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9th October 2014

Singapore Economy

Reverse mortgages still being studied: Khaw

The "complex" means of financing a property "has its risks" and needs to be studied carefully before being introduced as an additional option for the elderly, said Minister of National Development Khaw Boon Wan.

Source: Channel News Asia / Special Report

SINGAPORE: The Ministry of National Development (MND) is studying several countries with established reverse mortgage plans, which Mr Khaw Boon Wan called "a complex financial product".

The Minister of National Development was responding in Parliament on Wednesday (Oct 8) to a question from Nee Soon GRC MP Lee Bee Wah.

"We are studying several countries with established reverse mortgage plans, and to learn from their experiences," said Mr Khaw. "As the reverse mortgage is a complex financial product, we need to study it carefully, consult our people, before we decide whether to introduce it as an additional option for our seniors."

In March this year, the Government announced it has begun a "serious study" on reverse mortgages as another way for seniors to monetise their flat.

Mr Khaw added that the reverse mortgage system "has its risks", as the owner has to bear property risks, and that it does not require periodic cash payments so the loan balance grows in interest.

"If the market value of the property becomes less than the outstanding loan, the owner may have to sell the property to repay the loan," said Mr Khaw.

He also pointed out that NTUC Income had offered reverse mortgages for HDB flats in 2006, but has since stopped offering the product after only 24 households signed up. Mr Khaw added that the countries being studied are also finding their take-up rates to be quite low. 

"A reverse mortgage is a loan taken up by a property owner using his property as collateral. However, unlike a traditional mortgage, the borrower need not make cash repayment during the loan tenure. He only needs to repay the loan with accumulated interest upon termination or death, typically from the sales proceeds. A reverse mortgage thus allows the property owner to unlock some equity while retaining the financial upside from any appreciation in property value," said Mr Khaw.

- CNA/av

Reverse mortgage not a popular option, but will be further studied

Source: Straits Times / Singapore

AN ONGOING study into reverse mortgage schemes in other countries has shown that their take-up rates are low, Minister for National Development Khaw Boon Wan said yesterday.

Still, the Government will continue to study the scheme, which allows a property owner to convert some of the value of the home he owns into cash while still living in it, he added.

He did not name the countries under study but said: "I'm not giving up and we want to continue to explore."

He also said that "as the reverse mortgage is a complex financial product, we need to study it carefully, before we decide whether to introduce it as an additional option for our seniors."

Mr Khaw made the point in Parliament when replying to Ms Lee Bee Wah (Nee Soon GRC), who had asked for an update on the study. He noted that insurer NTUC Income previously offered such a scheme, but it did not take off. Only 24 households took it up between its launch in 2006 and it being scrapped in 2008.

While there are no regulations stopping financial institutions from offering the scheme to private property owners, the fact that they are not doing so indicates a lack of demand, he added.

Despite its unpopularity, the Government is still looking at whether there have been "changes in the business model" which may make it suitable for some.

Mr Zaqy Mohamad (Chua Chu Kang GRC) asked how the Government will help citizens differentiate between reverse mortgages, if these are offered, and the current Lease Buyback Scheme, that lets owners of HDB flats of up to three rooms sell part of their remaining lease back to the Government. This will be extended to four- room flats from next April.

"The key is informed decision-making, which therefore means very close handholding," said Mr Khaw. "If we were to offer such products, our staff have to be well-trained so that we can conduct individual counselling and go down to the specifics… because these are long-term commitments - 30 years, 40 years - down the road."

-By Walter Sim

HDB neighbourhood enhancement programmes 'significant': Khaw

National Development Minister Khaw Boon Wan says the Home Improvement Programme, Neighbourhood Renewal Programme and Selective Lift Replacement Programme will impose additional cost on the Government, which will set aside sufficient funds for them.

Source: Channel News Asia / Singapore

SINGAPORE: Efforts to upgrade and refresh estates are "significant" and will impose additional cost on the Government, National Development Minister Khaw Boon Wan said in Parliament on Wednesday (Oct 8).

The three programmes - the Home Improvement Programme (HIP), Neighbourhood Renewal Programme (NRP) and Selective Lift Replacement Programme (SLRP) - will further improve the living environment in existing Housing and Development Board (HDB) towns and will allow more residents to enjoy the benefits of upgrading, Mr Khaw said.

HDB expects to complete the selection of all eligible flats for HIP by 2018, he added. HIP was introduced in 2007, to help address common maintenance problems in older flats. The pace of its rollout is being being ramped up from 35,000 flats a year to 50,000 flats a year.

The programme is now almost at the midpoint of its target. Work has started on, or has been completed, in 145,000 flats out of 300,000 slated for improvement. Mr Khaw said he was confident that work on the HIP will be wrapped up during the next term of Government.

He is also prepared to up the pace of the NRP - which targets block and neighbourhood-level improvements - but added that this will depend on the town councils.

"NRP will also require the active engagement of residents in shaping their living environment. The pace of implementation will therefore depend on the extent of active local participation," he said. "The emphasis is consultation. You want the locals to own the project. So they meet, they discuss it. And I think that process of engagement - you cannot rush it." 

These programmes will impose additional cost on the Government, the minister pointed out.

"For example, the NRP cost cap will be raised from S$3,400 to S$4,700 per flat, to pay for the additional works. The SLRP will require the Government to fund 50 per cent of the lift replacement cost, up to a cap of S$125,000 per lift," he said. "We will set aside sufficient budget to fund all these enhancements."

Through this co-funding, the Government will be spending close to S$100 million to replace 750 old lifts under the SLRP. These lifts, which are not covered under the Lift Upgrading Programme, are mostly in the Choa Chu Kang and Pasir Ris housing estates.

Mr Khaw was responding to MP Zaqy Mohamad's question on whether the Ministry of National Development (MND) plans to increase the budget to enable more flats to qualify for the three programmes each year.


Commenting on stainless steel parts used in lift frames, MND Senior Minister of State Lee Yi Shyan said these parts must meet HDB's specifications.

"HDB requires contractors to submit a material testing report on the type of stainless steel grade used. It also conducts audit checks on the lift material used," he said, in response to a question raised in Parliament by MP Tin Pei Ling.

Mr Lee added that stainless steel parts need to be maintained regularly to preserve its corrosion resistance.

"HDB has shared with the Town Councils the need for a regular maintenance regime for the lifts and its stainless steel parts. HDB has also conducted demonstrations to the Town Councils and their maintenance contractors," he said. "Many of the lifts islandwide where Town Councils have regular maintenance regimes are in good condition."

- CNA/kk/xy

Singapore Real Estate

S'pore fails to place in property ranking

Softening market bumps Republic off list of top 20 cities for global real estate investment

Source: Straits Times / Money

SINGAPORE, with its softening property market, has fallen out of a ranking of the top 20 cities in terms of the volume of global real estate investment.

The Republic, along with Toronto, Moscow and Seoul, were knocked out of the top 20 by fast-growing Beijing, Shanghai, Miami and Stockholm.

However, the report released on Tuesday by property consultancy Cushman & Wakefield noted that "most of these moves are relatively small".

The global property investment market saw volumes grow 17.2 per cent to US$788 billion (S$1 trillion) in the year to June this year, with New York taking the top spot.

Singapore was placed 14th in last year's report, but as it fell out of the top 20, no ranking was given in the latest report.

Mr Getty Goh, director of property research firm Ascendant Assets, said: "A possible reason why foreign investors are keeping away is they feel that prices have started to come down.

"Some of these foreign investors may expect the lacklustre market conditions to persist for some time, hence they are not rushing in."

The report added that as a core gateway market, Singapore is one of the cities that will "deliver steady growth thanks to constrained pipelines and firming demand". As with other markets - Tokyo, London, Berlin, New York and San Francisco - Singapore has strong potential to grow, but more risk-taking by investors is needed to boost returns.

Singapore scored strongly in the report in terms of investments across five sectors: office, multi-family, hotel, industrial and retail.

The report noted that investor demand in Asia remains strong and liquidity is high, owing to rising real estate allocations from pension funds and insurers.

However, investors are holding back because of economic uncertainty and tighter lending conditions in some markets.

For instance, Singapore's stricter lending ruleshave been successful in cooling the market.

Mr Goh said such regulations have led to foreign investors "finding it onerous to invest in Singapore properties".

The report also looked at the strength of cities as hubs.

It said "Hong Kong and Singapore continue to vie as regional capitals". Singapore benefits from strong infrastructure, greater independence and demand from non-Asian businesses seeking a regional base, it said, while Hong Kong is growing as China's face to the world.

In terms of market power, Singapore ranked high in areas such as tourism appeal, and as technology or global business hubs.

For instance, the Republic placed second in the number of tourist arrivals, while Hong Kong was first. Singapore placed seventh as a technology hub, while Hong Kong placed 14th.

The report was positive about Singapore for the next year, noting that office investments here will be favoured.

"Singapore meanwhile will continue to develop as the key gateway market to South-east Asia and, with tight supply, rising demand will deliver attractive growth," it added.

-By Rachel Boon

Prime Thomson site draws 18 bids

Highest number for private residential plot in over a year; top bid is $173.6m

Source: Straits Times / Money

A PRIME site in the Thomson area has drawn a crowded field of 18 bids - the highest number for a private residential plot in more than a year.

Market watchers say high demand for homes in the area probably sparked the fierce tussle for the 113,051 sq ft parcel in Lorong Puntong, off Sin Ming Avenue.

The high number of bids was no surprise given the relatively small plot size which meant offers under $200 million, said CBRE research head Desmond Sim. "It also presents a good opportunity for a new player to put in a competitive bid to enter the market."

The last time a private residential site saw such fierce competition was in June last year at Faber Walk, which also drew 18 bids. That site is being developed into the Waterfront@Faber project.

Chinese and Hong Kong developers joined Singapore firms like Sing Holdings and Allgreen Properties in the battle for the Thomson site, with China-based Nanshan Group emerging on top.

It tendered $173.57 million or $731.10 per square foot per plot ratio (psf ppr), edging out SL Capital Ventures ($161.89 million or $681.90 psf ppr) and Sing Holdings and Maxdin (joint bid of $161.80 million or $681.53 psf ppr).

Last month, Nanshan signed a $270 million agreement to buy the former Midlink Plaza in Middle Road, which it will develop into a hotel.

The companyhas taken part in four government land sales tenders this year - three executive condominium sites and one mixed-use development plot, said SLP International research head Nicholas Mak.

The estimated breakeven price for a new condominium on the Thomson site could be from $1,240 to $1,310 psf, he added.

The Nanshan Group's bid of $731.10 psf ppr pips the $719.9 psf ppr paid by Singapore Land and UOL Group for the nearby Thomson Three site in August 2012, said Mr Ong Teck Hui, JLL national research director.

Mr Lee Liat Yeang, real estate lawyer at Rodyk & Davidson, told The Straits Times: "Developers probably saw the success of Thomson Three sales and concluded there was pent-up demand for Thomson area properties."

Thomson Three had sold 413 of 445 units at an average price of about $1,355 psf as at Aug 31.

Consultants said the new site's proximity to Ai Tong School and the proposed Bright Hill station on the Thomson Line were attractions while sites in mature private estates are hard to come by.

"While the residential market is slowing and recent tenders are seeing fewer bidders and more cautious bidding, developers are still keen on attractive sites and would try to secure them," said Mr Ong of JLL.

-By Rennie Whang

Lorong Puntong residential site attracts 18 bids

Source: Channel News Asia / Business

SINGAPORE: A residential land site at Lorong Puntong attracted 18 bids at the close of a tender by the Urban Redevelopment Authority (URA) on Wednesday (Oct 8).

The highest bid of S$173.57 million was submitted by Nanshan Group Singapore Co. Pte Ltd. This works out to about S$731.10 per square foot per plot ratio (psf ppr).

The top bid is about 7 per cent higher than the second-highest bid of S$161.9 million by SL Capital Ventures. Meanwhile, the lowest bid of S$108 million was submitted by Tee Vista Pte. Ltd.

The 99-year lease site near the Thomson area has a land size of 10,502.8 square metres.

Head of CBRE Research Mr Desmond Sim said in a statement that the high number of bidders is because the plot is relatively small and will command a smaller quantum of below S$200 million. "This gives a good opportunity for new players to put in a competitive bid to enter the market," he added.

Analysts expect the developer to build about 280 units on the site.

URA said the award of the tender will be announced at a later date.  

- CNA/dl

Surprise number of bids for Upper Thomson housing site

Source: Today Online / Business

SINGAPORE — Despite the sluggish property market, a private residential site near Upper Thomson Road has attracted the most bids since the introduction of the Total Debt Servicing Ratio (TDSR) in June last year, receiving a top offer that exceeded expectations.

The 113,051 sqf parcel at Lorong Puntong received 18 bids at the close of the tender yesterday, with the top offer of S$173.6 million, or S$731 per square foot per plot ratio (psfppr), placed by China-based Nanshan Group Singapore, the Urban Redevelopment Authority (URA) said yesterday.

Nanshan’s offer was 7 per cent above the second-highest bid of S$161.9 million, or S$682 psfppr, by SL Capital Ventures and 61 per cent above the lowest bid of S$108 million, or S$455 psfppr, by Tee Vista.

Property analysts said the strong interest in the site, under the Confirmed List of the Government Land Sales programme for the second half of this year, showed that developers are still hungry for land — albeit more selectively so. The parcel’s relatively small size also added to its attractiveness as smaller developers would find the price tag palatable.

“This plot is relatively small and thus commands a smaller quantum of below S$200 million … The bidders were probably also encouraged by the good attributes of the site — it is located in a mature estate and supported by a comprehensive network of amenities and renowned schools,” said Mr Desmond Sim, head of CBRE Research.

“Previous projects in the vicinity have sold well, further boosting developers’ confidence in the plot,” he added.

The 99-year leasehold site, with a maximum gross floor area of 237,409 sqf, is situated between two MRT stations currently under construction: Bright Hill and Upper Thomson. It is also near Ai Tong School — which is also currently under construction — Bishan Park Secondary School and Peirce Secondary School.

The site can potentially yield 280 units.

SLP International Property Consultants executive director Nicholas Mak said Nanshan Group appeared very confident of the site, noting that its bid surpassed the S$720 psfppr that UOL and Singapore Land had paid in 2012 for a nearby plot. “Based on the land price, the estimated break-even price for a new condominium to be developed on this (Lorong Puntong) site could vary from S$1,240 psf to S$1,310 psf. The Nanshan Group could be very confident of this site due to its attractiveness … Furthermore, it may plan to build an iconic development as its maiden condominium project in Singapore,” he said.

Nanshan Group hails from Shandong, China, and has been actively participating in Government Land Sales tenders this year.

Century 21 chief executive Ku Swee Yong said Nanshan’s offer could have been part of a strategy to “overbid” in order to secure a win and gain a foothold in Singapore. “That could explain the gap between the top bid and the rest,” he said.

Mr Ku added that the selling price for a 750 sqf unit might be between S$1,200 and S$1,400 psf.

-By Lee Yen Nee

Abysmal sales deal body blow to agencies

More than 60 exit property business in 2013; over half of the remainder expected to sink into the red

Source: Business Times

Heartland restaurant space in Jurong for sale

The space enjoys high traffic from Jurong Gateway and Jurong Lake, and keen interest is expected in this tender

Source: Business Times / Real Estate

Boon Lay Raja goes on sale for $15m

Partners put old-time foodie favourite on market due to lack of successors

Source: Straits Times / Singapore

THE owners of the popular Boon Lay Raja Restaurant in Jurong East are looking to sell the space for around $15 million and enjoy a well-earned retirement.

The four friends who started the eatery in 1979 are in their late 60s and 70s and want to put their feet up.

"I am getting on in years and my partners and I all want to take a break," said managing director Tan Kweng Nam in Mandarin.

Mr Tan, 73, told The Straits Times last night that business is doing well.

Sales reaches $30,000 on a good day but, with no successors in sight, he said this was an opportune time to look ahead.

"The venue is in a good location, which makes the decision for us to sell the restaurant an easier one," he said.

Mr Tan hopes a new owner will run the business. Much, however, depends on the eventual outcome of the bid.

He has also pledged to keep running the restaurant until Chinese New Year so customers will not be disappointed.

The 11,248 sq ft premises in Block 135, Jurong Gateway Road has 69 years left on its lease from the Housing and Development Board (HDB).

Its reserve price of $15 million works out to $1,334 psf. The tender closes at 3pm on Nov 6.

Real estate agency Savills Singapore said the space is zoned for restaurant purposes, but that the HDB may allow a change of use.

"This is a rare opportunity for restaurateurs facing escalating rentals to operate on their own premises, and establish or consolidate their presence in this highly sought-after location," said Mr Derrick Tan, Savills Singapore's associate director of investment sales, in a statement.

Boon Lay Raja is a proudly old-fashioned Chinese restaurant that has long been a popular venue for wedding dinners.

Its dining room seats up to 600 people and guests are served traditional fare such as dim sum, shark's fin soup, and braised pork trotters.

Some long-time patrons dined there last night after learning that the restaurant was for sale.

Mrs Kai Tan, 29, who has been eating at Boon Lay Raja since she was a child, said: "I thought, what if the owner is not able to find a buyer and decides to shut down the business? Then I would not be able to eat this food again."

Her husband, Mr Tan Wei Jie, 32, said most of their family dinners are held at the restaurant, which they like as it serves good quality food at a reasonable price.

"We pay $100 for a dinner for five adults," he said. "We have soup, a poultry dish, vegetables and tofu. It is simple food, but it tastes good and that's why we keep coming back."

Other patrons described the food as having "a flavour of home".

Engineer Eileen Yap, 31, who was at the restaurant with two colleagues, said: "The steamed fish and steamed prawns have the flavours of home-cooked food. There is something about their freshness and simple cooking style."

Patrons listed spring chicken, shark's fin soup and mango roasted duck as must-try dishes.

Engineer Tan Seu Guan, 37, said: "My friends and I always order the spring chicken. But it is not just the food that brings us back; this place feels like home."

-By Mok Fei Fei & Amelia Tan

Boon Lay Raja Restaurant may close next year

Source: Channel News Asia / Business

SINGAPORE: The Boon Lay Raja Restaurant, a popular Chinese dining establishment that has been operating for more than 20 years, will close next year if a buyer for its Jurong premises is found. 

Marketing agency Savills Singapore, which is managing the sale of the 11,248 square foot space at Jurong Gateway Road, said the vendors "would have preferred to continue operating if not for their impending retirement".

"This is a rare opportunity for restaurateurs facing escalating rentals to operate on their own premise, and establish or consolidate their presence in this highly sought-after location," Savills said in a media statement on Wednesday (Oct 8).

Boon Lay Raja Restaurant is located about 200 metres from Jurong East MRT station and bus interchange, and is near the Jurong Regional Library and JCube shopping mall.

Savills said the vendors are looking at a reserve price of S$15 million, or S$1,334 per square foot, for the restaurant space, which has a remaining lease of 69 years. The tender closes on Nov 6 at 3pm.

- CNA/xy

Samsung Hub's 19th floor sold at S$3,175 psf

Source: Business Times / Real Estate

At least two sizeable strata office deals have been done lately in the Raffles Place area: Level 19 of Samsung Hub, and half of the 11th floor at Prudential Tower. The 19th floor of Samsung Hub along Church Street has been sold for nearly S$41.7 million or S$3,175 per square foot (psf) based on the strata area of 13,121 sq ft. The buyer is said to be a foreign party purchasing the space purely as an investment. Market watchers say that might have resulted in the psf price being lower than the S$3,225 psf fetched for the whole of the 18th floor spanning 13,132 sq ft, sold last month.

Cost-cutting, fatigue hurt workplace safety: NGO

Heavy workloads, unreasonable productivity targets other key factors affecting work safety in construction, says report

Source: Today Online / Singapore

SINGAPORE — Fatigued from a series of 24-hour shifts that were followed by a day of rest, construction worker Tao (not his real name) unclipped his harness to descend from scaffolding with fewer rungs than were needed as a result of his employer’s cost-cutting measures. He could not find a comfortable footing and fell 3m, landing on his back last March.

The scaffolding at another injured worker’s worksite did not even have a rung to clip his safety harness to and its 60cm planks were narrower than the normal 1m width. The worker said an unqualified colleague operating a forklift hit the scaffolding, causing him to fall 2m to the ground and lose consciousness last December. When the worker returned the next morning to take a photograph of the scaffolding, it had been reconstructed according to safety regulations overnight.

SINGAPORE — Fatigued from a series of 24-hour shifts that were followed by a day of rest, construction worker Tao (not his real name) unclipped his harness to descend from scaffolding with fewer rungs than were needed as a result of his employer’s cost-cutting measures. He could not find a comfortable footing and fell 3m, landing on his back last March.

The scaffolding at another injured worker’s worksite did not even have a rung to clip his safety harness to and its 60cm planks were narrower than the normal 1m width. The worker said an unqualified colleague operating a forklift hit the scaffolding, causing him to fall 2m to the ground and lose consciousness last December. When the worker returned the next morning to take a photograph of the scaffolding, it had been reconstructed according to safety regulations overnight.

-By Neo Chia Chin

1 dead, 2 injured in construction site accident on Pioneer Turn

Source: Today Online / Singapore

A construction worker was killed yesterday after a platform collapsed at a worksite on Pioneer Turn, causing the Chinese national to fall, along with the platform, from the third storey. Two other workers who had also been on the platform were injured and taken to a hospital.

The Singapore Civil Defence Force (SCDF) was alerted to the accident at M+W Singapore’s five-storey light industrial development site at around 9.40am. A fire engine, a Red Rhino, a fire bike and two ambulances were sent to the site.

Officers from the Ministry of Manpower’s (MOM) Occupational Safety and Health Inspectorate responded immediately and were on-site to investigate, a spokesperson said. “Preliminary findings have indicated that three workers were on a platform installed over a stairwell when the platform collapsed, causing the workers to fall with the platform from the third storey.”

The Chinese worker, who was in his 20s, was pronounced dead by paramedics at the scene. The other two workers, a Chinese national and a Bangladeshi, were taken to the National University Hospital.

The MOM has instructed all work at the site to stop. Investigations are ongoing.

-By Elgin Chong

Guide to help local firms, landlords negotiate tenancies

Rising rents at renewal prompt SBF initiative to ensure fairer deals

Source: Straits Times / Money

ONE of the country's leading business groups is drafting a framework to help local firms negotiate fairer tenancy agreements as a way to offset the crippling rent rises many face when they renew leases.

The framework being drawn up by the Singapore Business Federation (SBF) will spell out the general elements of a fair agreement, including a clear basis for rent reviews and

more transparency of tenancy terms.

It is intended to be a voluntary guide but both commercial landlords and government agencies have been engaged to be "pioneering adapters" of it, said SBF chief operating officer Victor Tay yesterday.

The framework will also help tenants negotiate fairer gross turnover schemes.

These allow landlords to collect a percentage of a tenant's gross turnover on top of a base rent and are used by many mall owners.

The SBF will also publish a database of commercial rents by the end of the year with the help of government agencies as a move to increase transparency.

Many small and medium-sized enterprises (SMEs) have long complained about the toll taken on their businesses by ever-rising rents.

Mr Low Cheong Kee, the founder of local hardware chain Home-Fix, is often confronted with double-digit rent increases when he renews shop leases every three years or so.

He is not alone: Rising rents are a huge drag for many SMEs in the retail and food sectors. Rents can comprise 30 per cent of total costs among many retailers, said the SBF.

Mr Low said he backs the SBF initiative because "tenants are in a way being held hostage" to rent increases when their lease is up and they have already "committed to renovation, or taken two to three years of tenancy to build up a relationship with customers".

But Mr Jimmy Fong, chief executive of Apple reseller chain Epicentre, feels the framework lacks bite as it will not be mandatory.

"Landlords are big boys. You take it or leave it. And if most contracts are going to be the same, how can you work out a deal?" he added.

Mr Teo Ser Luck, Minister of State for Trade and Industry, commended the SBF's initiative when he spoke to more than 300 participants at the annual SME Convention at Suntec convention centre yesterday.

"We want to make sure that... tenants aren't always being cornered and landlords aren't always having the upper hand," he said.

Mr Teo later told the media that "the SBF is also not over-protective of the tenants, so it's fair on both sides".

-By Marissa Lee

Game changers

Groundbreaking technologies are helping to boost productivity in Singapore's built-environment sector. 

Source: Business Times / Real Estate

Imagine a room complete with internal finishes, fixtures and fittings that had been built from scratch in a factory, and then transported to a construction site for installation, just like a Lego block. This advanced form of building, known as Prefabricated Pre-finished Volumetric Construction (PPVC), is just one of several emerging technologies changing the face of the built-environment sector and boosting the productivity of industry players.

A productive gathering

Source: Business Times / Real Estate

Singapore Construction Productivity Week (SCPW) 2014 is an annual event for the built-environment sector to share knowledge on construction productivity and to learn from best practices and new technologies. Hosted by the Building and Construction Authority (BCA), SCPW will be held from Oct 13 to 16, during the National Productivity Month, at Singapore Expo and Max Atria.

Views, Reviews & Forum

Estate agents, developers must provide accurate info

Source: Straits Times / Forum Letters

MR KEVIN Quek Swee Poh expressed concerns about the information in marketing brochures for commercial properties ("Area of concern in marketing commercial properties"; Oct 1).

The Council for Estate Agencies (CEA) regulates the conduct of estate agents and salespersons in the real estate industry. They are required under the Estate Agents Act to ensure that materials that advertise or promote a property accurately describe it. The claims in the advertisements should not be inaccurate, false or misleading.

These requirements are applicable to all forms of advertising, including brochures, for industrial, commercial and residential properties marketed in Singapore.

When estate agents and salespersons are engaged by property developers to market their properties, they are advised by the developers on material information about the property, including its size.

Estate agents, developers and building owners are responsible for providing accurate information when marketing the properties to prospective buyers. If the marketing brochures are provided by the developers, estate agents must work with them to ensure that accurate information is given to consumers.

Under the CEA's Code of Ethics and Professional Client Care, if an estate agent or salesperson is found to have provided misleading information when marketing properties, he could face disciplinary action. Any similar complaint about the developer would be referred to the relevant authority.

We thank Mr Quek for raising his concern. We have contacted him for more information and are currently looking into the matter.

-By Yeap Soon Teck

Deputy Director (Licensing)

Council for Estate Agencies

Global Economy & Global Real Estate

Global Yellow Pages inks first property deal

Source: Business Times

Global Yellow Pages, in its first-ever deal in the real estate sector, is planning to buy a shopping mall and its accompanying land in New Zealand. This, however, will be done in a roundabout way, through an intermediate firm controlled by Global Yellow Pages' CEO Stanley Tan and director Pang Yoke Min.

US mortgage applications rise on more refinancing

Source: Business Times

China's US property trophy hunt begins

Source: Business Times

SouFun shares rise on investment in broker

Source: Business Times

TPG Capital unit invests US$120m in self-storage firm

Source: Business Times

Irish central bank to cap loans to home buyers

Source: Business Times

Deutsche Bank explores sale of property loans

Source: Business Times

Calpers boosting real estate investment

Source: Business Times

Homebuilders add on freebies as once-booming US markets cool

Source: Business Times

London House Prices Fall as Property-Market Outlook Deteriorates

Source: Bloomberg / Luxury

London house prices fell for the first time in almost four years and the outlook for the city’s property market is fading, according to the Royal Institution of Chartered Surveyors.

RICS said its house-price index for the capital dropped below zero in September for the first time since January 2011, ending a record period of growth. A national index fell to 30 from 39, the lowest in more than a year.

The report, based on a monthly poll of surveyors, also showed that London may lag behind the U.K. market over the next year with price growth of 1 percent. Respondents expect the average national price to rise 2.1 percent in that period.

As Britain’s property market cools, London is being hit hardest by measures aimed at curbing reckless mortgage lending and the threat of a tax on the most expensive properties. A surge in values in the capital over the past year has stretched affordability and put potential buyers on edge.

“The growing sense of caution seems to have taken a particular toll on the London market,” RICS said.

The survey also showed that new buyer demand nationally slipped for a third month in September and was down for a fifth month in London.

-By Fergal O’Brien

Asian Property Deal Boom Urgers Buyers to Malls

Source: Bloomberg / News

In Asia’s real estate market, dealmaking just hit a record. More is coming.

Property deals in China and its Asian neighbors reached a record $34 billion last quarter, a turnaround from the global financial crisis. That tally includes $10 billion for a single site in Seoul’s Gangnam district by a Hyundai Motor Co.-led group and Singapore’s Frasers Centrepoint Ltd. (FCL)’s bid of more than $3 billion, including debt, for control of Australand Property Group. (ALZ)

CapitaRetail China Trust (CRCT), a Singapore-listed company with 10 malls in eastern China, is among the next possible targets as it trades below the $1.7 billion estimated value of its assets, said Standard Chartered Plc. Saizen REIT (SZREIT), another Singapore-listed trust that owns about 5,500 apartments in Japan, is also undervalued by that measure. For a global buyout firm or Hong Kong developer, buying a Chinese mall would be a way to profit as the country’s economy becomes more consumer-centric, said CBRE Inc.

“Being in retail is a natural way to frontrun that trend,” Marc Giuffrida, CBRE’s executive director for global capital markets in Asia, said by phone from Singapore. “We see very strong demand in all the key gateway markets for good-quality real estate.”

Representatives for CapitaRetail and the company that manages Saizen, Singapore-based Japan Residential Assets Manager Ltd., declined to comment on the prospects for any takeover.

Record Deals

Last quarter’s record announced deals for real-estate companies and investment trusts in Asia pushed this year’s total to $82 billion, according to data compiled by Bloomberg. Beijing, Tokyo and Shanghai were the top destinations for commercial property investments in Asia in the first half of 2014, Cushman & Wakefield Inc. said in a Sept. 18 report. China alone attracted 73 percent of the total.

“Asian consumers have continued to expand spending, creating vast incentives for continued investments,” Priyaranjan Kumar, Singapore-based regional director of capital markets at property-services firm Cushman & Wakefield, said by phone.

Cities across Greater China are the most attractive Asia Pacific locations for international retailers, Jones Lang LaSalle Inc. said in a June report. Economists estimate retail sales will rise at least 12 percent in each of the next three years.

CapitaRetail’s Draw

CapitaRetail’s properties draw 73 million shoppers a year, more than three times the population of Beijing, the company’s website says. Almost every meter of CapitaRetail’s mall floorspace is leased to tenants including Wal-Mart Stores Inc. and fast-food chain KFC.

“Definitely, they could be a target,” said Desmond Chua, a market analyst at CMC Markets Singapore Pte. “It’s an appealing vehicle” to tap Chinese consumers, he said.

Earnings before interest, taxes, depreciation and amortization at CapitaRetail will jump 52 percent to about S$147 million in 2016 from last year, according to analysts’ estimates compiled by Bloomberg. Rental revenue at CapitaMall Grand Canyon in Beijing, the company’s biggest shopping center, may jump 26 percent between 2014 and 2016 as tenants sign up for more expensive leases, Standard Chartered said.

Shares in CapitaRetail have climbed 18 percent this year and traded 1.6 percent higher at S$1.57 at 10:43 a.m. in Singapore trading, giving the company a stock market value of S$1.3 billion. That compares with Standard Chartered’s estimate of S$2.13 billion, or S$2.58 a share, for CapitaRetail’s revalued net asset value.

Potential acquirers include private-equity firms and real-estate developers, CBRE said.CapitaLand Ltd. (CAPL), CapitaRetail’s largest shareholder with a 19 percent stake, is also a possible buyer, according to Standard Chartered.

Saizen Appeal

Saizen REIT, which owns apartments in cities including Tokyo and Sapporo, also may attract suitors because it’s so undervalued, said Regina Lim, an analyst at Standard Chartered in Singapore. About 91 percent of Saizen’s units are occupied, its website says.

Saizen shares have fallen 2.7 percent this year traded 0.6 percent higher at 90 Singapore cents today, compared with its net asset value of S$1.22 a share at the end of June.

Real estate prices across Japan have risen about 20 percent since Prime Minister Shinzo Abe took office about two years ago, according to an estimate by Deutsche Asset & Wealth Management. Property investment in Japan rose 70 percent to 4.6 trillion yen ($43 billion), the highest level since March 2008, in the 12 months ended March, according to the asset manager.

Residential prices in Japan’s three largest metropolitan areas increased for the first time in six years, the government said in a report last month.


Still, property owners and developers in Japan face the prospect of waning demand from a population that has shrunk every year since 2008, according to data from the International Monetary Fund. More than one in four people in Japan are older than 65, the highest proportion in the world, Bloomberg data show.

And in China, some investors are concerned economic expansion will slow. Growth will probably be 7.3 percent this year, according to a Bloomberg survey of economists last month. It would be the slowest pace since 1990.

That may not prevent bids for undervalued property companies such as CapitaRetail and Saizen.

“We could see more deals,” said Terence Wong, head of research at DMG & Partners Securities Pte in Singapore.

-By Angus Whitley, Pooja Thakur and Nichola Saminather

Helmsley Building Put Up for Sale, May Fetch $1.1 Billion

Source: Bloomberg / News

The Helmsley Building, a landmark office tower that straddles Park Avenue just north of Grand Central Terminal in New York City, is up for sale and may fetch more than $1.1 billion.

The 1.4 million-square-foot (130,000-square-meter) skyscraper is being put on the market by Invesco Ltd. (IVZ) and Monday Properties, said Darcy Stacom, vice chairman at CBRE Group Inc. (CBG), which is representing the owners. South Korea’s National Pension Service also has a stake in the building, according to Real Capital Analytics Inc., a company that tracks property sales.

The tower enters a market that’s on track to break a dollar-volume record set when real estate values peaked in 2007. Other New York office towers for sale include Blackstone Group LP (BX)’s 1095 Avenue of the Americas, which may command more than $2 billion. China’s Anbang Insurance Group Co. agreed this week to buy the Waldorf Astoria hotel for $1.95 billion.

The Helmsley Building “is a great below-replacement-cost play, a great value play at the most irreplaceable location you can get,” Stacom said in a telephone interview.

The tower may sell for at least $800 a square foot, which would put its value at more than $1.1 billion, said a person with knowledge of the offering who asked not to be identified because the price expectations are private. In 2011, when Invesco and National Pension bought their interests in the building from a joint venture that included Goldman Sachs Group Inc., GE Capital and Lehman Brothers Holdings Inc., the property was valued at $635 a square foot, Real Capital data show.

Attention Expected

“There are not many trophy Midtown assets on the market right now for sale, so there will be a lot of attention directed toward this one,” said Jonathan Mazur, director of capital-markets research for commercial-property brokerage Newmark Grubb Knight Frank.

High-quality Manhattan properties are prized by buyers seeking safe investments and the potential for rising values, Mazur said. The market has been of particular interest to Chinese companies and other foreign buyers. Norway’s Norges Bank Investment Management last month agreed to buy stakes in three Boston Properties Inc. (BXP) office buildings, including 601 Lexington Ave. in New York, formerly Citigroup Center.

Almost $200 million of capital improvements have been made at the Helmsley Building in the 16 years that Monday Properties has been an investor in the property, Chief Executive Officer Anthony Westreich said.

Cash Flow

The tower, at 230 Park Ave., is about 94 percent occupied, according to a CoStar Group Inc., a research company that tracks office leasing. Tenants include ING Groep NV (INGA), Clarion Partners LLC and Tokio Marine Holdings Inc. (8766)

Many of the building’s leases were signed from 2009 to 2012, when rents were recovering after New York’s securities firms lost value during the financial crisis. A new owner will have the chance to negotiate new agreements in the next 10 years, according to Westreich.

“The building’s rents are approximately 15 percent below market,” he said in a telephone interview. “Bringing those rents to the market rate will boost the cash flow and boost the value of the building.”

Bill Hensel, an Invesco spokesman, didn’t immediately return telephone calls seeking comment.

A buyer also may be able to increase revenue by improving the Helmsley Building’s ground-floor retail space, which totals about 70,000 square feet and can be enlarged, Stacom said. The tower also has a pair of arcades between the train terminal and Park Avenue, through which thousands of commuters stream daily. The value of signs in the passageway could be boosted, she said.

Railroad Headquarters

The design and ornamentation of the Beaux Arts tower “celebrate the prowess of the New York Central Railroad Co.,” which built it in the 1920s to serve as its headquarters, according to the Guide to New York City Landmarks, published by the city’s Landmarks Preservation Commission. The building was later sold to investor Harry Helmsley, who put his name on it.

A $350 million New York Life Insurance Co. senior mortgage was taken on the property in 2011 and matures in 2018, according to Real Capital. A buyer would have the option to replace the financing, Stacom said.

-By David M. Levitt

Disney $1.3 Billion Rescue Shows Paris Parks Too Big to Fail

Source: Bloomberg / Luxury

More than 8,000 people signed a petition last year on urging Walt Disney Co. (DIS)Chairman and Chief Executive Officer Robert Iger to “Save Disneyland Paris.”

The petition, written in six languages, registered complaints about poor maintenance, lousy food and mediocre attractions at the money-losing resort, which opened in 1992. This week, Iger showed he is listening.

A rescue package unveiled Oct. 6 will give Disneyland Paris and its sister park Walt Disney Studios at least 1 billion euros ($1.3 billion) over 10 years to add attractions and spruce up grounds. Euro Disney SCA (EDL) will probably upgrade the Star Tours attraction at Disneyland Paris, according to industry watcher Robert Niles, and the company said it is rejuvenating “Indiana Jones and the Temple of Peril” and “Big Thunder Mountain.”

“They’re going to need to make a significant capital investment,” said Niles, editor of the websiteTheme Park Insider. “It’s been 20 years.”

Euro Disney said it’s also refurbishing hotels and refreshing icons such as the Sleeping Beauty Castle (Le Château de la Belle au Bois Dormant). In July, Walt Disney Studios opened a Ratatouille ride and restaurant that have attracted more than 1 million guests, the company said.

More Needed

In the past five years, Euro Disney has spent more than 500 million euros , according to Burbank, California-based Walt Disney, the world’s largest entertainment company.

Mark Stead, Euro Disney’s chief financial officer, told The Guardian newspaper he hoped to bring technology from the U.S. to revamp and add new ride experiences. New blockbuster attractions are unlikely, he said.

More is needed, according to Dennis Spiegel, a theme park consultant in Cincinnati.

Euro Disney parks, especially the Walt Disney Studios, could benefit from attractions based on Marvel superheroes from Disney films such as “The Avengers” and “Iron Man 3.”

The Walt Disney Studios park is “too sterile and industrial looking, it doesn’t feel like a Disney park,” Spiegel said by telephone. “They’re not getting the same level of enthusiasm, the same level of people willing to spend.”

Disney’s California Adventure park in Anaheim, California, is the model to follow. Disney invested $1.1 billion in that park in recent years, including a Cars Land attraction that has helped lift attendance by 34 percent since 2011.

“Our industry lives on repeat visitation,” Spiegel said. “People want new attractions. Fantasyland, Cars Land, Star Wars, Avatar Land. It’s more than dropping in a single ride anymore. My money would be on Marvel.”

Euro Economy

Craig Hanna, chief creative officer for Thinkwell Group, a company that designs theme park attractions, agreed the Disney Studios needs work.

“There are a lot of possibilities,” Hanna said. “There’s plenty of land in Paris.”

Euro Disney partly blames its woes on the struggling European economies. Attendance is forecast to fall about 5 percent this year to 14.2 million guests, the company said on Oct. 6. Hotel occupancy will also decline, while spending per room will be flat.

“The problem now is that the hotels are aging and some rides aren’t working as well,” said Didier Arino, chief executive officer of Protourisme, a tourism researcher in Bourdeaux, France. “That’s making the parks less attractive to consumers and, with the level of investment the company has to sustain, it’s obviously a problem.”

Previous Bailouts

This isn’t Euro Disney’s first financial restructuring. In 1994, two years after its opening, Saudi Prince Alwaleed bin Talal acquired a 10 percent stake in a refinancing. Two years ago, Euro Disney consolidated debt from a number of banks into a loan from the Disney company.

Now, the company’s dependence on its California parent company looks set to grow.

Euro Disney is tapping current investors, including Disney, for as much as 420 million euros through a rights offering. In addition, the California company is converting 600 million euros of debt into Euro Disney equity. Finally, Euro Disney is postponing principal payments on debt until 2024, freeing up as much as 800 million euros over 10 years.

Disney gained 1.2 percent to $88.11 at the close in New York. Euro Disney shares fell 0.3 percent to 3.11 euros in Paris, giving the company a market value of 121 million euros.

‘Great Transaction’

In tossing the money-losing Euro Disney operation a lifeline, the California company may end up as majority owner.

“This is a great transaction for the company, which will put us on a much firmer financial footing and give us the capacity that we need to really continue to invest in our destination,” Stead said in a Euro Disney website video.

Analysts say Disney can’t pull the plug on its biggest single investment in Europe and a huge promoter of its brand on the continent.

“Euro Disney went through some tough times financially, had it been any other company than Disney it may not have survived,” said John Gerner, a theme park consultant in Richmond, Virginia. “It was too big to fail.”

-By Christopher Palmeri, Marie Mawad and Julie Miecamp

Africa’s Biggest Lender Woos Swiss Investors to Property

Source: Bloomberg / News

FirstRand Ltd. (FSR), Africa’s largest lender by market value, plans to raise as much as $500 million from Swiss private banks and other investors for a property fund focused on the continent.

Ashburton Investments, the asset-management arm of Johannesburg-based FirstRand, will start raising money when its existing $250 million property fund is 75 percent invested early next year, said Chief Executive Officer Boshoff Grobler. Ashburton put up a fifth of the money for the first fund.

“Investors are looking for growth in their portfolios,” Grobler said yesterday in an interview in Geneva. “The markets where investors are finding growth pushed them into Africa.”

While the first property fund invested in Ghana and Nigeria, the next will offer more access to developments in Angola, Africa’s second-biggest oil producer, said Grobler. Ashburton is also starting a private-equity fund of as much as 750 million rand ($67 million), focused mainly onSouth Africa, as it taps the continent’s growth in economies from the Cape to Cairo.

Ashburton’s first property fund, which has invested in Ikeja City Mall in Lagos, the Accra Financial Centre in Ghana and two retail projects in Angola, is targeting a net return of about 30 percent, said Tim Diack, head of distribution strategy. The second fund will add a fourth country on the continent and target a return of 25 percent, he said.

Consumer Boom

“It’s a way to play into the African consumer boom,” said Diack, adding that existing investors include a sovereign wealth fund, pension funds and family offices, mainly in North America and the Middle East.

Ashburton has $13.25 billion under management. It sees the greatest appetite for African assets among Swiss, Scandinavian and Belgian, Dutch and Luxembourg investors, said Grobler.

The asset manager, which has offices in Johannesburg, Jersey, London, Dubai, Nairobi, Cape Town and Durban, was created last year when FirstRand consolidated investment and consumer units. It is also attracting more clients from Africa’s growing middle class, said FirstRand CEO Sizwe Nxasana.

“Increasingly as Africa sees the growth of people into the middle and upper classes, they are going to need specialist investment management companies such as Ashburton,” Nxasana said in a separate interview. “Most of the growth happening in South Africa is now driven by the new emerging black middle class. The same applies to other countries.”

-By Dylan Griffiths