Singapore SINGAPORE — Consumer prices eased further last month — hitting a new low since February — as private road transport and accommodation costs continued to slide, suggesting inflation should remain at a relatively similar pace for the rest of the year, although analysts believe services inflation stemming from a tight labour market could present some upside risks. Against this backdrop, the Government is expected to keep its current monetary policy unchanged to act as a buffer against consumer price pressures, even while it moved last week to cut its inflation forecast for this year and the next. Last month, the all-items Consumer Price Index (CPI) rose 0.6 per cent from a year earlier, slowing from August’s 0.9 per cent increase, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said in a statement yesterday. The rate of expansion was the slowest since February, when the CPI rose 0.4 per cent. Private road transport costs dropped 2.8 per cent last month, while accommodation costs slipped 0.6 per cent. Meanwhile, core inflation came in at 1.9 per cent following August’s 2.1 per cent, as services inflation slowed from 2.1 per cent to 1.7 per cent last month, the statement said. “This was mainly due to the moderation in the increase in medical and dental fees … which reflects the impact of enhanced medical subsidies, including the Pioneer Generation Package,” the MAS and MTI said, referring to the implementation of higher subsidies for services at Specialist Outpatient Clinics and the Community Health Assist Scheme last month. Despite the healthcare relief, core inflation — which strips out accommodation and private road transport costs and is driven primarily by services costs — is expected to remain under pressure as wages increase with the economy at full employment, the MAS and MTI added. UOB economist Francis Tan agreed, saying: “We believe the full-year core inflation rate for both this year and 2015 will come in at 2.1 per cent — still higher than 2013’s 1.7 per cent. While not as pronounced as expected yet, the impact of wage costs on consumer prices is definitely there and will persist as restructuring continues.” That impact was visible on food inflation, which increased from 2.9 per cent to 3 per cent last month due to a 2.8 per cent jump in costs of prepared meals. Healthcare costs still rose 1.8 per cent despite the subsidies, while education and stationary inflation stood at 3 per cent in September. Against this backdrop, the MAS is unlikely to change its current stance of allowing a modest and gradual appreciation of the Singapore dollar, Credit Suisse analyst Michael Wan said. “While the global economic outlook is mixed, core inflation could pick up quickly and sharply — that already happened in 2011,” he said. “I believe now the MAS would rather err on the side of caution to keep an eye on wage pressures, which are here to stay for the next two to three years.” Agreeing, OCBC economist Selena Ling added that the MAS is also cautious of the United States Federal Reserve’s decision to normalise interest rates potentially by mid next year and will not “ease monetary policy even after revising inflation forecasts”.
In its latest policy statement last week, the MAS cut its forecast for core inflation in 2014 to 2 to 2.5 per cent from the previous 2 to 3 per cent range. The forecast for overall inflation was also lowered to 1 to 1.5 per cent, from 1.5 to 2 per cent, “amid the expected increase in the supply of Certificate of Entitlements and newly completed housing units”, the central bank said. -By Wong Wei Han Singapore Real Estate S'pore developer sentiment up slightly Source: Business Times / Real Estate Sentiment among Singapore property developers ticked up slightly but remained weak, according to a survey by the National University (NUS) and the Real Estate Developers' Association of Singapore (Redas). The overall sentiment gauge improved slightly to 3.7 in the third quarter from 3.5 in the second quarter, but remained below the 5.0 threshold above which sentiment is considered to be positive. The third quarter was the fifth period in a row in which sentiment was 4 or lower. -By Kenneth Lim http://www.businesstimes.com.sg/real-estate/spore-developer-sentiment-up-slightly Private home prices at a new equilibrium Source: Today Online / Business Private property market prices in Singapore may be levelling off at a new support level after five years of cooling measures that have been very effective at stalling the market. However, it appears the effectiveness of the measures has levelled off. Barring major catastrophes such as war, epidemics or financial crises, private property prices are expected to hold up, unless more resale supply is introduced or the Government removes the cooling measures. According to SRX Property, the market transacted an estimated 468 units last month. This is down 77.2 per cent from the peak of 2,050 units sold in April 2010. Prices, on the other hand, have dropped a mere 5.6 per cent since the market’s monthly peak in January 2014, based on the SRX Price Index. There are three signs that it is going to be difficult for the cooling measures to pull prices down further. The first half of this year was rough for the private resale market, with the SRX Price Index dropping rather dramatically from 178.8 in January to 170.2 in June. However, since June, the index has found a plateau in the 168 to 170 range. This suggests the market has come to terms with the impact of the Total Debt Servicing Ratio (TDSR). Until the TDSR, private resale prices would not come down. They finally capitulated at the beginning of the year. But now, it seems the market may have found a price equilibrium under the new TDSR regime. Second, market sentiment, as measured by the median Transaction-Over-X Value (T-O-X) has improved in the past few months. T-O-X measures the actual transaction prices over the computer-generated X-Value of each unit in Singapore. Last month, the national median T-O-X was negative S$2,000, which means the average buyer was paying only S$2,000 below the computer-generated X-Value. This is a big improvement over the negative S$20,000 in March and July. In other words, fewer people are paying significantly below the computer-generated X-Value. This means less downward pressure on prices. Third, volume is down significantly and has been consistently in the mid-400-unit range. There is not much more room for volume and, hence, prices to drop. The cooling measures, in particular those impacting the TDSR, have been quite effective at discouraging people from putting homes on the market. While bargain hunters and those unaffected by the cooling measures are delighted to buy today, sellers are not as inclined to sell. They have been sitting on the sidelines, waiting for prices to rebound before putting their properties on the market.
Unless a new round of resale supply comes onto the market or there is an external shock that causes a sell-off, it will be difficult for the market to drop much further, given the low stock of homes for sale each month. -By Sam Baker Co-Founder of SRX http://www.todayonline.com/business/property/private-home-prices-new-equilibrium?singlepage=true Industrial property prices, rents down in Q3 Bigger supply of space and state measures against speculation taking their toll, especially in factory segment Source: Business Times / Real Estate A RAMP-UP in supply of industrial space and anti-speculation measures have dented prices and rents in the third quarter, with the softness most pronounced in the factory space segment. And property consultants expect further downward pressure on factory occupancy and rental rates next year. Data released by JTC on Thursday showed that industrial property prices slipped 0.9 per cent from the second quarter, weighed down by a 1.8 per cent drop in prices of multiple-user factory space. This marked a reversal from their respective 0.7 per cent and 2.5 per cent rises in Q2. Colliers International research director Chia Siew Chuin noted that a standoff between buyers and sellers for strata-titled industrial property has led to a fall in multiple-user factory prices. Industrial rents dropped 1.8 per cent in Q3, despite a 0.2 percentage point increase in occupancy to 90.9 per cent. Compared to a year ago, rents fell 1.3 per cent - their first year-on-year fall since early 2010, according to JTC. Rents for multiple-user factory space slipped 2.2 per cent from a quarter ago as the vacancy rate rose to 13.2 per cent from Q2's 12.7 per cent. At 86.8 per cent, the average occupancy rate is the lowest since the third quarter of 2007. Bucking the trend, warehouse space prices rose 3.2 per cent while rents were unchanged from Q2. Nicholas Mak, executive director at SLP International, expects overall industrial property prices this year to still mark a 2 per cent to 3.5 per cent rise - propped up by the 4.5 per cent gain in the first half of the year. Overall industrial rents, which had already started to weaken in Q2, is likely to drop by 1.5 per cent to 3 per cent for the full year, he said. Ms Chia noted that sentiment for industrial space remains mixed in the fourth quarter, "taking into consideration the presence of persistent downside risks, including the uncertainties surrounding the global economic recovery and the political unrest in Iraq, as well as the traditional year-end holiday lull". Unless the price gap between buyers and sellers is bridged, sales of strata-titled industrial properties will remain slow, she said, though prices for properties with longer tenure could hold up better. "Rents for higher specification properties, such as those located within the business parks and independent high-specification buildings, are expected to hold steady in Q4 2014 due mainly to a tightening in supply." Since last year, JTC has introduced a string of measures to discourage speculation on industrial properties and address changing business needs. For instance, the assignment prohibition and minimum occupation periods were lengthened to ensure that industrialists are committed to the land that is allocated to them for productive economic activity for a reasonable period of time. At the same time, JTC has ramped up supply of industrial space. Four industrial Government Land Sales (iGLS) sites totalling 7.4 hectares were awarded in the third quarter, and some 44.6 ha of prepared industrial land was allocated to end-users. In the fourth quarter, some 1.2 million square metres of industrial space, including 167,000 sq m of multiple-user factory space, will come onstream - taking full-year supply to 3.1 million sq m. Some 2.6 million sq m and 1.9 million sq m of industrial space is estimated to come onstream in 2015 and 2016 respectively. JTC said: "This is significantly higher than the average annual supply and demand of around 1.4 million sq m and 900,000 sq m respectively in the past three years and is likely to exert further downward pressure on occupancy rates." According to JTC, recent measures have already tamed tender prices for large iGLS sites targeting multiple-user developments. JTC said that it would continue to monitor the market closely and introduce appropriate measures where necessary to promote a stable and sustainable market. Mr Mak cautioned that regulations on the use of industrial space may be due for a review, given the changing economic landscape in Singapore and the oncoming industrial supply. "One example is to be more flexible in the types of trades that are allowed to use industrial space. Currently, interior designers are allowed to use B1 factory space but architect firms are disallowed."
This, he believes, will "minimise a mismatch in supply and demand in the near future". -By Lynette Khoo http://www.businesstimes.com.sg/real-estate/industrial-property-prices-rents-down-in-q3 Prices, rents of industrial space taper off Third quarter sees first year-on-year drop in rentals since early 2010 Source: Straits Times / Money PRICES and rentals of industrial space kept moderating in tandem with occupancy rates in the third quarter after a rise in supply of industrial land and space by the Government in recent years. Tender prices for industrial government land sale sites targeting multiple-user developments have also declined, said state industrial landlord JTC yesterday. Indicies for industrial space and multiple-user rental fell by 1.8 per cent and 2.2 per cent respectively, quarter on quarter. Year on year, those two indices declined by 1.3 per cent and 2.3 per cent respectively. This is the first year-on-year drop in rentals since early 2010, in contrast to the average increase of about 8 per cent a year over the past four years, said JTC. Prices of industrial space also kept stabilising, with the industrial space and multiple-user factory space price indices falling by 0.9 per cent and 1.8 per cent respectively, quarter on quarter. These falls reverse their respective gains of 0.7 per cent and 2.5 per cent in the previous quarter. Colliers International director of research and advisory Chia Siew Chuin said the fall in multiple-user factory prices is not surprising, given the subdued state of strata-titled industrial property sales amid a price standoff between buyers and sellers. Year on year, the industrial space and multiple-user factory space price indices rose by 0.2 per cent and 3.4 per cent respectively, significantly slower than their average rises of about 16 per cent per year over the past four years. After a 0.9 percentage point decline in the second quarter, the occupancy rate of the overall industrial property market edged up by 0.2 percentage point quarter on quarter to 90.9 per cent in the third quarter. This was on the back of a 1 per cent rise in demand, outstripping a 0.8 per cent increase in supply. The better occupancy rate was driven by the warehouse segment, mainly due to the take-up of a few new single-user warehouses. For multiple-user factory space, the occupancy rate fell by 0.5 percentage point to 86.8 per cent, the lowest level since late 2007, as a 1.5 per cent increase in supply outstripped the 1 per cent increase in demand. Year on year, the occupancy rate of the overall industrial property market slid 1.8 percentage points to 90.9 per cent. For multiple-user factories, the occupancy rate fell by 3.3 percentage points to 86.8 per cent. Looking ahead, about 1.2 million sq m of industrial space, including 167,000 sq m of multiple- user factory space, is set to come onstream this quarter, bringing the full year supply of industrial space to 3.1 million sq m. A further 2.6 million sq m and 1.9 million sq m of industrial space is tipped to come onstream in 2015 and 2016 respectively. This is significantly higher than the average annual supply and demand of about 1.4 million sq m and 900,000 sq m respectively in the past three years, and is likely to exert further downward pressure on occupancy rates, JTC noted. The Government will keep monitoring the industrial property market closely to ensure that the diverse needs of industrialists are met, it added. "Appropriate measures will also be introduced where necessary to promote a stable and sustainable industrial property market. "JTC will also continue to develop more specialised and innovative facilities with productivity- enabling features such as shared facilities and services, to support the growth of key industry clusters and catalyse new ones in the coming years."
Ms Chia reckons sentiment is expected to remain mixed in the final quarter, given the uncertainties surrounding the global economic recovery. -By Dennis Chan http://www.straitstimes.com/premium/money/story/prices-rents-industrial-space-taper-20141024 Industrial land prices, rentals fall in Q3: JTCSource: Channel News Asia / Business SINGAPORE: Industrial land prices and rentals have continued to moderate in the third quarter of this year, according to the latest quarterly report on industrial properties by JTC. Industrial land prices in the third quarter fell 0.9 per cent from the previous quarter, following a 0.7 per cent rise in the previous quarter. However, on a year-on-year basis, prices edged up 0.2 per cent. In the multi-user factory space segment, prices fell 1.8 percent on-quarter – reversing the 2.5 per cent rise recorded in the previous quarter. Rentals for overall industrial space also fell in the third quarter, easing 1.8 per cent from the second quarter. On a year-on-year basis, the rental indices for industrial space fell by 1.3 per cent and by 2.4 per cent for multiple-user factory space. JTC said this is the first on-year decline in rentals since early 2010, and is in contrast to the average increase of about 8 per cent per year for the last four years. INDUSTRIAL OCCUPANCY RATES Occupancy rate on the overall industrial property market edged up slightly by 0.2 percentage points on-quarter. The increased occupancy rate was driven by the warehouse segment, mainly due to the take up of a few new single-user warehouses. For multiple-user factory space, the occupancy rate fell by 0.5 percentage points in the quarter – hitting its lowest level since late 2007. On a year-on-year basis, the occupancy rate of the overall industrial property market fell by 1.8 percentage points, and declined 3.3 percentage points for multiple-user factory space. Tender prices in the Industrial Government Land Sales (IGLS) sites targeting multiple-user developments have also declined, JTC said. It pointed out that the highest tender bids received for two large Tuas sites in late August and September were about 50 per cent below the highest bid for another Tuas site, whose tender closed in August last year. It added that "a similar trend was also observed for large IGLS sites in the north region and the number of bidders per site also fell in recent tenders”. Looking ahead, JTC said about 1.2 million sqm of industrial space is expected to come on-stream in the fourth quarter, bringing the supply of industrial space for the full year to 3.1 million sqm. Another 2.6 million sqm of industrial space is expected to be released in 2015 and 1.9 million sqm in 2016. This is significantly higher than the average annual supply of 1.4 million sqm and 900,000 sqm in demand for the past three years, JTC said, adding that this will exert further downward pressure on occupancy rates. - CNA/cy http://www.channelnewsasia.com/news/business/singapore/industrial-land-prices/1430812.html Industrial land prices, rentals in S’pore decline Rentals for overall industrial space fell by 1.3% on year — the first year-on-year decline since early 2010, says JTC Source: Today Online / Business The latest quarterly report on industrial properties by JTC Corp showed that industrial land prices in Q3 fell 0.9 per cent from the previous quarter. This is compared with a 0.7 per cent rise in the previous quarter. However, on a year-on-year basis, industrial land prices edged up 0.2 per cent. Rentals for overall industrial space eased 1.8 per cent on quarter and fell by 1.3 per cent on year. JTC said this is the first year-on-year decline in rentals since early 2010, in contrast to the average increase of around 8 per cent per year over the past four years. Occupancy rate in the industrial property market edged up slightly by 0.2 percentage point on-quarter, driven by the warehouse segment, and mainly due to the take-up of a few new single-user warehouses. On a year-on-year basis, it fell by 1.8 percentage points. Tender prices in the Industrial Government Land Sales (IGLS) sites targeting multiple-user developments have also declined. JTC pointed out that the highest tender bids received for two large Tuas sites in August and September were about 50 per cent below the highest bid for another Tuas site, whose tender closed in August last year. It added that a similar trend was also observed for large IGLS sites in the North Region and the number of bidders per site also fell in recent tenders. Looking ahead, JTC said about 1.2 million sqm of industrial space is expected to come on stream in the fourth quarter this year. This will bring the supply of industrial space for the full year to 3.1 million sqm.
Another 2.6 million sqm of industrial space is expected to be released next year and 1.9 million sqm in 2016. http://www.todayonline.com/business/property/industrial-land-prices-rentals-spore-decline Occupiers of S'pore, HK prime logistics space face cost challenge Occupancy cost growth expected to cross 3% a year, against 2.4% for rest of Asia-PacificSource: Business Times / Real Estate The gap between the top two nationalities of private home buyers among foreigners and PRs widened in the third quarter, after purchases by mainland Chinese fell more than those by Malaysians. This is the first time since Q3 2012 that a significant lead by the Malaysians has emerged. According to a caveats analysis by DTZ, the Chinese share fell four percentage points to 25.62 per cent in Q3 from a quarter earlier. This is their lowest share since Q4 2012, when it was 25.42 per cent. -By Mindy Tan More real estate agencies, agents taken to task Industry watchdog reports rise in warnings, fines and disciplinary cases Source: Straits Times / Top of The News MORE warnings and fines were meted out to errant real estate agencies and agents as the Council for Estate Agencies (CEA) clamped down on unprofessional behaviour, according to the industry watchdog's annual report released yesterday. In the 12 months to March 31 this year, 644 letters of advice or warnings were issued to agencies and individual agents - more than double the 287 issued the year before. There were 32 composition fines meted out, up from six before. More errant agencies and agents were also taken to court or disciplined. The number of disciplinary actions jumped despite the fact that fewer complaints were received last year. There were 751 complaints, of which 42 per cent were in relation to advertisements and fliers. This is down from 880 complaints a year before, when 36 per cent had to do with advertisements and fliers. "CEA has been stepping up its regulatory investigation efforts," said the council in response to queries. In addition, some cases ending in the recent financial year had begun in the previous one. CEA added that it "took firmer action in the more serious cases, such as cases that involved unlicensed moneylending and referrals to moneylenders, to ensure that such offences are appropriately addressed and to prevent similar future occurrences". Mr Chris Koh, director of estate agency Chris International, said that the rise in enforcement might be partly due to "a backlog being cleared" as the council was formed only in October 2010. Institute of Estate Agents president Jeffhery Foo said that the figures may not mean that agents' behaviour has worsened. Letters of advice are issued over "grey areas" and could be seen as constructive criticism, he said. Asked if the sluggish property market might have changed agents' behaviour, he replied: "Some might be over-zealous in closing deals." But they would be a small minority, he added. Fewer homes have been changing hands. For the period covered by the annual report, private resale transactions fell from 2,077 in the second quarter of last year to 899 in the first quarter of this year. Quarterly Housing Board resale deals fell from 5,235 to 3,781 over the same period. Against the backdrop of a weaker property market, there were fewer new estate agencies, which include sole proprietors, partnerships and firms. Of 1,449 licensed estate agencies, only 81 were new. A year before, there were 1,495 agencies, including 235 new entrants.
But the number of registered individual property agents rose to 33,498 from 32,982 a year ago. Only 3,061 joined the industry, down from 4,289 the year before. -By Janice Heng Ascott taking bigger slice of Aussie pie Source: Business Times / Real Estate Capitaland's serviced residence arm The Ascott has inked several agreements with Quest Serviced Apartments in Australia to increase its exposure Down Under. Under one of the agreements, Ascott's real estate investment trust, Ascott Residence Trust (Ascott Reit) will acquire three operating serviced residences in Greater Sydney from Quest for A$83.0 million (about S$93.0 million). -By Mindy Tan & Lynette Khoo http://www.businesstimes.com.sg/real-estate/ascott-taking-bigger-slice-of-aussie-pie Ascott's deals with Quest will boost its Aussie presence CapitaLand unit to buy stake in firm and 3 residences, tie up strategically Source: Straits Times / Money CAPITALAND'S serviced residence unit has sealed three agreements with a major Australian player as it makes a play for a greater share of the accommodation business Down Under. The deals struck by The Ascott involve investing in Quest Serviced Apartments, buying some of its existing property leases and embarking on a strategic partnership. One aspect of the agreements will see Ascott buy a 20 per cent stake in Quest for A$28.8 million ($32.2 million) with an option to raise its interest to 30 per cent. Ascott's real estate investment trust, Ascott Residence Trust (Ascott Reit), has also inked a deal to buy three operating serviced residences in Sydney from Quest for A$83 million. The residences - Quest Sydney Olympic Park, Quest Campbelltown and Quest Mascot - will be Ascott Reit's first acquisitions in the state of New South Wales. They will continue to be operated by Quest's franchisees, while Ascott Reit will take over the leases and receive a fixed rent. The residences have a yield of 7.7 per cent and are expected to raise Ascott Reit's distribution per unit from 8.4 cents to 8.46 cents for this financial year. Mr Ronald Tay, chief executive of Ascott Reit's manager, said: "The properties enjoy high demand, mainly from corporate travellers attending conferences and events or those staying for an extended period for projects from industries such as logistics, airlines and manufacturing." Another facet of the agreements involves Ascott investing up to A$500 million over the next five years in new properties that Quest will source. Ascott will have the first right of refusal to acquire the properties. Quest will, in turn, look for franchisees to take on the leases for the properties, which will be operated under its brand. The firm is Australia's largest serviced apartment provider, with 112 properties. Ascott chief executive Lee Chee Koon told a briefing yesterday that while the firm operates its own brands of Citadines and Somerset serviced residence apartments in Australia, they are complementary to the Quest deal. For one thing, the targeted customer segments are different. "Ascott's strength is that we deliver a lot of our business to our properties through international customers going to Australia, whereas the strength of Quest is that their sales and distribution is to promote more domestic, corporate travellers." Another differentiating factor is the locations of the apartments. Ascott runs five Somerset and Citadines serviced apartments in major Australian cities. Quest operates mostly in regional cities and suburban areas. Ascott is using the franchising model to grow its global presence. It has a target of 80,000 apartments globally by 2020. It now has around 24,000 operating serviced residence units with about 11,000 under development. -By Mok Fei Fei Ascott deepens presence in Australia CapitaLand’s wholly-owned serviced residence offshoot to forge S$560m partnership with major Aussie player, Quest Source: Today Online / Business SINGAPORE — Property developer CapitaLand’s wholly-owned serviced residence offshoot The Ascott Limited is deepening its presence Down Under with a series of moves that include a A$500 million (S$558 million) investment to forge a strategic partnership with a major Australian player, in a bid to tap the growing business travel industry there. Under the partnership with Quest Serviced Apartments, Ascott said yesterday that it will invest up to the amount over the next five years on acquisitions of new properties that will be leased and operated under Quest’s franchise model. Ascott is also taking a 20 per cent stake in Quest for A$28.8 million with the option to increase the holding to 30 per cent in a move to strengthen its foothold in the business travel segment in Australia, chief executive Lee Chee Koon said yesterday. “Competition in the travel industry has stiffened with the emergence of players such as Airbnb … They pose a lot of competition to players that capture only the leisure market, but our focus has predominantly been corporate travellers and it’s the same for Quest, so we think that we can combine our global network and that will help us to dominate this particular market segment,” Mr Lee said. “Ascott and Quest have complementary strengths. For Ascott, a lot of our business comes through international customers to Australia, while Quest’s sales and distribution is more to domestic corporate travellers,” he added. Quest currently has the largest network of serviced apartments in Australia with 112 properties, most of them located in the state of Victoria. Its chairman Paul Constantinou said the company has opened an average of eight new properties each year and the partnership with Ascott will help to more than double its portfolio to 250 properties in Australia and New Zealand before the end of this decade. Separately, Ascott Residence Trust, a real estate investment trust 46 per cent owned by Ascott, is buying three properties in Greater Sydney from Quest at A$83 million which will significantly boost its Australian footprint from one property in Perth currently. The accretive acquisitions at an EBITDA (earnings before interest, taxes, depreciation and amortisation) yield of 7.7 per cent are expected to increase the trust’s distribution per unit from 8.4 Singapore cents to 8.46 cents on a pro forma basis. Following the acquisition, the trust will receive fixed rent by taking over the leases for the three serviced residences — Quest Sydney Olympic Park, Quest Campbelltown and Quest Mascot. “Fixed rent from the three serviced residences is underpinned by long-term master leases and will enhance the stability of Ascott REIT’s income … Demand is anticipated to grow due to the urban development plans earmarked at each of the locations,” said Mr Ronald Tay, chief executive of Ascott Residence Trust Management, the manager of the REIT. Mr Lee said the announcements affirm Ascott’s confidence in Australia’s serviced residence segment, despite parent company CapitaLand’s exit from the market by divesting its stake in developer Australand in March.
“The Australian accommodation sector continues to expand with more than 100 properties expected to be opened over the next few years. Foreign investment in the sector has been on the rise in recent years due to the reliable legislative environment, resilient economy and stable returns in Australia,” he said. -By Lee Yen Nee http://www.todayonline.com/business/property/ascott-deepens-presence-australia Companies' Brief CMA deputy CEO joins C-suite exodus Simon Ho is latest high-level CapitaLand departure but CEO Lim Ming Yan is unfazed given the group's 'deep management bench strength'Source: Business Times / Companies & Markets Simon Ho, deputy CEO of CapitaMalls Asia (CMA), is the latest to join a string of high-level departures from the CapitaLand group. Disclosing this yesterday, CapitaLand said that Mr Ho was leaving to pursue personal interests. But the group remains unperturbed. The recent exits are "not unexpected", insisted group CEO Lim Ming Yan, though he conceded that "perception is important" and thus called for a press briefing on Thursday to address the issue. -By Lynette Khoo http://www.businesstimes.com.sg/companies-markets/cma-deputy-ceo-joins-c-suite-exodus Bench strength 'helps CapLand weather exit of senior execs' Source: Straits Times / Money BENCH strength at CapitaLand means that the group can weather recent departures of senior executives even as another top executive heads for the door, said group chief executive Lim Ming Yan. Mr Lim told a briefing yesterday that CapitaMalls Asia (CMA) deputy chief executive Simon Ho is leaving the firm. "I very much would like him to stay, but I think he has made up his mind, so it's a personal decision and I respect the personal decision. I think we just have to move on," Mr Lim said. CapitaLand has seen a spate of high-level departures in the past few months. The firm announced earlier this month that CapitaLand Residential Singapore chief executive Wong Heang Fine had resigned. CMA chief executive Lim Beng Chee's resignation was announced last month , while CapitaLand deputy CEO Olivier Lim's departure was made known in June. The CapitaLand group CEO stressed, however, that the firm has a core management team in place, adding that it was not dependent on just a few top people at the group. A team of some 50 key personnel is in place to drive profitability at the firm, thanks to its strong succession planning over the years, he added. Many of them are also relatively young, with the average age of the core team coming in at around 45 years. "We have a new team of people, we have moved quite a number of our younger colleagues up into positions," Mr Lim said. "When they took on the positions, I could see a lot of passion and enthusiasm and new ideas coming through." Mr Lim does not expect further resignations, though he acknowledged that his staff's high calibre means they will always be targets for head-hunters. Analysts agree CapitaLand has enough resources despite the loss of top personnel. Macquarie Asean head of research Soong Tuck Yin said: "It's a big organisation and having covered the stock for so long... I think they do have a deep leadership team to carry them through this period." Another analyst who declined to be named said while there are enough capable people in the firm, there are still concerns. "Some investors are concerned as to why so many senior people are leaving and will they transfer their knowledge to a competitor," he said.
CapitaLand shares closed three cents higher at $3.01 yesterday. -By Mok Fei Fei CMMT's leadership change no cause for concern Source: Business Times / Companies & Markets An impending leadership change at CapitaMalls Malaysia Trust (CMMT) is not expected to cause any disruptions, as the appointed successor is an "insider" familiar with its operations. "Despite investors' concerns on the change of guard, we believe that CMMT's future performance is unlikely to be affected," said RHB Investment analyst Alia Arwina in a client note on Thursday. -By Pauline Ng http://www.businesstimes.com.sg/companies-markets/cmmts-leadership-change-no-cause-for-concern A-Reit posts 1.7% rise in Q2 DPU Reit puts up a good fight in tougher market environment; distributable amount rises 1.6% to S$87.8mSource: Business Times / Companies & Markets Ascendas Reit (A-Reit) has posted an encouraging set of second-quarter results, despite what it calls a "tougher market environment", with the ongoing Singapore economic restructuring, changing government regulations and rising costs. The real estate investment trust, one of Singapore's oldest and largest, on Thursday announced a 1.7 per cent rise in its distribution per unit (DPU) to 3.66 Singapore cents for its Q2 ended Sept 30. This came on the back of a 1.6 per cent increase in distributable amount to S$87.8 million. -By Lee Meixian http://www.businesstimes.com.sg/companies-markets/a-reit-posts-17-rise-in-q2-dpu Property income up for Ascendas Reit and CIT Ascendas DPU up 1.7 per cent, while Cambridge posts little change in DPU Source: Straits Times / Money ASCENDAS Real Estate Investment Trust (Reit) received a boost in the second quarter as rents increased to meet market rates. However, the challenging operating environment, lower occupancy, the disposal of three properties and the slightly higher number of units outstanding moderated growth in distribution per unit (DPU), which rose 1.7 per cent in the quarter over the same period last year to 3.66 cents. The industrial Reit reported net property income of $114.7 million for the three months to Sept 30, up 7 per cent over last year. Gross revenue for the quarter came in 8.6 per cent higher at $164.8 million, mainly due to the recognition of rental income earned from a number of properties, including integrated mixed-use industrial property Aperia, which the Reit acquired in August for $458 million. The total amount available for distribution ticked up 1.6 per cent to $87.8 million. Property operating expenses rose about 10 per cent in the first half of the financial year over last year owing to changes in lease structure from the conversion of certain properties from single-tenanted to multi-tenanted, Ascendas Reit said yesterday. Net asset value per unit was $2.06 as at Sept 30, from $2.01 as at March 31. Separately, third-quarter DPU at Cambridge Industrial Trust (CIT) was almost unchanged at 1.25 cents. It was 1.251 cents in the same quarter last year. This was partly due to increasing costs in connection with the conversion of single-tenanted properties to multi-tenanted ones. In the light of the reduction in income available for distribution as a result of these conversions, $600,000 due to the Reit manager will be paid in units, the industrial Reit said yesterday. Net property income for the quarter ended Sept 30 increased 1.8 per cent over last year to $19.7 million, mainly due to completed asset enhancement efforts, while gross revenue rose 5 per cent to $25 million. The trust has three upgrading works ongoing, expected to be completed by early next year. Net asset value per unit was 68.4 cents as at Sept 30, from 69.5 cents as at Dec 31 last year. "While Singapore remains our core market, in line with our strategy, we will continue to selectively seek quality and yield-accretive properties in Australia, Japan and Malaysia to support and strengthen CIT's overall portfolio," said Mr Philip Levinson, the chief executive of the Reit manager. Sentiments in the industrial property market remain muted amid tepid economic growth, the two Reit managers said yesterday in their results announcements. "The business environment in Singapore remains challenging due to the ongoing economic restructuring, changing government regulations and policies on manpower and industrial land use and rising operating costs," said Ascendas Reit in its statement. In China, "demand for high-quality business and industrial space should be strong as the economy moves towards more sustainable growth driven by domestic consumption and private demand". With 12.8 per cent of vacant space in its portfolio, "there could be potential upside when some of the space is leased up, the speed of which will largely depend on prevailing market conditions". -By Chia Yan Min http://www.straitstimes.com/premium/money/story/property-income-ascendas-reit-and-cit-20141024 Cache Logistics Trust produces steady set of results for Q3 Source: Business Times / Companies & Markets Mainboard-listed Cache Logistics Trust posted a distribution per unit (DPU) of 2.140 Singapore cents for the third-quarter of 2014, up 0.7 per cent from a year ago. The distribution will be paid by Nov 26. Gross revenue rose slightly by 0.4 per cent in the third-quarter to S$20.87 million, compared with the same period last year. -By Claire Huang Cambridge Industrial Trust's Q3 DPU dips Source: Business Times / Companies & Markets The distribution per unit (DPU) for Cambridge Industrial Trust (CIT) in the third quarter ended Sept 30 dipped 0.1 per cent from 1.251 Singapore cents to 1.25 Singapore cents, even as its distributable income rose 2.5 per cent to S$15.8 million. The drop in DPU was due to two reasons. One was the increasing costs related to the conversion of its single- tenanted properties to multi-tenanted ones. The second reason was a slight dilution effect, owing to an increase in units in issue due to unitholders' subscription to its "distribution reinvestment plan", which issued units as part payment of distributions to unitholders. -By Lee Meixian http://www.businesstimes.com.sg/companies-markets/cambridge-industrial-trusts-q3-dpu-dips Property income up for Ascendas Reit and CIT Ascendas DPU up 1.7 per cent, while Cambridge posts little change in DPU Source: Straits Times / Companies & Markets ASCENDAS Real Estate Investment Trust (Reit) received a boost in the second quarter as rents increased to meet market rates. However, the challenging operating environment, lower occupancy, the disposal of three properties and the slightly higher number of units outstanding moderated growth in distribution per unit (DPU), which rose 1.7 per cent in the quarter over the same period last year to 3.66 cents. The industrial Reit reported net property income of $114.7 million for the three months to Sept 30, up 7 per cent over last year. Gross revenue for the quarter came in 8.6 per cent higher at $164.8 million, mainly due to the recognition of rental income earned from a number of properties, including integrated mixed-use industrial property Aperia, which the Reit acquired in August for $458 million. The total amount available for distribution ticked up 1.6 per cent to $87.8 million. Property operating expenses rose about 10 per cent in the first half of the financial year over last year owing to changes in lease structure from the conversion of certain properties from single-tenanted to multi-tenanted, Ascendas Reit said yesterday. Net asset value per unit was $2.06 as at Sept 30, from $2.01 as at March 31. Separately, third-quarter DPU at Cambridge Industrial Trust (CIT) was almost unchanged at 1.25 cents. It was 1.251 cents in the same quarter last year. This was partly due to increasing costs in connection with the conversion of single-tenanted properties to multi-tenanted ones. In the light of the reduction in income available for distribution as a result of these conversions, $600,000 due to the Reit manager will be paid in units, the industrial Reit said yesterday. Net property income for the quarter ended Sept 30 increased 1.8 per cent over last year to $19.7 million, mainly due to completed asset enhancement efforts, while gross revenue rose 5 per cent to $25 million. The trust has three upgrading works ongoing, expected to be completed by early next year. Net asset value per unit was 68.4 cents as at Sept 30, from 69.5 cents as at Dec 31 last year. "While Singapore remains our core market, in line with our strategy, we will continue to selectively seek quality and yield-accretive properties in Australia, Japan and Malaysia to support and strengthen CIT's overall portfolio," said Mr Philip Levinson, the chief executive of the Reit manager. Sentiments in the industrial property market remain muted amid tepid economic growth, the two Reit managers said yesterday in their results announcements. "The business environment in Singapore remains challenging due to the ongoing economic restructuring, changing government regulations and policies on manpower and industrial land use and rising operating costs," said Ascendas Reit in its statement. In China, "demand for high-quality business and industrial space should be strong as the economy moves towards more sustainable growth driven by domestic consumption and private demand". With 12.8 per cent of vacant space in its portfolio, "there could be potential upside when some of the space is leased up, the speed of which will largely depend on prevailing market conditions". -By Chia Yan Min http://www.straitstimes.com/premium/money/story/property-income-ascendas-reit-and-cit-20141024 FCT's fourth-quarter DPU falls 6.5% Source: Business Times / Companies & Markets Frasers Centrepoint Trust (FCT) posted a 17.5 per cent increase in income available for distribution for its fiscal fourth quarter as it reaped contributions from the newly acquired Changi City Point mall. The retail real estate investment trust (Reit) said income available for distribution rose to S$25.5 million over the three months to Sept 30, in line with its own forecast. All of that will be paid out to unitholders. The per-unit distribution of 2.785 Singapore cents, of which 2.711 cents is taxable and 0.074 cent is exempt, represents a 6.5 per cent decrease from the year-ago payout of 2.98 cents. -By Kenneth Lim http://www.businesstimes.com.sg/companies-markets/fcts-fourth-quarter-dpu-falls-65 Better rents, new mall lift Frasers Centrepoint Trust's results Source: Straits Times / Money FRASERS Centrepoint Trust's (FCT) latest results received a boost from the recently acquired Changi City Point and better rental rates for new and renewed leases. Net property income at the trust, which owns several malls across Singapore, jumped 14.9 per cent to $31.34 million for the fourth quarter. Gross revenue rose 16.1 per cent year on year to $46.68 million for the three months ended Sept 30. Distribution per unit (DPU) for the quarter was 2.785 cents - a 6.5 per cent fall as the DPU for the corresponding quarter last year included retained cash from earlier quarters. For the full year, net property income rose 5.8 per cent year on year to $118.1 million, while gross revenue rose 6.8 per cent to $168.75 million. DPU for the full year rose 2.4 per cent to 11.187 cents. The trust's property portfolio consists of Causeway Point, Northpoint, Anchorpoint, Yew Tee Point, Bedok Point - and Changi City Point, acquired on June 16. FCT also holds 31.17 per cent of units in Hektar Real Estate Investment Trust (Reit), a retail-focused Reit in Malaysia. Overall portfolio occupancy was 98.9 per cent as at Sept 30, higher than the 98.5 per cent occupancy as at June 30. During the quarter, 46 leases accounting for 53,484 sq ft, or 4.9 per cent of FCT's total net lettable area, were renewed, at an average rental 10.9 per cent higher than the preceding leases which had been typically contracted three years ago. "While concerns persist over manpower shortage and slowing retail sales growth, the rising average household income and low unemployment rate will continue to underpin non-discretionary expenditure, which will benefit FCT's well-located suburban malls," said Dr Chew Tuan Chiong, chief executive of FCT's manager Frasers Centrepoint Asset Management. Earnings per unit for the three months ended Sept 30 was 10.34 cents, down from 26.23 cents for the same period last year. Net asset value per unit was $1.85 at Sept 30, up from $1.77 a year back. FCT's units closed three cents higher at $1.94 yesterday. -By Rennie Whang Frasers Commercial Trust Source: Business Times / Companies & Markets Frasers Commercial Trust (FCOT) posted Q4 2014 revenue of S$32 million, up 10 per cent year-on-year, and distributable income of S$15 million, up 9 per cent, driven by better-than-expected reversionary income from Alexandra Technopark (ATP) post-expiry of the master lease, as well as higher rents and occupancies at China Square Central. This was mitigated by lower contribution from the Australian properties on the back of the weaker AUD. http://www.businesstimes.com.sg/companies-markets/brokers-take-6 Global Economy & Global Real Estate Scottish property market seen cooling ahead of new tax Source: Business Times / Real Estate http://www.businesstimes.com.sg/real-estate/scottish-property-market-seen-cooling-ahead-of-new-tax A place to hang your hat, and bridles US properties with proximity to horse show venues command a premiumSource: Business Times / Real Estate http://www.businesstimes.com.sg/real-estate/a-place-to-hang-your-hat-and-bridles Judge blocks San Francisco law on huge compensation to tenants He says it crosses line between legal government regulation and a money grab Source: Business Times / Real Estate Higher home prices boost PulteGroup's Q3 revenue Source: Business Times / Real Estate http://www.businesstimes.com.sg/real-estate/higher-home-prices-boost-pultegroups-q3-revenue London home price surge hits first-time buyers With little help likely from parents, they are forced to make huge downpayments, take out large mortgagesSource: Business Times / Real Estate http://www.businesstimes.com.sg/real-estate/london-home-price-surge-hits-first-time-buyers London Home Price Surge Outdoes Bank of Mom and Dad Source: Bloomberg / Luxury Even the Bank of Mom and Dad can’t keep pace with London’s spiraling property market. The average cost of a home in the city has climbed to more than 500,000 pounds ($804,000), forcing first-time buyers to make the largest down payments as a proportion of their income in at least a decade, according to an analysis of Council of Mortgage Lenders data by Neal Hudson, an associate director at Savills Plc. It’s also prompting them to take out larger mortgages, the CML said. At almost four times income, lending multiples for first-time buyers of average London homes are close to the limit for many banks after regulators last month ordered a crackdown on risky lending. That spells further financial pain for parents, who give their children about 2 billion pounds a year to help them get onto the property ladder, housing charity Shelter said in July 2013. “Young people in decent jobs are relying on their parents just to rent a home, never mind save for a mortgage deposit,” National Housing Federation Chief Executive Officer David Orr said by e-mail yesterday. “Without the support of their parents, an entire generation is at risk of missing out on home ownership. And for those who cannot rely on parental help, the situation is even more bleak.” London home values rose 20 percent in the 12 months through August, according to data compiled by the Office for National Statistics. That pushed the average price up to 514,000 pounds, about 46 percent more than before the financial crisis. Which is where the Bank of Mom and Dad comes in. Parents’ ContributionTwo-thirds of first-time purchasers in the U.K. now receive money from their parents when buying a home, double the level five years ago, according to the National Housing Federation, a lobby group for affordable homes. The average first-time buyer in London borrowed 212,000 pounds in the second quarter, or 3.9 times their income, compared with 3.7 times a year earlier, the Council of Mortgage Lenders said Aug. 27. They’re paying 62 percent of their after-tax salary to make the mortgage payments, the highest level in six years, according to Nationwide Building Society. That’s despite London home buyers having average down payments of 130 percent of their salary, the most in at least a decade, Hudson of Savills said. The extra savings, or money from their parents, was needed as high loan-to-value mortgages were withdrawn in the aftermath of the financial crisis, he said. Fewer ApprovalsIn Ireland, which suffered Western Europe’s worst property crash, down payments for first-time buyers have fallen from about 180 percent of income in 2008 to around 110 percent in 2013. It’s now considering limiting high loan to income mortgages. The prospect of higher interest rates in the U.K. is starting to deter buyers. Mortgage approvals for house purchases fell 10 percent in September from a year earlier, the British Bankers’ Association said today. Housing-market transactions may have dropped 9 percent from August, according to an Oct. 10 report by Acadata and LSL Property Services. London, which was first to emerge from the last U.K. property slump, is seeing the biggest drop in demand. Foxtons Group Plc, a property broker based in the U.K. capital, today said a “sharp” slowdown in the number of homes being sold in the city will cause its 2014 earnings to drop. That triggered a 20 percent decline in the company’s shares. ‘Attractive’ OptionMany London first-time buyers find themselves relying on the Bank of Mom and Dad, “who themselves will be feeling the pain of persistently low interest rates on savings they may have,” said Richard Sexton, a director at property appraiser e.surv. “Moving it from a low-interest account to invest in property is probably an attractive choice for many.” To increase lending, the government introduced the Help-to-Buy program, which enables home purchasers to take out a loan with a down payment of as little as 5 percent on properties valued at as much as 600,000 pounds. It also plans to make it easier for people aged 55 or older to access their pension fund to draw down a number of lump sums instead of just one, which may be used to boost payments to children for homes. Loan RestrictionsRegulators are moving in the opposite direction, introducing measures to limit lending. These include restrictions on high loan-to-income mortgages and a stipulation that lenders turn down credit to homebuyers who fail a stress test, which assumes an immediate 3 percentage-point increase in the benchmark interest rate of 0.5 percent. Lloyds Banking Group Plc, the U.K.’s biggest mortgage lender, and Royal Bank of Scotland Group Plc said this year they will limit customers to a maximum of four times income on mortgages of 500,000 pounds or more to damp house price inflation in London. About half of new mortgages in London are for four times income or more, according to an estimate by Julian Sinclair, chief investment officer at Talisman Global Asset Management Ltd. That “just shows how stretched new mortgage lending in London is, especially relative to incomes,” said Sinclair, whose company oversees 2.5 billion pounds of equities, credit and private lending. Parents are giving 23,000 pounds for each child’s first home purchase, Shelter said on Sept. 16. Almost 20 percent of parents used money that had originally been set aside for retirement or elderly care. Large DepositsIn London, “most prospective first-time buyers would be unable to afford the repayments on a 90 percent to 95 percent loan to value mortgage even with current low mortgage rates,” Hudson said. “The majority of first-time buyers that are able to purchase in London are those with a large deposit available.” Parts of the U.K. capital are already off-limits to most first-time buyers. About 56 percent of homes in London’s best districts, including Chelsea and Notting Hill, are now worth 1 million pounds or more, Marsh & Parsons Ltd. said in a report today. Investors were the biggest buyers of homes in prime neighborhoods, purchasing 26 percent of the properties, down from a record 31 percent in the previous quarter, the broker said. -By Neil Callanan http://www.bloomberg.com/news/2014-10-22/london-home-price-surge-outdoes-bank-of-mom-and-dad.html Foxtons warns earnings hurt by property slowdown Source: Business Times / Real Estate http://www.businesstimes.com.sg/real-estate/foxtons-warns-earnings-hurt-by-property-slowdown Foxtons Falls Most Since IPO on London Housing Slowdown Source: Bloomberg / Luxury Foxtons Group Plc (FOXT) fell the most since last year’s initial public offering after the real estate broker said a slump in London property deals will cause its full-year earnings to drop. Foxtons plunged as much as 20 percent in London. The shares were down 18 percent at 167.70 pence at 2:45 p.m., bringing the decline since its IPO in September 2013 to about 27 percent. The company has a market value of 474 million pounds ($760 million). A “sharp” slowdown in the number of homes being sold in London in the second half of this year is hurting its earnings, Foxtons said in a statement today. The chain of estate agents is focused on the U.K. capital and southeast England. “The deterioration in market conditions reflects the reduction in buyer demand, which seems to be driven by high asking prices, uncertainty ahead of the election and some impact from the mortgage market review,” Chris Millington, an analyst at Numis Securities Ltd., said in a note to clients today. He has a buy recommendation on the stock. Funds advised by BC Partners Ltd. sold more than half their stake in Foxtons on Sept. 10, according to a stock exchange filing. The funds still own about 7 percent of the broker, the Sept. 11 filing said. Adjusted earnings before interest, tax, depreciation and amortization for 2014 will be lower than the 49.6 million pounds that Foxtons reported last year, the company said in today’s statement. “The market is expected to continue to be constrained for some time due to political and economic uncertainty within the U.K. and Europe, tighter mortgage lending markets and mismatches between the price expectations of buyers and sellers,” Foxtons said. -By Neil Callanan Houston, Austin top US markets for property investors Source: Today Online / Business CHICAGO — Houston and Austin are the most attractive United States markets for buying and developing real estate, topping San Francisco, as growth potential in the Texas cities draws investors from popular coastal areas, a survey showed. The Northern California city ranked third, down from No 1 last year, showed a report released by PricewaterhouseCoopers and the Urban Land Institute. Denver and Dallas-Fort Worth rounded out the five markets offering the best prospects for investors next year, the poll of more than 1,400 people in the real estate business shows. Manhattan slipped out of the top 10 to rank 14th. Several non-coastal markets are drawing more property investors partly because they offer higher yields than places such as San Francisco and Manhattan, which led the recovery from the financial crisis. The smaller cities also are benefiting from employment growth and increasing numbers of people moving into urban centres, said Mr Mitch Roschelle, a partner and US real estate advisory practice leader at Pricewaterhouse Coopers in New York. “Real estate demand is there because jobs are there,” Mr Roschelle said in a telephone interview. “When jobs chase people, there’s a knock-on real estate benefit.” Houston, where an expanding energy industry is driving the economy, climbed to the top spot from No 2 last year in the survey. Austin, the state capital and the home of the University of Texas, ranked seventh last year. One big advantage in Austin is that employers are able to recruit people to move into the area as well as find workers locally, said Mr Tim Hendricks, a senior vice-president at Cousins Properties, a real estate investment trust. “You’ve got a low cost of living, you don’t have personal income tax,” said Mr Hendricks, who oversees the Austin market for Cousins. “It’s a Sun Belt city.” The US-based REIT is developing the 35,000sqm Colorado Tower, slated for completion by the end of the year. The office property is 95 per cent leased, said Mr Hendricks. The firm last week said it plans to begin work on a 16,233sqm building in the city. “We feel like there’s enough internal and external growth to justify starting (construction),” Mr Hendricks added. Survey respondents liked Denver’s popularity with millennials as well as its strong energy and technology employment, while lower living and business costs in Dallas-Fort Worth are bolstering the property market in that area, the survey showed. San Francisco and Manhattan are still important to investors, with the California city slipping from No 1 more because of growth opportunities elsewhere in the US than any identifiable flaw in the market, said the report. Manhattan’s decline in the survey may be due to its own success, which put many transactions out of reach for some domestic investors, showed the report.
PricewaterhouseCoopers said in the report: “Manhattan is expensive, but if you have the capital, survey respondents feel there may be good investment opportunities. Manhattan is clearly the most attractive destination for global and domestic capital in the US.” -By Bloomberg http://www.todayonline.com/business/property/houston-austin-top-us-markets-property-investors Amtrak Considers Selling Real Estate for Development Source: Bloomberg / Luxury Amtrak will consider selling or leasing real estate it owns in New York, Washington, Baltimore, Chicago and Philadelphia as part of a plan to raise money, the U.S. passenger rail operator’s chairman said. The intercity railroad needs funds to keep up with a system that has seen record ridership, Chairman Anthony Coscia said during a panel discussion at a Manhattan conference sponsored by the Urban Land Institute. Among the sites under review is Sunnyside Yard in western Queens, which is used by Amtrak, the Long Island Rail Road and New Jersey Transit. A sale or rental of rail yards would open up land for development in the five cities, following the examples of Hudson Yards in Manhattan and Atlantic Yards in downtown Brooklyn, both Long Island Rail Road staging areas. The projects account for about $25 billion of present and planned development in New York by Related Cos. and Forest City Ratner Cos. (FCE/A), respectively. “We own a ton of real estate assets, and they’re all in center-city areas in very active, vibrant places where development is a true opportunity,” Coscia said at the conference. Selling or leasing sites “would have the benefit of helping urban development in places where we have a very significant service area, but equally a financial value to Amtrak, because we could monetize real estate assets.” Amtrak is doing “due diligence” on the sites, and should be in a position to approach developers by March, he said. ‘Perfect Example’Coscia called Sunnyside Yard “a perfect example” of a site for a real estate project. The area, near the eastern bank of the East River, is part of a corridor stretching from such Brooklyn shoreline neighborhoods as Sunset Park and Williamsburg, to Long Island City in Queens, that have seen property values soar with an influx of young technology and media workers. Jeffrey Rosen, director of real estate for the Metropolitan Transportation Authority, said at an earlier conference session that officials of his agency in recent weeks to talk about possible development of the Sunnyside Yard. The authority operates the Long Island and Metro North railroads, and the New York City subway system. Coscia said Amtrak’s plan is an outgrowth of a 2011 restructuring, which he called “a very aggressive effort to plan the future needs of passenger rail.” Amtrak has been looking at building a tunnel across the Hudson River that would relieve a bottleneck plaguing commuters from New Jersey and take pressure off the existing tunnels, which are more than 100 years old and were damaged in Hurricane Sandy. The rail operator also has been exploring ways to implement a high-speed system similar to the intercity trains in Japan and Europe. -By David M. Levitt http://www.bloomberg.com/news/2014-10-23/amtrak-considers-selling-real-estate-for-development.html Hamptons Home Prices Jump as Wall Street Gains Fuel Sales Source: Bloomberg / Luxury A vacation house in New York’s Hamptons is getting more expensive as Wall Street bonuses and stock-market gains fuel a jump in luxury-home sales. The median sale price of a Hamptons home rose 13 percent in the third quarter from a year earlier to $865,000, appraiser Miller Samuel Inc. and brokerageDouglas Elliman Real Estate said today in a report. Purchases surged 31 percent to 701. Thirty-nine homes sold for $5 million or more, a 70 percent jump and the second-most in quarterly records dating to 2006. Hamptons buyers, largely employed in New York’s financial industry, completed purchases following the best year for Wall Street bonuses since the financial crisis. After sales of primary residences in Manhattan and Brooklyn reached records in 2013, home seekers turned their attention to vacation properties, said Jonathan Miller, president of Miller Samuel. The Hamptons, a group of villages and hamlets on the eastern end of Long Island, is traditionally a second-home market. “The city boomed in 2013,” Miller, a Bloomberg View contributor, said in an interview. “Record transactions almost every quarter. That probably triggered step two, which was buying a second home this year.” Wall Street employees got an average bonus of $164,530 last year, the most since 2007 and the third-highest on record, according to a March estimate by New York State Comptroller Thomas DiNapoli. The Standard & Poor’s 500 Index jumped 30 percent in 2013, the type of gain that spurs investors to “take some money out and buy hard assets,” said Judi Desiderio, president of Town & Country Real Estate. ‘Buckle In’“When the stock market was up 30 percent in December, I said at our holiday party, ‘Everybody buckle in,’” Desiderio said in an interview. The dollar value of Hamptons homes that changed hands in the third quarter more than doubled from a year earlier to $758.3 million, according to a Town & Country report. That’s the highest since the market peak in the second quarter of 2007, when sales topped $1 billion. There were 11 purchases of at least $10 million, compared with two a year earlier, Desiderio said. Whether the momentum continues through the next several quarters depends on “what happens on Wall Street for the rest of the year,” she said. “The over-$8 million market is umbilically connected to the Street,” she said. Most ExpensiveLuxury sales, the top 10 percent of the market, rose 19 percent in the Hamptons from last year’s third quarter, New York-based Miller Samuel and Douglas Elliman said. The median price of the 62 deals in the category was $6.5 million, a 46 percent jump. Listings of luxury properties dropped 28 percent from a year earlier to 218. Homes spent an average of 227 days on the market, up from 153 days in the third quarter of 2013. The third-quarter sales figures don’t include the East Hampton oceanfront home that Barry Rosenstein, founder of hedge-fund firm Jana Partners LLC, agreed to buy for $147 million in what would be the most expensive U.S. deal ever when completed. The purchase is tied up in litigation after the parent company of Corcoran Group sued the sellers, claiming they cut the brokerage out of the deal and an $8.8 million commission. The biggest transaction that closed in the quarter was the $37.7 million purchase of 16 Gin Lane in Southampton, according to Miller. The seller of the 10,000-square-foot (929-square-meter), seven-bedroom beachfront property cut the asking price to $48 million from an initial $98 million, according to listings website Streeteasy.com. Market VoidDemand in the area encouraged developer Jane Gol to raise prices at Barn & Vine, a 37-home community under construction in Bridgehampton, before opening the sales office in July, she said. Properties at the site, each of which has six bedrooms and comes with a concierge service for tasks such as filling the refrigerator and mowing the lawn, now range from $2.75 million to $4.5 million. The project fills a void in the market for homes priced at that level, said John Gomes, part of the team at Douglas Elliman that’s marketing the Barn & Vine homes. Gol is building eight houses at the site on speculation, meaning without committed buyers. Seven properties at the 50-acre (20-hectare) development are under contract, including a few that started out on spec, said Gol, president of Continental Pinewood Development Partners. “We feel very confident” that the others will be sold, she said. Land SalesLand prices also climbed in the third quarter, according to Corcoran Group, which released its own report on the Hamptons today. Parcels traded for a median of $710,000, up 2 percent from a year earlier. The dollar value of all land purchases jumped 92 percent to $198 million, the brokerage said. In the village of East Hampton, the median price of homes that sold in the quarter more than doubled to $3.45 million, Corcoran said. In the Bridgehampton and Sagaponack areas, the median rose 27 percent to $2.6 million. -By Oshrat Carmiel NYC Builders Spend Billions More on Homes in Luxury Boom Source: Bloomberg / Personal Finance New York City developers will spend 60 percent more on new homes this year, while adding only 22 percent more units, a sign of the market’s tilt toward luxury condominiums, the New York Building Congress said. Spending on new housing will reach $10.9 billion, the most in records dating to 1995 and $4.1 billion more than last year’s total, the trade group said in a report released today. The number of homes that money will build is 22,500, up from 18,400 in 2013. A record wave of ultra-luxury condo projects planned or under construction in Manhattan accounts for the “wide disparity” between costs and unit production, said Frank Sciame, chairman of the New York Building Foundation, the trade group’s philanthropic arm. “While any and all new housing stock is certainly welcome, the key to the city’s future success will rest in part on our ability to produce a wide range of housing at multiple price points,” Sciame, chief executive officer of F.J. Sciame Construction Co., said in a statement accompanying the report. Mayor Bill de Blasio took office in January, pledging to produce or preserve 200,000 units of affordable housing over the next 10 years. The building congress urged the mayor to form a partnership with developers to achieve that goal, in part through zoning changes, reviving stalled projects and streamlining regulations. The group cited several “super-tall towers” rising near the southern end of Central Park -- including 432 Park Ave., 225 West 57th St. and 220 Central Park South -- that are helping to skew the supply of homes toward the high end. Those projects are being built by CIM Group and Macklowe Properties, Extell Development Co. and Vornado Realty Trust, respectively. Even as construction spending increases, the number of homes produced still falls far short of the 30,000-plus built annually from 2005 to 2008, the building congress said. In 2008, the city gained 33,200 units at a cost of $5.9 billion. Developers are projected to build 23,250 units next year and 24,000 in 2016, while spending $11.7 billion in 2015 and $12.4 billion the year after, according to the study. -By David M. Levitt Hines Seeks $380 Million to Revamp Storied Venice Hotels Source: Bloomberg / Luxury Two Venice grand hotels at the site of the city’s 82-year-old film festival are part of a renovation plan led by U.S. investor Hines (HIRT), which plans to raise 300 million euros ($380 million) for the project. Hines Italia SGR, a venture between the Houston-based company and Italian investor Manfredi Catella, plans to redevelop and manage the Hotel Excelsior and Grand Hotel Des Bains on Venice Lido for the privately held Real Venice 1 fund, Catella, the company’s managing director, said in an interview. As part of the plan, the company will renovate a disused state-owned hospital next to the hotels for Italy’s sovereign wealth fund. The project shows how private companies can work with the state to generate income from the real estate it owns, according to Catella. Prime Minister Matteo Renzi is targeting disposals of about 500 million euros a year to help trim the country’s 2.2 trillion euros of debt. “The Lido is a good example of a location that includes several run-down public and private assets that require a broader vision and a public-private joint venture that can produce a compelling re-launch plan,” Catella said. The Lido beach project has the advantage of a storied past and its location in one of Italy’s most popular tourist destinations. Thomas Mann set his 1912 novella “Death in Venice” at the Hotel des Bains and Luchino Visconti’s 1971 movie of the book was filmed there. Famous GuestsThe Excelsior hosted luminaries from actor Errol Flynn to Winston Churchill, according to its website, and the first film festival in 1932 was staged on its terrace. Hines Italia is in the process of identifying both investment partners and operators for the project, according to Catella. Investors would become stakeholders in the development, receiving a share of its earnings. The joint venture Italia took over management of the Venice 1 fund with a plan to regenerate the area, according to a Feb. 21 statement. The company is working with Chris Choa of Aecom and Italian architects Vittorio Gregotti and Claudio Rebeschini to study how to refurbish the properties and prepare a plan that will be presented to investors by the end of 2014, Catella said. Selling vacant properties in Italy’s slumping commercial property market will be a challenge for the government because the assets often require “intense” management from local partners and significant investment from potential buyers to improve them, Catella said. The state hospital on the Lido will be developed as a residential and tourist property, according to Hines Italia. Divestment TargetsItaly owns as much as 420 billion euros of real estate, according to a September 2011 study cited on the treasury’s website. Agenzia del Demanio, the country’s public property agency, manages about 56 billion euros of assets. Renzi’s disposal targets continue the policy of his predecessor, Enrico Letta. Before selling occupied assets, the government should first carry out a detailed review of the space it needs for public administration so it can establish solid long-term sale-and-leaseback agreements that investors target, Catella said. Italian commercial property transactions dropped 7.3 percent in 2013 compared to the prior year, according to data compiled by the Economy Ministry. The data excludes real estate used for industry and services. Last month, the government passed several decrees under the title “Unlock Italy” to foster investment. It includes steps to transform the real estate investment trust industry to mirror changes made by Spain that encouraged investors including Blackstone LP, Goldman Sachs Group Inc. and Cerberus Capital Management LP, to purchase property assets in the country. ‘Positive Rules’The decrees will facilitate the real estate listed market, pushing Italy to move toward a more investor-friendly country with standards in line with other main markets in the EU,’’ Catella said. Hines Italia has advised more than 1 billion euros of property deals in the last 12 months, Catella said. In July, the company acted as an adviser to the Qatar Investment Authority on its purchase of Credit Suisse Group AG’s Milan headquarters for an undisclosed amount. It also bought Aviva Plc’s Milan headquarters from BlackRock Inc.’s Europe Property Fund III. -By Sharon Smyth Simon Property Bonus Reversal Still Triggers Investor Suit Source: Bloomberg / News Simon Property Group Inc. (SPG) can’t seem to win. Seeking to avoid investor litigation, the biggest U.S. owner of shopping malls earlier this year eliminated a $120 million stock award to Chief Executive Officer David Simon in favor of a performance-based bonus. Now the company and its directors have been sued anyway. The Delaware County Employees’ Retirement Fund claims the original award was nixed “only to avoid personal liability” and Simon may end up getting more than $150 million under the new plan. “The amended award failed to establish meaningful performance metrics and instead reflects the compensation committee’s decision to bury the bar in terms of performance goals for Simon,” the fund said in a complaint unsealed today in Delaware Chancery Court in Wilmington. The fund seeks the change rescinded. “This lawsuit is yet another attempt by the same plaintiffs’ lawyers to challenge the performance-based changes to Mr. Simon’s retention agreement supported by 97 percent of our shareholders,” Les Morris, a Simon Property spokesman, said in an e-mail. Simon, based in Indianapolis, has faced criticism over its CEO compensation with more than 70 percent of shares voting in 2012 to reject Simon’s initial pay package. To address the complaints, the directors changed the pay plan to cut the number of shares eligible to vest if Simon leaves this year. Suit TossedIn April, Judge Travis Laster ruled that the company won’t have to face a 2012 shareholder lawsuit brought by a Louisiana fund over the plan because Simon officials had agreed to change it. Directors changed course because they were faced with “an imminent adverse decision” from the court, the Delaware fund said in its complaint. Simon is the son of Melvin Simon, who helped form the company in 1960, the same year it opened its first shopping center in Bloomington, Indiana. The landlord went public in 1993. Simon’s compensation for 2013 was about $16 million, including salary, bonus and stock awards, according to the company’s proxy filing in April. “Mr. Simon is widely recognized as the leading CEO in the industry, and the company has delivered outstanding performance and outsized shareholder returns during his tenure,” Morris said in the e-mail. The case is Delaware County Employees’ Retirement Fund v. Bergstein, CA10249, Delaware Chancery Court (Wilmington). -By Sophia Pearson Societe Generale Agrees to Lease London Offices at Canary Wharf Source: Bloomberg / News Societe Generale SA (GLE) agreed to lease about 280,000 square feet (26,000 square meters) of space at an office tower in London’s Canary Wharf financial district before construction begins. France’s third-largest banking group by assets will occupy the bottom eight floors of the 26-story tower at 1 Bank Street being built by Canary Wharf Group Plc, the developer said in a statement today. Companies are signing more leases in unfinished buildings as central London faces a 13 million-square-foot shortfall of office space by 2018, according to broker Jones Lang LaSalle Inc. Financial and related professional service employment in London reached a record high of 703,900 in June, according to TheCityUK financial services lobby group. Societe Generale, based in Paris, has signed a 25-year lease for the Canary Wharf tower and will pay an annual rent of 47.50 pounds a square foot for the workspace. The deal includes three rent-free years from the summer of 2019 and options to lease or leave space in the tower. -By Neil Callanan |