Top Stories PM Lee outlines parameters for third govt-to-govt joint venture with China Source: Straits Times / Top of The News FOR its third government-to-government bilateral venture in China, Singapore wants to conceive of a project that fits in with China's priorities, will be fully supported by the local authorities and is commercially viable, said Prime Minister Lee Hsien Loong. He sketched these parameters in his first comments on the prospective project, to be located in western China, in an interview with Guangdong newspaper Nanfang Daily. It was published yesterday, the first day of Mr Lee's week-long visit to southern China. Noting that Singapore and China's bilateral cooperation is "progressing at all levels and on multiple fronts", he said that both governments had to set the framework for good relations and foster free trade and investments to bring relations to the next level. Singapore and China are currently exploring where and in what form this third joint venture - coming after the Suzhou Industrial Park, which marks its 20th anniversary this year, and the Tianjin Eco-City - will take. The Chinese government had asked Singapore to start a new project in its western region and, while talks are still in the early stages, Singapore leaders have made clear their desire that the project breaks new ground in China, like the first two. In the Nanfang Daily interview, Mr Lee emphasised that Singapore, with its small size and differing strategic context and history, does not presume to be a model for China to learn from. But Chinese officials have found Singapore an interesting case study, with almost 50,000 visiting for training in the past 20 years, he noted. "They are interested in our practical mindset, the way we work across multiple agencies, and how we work with the population. "They tell us that they have found our experiences useful, and shared with us that what they saw here has inspired several experiments in China," he said. Over time, Singapore has noticed that the focus of Chinese officials has also shifted from economic development to social governance issues like housing, education, social harmony and the rule of law, he added. Singapore is also eager to learn from China, he said. "I am particularly impressed by how Chinese at all levels, in and out of government, have a powerful drive to improve, and how China continues to nurture a great thirst for knowledge in dealing with its challenges." Mr Lee described Guangdong, which he last visited in 2006, as "a gateway to China", a status it has enjoyed for centuries. Guangzhou and Shenzhen were open, vibrant and rapidly changing, he said, adding: "I am looking forward to seeing the cities for myself and feeling the vibes." Yesterday, Mr Lee had dinner with Guangdong party secre-tary Hu Chunhua, who is widely seen as one of China's next top leaders. Guangdong has deep economic and cultural links with Singapore. Last year, it accounted for nearly a quarter of Singapore's total $115.2 billion in trade with China. Singapore has a major bilateral project sited in Guangzhou, the private sector-led, government- backed Guangzhou Knowledge City (GKC). One of the areas it is working on, Mr Lee noted, is the development of an intellectual property (IP) protection framework. The GKC is likely to host one of the first specialised IP courts to be set up in China.
Two others, the Chinese government said last week, will be established in Beijing and Shanghai. -By Rachel Chang Singapore Real Estate Sharper focus on interest rates needed in property market projections Source: Today Online / Business Another month passes and another property market forecast is made — but nothing really new is said. If you want to be cynical about it, the prediction of the market’s demise in the near future is old hat. Analysts have been queueing up to repeat this mantra with increasing frequency since a couple of years ago, some even as early as when stamp duties were introduced in an attempt to cool the market. While the analysts have backed their forecasts with arguments and data about the oversupply, the tepid growth, the new productivity-driven economic model and tighter population policy, there is very little discussion on interest rates and how they may trend in the near future. This topic is usually sidelined, with the reports merely mentioning how interest rates might rise by a stated period as though other factors play a far more important role. Given how persistently-low interest rates have played havoc with the property markets in almost all the major global cities over the last few years, I would have thought the topic of rates and holding costs deserve more analysis. Seasoned investors would be aware of this, but less savvy ones are getting confused. The idea of a huge oversupply of property not driving rents and prices significantly lower may seem inconceivable. But it has already happened in some cities in China where they have been described as ghost towns. Singapore may not be big enough to have ghost towns, but we do have ghost neighbourhoods. The adoption of the productivity-driven economic model has been cited as one major factor that will hold back our growth significantly and which in turn will affect the property market. Yes, small- and medium-sized enterprises are bearing the brunt of this new model and a pause may be in order, with restructuring proceeding at too fast a pace. But we must also recognise the political dimensions of this new model: A little sacrifice now will do wonders for us in the future. Labour and rentals are usually the two largest costs for most SMEs. If wages rise rapidly, lower rents can mitigate the cost burden. It cannot escape our attention that the authorities have also been ramping up supply for industrial and commercial properties. This is where I think the timing was a little off. Supply should have been ramped up earlier, even before the introduction of the new economic initiative. Still, it is better late than never. So there is more supply — residential, commercial as well as industrial. Need we be worried about the impact? For some developers and landlords, perhaps, but not for the rest of us. For too long we have been held hostage to the high-cost environment.
In any case, with no clarity on the interest rate front, I think it is premature to worry about the oversupply — particularly for non-residential properties. As for residential property and private housing in particular, I think the Monetary Authority of Singapore probably feels it has done enough to rule out a panic decline or market collapse. -By Colin Tan, Director, Research & Consultancy, Suntec Real Estate HDB fleshes out Smart Town framework It will involve energy saving, smarter homes and estate management tools Source: Business Times / Singapore SINGAPORE'S Housing and Development Board (HDB) on Thursday announced a smart town framework and said it will pilot selected initiatives in Punggol Northshore to assess their viability and suitability, before extending them to other estates. The framework will leverage on Information and Communication Technology to make HDB towns and estates "more liveable, efficient, sustainable and safe for our residents", said HDB's CEO, Cheong Koon Hean on Thursday. The framework - which maps out how HDB intends to introduce the "smart" element to its towns and estates - focuses on planning, environment, estate and living.
HDB said that an example of a smart planning technology is a decision-making modelling tool to help planners understand the trade-offs involved when introducing new sustainable features into HDB towns. For example, the tool enables HDB to assess the effectiveness of various initiatives such as LED lighting, solar energy, skyrise and vertical greenery, and rainwater harvesting and make a decision on the best combination of these to achieve sustainability goals in a cost-effective way. The tool will be used to plan sustainability features in Punggol Northshore. 'Smart' systems for new HDB towns Upcoming Punggol Northshore flats to feature energy, motion sensors Source: Straits Times / Top of The News THE future Housing Board flat could come with energy sensors that monitor consumption as well as motion sensors that sound the alarm if an elderly resident is in trouble. And the first sneak peek of what such flats could be equipped with in the future will start with upcoming precincts in Punggol Northshore, said HDB chief executive Cheong Koon Hean. If the features prove to be feasible there, the HDB could roll them out to other projects. Speaking at the HDB Peak Forum yesterday, Dr Cheong said the use of smart inventions will focus on four areas: the home, estate, environment and planning process. Homes will be built with digital infrastructure that enables the use of technologies like home energy management systems. Such a system could monitor energy consumption patterns by appliance, and encourage residents to reduce their energy usage. Another smart feature is an alert system that uses motion sensors to track the movements of elderly people at home. Caregivers will be alerted if there are any irregular movements. "We want to leverage information and communication technology to make HDB towns and estates more liveable, efficient, sustainable and safe for our residents," said Dr Cheong. These domestic systems, which will be provided by commercial companies, will be made optional. Beyond the home, such technologies will also be harnessed for town planning, estate management and maintaining environmental conditions. Common areas, for instance, will have smart fans that can regulate their speeds according to the temperature and humidity measured by sensors. Refuse systems, lights and other amenities will be similarly fitted with sensors to improve maintenance and lower energy usage. Computer simulation tools will also be used when towns are planned. Together with data analytics, they can assess green installations such as solar panels and LED lighting, and determine how cost-effective they are. "Such a tool will better inform planners of the optimal solution for towns, balancing the costs involved with the environmental goals set," explained Dr Cheong. Experts said this push for technology not only provides convenience, but can also lead to savings in the long run. "Unlike private developments, the volume and homogeneity of HDB projects make these technologies easily replicable and adaptable," said Associate Professor Sing Tien Foo, deputy head of the real estate department at the National University of Singapore. Operations manager Herman Shah, 26, who lives in a Yishun five-roomer, said: "I don't mind paying more if the energy tracking system can help me save money eventually." -By Yeo Sam Jo HDB towns to use smart technologies under new framework Source: Today Online / Singapore SINGAPORE — Information and communication technologies will be used to aid in town planning and improve the estates, environment and lives of public housing residents under a new “Smart HDB Town Framework” announced by the Housing and Development Board (HDB) yesterday. When planning new projects, computer modelling and data analytics will be used to inform planners of optimal solutions. Historical data is currently used for analyses, but with sensors, real-time data can be collected to validate assumptions. By using the Complex Systems Modelling tool — a partnership with French organisations EDF and Veolia — the HDB will be able to determine the effectiveness of a slew of measures, such as LED lighting, solar energy and rainwater harvesting, and decide which combination would be able to achieve the sustainability goals that have been set, in the most cost-effective way. Households could also have smart home energy systems in future. After a year-long test-bed programme, which enabled 10 households in Punggol to monitor their energy usage, reaped energy savings, the HDB is now studying if a more extensive Smart Home Energy Pilot is feasible in Yuhua in Jurong East. The feasibility study, conducted in collaboration with the Energy Market Authority and Panasonic, began in June and is expected to take a year. Should it go ahead, the pilot project will include smart meters and provide energy choices for households using the time-of-use pricing. Under the Smart HDB Town Framework, the HDB said it will also provide the infrastructure in flats which will enable commercial companies to implement smart systems, such as for families who wish to monitor the safety of the elderly at home. HDB chief executive Cheong Koon Hean said at a forum for knowledge sharing yesterday that it is working out the framework to guide the development of the Smart HDB Town. Many of the new urban solutions will be test-bedded in Punggol Northshore, an upcoming district in Punggol eco-town, for which detailed plans were announced on Tuesday.
They include sensors, which will be deployed in its pneumatic waste conveyance system to sniff out waste disposal patterns and in corridor lighting to respond to human traffic patterns. -By Neo Chai Chin http://www.businesstimes.com.sg/premium/singapore/hdb-fleshes-out-smart-town-framework-20140912
http://www.todayonline.com/singapore/hdb-towns-use-smart-technologies-under-new-framework Major Chinese developer eyes Singapore market Source: Straits Times / Money A MAJOR Chinese developer is setting its sights on Singapore as it continues to build its overseas portfolio. Shanghai-based Chiwayland International sees plenty of potential here but is wary of the lacklustre market. Executive chairman Kevin Qian told The Straits Times yesterday: "We hope to enter the Singapore market in about two to three years' time but it will still depend very much on whether the returns on investment are totally satisfactory." Speaking in Mandarin, Mr Qian added that he is open to undertaking projects with local partners, who would be "more familiar with the business environment and market here". Chief financial officer Louis Tai added: "Politically and economically, it's very stable here. Singapore comes up as a natural choice for us to consider in terms of overseas prospects." The firm, which listed here in August via a $399 million reverse takeover of RH Energy, mainly develops residential and commercial property in Shanghai and other parts of the Yangtze River Delta region but is now looking farther afield. It is working on three apartment projects with commercial space in Brisbane, Australia, in league with local developer Property Solutions. The developments will cost about A$160 million (S$185 million) in total to complete. Chiwayland announced yesterday that net profit for the second quarter rose 23 per cent to 29.5 million yuan (S$6 million) while revenue was 94 per cent up at 732.1 million yuan. Earnings for the six months to June 30 came in at 10.6 million yuan, down 29 per cent on the same period last year, while revenue increased 54 per cent to one billion yuan. The firm said the revenue increase was mainly driven by two key projects in China that accounted for more than 93 per cent of total sales for the first and second quarters.
Chiwayland shares closed unchanged at 36 cents yesterday. -By Jacqueline Woo CGW Construction fined record S$150,000 for fatal worksite accident The construction firm failed to install guard rails and lifelines for workers to anchor their safety harnesses to at a Beach Road worksite. A worker fell from an open staircase landing and died. Source: Channel News Asia / Singapore SINGAPORE: CGW Construction has been fined S$150,000 on Thursday (Sep 11) in connection with a fatal accident at a Beach Road worksite. A news release by the Ministry of Manpower says the fine is the highest imposed on an employer for failing to ensure safety of its workers under Section 12 of the Workplace Safety and Health Act. The accident on Oct 25, 2012 saw an employee of CGW fall from the open side of a staircase landing on the second floor to his death. Zhou Shi Hong died from multiple injuries, after falling from a height of 6.4 metres. A co-worker says he had been bending down to look for nails in a pail, and as he got up, lost his balance and fell backwards. CGW had been engaged as a subcontractor for Hyundai Construction and Engineering at the worksite. Investigations by the Ministry of Manpower found that CGW failed to install guard rails, and did not provide lifelines for workers to anchor safety harnesses to. Also, it had started work on the stairwell even though its application for a permit to do so had not been approved by Hyundai. Three years ago, CGW was fined S$50,000 for failing to adhere to the Workplace Health and Safety Act as well. This was for an incident at Bayfront Avenue in 2008 where a construction worker stepped onto an unsupported plank on a formwork platform and fell four storeys below. He was sent to hospital with injuries to his arm and leg.
- CNA/ly http://www.channelnewsasia.com/news/singapore/cgw-construction-fined/1357780.html Global Economy & Global Real Estate M'sia developer sales hit by cooling measures After H1 slowdown, negative outlook increases for H1 '15 Source: Business Times / Malaysia MALAYSIA'S property cooling measures appear to have hit home, with nine out of 10 developers in a recent survey reporting a slowdown in sales in the first six months of this year. Most are neutral to pessimistic in their outlook for the second half, but the negative outlook is increasing for the first half of 2015. Still, those who expect a reduction in prices may not get their wish.
Developers said that prices for new launches are expected to be stable, with nearly two out of three respondents in a poll by the Real Estate and Housing Developers' Association claiming that the cost of doing business had increased in the first half (with more than 50 per cent of them stating by up to a fifth) mainly because of higher conversion premium, compliance costs and infrastructure contribution funds. -By Pauline Ng in Kuala Lumpur http://www.businesstimes.com.sg/premium/malaysia/msia-developer-sales-hit-cooling-measures-20140912 Chinese speculators chase profits online as home prices drop Source: Today Online / Business BEIJING — With just 11,000 yuan (S$2,260), 50-year-old Deng Bangfu made his first property investment in China, flipping it in only two months for a healthy return while the nation’s home prices fell. Mr Deng and about 300 other investors bought a 14.9 million yuan townhouse in June in the southern Chinese city of Dongguan and sold it last month for 16 million yuan. The vehicle: A peer-to-peer lending and financing website called Tuandai, which is testing a crowdfunding product that meets developers’ desire to quicken sales by tapping demand for better returns. “Now, I can tell people I once owned a townhouse, which I could never afford myself all my life,” said Mr Deng, an accountant at a technology company in Dongguan. “We know that local governments have started loosening home purchase restrictions. As soon as banks ease mortgage curbs, home prices will quickly rebound.” Chinese online investors, who since 2011 helped drive a 50-fold increase in financing through peer-to-peer websites such as Tuandai, are turning to property as falling home prices prompt the government to ease curbs aimed at stamping out speculation. Officials are seeking to revive local-government revenues at the risk of bringing home-flippers back to the market. SPECULATORS RETURN Speculators could return, ratings agency Fitch said last month. Said Mr Andy Chang, Fitch’s Hong Kong-based property analyst: “If liquidity recovers, home prices start to go up and sentiment improves. Peer-to-peer lending will surely play a stronger role pushing the waves because it’s pure speculation or investment demand.” JPMorgan Chase analyst Ryan Li wrote in a report last month that speculative buying accounts for more than 20 per cent of demand in first-tier cities, which include Beijing and Shanghai. Investors accounted for 40 per cent of home buyers in 2007, three years before then-Premier Wen Jiabao imposed home purchase curbs and raised downpayments to prevent a housing bubble. Home sales plunged 10.5 per cent in the first seven months this year from a year earlier amid tight credit, government data showed, reversing a 27 per cent jump last year. New home prices fell in 64 of the 70 cities tracked by the government in July from June, the most since January 2011. To stem the downturn, 37 of the 46 Chinese cities that imposed limits on home ownership since 2010 to snuff out property flippers have relaxed or scrapped restrictions on the number of apartments one can buy as of Sept 3. The nation’s biggest lenders cut interest rates on first mortgages in Beijing and Shanghai. VERY HIGH RISKS The risks of online property speculation are very high because anybody with 1,000 or 2,000 yuan can take part and many of them do not understand investing, Standard & Poor’s Hong Kong-based analyst Fu Bei said. He warned that prices will keep falling because of the rising supply of unsold apartments. The inventory of unsold new homes in 20 large cities jumped to an average of more than 23 months of sales in June, showed Shenzhen World Union data compiled by Bloomberg. However, bricks and mortar have historically offered better returns in China. The average home price, excluding government-subsidised housing, jumped almost 180 per cent from 2000 through 2012, showed official data. The benchmark Shanghai Composite Index gained less than 10 per cent in the same period. “There aren’t that many investment channels with satisfactory performance in China,” said Fitch’s Mr Chang. “If you look around, property remains relatively good among industries.” That is what the Dongguan online investors are betting on. Tuandai attracted 288 of them, including Mr Deng, to take part in the purchase of the 7,060sqf townhouse on June 17. Two weeks later, 517 investors pooled 18 million yuan online in nine hours to snap up a second fangbaobao, or “home baby”, as the products are known in Chinese. This time it was a 7,590sqf townhouse in the same Citic Real Estate project in Dongguan. Tuandai negotiated to pay 25 per cent below market for Mr Deng’s townhouse and got similar discounts for another 17 Citic homes. A buyer agreed to pay 16 million yuan for the first property and the transaction was completed Aug 23. That handed Mr Deng and his fellow investors an annualised return of about 40 per cent, more than 13 times the benchmark one-year deposit rate, said the website. PEER-TO-PEER BOOM Peer-to-peer lending has taken off in China since 2011 as traditional methods of private lending among family and acquaintances, part of the country’s unregulated 36 trillion yuan shadow-banking system, move online. The little-supervised platforms pool money from small investors to finance anything from wedding preparations, personal medical expenses to car purchases. About 60 per cent of investors lending through peer-to-peer websites had annual income of less than 100,000 yuan, 85 per cent of them were male, and 80 per cent of them were aged between 20 and 40, said wangdaizhijia.com, which tracks more than 1,000 peer-to-peer loan websites. Sites such as Tuandai are able to negotiate large discounts as developers in China’s crowded homebuilder market are eager to revive slumping sales. Tuandai had 2 billion yuan of transactions in the year to Aug 28, more than 11,000 investors and a lending rate averaging 16.45 per cent, said wangdaizhijia.com. “Some developers are pushing out some of their products at low prices because homes are not selling well, and some crowdfunding websites are just seeing the business opportunity,” said Zheshang Securities analyst Dai Fang. “The key question is: What if they can’t sell it?”
It is something Mr Deng has thought about. “For the long run, home prices will rise,” said Mr Deng, who ploughed 55,000 yuan into a third townhouse, also by Citic, five times his first investment and almost double the one he made in the second Tuandai offering. “Even if we can’t sell it in the market, the property will still be there.” -By Bloomberg Kingsmen unit buys Johor property Source: Business Times / Companies KINGSMEN Creatives, through its wholly owned subsidiary K-Fix Production Sdn Bhd, has inked a deal to buy a freehold property in Malaysia's Johor Baru for RM$35 million (S$13.9 million). The property, located in the town of Senai, has a land area of 37,104 square metres and a built-in area of 14,690 square metres. It is on the same plot of land that Kingsmen, a mainboard-listed communication design and production group, has been operating its Johor Baru production facility on a lease basis for the past few years.
Said Kingsmen executive chairman Benedict Soh: "The acquisition of the Johor Baru property is a step forward in establishing a permanent manufacturing base that will be the group's key manufacturing hub for the production of fixtures for international clients in Europe and the United States. http://www.businesstimes.com.sg/premium/companies/others/kingsmen-unit-buys-johor-property-20140912 Regeneration projects in London banking on overseas demand Battersea Power Station on tour to woo home buyers, commercial tenants Source: Business Times / Property [SINGAPORE] Developers of some of the largest regeneration projects in London are banking on overseas buyers' interest in the live-work-shop experience of mixed developments. The Malaysian-backed developer of Battersea Power Station aims to transform the area along London's South Bank into "the next London village with a different character". In its global launch for phase three starting from Oct 31, it is releasing some 539 homes and also 3.5 million square feet of commercial space to bring the best retailers, food and beverage players and businesses worldwide to London. To convince firms to set up shop there, the developer is blazing an 11-country tour to major cities including New York, Paris, Milan, Doha, Tokyo, Hong Kong, Shanghai, Kuala Lumpur and Singapore. The Malaysian consortium comprising SP Setia, Sime Darby and Employees Provident Fund had acquired the power station for £400 million (S$821 million) in 2012, beating rival bidders from as far afield as Brazil, China and Kazakhstan. It has just secured financing of another £1.35 billion from several banks to undertake phase two and three of the £8 billion redevelopment project. Rob Tincknell, chief executive of Battersea Power Station Development Co, told BT that he hopes to draw foreign brands that have not made their foray yet in London to its 1.25 million sq ft of retail, restaurants and leisure space. Mr Tincknell believes the unique setting will attract companies in the creative industries and the TMT (technology, media and telecommunications) sector to open offices there. Some 1.62 million sq ft of office space will be housed in both the power station and new buildings. There are also three hotels with a total of 400 rooms. They will fall into the "business", "boutique" and "trendy" segments, said Mr Tincknell. The developer is now in talks with a few hotel players, including some in Singapore, he added. The tender will be issued only in the middle of next year. When completed, the project will also have a total of 4,000 homes ranging from studios to townhouses. So far, it has already received 16,000 expressions of interest from UK residents, including previous buyers in phase one who have offloaded their units, Mr Tincknell said. Liew Kee Sin, chairman of Battersea Project Holding Company, noted that phase-one buyers who flipped their uncompleted units enjoyed capital gains of between 15 and 60 per cent. The average pricing for phase-three units will be £1,800 per square foot (psf), according to marketing agents for the project, higher than the £1,100 psf achieved for some 860 units sold in phase one. Mr Tincknell explained that phase-three pricing will be lower than the average £2,300 psf for the London-only phase-two sales of 254 homes, which are located within the iconic power station. He added that he is expecting a larger proportion of international buyers, up from 55 per cent in phase one. Buyers from Hong Kong, Singapore and Malaysia formed the bulk of international buyers in phase one. "The US market, in particular, is something we are very keen to explore," said Mr Tincknell, citing the project's proximity to the American embassy. According to Savills, prices across the prime central London - which include Mayfair, Marylebone, Knightsbridge, Belgravia, Regent's Park, Kensington and Holland Park - have risen by 13 per cent, compared to 23 per cent across Greater London. Charles Calverley, regional director of London-based Quintain Estates and Development, told BT on Thursday that he believes the real growth in property prices will be in zones three to five, due to the shortage of supply in the mainstream mid-market. In two weeks' time, Quintain will also embark on a global launch for phase two of Wembley Park, a mixed-use development in north-west London, and will be holding exhibitions in Singapore and Hong Kong. Mr Calverley said he is confident of the project's potential, having sold 92 residential units in phase one at an average price of above £570 psf. Last year, Quintain opened London Designer Outlet with a cinema for the "retail-led regeneration scheme" next to Wembley Stadium. Savills associate director for residential research Katy Warrick noted that several large-scale regeneration projects undertaken by private developers are taking place outside of London's established prime areas.
There are some 22,700 new homes priced at more than £1,000 psf, of which 48 per cent are located in six key clusters along the River Thames. Some 13,000 units could enter the rental market, which will be tested when a large supply of new prime stock is completed over the next few years, she said. -By Lynette Khoo UK home prices rise at slowest pace in a year Poll shows interest rate speculation may have dampened buyer confidence Source: Business Times / Property [LONDON] British house prices rose at the slowest pace in a year in August, according to a survey on Thursday that suggested speculation about higher interest rates has dampened buyer confidence. The Royal Institution of Chartered Surveyors' monthly house price balance fell to +40 last month, its lowest level since last August, and falling short of forecasts for +47 in a Reuters poll of economists. July was revised down slightly to +48. Agreed sales fell for the first time since September 2012 and there was a second consecutive fall in buyer inquiries.
"Some of the momentum has come out of the housing market of late reflecting in part concerns over a likely rise in the cost of borrowing at some point in the not too distant future," said Simon Rubinsohn, chief economist at RICS. -From London, UK http://www.businesstimes.com.sg/specials/property/uk-home-prices-rise-slowest-pace-year-20140912 Manhattan’s Rent Gains Send Queens Leasing Deals Surging Source: Bloomberg / Personal Finance Apartment leasing in New York’s Brooklyn and Queens boroughs surged in August as newly built units offered options to tenants seeking relief from Manhattan rents close to records. New lease signings increased 72 percent from a year earlier in Brooklyn and more than quadrupled in Queens, while rents fell, appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate said today in a report. In Manhattan, where the median monthly rent climbed 0.8 percent to $3,175, new deals declined 5.9 percent. New York City tenants are showing resistance to price increases at the time of renewal as a new supply of apartments in the outer boroughs gives them a chance to find better deals. About 15,300 new rental units are under construction or planned through 2015 for Brooklyn, brokerage MNS estimated last year. In Queens, new buildings are dotting the waterfront in areas such as Long Island City, where further inland developer Rockrose last month completed leasing its 709-unit Linc LIC tower. “You have a whole new form of housing stock,” said Jonathan Miller, president of Miller Samuel and a contributor to Bloomberg View. “Most new development in Brooklyn is rental and they’re coming on line. On the Queens side, basically a third of the market is new development.” Rents in Brooklyn declined in August for the first time in 15 months, slipping 1.5 percent to $2,808. In Queens, rents fell 1 percent from a year earlier to a median of $2,788, Miller Samuel and Douglas Elliman said. Manhattan JumpManhattan rents have rebounded following a lull at the end of 2013 and early this year, when landlords needed to fill rising vacancies after a jump in home sales. The median monthly rent reached a record $3,470 in June, according to brokerage Citi Habitats. “At a certain point, people say to themselves, ‘There’s only so much I can afford,’” Gary Malin, president of Citi Habitats, said in an interview. “There’s enough options for them now, either elsewhere in Manhattan or in the outer boroughs.” Manhattan’s East and West Villages, typically high-demand areas, are two neighborhoods that may be losing favor as tenants seek cheaper options, Malin said. The East Village had the highest vacancy rate in Manhattan last month, at 2.08 percent, according to Citi Habitats. In the West Village, among the most expensive neighborhoods in the city, the rate was 1.58 percent, the second-highest. Studio IncreaseStudios in Manhattan rented for a median of $2,467 in August, a 3.2 percent increase from the same month a year earlier, according to Miller Samuel and Douglas Elliman. One-bedrooms in the borough rented for $3,200 a month, a 1.5 percent decline. Studio apartments in Brooklyn were cheaper at $2,182, even as their price increased 9 percent from a year earlier, Miller Samuel and Douglas Elliman said. One-bedrooms rented for a median of $2,660, a 4.3 percent jump. The report covers communities such as Greenpoint and Park Slope in north and northwest Brooklyn, as well as neighborhoods in the eastern part of the borough such as Crown Heights. It excludes communities in south Brooklyn such as Canarsie and Brighton Beach. In Queens, studio rents climbed 14 percent to a median of $2,275 in August, while costs for one-bedroom leases rose 1 percent to $2,829, according to Miller Samuel and Douglas Elliman’s report, which covers the northwest neighborhoods of Long Island City, Sunnyside, Woodside and Astoria. -By Oshrat Carmiel Blackstone Said to Sell Burger King Locations to Houston Foods Source: Bloomberg / News Houston Foods Inc., a fast-food franchisee in Texas, plans to buy about 260 Burger King (BKW) locations owned by Blackstone Group LP (BX)’s Heartland Food Corp. in the Midwest, according to a person with knowledge of the matter. Blackstone, which acquired Heartland through its GSO Capital Partners LP unit, agreed to sell the restaurants for less than $100 million, said the person, who asked not to be identified because the deliberations are private. Blackstone bought GSO, a credit manager run by Bennett Goodman, in 2008. Heartland, based in Downers Grove, Illinois, owns about 330 Burger King locations in eight Midwestern states. Last month, Carrols Restaurant Group Inc., the largest Burger King franchisee, said it was buying 64 of Heartland’s restaurants in Tennessee, Indiana and Illinois for about $18 million. Heartland has reported annual sales of more than $420 million, according to its website. Blackstone, a New York-based private-equity firm, is using the deals to cut its exposure to an increasingly sluggish fast-food industry. Restaurant chains have struggled with slow sales in North America, hurt by fierce competition and a fast-food price war. In the U.S. and Canada, Burger King’s same-store sales rose just 0.4 percent in the second quarter. Total revenue fell 6.1 percent to $261.2 million. More than 99 percent of Burger King restaurants are owned by franchisees, and it’s not uncommon for them to change hands. In Heartland’s case, the company has been evaluating its portfolio, said Miguel Piedra, a spokesman for Miami-based Burger King Worldwide Inc. “A full review is part of that process,” Piedra said. Burger King “supports Heartland’s efforts and will work closely with its leadership moving forward,” he said. Tim HortonsBurger King, meanwhile, is working on its own acquisition. The company agreed last month to buy Tim Hortons Inc. (THI) for about $11.4 billion, creating the third-biggest fast-food company. Shoukat Dhanani, chief executive officer of Houston Foods, declined to comment on buying Heartland’s stores. Houston Foods owns 196 Burger King stores in Texas and the New England area, he said. Heartland didn’t respond to requests for comment, and Blackstone spokesman Peter Rose declined to comment. -By Leslie Patton and Devin Banerjee Canada 2015 Home-Start Forecast Rising on Low-Rate Sign Source: Bloomberg / Luxury Economists are raising Canadian housing-start forecasts for next year as signals that borrowing costs will remain low boost demand. Work will begin on 182,000 units in 2015, according to median estimates in the monthly Bloomberg News survey of economists taken Sept. 5 to Sept. 10. That’s up from the August forecast of 177,000 units and the highest this year. The Canadian housing market has shown surprising strength this year. Condominium and apartment work in Vancouver and Toronto led nationwide building permits to a record high in July, according to a Sept. 8 Statistics Canada report. “We have had to revise up our near term expectations for homebuilding, and it has to do with just how responsive the housing sector has been to a low-rate environment,” said Emanuella Enenajor, senior Canada economist at Bank of America Merrill Lynch in New York, referring to borrowing costs “At the start of the year most people would have anticipated that the two-year rate, the five-year rate would have been much higher.” Mortgage rates are holding at the lowest in decades, as an inconsistent global recovery triggers a drop in yields in bond markets where banks borrow to raise money for home loans. Average five-year mortgage rates were 4.79 percent last week, down from 5.34 percent at the start of the year and compared with an average of 5.93 percent over the past 10 years, according toBank of Canada data. ‘More Interest’Pete Graham, founder and principal at Acorn Developments, said he’s seen increased demand from residential firms for the land he develops in Guelph. “There’s more interest and more builders inquiring about land properties,” he said by phone from Guelph, a town of about 141,000 in the country’s most populous province where his firm revamps acres of land with sewage, roads, and electricity supply for residential builders. “Residential developers need the land in their inventory and they can’t build fast enough. From what I see, it’s a low amount of supply creating demand and interest rates are low.” Canadian two-year government bonds yielded 1.14 percent at 1:24 p.m. in Toronto. Economists in the Bloomberg survey predict the bonds will yield 1.30 percent at the end of 2014 and 2.15 percent by the end of 2015, median forecasts show. Household ImbalancesCanada Mortgage & Housing Corp., the national housing agency, also lifted its outlook for starts, saying Aug. 13 work will begin on 184,800 units in 2014, higher than a May 22 forecast of 181,100 units. Bank of Canada Governor Stephen Poloz said last week the economy remains at risk from “imbalances” in household finances, compared with July when he said those risks were fading. He kept his trend-setting overnight interest rate at 1 percent, citing slack in other parts of the world’s 11th largest economy. Statistics Canada reports the ratio of household debt to disposable income tomorrow from Ottawa, a key measure of the state of consumer finances. The ratio rose to a record 164.1 percent in the third quarter of 2013. It fell to 163.2 percent in the first three months of this year. -By Greg Quinn and Catarina Saraiva Pestana Group Rules Out Espirito Santo Hotel Chain Acquisition Source: Bloomberg / News Pestana Group, responding to speculation, said it won’t offer to purchase the Tivoli hotel chain that’s been put up for sale by owner Grupo Espirito Santo’s Rioforte Investments unit. “It’s absolutely certain that we won’t buy the Tivoli hotels,” Jose Theotonio, a board member at Pestana, said in a telephone interview yesterday. “However, if the Tivoli hotels are bought by institutional investors there may be an opportunity to manage some units.” Rioforte Investments, a unit of family-controlled Grupo Espirito Santo, in April said it planned to sell Tivoli Hotels & Resorts. It sought protection from creditors in a Luxembourg court in July. Portuguese newspaper Sol reported in July that Pestana Group, in partnership with U.S. and European funds, was competing for the Tivoli hotels, comprised of 12 units in Portugal and two in Brazil. The weekly cited Pestana Chairman Dionisio Pestana. Pestana Group, Portugal’s biggest hotel operator, is focused on expanding abroad, Theotonio said. “At this stage, an acquisition in Portugal is not a priority,” he said. -By Henrique Almeida Paris Housing Market Lures Most Foreigners in 15 Years Source: Bloomberg / Luxury The proportion of foreigners buying Paris apartments climbed to the highest in 15 years in the first half as they took advantage of falling prices. Foreign purchasers accounted for 8.3 percent of the total, up from 7.8 percent a year earlier, according to data compiled by notaries published today. Ninety percent of non-French buyers of apartments already live in the capital, according to the report. The biggest group are Italians, which make up 17 percent of the foreign purchasers, followed by the Chinese with 6.5 percent. Foreigners “are confident in French property,” Thierry Delesalle, a Paris-based notary, said at a briefing in the city today. “They haven’t been so much prevalent in 15 years,” Real estate prices in Paris have dropped 3.7 percent since peaking in the third quarter 2012, according to notaries and national statistics office Insee. Values are expected to decline further in the second half as the government attempts to cap rents, which would make homes less attractive as an investment. Apartment prices, which averaged 8,120 euros ($10,500) a square meter in the three months through June, may drop by 0.8 percent in the third quarter based on preliminary contracts, and probably will fall to less than 8,000 euros by the end of the year, Delesalle said. ‘Falling Returns’“The drop may quicken if sellers agree to negotiate,” said Frederic Dumont, a notary based in Montreuil, near Paris. “The price trend is making buyers more cautious and investors tend to stay away, discouraged by taxes, falling returns and threats to cap rents.” A dearth of homes on the market has prevented properties from losing more value. To encourage homebuilders to be more active, the government last month said it will temporarily cut some taxes on land sales, loosen rules on buy-to-let investments and roll out rent controls in Paris on an experimental basis only. It also pledged to free up more plots for development, invest more in housing and loosen building rules. “We’re somewhat skeptical about the effectiveness of these measures, which are good but temporary,” Delesalle said. “We need stable measures because it takes 4, 5 or 6 years to get a building done from scratch.” -By Francois de Beaupuy http://www.bloomberg.com/news/2014-09-11/paris-housing-market-lures-most-foreigners-in-15-years.html |