S'pore 'best place to park infrastructure investment'

But investment openings are limited as govt funds most projects, says study

Source: Business Times / Singapore

A STUDY released on Monday has again named Singapore as the most attractive global and Asia-Pacific market for infrastructure investment.

The second Global Infrastructure Investment Index, compiled by design and consultancy firm Arcadis, ranked Qatar second globally; United Arab Emirates (UAE) pipped Canada to third spot.

The index lauded the Republic for its "integrated strategic plan" that links infrastructure planning with business and social requirements.

Altogether, 41 countries were ranked according to their potential for economic infrastructure growth and investment, including transportation, communication and energy assets. A total of 26 criteria in five key areas - economy, business, risk, infrastructure and finance - were considered.

-By Claire Huang

http://www.businesstimes.com.sg/premium/singapore/spore-best-place-park-infrastructure-investment-20140923

Landlords call the shots amid office crunch in CBD

Near-capacity occupancy pushing rents up for past 18 months: Colliers

Source: Straits Times / Money

THE pendulum is swinging in favour of office landlords in the third quarter, with rents and capital values continuing to climb, said consultancy Colliers International yesterday.

It noted that most areas - called micro-markets - are experiencing a worsening supply squeeze that has generated occupancy rates of 95 per cent and kept rents rising for 18 months.

"The tight market has given landlords greater pricing power over tenants and we are seeing a growing divide between the type of spaces tenants desire in relation to affordability and landlords' rental expectations," said Mr Marcus Loo, the firm's executive director of office services.

Raffles Place and New Downtown are the market's red-hot zones.

Monthly rent for premium-grade offices shot up 6.1 per cent from the second quarter to the third to $11.67 per sq ft (psf) a month, the highest quarterly growth in three years, while Grade A office rents rose 2.9 per cent to $10.25 psf.

Rents for Grade A offices in other areas of the Central Business District (CBD) have expanded between 0.4 per cent and 2.9 per cent quarter on quarter and are heading for the "psychological rental benchmark level" of $10 psf a month, said Colliers.

Overall, the average occupancy rate for completed premium-grade and Grade A offices in the CBD has held firm during this quarter, at 96.5 per cent - the highest in six years.

The average occupancy rate is 97.2 per cent in Orchard Road, 97.8 per cent in the city fringe and 98.8 per cent in the suburbs.

While there were fewer transactions of strata-titled office units due to the Hungry Ghost Festival, the market for sales en bloc has been "bustling with activity" in this quarter.

Anson House in Tanjong Pagar sold for $172 million, Straits Trading Building in Battery Road reportedly went for $450 million and three levels of GB Building in Cecil Street sold for about $31.7 million in total.

The prices at these sales pushed up capital values, which are up 2.2 per cent for premium-grade offices and by 1.9 per cent for Grade A ones in the Raffles Place and New Downtown.

Ms Chia Siew Chuin, director of research and advisory at Colliers International, said rents of premium-grade office space in this zone are expected to grow close to 15 per cent for the full year, with rents in overall CBD grades A and B office space growing up to 10 per cent. She said capital values for premium and Grade A offices in Raffles Place and New Downtown will grow about 5 per cent this year.

The report also noted that more tenants have been asking for longer lease terms of, say, five years, with an option to extend for another five, or six-plus-six- year terms, with built-in rental review terms.

"(This) provides tenants with more stability and allows them to spread their asset depreciation for the longer period of time...

"However, longer lease terms do not generally equate to lower rents. Landlords may factor in potential rental upside if they are tied to a longer period of time," said Mr Loo.

-By Rennie Whang

http://www.straitstimes.com/premium/money/story/landlords-call-the-shots-amid-office-crunch-cbd-20140923#sthash.JQMlJ7ri.dpuf

Citimac complex seeks S$1,350 psf ppr in en bloc sale

Source: Business Times / Top Stories

[SINGAPORE] The owners of Citimac Industrial Complex have hit the en bloc trail, with a minimum price of S$550 million, which works out to S$1,350 per square foot of potential gross floor area for the freehold site.

The unit land price figure is inclusive of an estimated development charge (DC) of S$109 million payable to the state.

Located a stone's throw from Tai Seng MRT Station, the 139,789 sq ft site can be redeveloped into a new project with 489,261 sq ft maximum gross floor area (GFA). The site is zoned for Business 1-White use, with a 3.5 maximum gross plot ratio. Of this, at least 2.5 plot ratio (translating to 349,473 sq ft GFA) shall be for Business 1 (or B1) use and the remaining GFA of up to 139,789 sq ft will be for white uses. Most developers would likely utilise the white component for retail use, given the site's prime Macpherson Road frontage.

The Citimac site is the largest freehold Business 1-White redevelopment site in Singapore to be put up for sale, according to Cushman & Wakefield, which is handling the collective sale through a tender that will close on Oct 30.

The property consulting group said it is expecting "very good reception" for Citimac especially from local and overseas mid-sized and large developers, given its prized location and the white component in its zoning. The potential future growth of the Paya Lebar commercial hub will drive strong investor interest, it added.

Christina Sim, director of capital markets at the property consulting group, said: "Given current market conditions and a dearth of freehold Business 1-White sites in prime locations, this site offers a unique opportunity to develop top-end Business 1 space for data centres, research and development, information technology, as well as a sales and distribution centre for the medical and aviation industries." Business 1 typically includes non-pollutive light industrial and warehouse use.

Market watchers acknowledged the site's prime location but said the pricing expectation is ambitious. A seasoned observer said assuming average selling prices of about S$4,500 psf for the retail space and S$1,200 psf for the B1 space, the land price could be around S$1,000 psf per plot ratio (psf ppr) at most, including DC. "This would be how established local developers would bid for the site, assuming 15 per cent profit margin," he said. That said, it may be conceivable for say a China player keen on investing in Singapore, to bid more aggressively.

In October last year, Guang Ming Industrial Building, also near Tai Seng Station albeit on a longish, somewhat irregular-shaped strip of nearly 20,000 sq ft land, fetched S$45.8 million or S$837 psf ppr.

In May this year, Irving Industrial Building, a 65,309 sq ft site with a more regular shape albeit tucked from the main road, was launched for collective sale. The reserve price was said to be S$200 million (or S$1,079 psf ppr) but there were no takers.

The latest talk in the market is that a potential buyer, believed to be China's Nanshan Group, has been secured and that efforts are underway to get the requisite consent level from Irving Industrial Building's owners at a lower price that would reflect around S$930 psf ppr.

Citimac Industrial Complex in comparison is a rectangular-shaped plot boasting prime road frontage. "It is likely that the developer will break even on B1 use, with profit likely to come from the retail space for the white component," said Ms Sim.

Cushman & Wakefield brokered the sale of Guang Ming Industrial Building and is also marketing Irving Industrial Building. Both are also freehold and have the same zoning as Citimac Industrial Complex.

JLL regional director (investments) Tan Hong Boon noted that freehold industrial sites are not easy to come by. "Sources are typically from single-owner sales and collective sales of generally small to medium sized, old projects," he added.

-By Kalpana Rashiwala

Paya Lebar industrial site up for collective sale

Source: Straits Times / Money

A FREEHOLD industrial site in Paya Lebar is up for collective sale, with a price of more than $550 million expected.

Citimac Industrial Complex at the junction of MacPherson and Paya Lebar roads is one of the few plots near Paya Lebar iPark and the Paya Lebar regional centre that can be redeveloped.

It has two adjoining buildings used for production, warehousing and showroom purposes.

Ms Christina Sim, director of capital markets at marketing agent Cushman & Wakefield, yesterday said the building's multiple owners have given the requisite 80 per cent consent for a collective sale.

The 139,789 sq ft plot is zoned Business 1-White, which means part of the industrial space can be used for shops and offices.

Ms Sim said the site can be used for tech services such as data centres, research and development or as a sales and distribution facility for medical or aviation companies.

The maximum allowable plot ratio of 3.5 under the Urban Redevelopment Authority's masterplan means developers can build up to a gross floor area of around 489,261 sq ft, with about 140,000 sq ft of that allocated to retail and commercial ventures.

Ms Sim noted that the firm is in negotiations for the collective sale of nearby Irving Industrial Building for an estimated $1,000 per sq ft per plot ratio.

Cushman & Wakefield, which expects a good response from local and overseas mid-sized and large developers, said the potential growth of the Paya Lebar commercial hub will interest investors.

Ms Sim said that with the MRT station within walking distance, the MacPherson and Paya Lebar area has seen an "influx of young talent keen to locate there, given the positive change in the landscape and amenities".

The tender closes at 3pm on Oct 30.

-By Rachel Boon

Citimac Industrial Complex put up for en-bloc sale

SINGAPORE: Citimac Industrial Complex at the junction of Macpherson Road and Paya Lebar Road has been put up for collective sale, with the owners seeking bids of S$550 million and above.

Cushman & Wakefield, which is handling the en-bloc sale, described the complex as a rare developable site near the Paya Lebar iPark vicinity and the Paya Lebar Regional Centre.

According to Cushman, Citimac occupies a land area of 139,789 square feet.

Based on a maximum allowable plot ratio of 3.5 under the 2014 Master Plan, the successful bidder can redevelop the freehold site into a property with gross floor area of about 489,261 sqft, Cushman said in a statement on Monday (Sep 22).

This could include a shopping mall with about 140,000 sqft of retail and commercial space.

The tender closes at 3pm on Oct 30.

- CNA/cy

http://www.businesstimes.com.sg/premium/top-stories/citimac-complex-seeks-s1350-psf-ppr-en-bloc-sale-20140923

http://www.straitstimes.com/premium/money/story/paya-lebar-industrial-site-collective-sale-20140923

http://www.channelnewsasia.com/news/business/singapore/citimac-industrial/1374730.html

MSF enhances grant for neighbourhood malls

Source: Business Times / Singapore

THE Ministry of Social and Family Development (MSF) will be enhancing the FamilyMatters@Business Grant from October to further incentivise neighbourhood shopping malls to be more family-friendly.

Under the enhanced grant, neighbourhood malls will receive a one-off amount of up to 70 per cent of actual costs - capped at S$200,000 - when they implement family-friendly initiatives. This is a significant four-fold increase from the current cap of S$50,000, said MSF.

The grant, introduced in April last year, provides funding to help businesses adopt practices that welcome families. It has since funded over 50 businesses.

It covers infrastructure, amenities and services that offer safety, convenience and fun to families, such as non-slip floors, nursing rooms and children play areas.

-By Jacquelyn Cheok

Making malls more family-friendly

Govt quadruples grant for heartland malls to $200,000 for such amenities

Source: Straits Times / Singapore

NURSING rooms, wheelchair rentals and family carpark spaces could become commonplace in neighbourhood malls soon.

The Government is giving the managements of heartland malls more funding to introduce such family-friendly features.

From Oct 1, these malls can claim a one-off grant of up to $200,000 to spend on pro-family features under the FamilyMatters@Business grant.

This is four times the current limit of $50,000, which has been available since April last year. More than 50 businesses have successfully applied for the grant since its launch.

Ministry of Social and Family Development (MSF) Parliamentary Secretary Low Yen Ling announced the enhanced grant at Compass Point Shopping Centre yesterday.

She said that malls had given feedback that the $50,000 funding allows them to implement family-friendly initiatives only "on a piecemeal basis".

The grant covers infrastructure, amenities and services that offer safety, convenience and fun to families, especially those with young children and elderly or disabled family members.

These include having non-slip floors, ramps and wider corridors, which will benefit families with strollers or those with wheelchairs.

Ms Low said: "Family-friendly malls not only attract customers, they also contribute to family life in Singapore. It's a win-win outcome for everyone."

MSF will also launch a programme next year to train mall managers and front-line staff to serve families better.

A spokesman for Punggol Plaza, Mr Edward Heng, said the increased funding is "definitely very good".

The mall currently does not have any nursing rooms.

"We will study the grant in greater detail to see how we can tap it," he said.

Marketing engineer Bonny Zhang, 30, who has a two-year-old son, said she hoped more malls will have nursing rooms on every floor.

"If nursing rooms are costly to build, maybe malls can just provide more hot water dispensers," she said.

-By Melissa Tan

http://www.businesstimes.com.sg/premium/singapore/msf-enhances-grant-neighbourhood-malls-20140923

http://www.straitstimes.com/premium/singapore/story/making-malls-more-family-friendly-20140923

HSR dropped from marketing 2 EC projects

Its new 100% commission scheme for sales agents may have ruffled feathers of alliance partners

Source: Business Times / Property

HSR International Realtors' new commission scheme appears to have ruffled the feathers of its alliance partners even before the scheme takes effect in January.

The firm is kept out from marketing the two upcoming executive condominium projects under the Project Alliance Group (PAG), of which it is a part, for now.

In recent advertisements promoting Belleswood and Belleswater, HSR was excluded from the list of marketing agents, even though the PAG logo was present. The projects are being 

developed by China-based Qingjian Realty and were first clinched by SLP International and shared with the alliance.

When contacted, the other members of PAG - namely DWG, OrangeTee and SLP International - maintained that the alliance of the four agencies remains intact.

-By Lynette Khoo

http://www.businesstimes.com.sg/specials/property/hsr-dropped-marketing-2-ec-projects-20140923

Property agent faces breach of DNC charges

Huttons agent allegedly sent unsolicited marketing messages

Source: Business Times / Property

A PROPERTY agent registered with Huttons Asia will become the latest person here to be charged by the Personal Data Protection Commission (PDPC) for offences relating to the Do Not Call Registry under the Personal Data Protection Act 2012 (PDPA).

The commission, in a statement on Monday, said it had received complaints relating to unsolicited telemarketing messages allegedly sent by the property agent to Singapore telephone numbers that are registered with the DNC Registry.

The unsolicited telemarketing messages had advertised various residential property developments in Singapore.

The property agent will be charged in the State Courts on Sept 24, and faces up to 27 counts of contravening Section 43(1) of the PDPA, having failed in his obligation to check the DNC Registry before sending any telemarketing messages to Singapore telephone numbers.

-By Jacquelyn Cheok

'Do Not Call' rules: Realtor to be second person charged

Source: Straits Times / Top of The News

A PROPERTY agent from real estate firm Huttons Asia will be the second person to be charged here with breaching the "Do Not Call" rules since they kicked in on Jan 2.

The unnamed agent allegedly sent unsolicited telemarketing messages to advertise various residential property developments here to numbers listed in the Do Not Call (DNC) Registry.

He will face 27 counts of violating the rules, which carry a fine of up to $10,000 per message sent, tomorrow.

The rules bar firms from marketing to numbers listed in the registry without first getting consent. More than 600,000 phone numbers are on it.

"Telemarketers looking to promote their products or services to individuals with Singapore telephone numbers must abide by the DNC provisions," said Mr Leong Keng Thai, chairman of the Personal Data Protection Commission which administers the DNC rules, in a statement yesterday.

"It is a frustrating experience for individuals who have registered their numbers with the DNC Registry to continue receiving unsolicited telemarketing messages, and the commission will take enforcement action against those who continue to ignore the rules," he added.

The commission has investigated more than 3,500 valid complaints to date, while investigations into 1,700 other complaints are ongoing.

The real estate sector accounts for about half of the complaints pertaining to DNC-related offences, with the rest from sectors such as private education and retail.

Star Zest Home Tuition and its sole director Law Han Wei, 35, were the first to be charged with breaching DNC Registry rules.

Last month, Law and the agency were each fined $39,000 - or $3,000 per charge - after pleading guilty to 13 of 37 offences committed between Jan 3 and 14.

Two other unnamed organisations had agreed to pay between $500 and $1,000 to compound their offences for sending telemarketing messages to numbers listed in the registry.

The commission has also issued warnings to 900 organisations against which the public had lodged complaints.

-By Irene Tham, Technology Correspondent

Property agent to be charged for flouting DNC Registry rules

FEHT taking 30% stake in Sentosa hotel project

Source: Straits Times / Money

TWO new hotels will be built on a Sentosa conservation site housing old military buildings.

The $443.8 million development by Far East Organization and Far East Hospitality Trust (FEHT) will add 850 hotel rooms to the resort island.

The firms will preserve a former military parade square and convert six blocks of barracks along Artillery Avenue into the Outpost Hotel Sentosa and Village Hotel Sentosa.

FEHT yesterday said it will acquire a 30 per cent share in the 60-year leasehold project, with the intention of buying the remaining stake from its sponsor, Far East Organization.

It will fork out $133.1 million to develop the project, with plans to inject it into its portfolio of 12 hotels and serviced residences.

Chief executive Gerald Lee said FEHT had planned to build just one hotel after Far East Organization beat three contenders to secure the 484,400 sq ft heritage site from Sentosa Development Corp in March.

"After going through the plans, we decided to create two hotels," said Mr Lee.

The 620-room Village Hotel Sentosa is aimed at the mid-tier segment while the 230-room Outpost Hotel Sentosa will be an upscale offering.

Mr Lee said the acquisition gives the trust an opportunity to develop a project amid a dearth of hotel sites up for grabs in the Government Land Sales programme.

Buying a stake at an "early stage" will also lower costs, compared with buying the property after its completion. Its cost per hotel room for the project is estimated at $522,000, 38 per cent lower than the $846,000 average based on deals concluded last year.

FEHT's stake will be financed by term loans of $138.5 million and is not expected to affect its distributable income during the construction period, said Mr Lee.

FEHT units closed half a cent down at 81 cents yesterday.

-By Cheryl Ong

Far East Hospitality to take 30% stake in Sentosa hotel project

Curb supply to avert dangers of a burst property bubble

Source: Today Online / Voices

Mr Ku Swee Yong’s commentary, “Tidal wave of property supply hits S’pore” (Sept 19), was excellent in detailing the softening market for residential properties. He analysed and outlined how excess supply will hit Singapore from next year to 2017.

But the real fear is that those who have booked properties and are unable to take up or pay loans start to dump the assets below the prices they paid, just to clear their debts.

This would affect financial institutions with heavy property loans. Such a property bubble would cause a general collapse of property prices and affect the business climate and economy.

This happened in the United States when mortgage lending became rampant and caused prices to slump in certain states. Once the damage is done, it would take a few years for the markets to return to normalcy.

Mr Ku’s suggestion to sell property investments would exacerbate the problem.

The authorities must look strictly at how to curb supply before things get out of hand. This would prevent panic selling and its fallout.

-By Anil Kumar Bhatia

http://www.todayonline.com/voices/curb-supply-avert-dangers-burst-property-bubble

Levelling up mission of HDB upgrades

Source: Straits Times / Opinion

HOME and precinct improvements in Housing Board towns have been a part of the agency's mission for more than two decades. When its Main Upgrading Programme to rejuvenate the oldest estates built in the 1960s and 1970s was winding down, $3.3 billion in taxpayer funds and owner contributions had been spent on new facades, lifts, optional extra rooms and designs for community sharing. Liveability improved hugely for some 130,000 households. Notably, the value of homes rose in tandem. This, to many people, was the icing on the cake - a payoff accruing to them from the HDB's programmes.

All of these endowments are now so much part of the scene here that some might take them for granted. But it is different in parts of Asia and even in Europe, where council and tenant neglect of state housing results in squalor and crime-infested neighbourhoods. The contrast with HDB estates can be traced to policy differences - state-provided housing, mostly rentals, forms only a small part of the accommodation stock elsewhere, whereas public housing is the choice of 80 per cent of Singaporeans, with home ownership a key feature.

The challenge here is to bridge the contrasts in home comfort and public amenities among older estates, fairly new towns and new-generation ones being planned. Upcoming developments slated for Bidadari, Punggol Northshore and Tampines North might feature smart systems, like household energy conservation, mechanised parking, clean waste disposal and monitoring of the frail elderly with remote sensors. 

These might look like bells and whistles to the less technically inclined. But harnessing commercially available technologies to make living more pleasant, yet yield cost savings in cutting down on labour should not be dismissed. Of course, such improvements would look like questionable frills if older estates are left in their original state and not part of a general effort to improve the way people live and mix in HDB estates.

Not all would hanker for new technologies in what the HDB regards as "middle-aged" towns like Chua Chu Kang, Pasir Ris, Tampines and Marine Parade. These are places whose residents would not think of as under-provided. Residents in established estates might place greater value on their character and prefer to preserve familiar features.

To the extent desired by residents, refurbishment should be supported. Noteworthy is the HDB's relaxation of the age-of-origin criterion for neighbourhood renewal, besides speeding up of the Home Improvement Programme, which takes care of common problems like spalling concrete, structural cracks and inadequate bathrooms. More than just achieving a shiny new look, it's improving the quality of life that matters.

http://www.straitstimes.com/premium/opinion/story/levelling-mission-hdb-upgrades-20140923#sthash.NvzDeShc.dpuf

Review need for costly HDB carparks

Source: Straits Times / Forum Letters

THE article ("HDB building high-rise mechanised carparks in trial"; Sept 15) reported that the Housing Board has started building high-rise mechanised carparks in Bukit Panjang, Changi and Yishun, which will add 219 parking spaces at a cost of $18 million.

Doesn't this mean each parking space comes at a cost of about $82,000? And this is only the building cost and excludes maintenance.

Given that taxpayers' money is being used, does the benefit of having 219 more parking spaces justify this huge investment?

Also, doesn't such a project encourage car ownership?

Vehicle owners should have to live with the "inconvenience" of having to walk to a distant carpark, or leaving their cars at home and using public transport, or better still, giving up their cars altogether.

The money would have been better spent subsidising public transport fares for the elderly and the needy, rather than helping car owners have easier access to parking spaces.

Although I am a car owner living near Bukit Panjang, I am against the trial and urge the Government to reconsider it.

-By Chua Tiong Guan

http://www.straitstimes.com/premium/forum-letters/story/review-need-costly-hdb-carparks-20140923#sthash.8HNtA1hy.dpuf

CapitaLand's Iskandar township project hits snag

It seeks 6-month extension on launch of first phase of S$3.2b township

Source: Business Times / Top Stories

[SINGAPORE] Amid growing anxiety over a glut of high-rise residences in Malaysia's Iskandar, a mega waterfront township project there appears to have hit a snag.

The Business Times understands that CapitaLand, South-east Asia's largest real estate developer, recently sought a six-month extension on the launch of its 900-unit high rise condominium, which is the first phase of a S$3.2 billion Danga Bay project, which spans some 28 ha on a man-made island.

The project is CapitaLand's first big project in the country and one of several major business deals born out of warmer Singapore-Malaysia ties.

The group, which is leading the masterplan and project development, may also tweak the plan and cut down the number of high-rise residential units it plans to offer as Iskandar's rosy appeal wilts under a massive oversupply of homes on the back of frenzied building, according to sources.

-By Anita Gabriel

http://www.businesstimes.com..sg/premium/top-stories/capitalands-iskandar-township-project-hits-snag-20140923

Keppel Land sells 80% stake in Surabaya mall

Group expects S$12.5m after-tax gain from disposal

Source: Business Times / Companies

KEPPEL Land (KepLand), through its wholly owned subsidiary PT Keppel Land, has divested its 80 per cent stake in BG Junction - a strata-titled retail development in Indonesia's Surabaya - to Silverise Enterprise and PT Pelangi Arjuno, for about 400 billion rupiah (S$42.8 million).

The sale is expected to yield an after-tax profit of about S$12.5 million for KepLand, the company said in an announcement to SGX on Monday.

The transaction is expected to be completed by the end of this year.

Silverise Enterprise owns a 20 per cent stake in BG Junction.

-By Jacquelyn Cheok

http://www.businesstimes.com.sg/premium/companies/others/keppel-land-sells-80-stake-surabaya-mall-20140923

Nakheel may follow Emaar unit's IPO lead

Source: Business Times / Property

[DUBAI] The chief executive of Dubai's palm island developer Nakheel said the success of a share sale by the malls unit of rival Emaar Properties could encourage it to list its own shares on the emirate's stock market.

Emaar, Dubai's largest real estate developer, is aiming to raise as much as US$1.58 billion from the offer of shares in Emaar Malls Group, which is expected to be the Gulf's biggest stock sale since 2008.

Institutional investors covered their portion of the deal after one day of marketing, and the flotation is expected to encourage others into listing shares after a drought of initial public offerings in the emirate in recent years.

Government-owned Nakheel, famous for building the palm-shaped island off Dubai's coast, is looking at various options to raise funds, including listing its shares, said chief executive Sanjay Manchanda.

-From Dubai, UAE

http://www.businesstimes.com.sg/specials/property/nakheel-may-follow-emaar-units-ipo-lead-20140923

OECD too asks BOJ to ease monetary policy

Source: Business Times / World

THE Bank of Japan came under pressure on Monday to ease policy further when a senior official of the Organisation for Economic Cooperation and Development urged the central bank to implement monetary stimulus in order to counter the impact of the next scheduled hike in the national consumption tax.

OECD deputy secretary-general and acting chief economist Rintaro Tamaki warned in Tokyo that the planned rise in the tax to 10 per cent next year would "inevitably" weigh on Japan's economy, which has already slowed under the impact of an initial hike in the tax in April.

An economic slowdown triggered by the tax hike should be avoided by "short-term measures, in particular, monetary policy", Mr Tamaki told the National Press Club.

Further fiscal stimulus to the economy appears to have been all but ruled out given the precarious state of government finances. At some 230 per cent of GDP, Japan's gross outstanding government debt ratio is by far the highest within the OECD.

-By Anthony Rowley in Tokyo

http://www.businesstimes.com.sg/premium/world/oecd-too-asks-boj-ease-monetary-policy-20140923

Sales of existing homes fall for 1st time in 5 months

Share of properties sold to investors hits 5-year low

Source: Business Times / Top Stories

[WASHINGTON] Purchases of previously owned US homes unexpectedly declined in August for the first time in five months, as investors retreated from the market.

Existing home sales dropped 1.8 per cent to a 5.05 million annual pace, from a revised 5.14 million pace in July, the National Association of Realtors (NAR) reported on Monday in Washington. The median forecast of 72 economists in a Bloomberg survey called for 5.2 million. The share of properties sold to investors was the lowest in almost five years.

Estimates in the Bloomberg survey of economists ranged from a sales pace of five million to 5.35 million. The July figure was revised from a previously reported 5.15 million.

The median price of an existing home rose 4.8 per cent to US$219,800 in August from US$209,700 a year earlier, Monday's report showed. The number of existing properties for sale fell to 2.31 million from 2.35 million. At the current pace, it would take 5.5 months to sell those houses, the same as in July.

-From Washington, US

http://www.businesstimes.com.sg/premium/top-stories/sales-existing-homes-fall-1st-time-5-months-20140923

London apartments reach £5,000 psf

British Land raises £210m from selling 18 of 24 units at Clarges Mayfair

Source: Business Times / Property

[LONDON] British Land Co sold an undisclosed number of luxury apartments in London's Mayfair for more than £5,000 (S$10,355) per square foot (psf), the most paid for a new home in the district.

More than one of the apartments broke the record by a "big margin", said Tim Roberts, head of offices and residential at British Land. He declined to be more specific, citing the privacy of the buyers.

The London-based developer sold 18 of the 34 apartments at Clarges Mayfair, a short walk from The Ritz hotel, at an average price of £4,750 psf, according to a statement on Monday.

British Land, Land Securities Group plc and Great Portland Estates plc, best known for building offices, have been developing homes in London's priciest districts to take advantage of a five-year rally.

-From London, UK

http://www.businesstimes.com.sg/specials/property/london-apartments-reach-%C2%A35000-psf-20140923

Fancy a $100m home?

Meant for the ultra-rich, the two-storey house in Los Angeles has $7,100 toilets and a $165,000 candy wall

Source: Straits Times / Life!

"Even though this represents 0.01 per cent of the housing market, this kind of a price tag is not out of the realm of possibilities."

Mr Jonathan Miller, president of New York- based appraiser Miller Samuel Inc, on the multi-million-dollar Los Angeles mansions

Los Angeles - The eight- bedroom, 15-bath mansion in Beverly Hills, California, has US$5,600 (S$7,100) toilets, a wall of caramel onyx and an 18-seat screening room with doors clad in Italian lizard skin. Asking price: US$85 million.

Rapper Jay Z has taken two tours of the hillside aerie with views that sweep from downtown Los Angeles to the Pacific Ocean. The estate was developed by Mr Bruce Makowsky, who made his fortune selling handbags through department stores and the QVC television channel.

"There was a void of homes for super-wealthy people and that's why I did it," he said while sitting near a curved 16m glass wall that slides open to an infinity pool with iPad-controlled fountains.

"I don't think there's anybody who's served up US$85 million to US$100 million homes at this level for somebody to step into and buy."

He may be the boldest developer of Los Angeles mansions built on speculation, without a buyer in place.

He is betting on growing demand from billionaires, technology magnates and entertainers - a global elite who collect mansions in cities such as Hong Kong, London or Miami, where they alight a few times a year from their yachts and private jets.

Mr Jonathan Miller, president of New York-based appraiser Miller Samuel Inc and a Bloomberg View contributor, said: "Even though this represents 0.01 per cent of the housing market, this kind of a price tag is not out of the realm of possibilities.

"About three years ago, this global phenomenon built momentum where luxury real estate has become a new global currency."

At least 20 American homes have sold for US$50 million or more since 2010, according to Miller Samuel.

Homes costing in the tens of millions of dollars stand in stark contrast to the dwellings of most local residents.

Angelenos use a bigger slice of their paycheques on shelter than people in New York, San Francisco or Miami, studies by economists at Harvard University and Zillow Inc show.

Surging property prices are pushing some lower-income households into converted garages or to move to distant suburbs.

"Clearly, the buyer I'm trying to attract is a very narrow group of people," Mr Makowsky said during a tour of the two-storey, 2,072 sq m Beverly Hills home, complete with a vehicle elevator that lowers cars to a glass-walled showroom. "It's the super-wealthy people that might own a big mega-yacht for US$250 million or they own a big Gulfstream plane for US$100 million."

Twenty-seven of the world's 400 richest people live in California, according to the Bloomberg Billionaires Index.

Globally, there were about 128,000 ultra- wealthy individuals, who each have at least US$30 million of investable assets, a population that grew 12 per cent last year, according to the Capgemini-RBC Wealth Management 2014 World Wealth Report.

In addition to American technology, energy and entertainment money, Los Angeles has lured investors from China, Indonesia, Russia, Latin America and the Middle East who use American real estate as a haven from political and economic uncertainty back home, said Mr Alessandro Cajrati Crivelli, builder of a speculative home listed for US$45 million in the Holmby Hills area of Los Angeles.

As Mr Makowsky led an hour-long tour of the house, he cited prices and brands of furniture and fixtures, speaking in the patter that made him a QVC star.

A 24-person dining-room table has place settings by Roberto Cavalli priced at US$3,700 each and the living room has 10 chairs designed by Bentley Motors that cost US$56,000 a piece.

A climate-controlled wine cellar is stocked with Dom Perignon and Perrier- Jouet champagne along with Cohiba and Montecristo cigars.

"I want every detail inside of the house to be as good as the view," he said.

He and his wife Kathy Van Zeeland spent 30 years making handbags and shoes, a business they sold in 2008 to Hong Kong-based trading company Li & Fung for US$495 million, according to a company filing.

Mr Makowsky, a Rhode Island native who would say only that he is in his 50s, built his fashion business in New York before the couple moved to Los Angeles four years ago.

"What I was coming out here for was the lifestyle," he said. "Happy people, entrepreneurs, not quite the rat race that New York was."

He jumped into home-building after observing the high demand for ultra- luxury mansions in Beverly Hills, Bel Air and Holmby Hills, an area known as the Platinum Triangle.

Towards the end of the Trousdale mansion tour, he headed to the home's lower level, where a candy wall that cost US$130,000 is stocked with US$70,000 of jelly beans, chocolates and other sweets. Three flat-screen televisions above a bar show panoramic views from rooftop cameras.

Nearby, a turntable in the car showroom displays a two-tone blue Bugatti Veyron next to a black Spyker supercar and a 2015 Rolls-Royce Phantom, which are not included in the US$85-million asking price.

http://www.straitstimes.com/premium/life/story/fancy-100m-home-20140923

China’s Big Four Banks May Ease Mortgage Policies: Herald

Source: Bloomberg / Luxury

China’s four biggest banks may ease mortgage lending, the latest in a series of policy steps aimed at supporting the country’s sliding property market, the 21st Century Business Herald reported yesterday.

Criteria for loans to first-home buyers may be eased and people who have paid off outstanding mortgages may be considered eligible for first-home status, the newspaper said, citing unidentified people at Industrial & Commercial Bank of China Ltd. (601398) and Agricultural Bank of China Ltd. (601288) Executives at Bank of China Ltd. met yesterday to discuss adjusting mortgage policies, according to the report, citing an unidentified person. The report didn’t say if the change applied to those who already own more than one home.

Tight credit is damping housing demand even after the central bank on May 13 called on the biggest lenders to accelerate the granting of mortgages. While 37 of the 46 cities that imposed limits on home ownership since 2010 had removed or eased such restrictions as of Sept. 3 to stem the decline in sales, many homebuyers still have a wait-and-see attitude, according to Centaline Group, parent of China’s biggest property agency.

“This reported property policy loosening marks the first major relaxation of mortgage lending rules, which should effectively lower both the down payment requirement and mortgage rates for some second home buyers,” UBS economists led by Hong Kong-based Wang Tao wrote in a report today, adding more easing is likely. “We expect these measures to help ease the property market downturn to an extent, but not to reverse the downtrend or drive through a visible rebound.”

Down Payments

Bank of China and Agricultural Bank declined to comment. ICBC and China Construction Bank Corp. (939) were not immediately available for comment. The central bank didn’t immediately reply to faxed questions.

China raised the minimum down payment for second homes to 60 percent with higher interest rates, and suspended third-home mortgages in a four-year campaign to curb property speculation that had driven up housing prices. Beijing, Shanghai, Guangzhou and Shenzhen, known as “first-tier” cities, lifted the requirement further to 70 percent last year after prices jumped. First-home buyers are allowed to pay only 30 percent up front, and are eligible for mortgage-rate discounts of as much as 30 percent the central bank’s benchmark.

Strict Curbs

In Beijing, at least 70 percent of homebuyers who are currently deemed second-home buyers may qualify for first-home status if the reported policy changes take place, according to Wu Hao, a manager at the loan brokerage of Bacic & 5i5j Group, the city’s second-biggest realtor for existing homes. The city is the most strict with the curbs, treating all mortgage applicants who ever owned a home or borrowed money as second-home buyers even if they’ve sold their only home or paid off their only mortgage, she said.

The loosening will benefit first-tier cities the most, where the definition of first-home buyers has been most strictly applied, according to Jinsong Du, a Hong Kong-based property analyst at Credit Suisse Group AG. The move will also raise investor expectations for more policy support, he said.

A gauge tracking Shanghai-listed developers rose 0.6 percent as of 2:24 p.m. local time.

Home prices dropped in August from July in 68 of 70 cities tracked by the government, including in Beijing and Shanghai, the National Bureau of Statistics said Sept. 18, the most since January 2011, when China changed the way it compiles the data.

Mortgage Discounts

Mortgage-rate discounts on first homes have been rare since last year after banks tightened lending as competition for deposits intensified and default risks climbed. In Beijing and Shanghai, first-home mortgage rates were the same as the benchmark rate in July, and in Guangzhou they were 5 percent to 10 percent higher than the benchmark rate, according to Centaline.

A Chinese bank will consider buyers as first-home buyers if they pay off outstanding mortgages, and will ease restrictions on second-home purchases, the Shanghai Securities News reported today, citing an unidentified official from the bank. The newspaper didn’t identify the bank or provide details about the changes.

Fuzhou, capital of the southeastern province of Fujian, said yesterday people who have paid off loans could be considered first-time home buyers and enjoy preferential rates, according to a statement on local government’s website.

-By Bloomberg News

http://www.bloomberg.com/news/2014-09-22/china-s-big-four-banks-may-ease-mortgage-policies-herald.html

China Beige Book Shows Economy Stuck in Low Gear

Source: Bloomberg / News

China’s economy remained stuck in “low gear” this quarter, with struggling retail and residential real-estate industries countering improvements in manufacturing and transportation, a private survey showed.

Growth in investment slowed further, borrowing costs rose and the share of firms applying for and getting bank loans remained at “rock bottom levels,” according to the China Beige Book, a report published quarterly by New York-based China Beige Book International. In contrast, hiring picked up and corporate profit margins improved, suggesting widespread government efforts to reignite growth are unlikely, it said.

“The absence of deteriorating conditions for most firms, both in terms of hiring and margins, does much to explain Beijing’s reluctance to introduce more large-scale stimulus,” Leland Miller, China Beige Book International president, said in a statement with Craig Charney, research and polling director.

Banks including Royal Bank of Scotland Group Plc and Barclays Plc reduced their economic growth forecasts after data for August showed the weakest industrial-output expansion since the global financial crisis and a 40 percent drop in the broadest measure of new credit. Premier Li Keqiang reiterated this month that the government will stick to targeted easing and can’t rely on monetary stimulus to spur growth.

A preliminary September reading of a manufacturing Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics due today will give a further indication of the state of the economy. The gauge’s August number fell to a three-month low and a separate PMI from the government also dropped.

Growth Stimulus

Premier Li in March set a 2014 target for an increase in gross domestic product of about 7.5 percent. Barclays and RBS this month lowered their estimates to 7.2 percent.

“Whenever weak growth is discussed, the next topic is invariably stimulus,” China Beige Book said. “Yet the true problem, still missed in most policy discussions, is that intense stimulus wouldn’t work.”

Credit participation has “cratered” over the past two years, the report said. “Most firms are reacting to the economic uncertainty by staying on the sidelines,” it said.

China’s response to the global financial crisis brought overcapacity, pollution and higher local government debt, so the nation can’t rely on fiscal funds for large investments, Finance Minister Lou Jiwei said in a statement posted on the People’s Bank of China website on Sept. 21.

Liquidity Injection

Even so, the central bank last week agreed to provide 500 billion yuan of short-term credit to the nation’s five biggest banks. The move was seen by some analysts as a temporary measure to overcome a potential cash crunch before the weeklong National Day holiday starting Oct. 1, while others saw it as monetary easing.

In the latest step aimed at supporting the sliding property market, China’s four biggest banks may loosen terms for mortgage lending. Criteria for loans to first-home buyers may be eased and people who have paid outstanding mortgages may be considered eligible for first-home status, the Guangzhou-based 21st Century Business Herald reported.

The China Beige Book survey showed growth in capital spending slowed again in the quarter to the lowest level since the survey began in 2012. The share of firms applying for and receiving loans held at record lows, according to the report.

Commercial Realty

While residential real estate was in contraction, home builders continue to report growth. Commercial realty and construction picked up, helping to explain the lack of collapses or defaults, China Beige Book said.

Among positive signs, the survey found corporate profitability improving, with margins in the current quarter growing at the healthiest pace in more than a year. The hint of employment weakness seen in the second quarter faded away, hiring improved and the jobs outlook was stable, it said.

The China Beige Book report, modeled on the U.S. Federal Reserve’s Beige Book business survey, was compiled from 2,187 10-minute interviews conducted from Aug. 11 to Sept. 2 through an online survey plus 28 face-to-face 20-minute interviews conducted from Sept. 9 to Sept. 22. Telephone interviews were also conducted with 160 bank loan officers and branch managers.

The previous survey showed the slowdown in the world’s second-largest economy deepening amid weakness in capital spending, hiring and wages and lower demand for credit.

-By Bloomberg News

http://www.bloomberg.com/news/2014-09-22/china-beige-book-shows-economy-stuck-in-low-gear.html

TPG Group to Buy Cassidy Turley and Combine It With DTZ

Source: Bloomberg / News

A joint venture including TPG Capital agreed to buy commercial real estate services firm Cassidy Turley and combine it with DTZ Group to create a global property brokerage.

Cassidy Turley, based in Washington, will be purchased by DTZ Investment Holdings with backing from private-equity firm TPG, PAG Asia Capital and the Ontario Teachers’ Pension Plan, creating a company with more than $2.9 billion of revenue, the companies said. Terms weren’t disclosed.

The agreement continues a trend of commercial-property brokerages seeking partners to create global heft and better compete with the three real estate service giants, CBRE Group Inc., Jones Lang LaSalle Inc. and Cushman & Wakefield Inc., according to Brandon Dobell, an analyst with Chicago-based William Blair & Co.

“DTZ recognized, as did TPG, that they needed more scale, and they have the financial backing to get that scale,” Dobell said in an interview. “And probably as importantly, they have the financial backing to make sure all the producers at DTZ and now at Cassidy know they’re going to be around for a while.”

CBRE is the world’s biggest real estate services firm, with about $8.7 billion of estimated 2014 revenue. Jones Lang LaSalle, the second-largest, has about $5 billion of revenue.

Led by billionaire David Bonderman, Fort Worth, Texas-based TPG Capital has $66 billion of assets under management. The firm, which expanded into real estate after the credit crisis, has deployed about $2.6 billion in properties including California malls, a homebuilder, Florida apartments and office buildings in the U.S. and Europe.

Asia, Europe

“Cassidy Turley is a leading real estate services business in the U.S. and will complement DTZ’s existing very strong businesses in Asia and Europe as well as DTZ’s existing U.S. businesses,” Ben Gray, managing partner for Asia at TPG, said in today’s statement. DTZ, which has its headquarters in Chicago, has historically been based in the U.K.

The DTZ brand will be retained, the companies said. The purchase, scheduled for completion at the end of the year, is dependent upon the investment group finishing its acquisition of DTZ. That deal is expected to be completed around Oct. 31.

Brett White, former chief executive officer of CBRE, is an investor in the acquisition and will join the combined company’s board of directors. He will become executive chairman in March 2015, according to today’s statement.

Acquisition Focus

White is “an industry luminary” likely to bring a focus on acquisitions to the combination of Cassidy Turley and DTZ, Dobell said. White was among the executives who engineered CBRE’s 2003 acquisition of Insignia Financial Group Inc., which gave the buyer a strong New York City presence. Four years later, CBRE bought Dallas-based Trammel Crow Co., more than doubling the property-management business.

The Insignia deal “really vaulted CBRE into a whole different league, just as buying Trammell Crow put CBRE in the catbird seat for property management,” Dobell said.

-By David M. Levitt and David Carey

http://www.bloomberg.com/news/2014-09-22/tpg-group-to-buy-cassidy-turley-and-combine-it-with-dtz.html

U.S. Home Buyers Seen Boosted by Taiwan Rule Change

Source: Bloomberg / Luxury

A change in regulations for Taiwan insurers may be proving a boon for U.S. home buyers.

That’s because new rules are allowing the companies to buy more callable bonds, which is stoking issuance of that debt and affecting derivatives markets that are used to gauge expectations for interest-rate volatility, according to JPMorgan Chase & Co.’s top-ranked mortgage-bond analysts.

Implied volatilities, or vols, play a role in how much extra yield over benchmark rates investors demand to hold U.S.- backed mortgage bonds because they signal how erratic borrowing costsmight be -- and hence also the homeowner refinancing that guides how quickly they’ll be repaid. Lower vols are contributing to a drop in mortgage-bond spreads, including recent decreases linked to Taiwan, the JPMorgan analysts wrote in a Sept. 19 report.

The “tightening this year has been fueled by a remarkable decline in vols,” according to the analysts led by Matt Jozoff and Brian Ye, who were again ranked No. 1 for the market in this year’s Institutional Investor survey. And, “the most recent decline in vols, August in particular, can be traced to a surge of issuance of Formosa bonds in Taiwan.”

Formosa securities are notes that are registered domestically in the nation but denominated in a foreign currency. After a change in May, they’re exempt from regulatory limits on Taiwanese insurers’ foreign investments, according to a report last month from JPMorgan analysts led by Joshua Younger.

Issuance Surge

The result has been a surge in issuance of callable bonds that the insurers like to buy in the Formosa market for their higher yields, according to the bank.

The purchases affect the broader volatility market as the insurers turn to dealers to swap the fixed rate on the bonds into floating ones with derivatives, and then the dealers pass that risk on to investors such as hedge funds, asset managers and other insurers, Younger wrote.

The rise in Formosa callable sales since last month helps explain the recent renewed drop in implied volatilities, the JPMorgan mortgage-bond analysts wrote. The Federal Reserve’s unprecedented stimulus measures and investors’ comfort with its unwinding of them have contributed to longer-term declines.

Mortgage-bond holders can get their principal back faster or slower than they want as rates swing and refinancing among borrowers fluctuates. Options whose prices are used in calculations of implied volatility also provide a way for mortgage investors to hedge against rate swings, with the protection becoming cheaper as vols decline.

Tighter Spreads

Mortgage-bond spreads last week reached the tightest since January 2013, even as the Fed continued reducing its purchases of the debt on a pace that would end the acquisitions next month, one measure shows.

Yields on Fannie Mae securities used to package new 30-year loans fell to within 106 basis points of an average of five- and 10-year Treasury rates on Sept. 19, down from 117 basis points a month earlier and 122 basis points at the end of last year, according to data compiled by Bloomberg. A basis point is 0.01 percentage point.

The way that the mortgage-bond market looks different under an alternative measure known as option-adjusted spreads that takes volatility into account shows how important that item has been, the JPMorgan analysts wrote.

The OAS for the Fannie Mae securities climbed last week to 22 basis points from as low as 10 basis points in June, after ending 2013 at 23 basis points, according to Bank of America Merrill Lynch index data.

The average rate on typical 30-year mortgages rose 11 basis points last week to 4.23 percent as benchmark bond yields increased, down from about 4.5 percent at the start of this year, according to Freddie Mac surveys. Without tighter absolute spreads, borrowing costs would be even higher.

-By Jody Shenn

http://www.bloomberg.com/news/2014-09-22/u-s-home-buyers-seen-boosted-by-taiwan-rule-change.html

Marathon Getting by on Malls, Leases Amid Distressed Funk

Source: Bloomberg / News

Marathon Asset Management LP’s Bruce Richards says the firm is turning to German malls and airplane leases to make money while the distressed corporate debt it usually buys is in short supply.

The hedge fund, which manages $12.5 billion, has bought non-performing commercial real-estate loans in Germany as banks retreat amid tighter regulations and capital controls, Richards, chief executive officer and co-managing partner of New York-based Marathon, said yesterday at Bloomberg Markets Most Influential Summit in New York. The firm is also making leases to borrowers like American Airlines Group Inc., he said.

“We’re stepping up our activity now because this void is in place,” Richards said in a Bloomberg Television interview from the summit. Marathon bought the underperforming debt secured by controlling stakes in German shopping centers at between 30 cents and 50 cents on the dollar, he said later in a panel discussion.

Josh Freed, a spokesman for Fort Worth, Texas-based American Airlines, didn’t immediately respond to a telephone message seeking comment.

Marathon shifted focus to alternative investments, including municipal debt, as demand for distressed corporate securities from other yield-seeking investors pushes up prices, leaving little room to profit.

Puerto Rico

The firm has invested in Puerto Rico’s municipal securities, including power bonds, and is involved in talks to restructure some of the U.S. territory’s debt, he said. The power authority, with $8.3 billion of obligations, must file a debt-restructuring plan by March 2 as part of an agreement with bondholders.

Marathon also bought from a Spanish bank debt of ITR Concession Co., the operator of the Indiana Toll Road, a public-private partnership that filed for bankruptcy, according to Richards.

Marathon is raising $500 million for a new fund that allows it to move into the direct-lending business once dominated by banks, a person with knowledge of the matter said earlier this month. The Structured Products Strategies Fund will make commercial real estate loans, buy and lease commercial equipment and invest in mortgage-related assets created before the 2008 financial crisis.

Hedge funds themselves are partly to blame for higher prices in their once choice securities,Howard Marks, chairman of Oaktree Capital Group LLC, said in a Bloombeg Television interview from the summit. More and more of them means that “the adroit hedge fund” can no longer gobble up the “bargains” larger money managers leave behind, he said.

“Now it’s harder and harder to find real bargains,” Marks said.

-By Laura J. Keller

http://www.bloomberg.com/news/2014-09-22/marathon-getting-by-on-malls-plane-leases-amid-distressed-funk.html

Sales of Existing U.S. Homes Decrease on Fewer Investors

Source: Bloomberg / Luxury

A decrease in investor purchases prompted an unexpected decline in sales of U.S. existing homes in August, indicating the housing rebound is not yet self-sustaining.

Purchases of previously owned houses dropped 1.8 percent to a 5.05 million annual pace from a 5.14 million rate in July, the National Association of Realtors reported today in Washington. The share of properties sold to investors was the lowest in almost five years, the group said.

Transactions at the lower end of the market are suffering as the potential for higher interest rates makes housing a less attractive investment. First-time buyers have yet to fill the void amid slow wage gains and tight credit conditions.

The drop “adds to some of the trepidation” about a slowdown in housing, said Anika Khan, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, who projected sales would fall. “As we start to see overall improvement in employment,” particularly for younger Americans, “we’ll start to see that first-time homebuyer activity increase.”

Stocks declined, led by a plunge among small companies, as China’s finance minister damped hopes the world’s second-biggest economy would get additional stimulus. The Standard & Poor’s 500 Index fell 0.8 percent to 1,994.29 at the close in New York.

The median forecast of 72 economists in a Bloomberg survey called for sales of existing homes to rise to a 5.2 million rate. Estimates ranged from 5 million to 5.35 million. The July figure was revised from a previously reported 5.15 million.

All Cash

All-cash purchases fell to about 23 percent of the market from the usual 33 percent, NAR Chief Economist Lawrence Yun said at a news conference as the figures were released. Investors accounted for 12 percent, the least since late 2009, he said.

The drop in sales last month is “primarily attributable to investors stepping out of the market,” he said.

Demand for homes priced at $100,000 or less slumped 15.9 percent last month, reflecting a lack of inventory of distressed properties, said Yun. Those transactions, which include foreclosures and short sales where a seller accepts a price lower than the underlying mortgage, accounted for 8 percent of the market in August, the least since records began in October 2008, according to real-estate agents’ group.

The drop in investor activity could be a one-month fluke or may also represent growing concern that Federal Reserve policy makers will soon boost interest rates, Yun said. Higher interest rates make investing in real estate less attractive compared with other assets, he said.

First Time

As investors exit, those making their initial foray into real estate have yet to come in. First-time buyers accounted for 29 percent of the market last month, short of the more typical 40 percent. As employment improves, wages pick up and lending rules ease, these buyers will enter, Yun predicted.

“As long as solid job growth continues, wages should eventually pick up to steadily improve purchasing power and help fully release the pent-up demand,” he said in a statement.

Andrew and Claire Witko are among those taking the plunge into home buying for the first time as they grow secure in their jobs. They say they’re confident that the neighborhood in Washington. D.C., where they have chosen to live, Eckington, will continue to post home-price gains.

The couple married earlier this year, and if all goes well, they hope to close in mid-October on a three-bedroom condominium with a big kitchen and lots of light.

No Equity

“Even though there is student-loan debt, the fact that we’re secure in our employment” gave them the confidence to take on housing debt, said Andrew, 29. “The idea of continuing to pay a couple thousand dollars in rent without getting any equity on it was not appealing.”

The median price of an existing home rose 4.8 percent to $219,800 in August from $209,700 a year earlier, today’s NAR report showed.

Purchases dropped in two of four regions, led by a 5.1 percent decrease in the West, today’s report showed.

Existing home sales, which are tabulated when a purchase contract closes, have rebounded from a 13-year low of 4.11 million in 2008. They reached a record 7.08 million in 2005.

The housing recovery has been inconsistent this year after harsh winter weather slowed progress in the first quarter. Data for this quarter has see-sawed.

Builder Confidence

A gauge of homebuilder confidence rose last month to the highest level since 2005. Meanwhile, beginning home construction slumped 14.4 percent, the most since April 2013, following a pace in July that was the strongest since November 2007, the Commerce Department said last week.

Cheaper borrowing costs could help buyers enter the market. The average 30-year, fixed-rate mortgage was 4.23 percent in the week ended Sept. 18, down from 4.53 percent at the start of January, according to data from Freddie Mac in McLean, Virginia.

Mortgage rates have held low as the Fed keeps the main interest rate near zero. At their meeting last week, members of the central bank’s policy making Federal Open Market Committee chose to stay the course, reducing their pace of bond purchases while maintaining that the main interest rate will remain low for a “considerable time” after the program ends.

Homebuilders benefiting amid the low-rate environment include Miami-based Lennar Corp.

“The market has continued a slow and steady recovery that is markedly different from past down-cycle recoveries,” Chief Executive Officer Stuart Miller said in a Sept. 17 earnings call. “History would suggest a more vertical recovery, especially given the severity of the economic decline. This recovery has been a decidedly different experience as the slope of recovery has been shallow and the expected acceleration has not materialized.”

-By Jeanna Smialek

http://www.bloomberg.com/news/2014-09-22/sales-of-previously-owned-u-s-homes-drop-as-investors-retreat..html

Purse Tycoon Aims at Ultra-Rich With $85 Million Home

Source: Bloomberg / Luxury

The eight-bedroom, 15-bath Beverly Hills,California, mansion has $5,600 toilets, a wall of caramel onyx and an 18-seat screening room with doors clad in Italian lizard skin. Asking price: $85 million.

Rapper Jay Z has taken two tours of the hillside aerie with views that sweep from downtown Los Angeles to the Pacific Ocean. The estate was developed by Bruce Makowsky, who made his fortune selling handbags through department stores and the QVC television channel.

“There was a void of homes for super-wealthy people, and that’s why I did it,” Makowsky said while sitting near a curved 54-foot (16-meter) glass wall that slides open to an infinity pool with iPad-controlled fountains. “I don’t think there’s anybody who’s served up $85 million-to-$100 million homes at this level for somebody to step into and buy.”

Makowsky may be the boldest developer of Los Angeles mansions built on speculation, without a buyer in place. He’s betting on growing demand from billionaires, technology magnates and entertainers -- a global elite who collect mansions in cities such as Hong Kong, London or Miami, where they alight a few times a year from their yachts and private jets.

“Even though this represents 0.1 percent of the housing market, this kind of a price tag is not out of the realm of possibilities,” said Jonathan Miller, president of New York-based appraiser Miller Samuel Inc. and a Bloomberg View contributor. “About three years ago, this global phenomenon built momentum where luxury real estate has become a new global currency.”

East Hampton

At least 20 U.S. homes have sold for $50 million or more since 2010, according to Miller Samuel. This year, Barry Rosenstein, founder of hedge-fund firm Jana Partners LLC, agreed to buy a home for $147 million in East Hampton on New York’s Long Island in what would be the most expensive deal ever when completed, said Tim Davis, a broker with Corcoran Group Real Estate. Davis sued the sellers in July, claiming he was cut out of the deal and a $8.8 million commission, he said in a telephone interview today.

The highest current U.S. asking price is $139 million for the Le Palais Royal, a 60,000-square-foot (5,600-square-meter) estate north of Fort Lauderdale, Florida, William P.D. Pierce, a broker at Coldwell Banker Residential Real Estate, said in a statement this month.

The sale of the Fleur de Lys mansion for $102 million in March was the most expensive in Los Angeles.

‘Narrow Group’

Homes costing in the tens of millions of dollars stand in stark contrast to the dwellings of most local residents. Angelenos use a bigger slice of their paychecks on shelter than people in New York, San Francisco or Miami, studies by economists at Harvard University and Zillow Inc. show. Surging property prices are pushing some lower-income households into converted garages or to move to distant suburbs.

“Clearly, the buyer that I’m trying to attract is a very narrow group of people,” Makowsky said during a tour of the two-story, 22,300-square-foot Beverly Hills home, complete with a vehicle elevator that lowers cars to a glass-walled showroom. “It’s the super-wealthy people that might own a big mega-yacht for $250 million, or they own a big Gulfstream plane for $100 million.”

California Billionaires

Twenty-seven of the world’s 400 richest people live in California, according to the Bloomberg Billionaires Index. Globally, there were about 128,000 ultra-wealthy individuals, who each have at least $30 million of investable assets, a population that grew 12 percent last year, according to the Capgemini-RBC Wealth Management 2014 World Wealth Report.

In addition to U.S. tech, energy and entertainment money, Los Angeles has lured investors from China, Indonesia, Russia, Latin America and the Middle East who use U.S. real estate as a haven from political and economic uncertainty back home, said Alessandro Cajrati Crivelli, the builder of a speculative home listed for $45 million in the Holmby Hills area of Los Angeles.

“If you buy a house for $50 million, $60 million, and it falls to $40 million, it’s still better than having your money under a dictator who decides that money doesn’t belong to you any more,” the Italian-born Cajrati Crivelli said in a telephone interview. “It’s the return of capital rather than the return on capital.”

Jay Z

Makowsky’s luxury abode has attracted interest from shoppers both international and domestic, including the two visits by Shawn Carter, the musician better known as Jay Z and husband of singer Beyonce, according to two people with knowledge of the tours who asked not to be named because the matter is private. Makowsky declined to comment on the visits.

Jana Fleishman, a representative at Roc Nation, Jay Z’s entertainment company, didn’t respond to an e-mail seeking comment on the tours, reported last week by gossip website TMZ. Yvette Noel-Schure, a publicist for Beyonce at Schure Media Group, didn’t return a phone call.

The property at 1181 N. Hillcrest Road, in the Trousdale Estates neighborhood of Beverly Hills, has already received two offers, said Branden Williams, a real estate agent with Hilton & Hyland.

“There’s a very good chance we could get asking or above,” said Williams, who shares the listing with Ben Bacal of Rodeo Realty Inc.

$56,000 Chairs

As Makowsky led an hour-long tour of the house, he cited prices and brands of furniture and fixtures, speaking in the patter that made him a QVC star. A 24-person dining-room table has place settings by Roberto Cavalli priced at $3,700 each, and the living room has 10 chairs designed by Bentley Motors that cost $56,000 apiece. A climate-controlled wine cellar is stocked with Dom Perignon and Perrier-Jouet champagne along with Cohiba and Montecristo cigars.

“I want every detail inside of the house to be as good as the view,” he said. “I will tell you because I’m not going to sell you.”

Makowsky and his wife, Kathy Van Zeeland, spent 30 years making handbags and shoes, a business they sold in 2008 to Hong Kong-based trading company Li & Fung Ltd for $495 million, according to a company filing. Makowsky, a Rhode Island native who would say only that he’s in his 50s, built his fashion business in New York before the couple moved to Los Angeles four years ago.

“What I was coming out here for was the lifestyle,” he said. “Happy people, entrepreneurs, not quite the rat race that New York was.”

High Demand

The couple bought an oceanfront house in Malibu in 2010 for about $15 million. Four months later, they purchased a second home, in Beverly Hills, for $22.6 million. Makowsky jumped into homebuilding after observing the high demand for ultra-luxury mansions in Beverly Hills, Bel Air and Holmby Hills, an area known as the Platinum Triangle.

The Trousdale neighborhood alone has 46 construction sites, according to a city of Beverly Hills report from June.

“I was inspired by the amount of construction I saw out here,” said Makowsky, dressed in a T-shirt, white jeans and black blazer with white elbow patches by Beverly Hills designer Bijan. “People are really starting to care what their house looks like more than ever -- the really wealthy people.”

Makowsky said he’s put money into six residential investment properties so far. He paid $5.3 million in January 2013 for a house above the Sunset Strip that he renovated and then sold for $19 million this past April. He’s updating a Bel Air property formerly owned by Michael Strahan, the retired New York Giants football player, bought last July for $11 million. Makowsky has three ground-up developments in the pipeline, each larger and more opulent than the Trousdale home, he said.

More Competition

Rather than relying on investors or bankers to finance his projects, Makowsky said he’s spending his own cash.

A growing number of luxury developments and renovations in Los Angeles’s toniest neighborhoods may hurt demand for Makowsky’s houses. On a lot adjacent to his Trousdale estate, a mansion is under construction by another speculative developer, according to Williams, the real estate agent, and several newly built or renovated homes line Hillcrest Road.

“Yes, there is competition, but nobody will invest this kind of money and build this kind of a house,” said Makowsky, who said he has 150 architects, designers and other people working on his projects.

Beverly Hills imposed restrictions on truck traffic in the neighborhood in June “in recognition of the significant levels of construction-related activity” after two police officers were killed by runaway vehicles in separate accidents, the city said in a website posting.

Candy Wall

Toward the end of the Trousdale mansion tour, Makowsky headed to the home’s lower level, where a candy wall that cost $130,000 is stocked with $70,000 of jelly beans, chocolates and other sweets. Three flat-screen televisions above a bar show panoramic views from rooftop cameras. Nearby, a turntable in the car showroom displays a two-tone blue Bugatti Veyron next to a black Spyker supercar and a 2015 Rolls-Royce Phantom, which aren’t included in the $85 million asking price.

“I want to create and design things that I am proud of and that people will die for or love,” Makowsky said. “That’s what we did in the handbag-and-shoe business, and that’s hopefully what we’ll do here.”

-By John Gittelsohn and Nadja Brandt

http://www.bloomberg.com/news/2014-09-22/purse-tycoon-s-85-million-beverly-hills-home-targets-ultra-rich.html

Parkway to Buy 22 Office Properties for $475 Million

Source: Bloomberg / News

Parkway Properties Inc. (PKY) agreed to buy 22 office properties in the U.S. for $475 million and will finance part of the deal by selling shares.

Parkway, which focuses on buildings in the southern U.S., will purchase three buildings in Tampa,Florida, the Orlando-based company said in a statement today. The real estate investment trust will also acquire 19 buildings in six states, which it plans to sell because they don’t fit with the company’s strategy.

The real estate investor offered 10 million shares to help pay for the acquisition. If the deal doesn’t go ahead, the proceeds of the stock sale will be used to repay debt or to fund other purchases, the REIT said in separate statement. An additional 1.5 million shares can be bought by the underwriters, according to the statement.

Parkway Properties controls or part-owns 51 office properties in eight states. It also manages or leases 11.1 million square feet of properties for other owners.

Bank of America Merrill Lynch, Wells Fargo Securities, Barclays Plc and Morgan Stanley are joint bookrunners for the offering.

-By Neil Callanan

http://www.bloomberg.com/news/2014-09-22/parkway-to-buy-22-office-properties-for-475-million.html

Agile Property Plunges in Hong Kong on Rights Offer Plan

Source: Bloomberg / News

Agile Property Holdings Ltd. (3383)fell the most in more than two and half years in Hong Kong trading after announcing a rights offer, making it the third Chinese developer to seek equity financing in the past month.

Agile, based in Guangdong province, dropped 7.2 percent to HK$5.39 after saying it will offer one rights share for every five held at HK$4 apiece, a discount of 31 percent to Sept. 19 closing price. The stock’s decline today is the biggest since January 2012, while the benchmark Hang Seng Index dropped 1.4 percent.

The developer follows Country Garden Holdings Co. (2007) and Yuexiu Property Co. (123) in tapping shareholders for funds as tighter credit and an economic slowdown cut demand for real estate. China’s new-home prices fell in August from the previous month in all but two cities monitored by the government, and some builders are trailing their annual sales targets.

“There’s a possibility that more Chinese developers will do a rights issue,” said Alan Jin, an analyst at Mizuho Securities Co., declining to name specific companies. “Those with the highest gearing are the most likely.”

Agile said in a statement today it plans to raise HK$2.75 billion ($355 million) to refinance debt and use as working capital. HSBC Holdings Plc, Standard Chartered Plc and BNP Paribas SA are underwriting the offer.

Agile has a net debt-to-equity ratio of 99 percent, compared with the average of 61 percent among its peers, according to data compiled by Bloomberg. Its total debt rose to 44.7 billion yuan ($7.3 billion) as of June 30, from 39.5 billion yuan at the end of last year, Bloomberg data shows.

The proceeds from the rights issue are unlikely to solve Agile’s “current problems” such as exposure to low-tier cities and mismatching of products and segments, Oscar Choi, an analyst at Citigroup Inc., said in a note today.

“Without a ’top-down’ overall strategy to rectify the situation, we believe any efforts on problem-solving may just be superficial with a short-lived impact,” he said, maintaining a sell recommendation on the stock.

-By Michelle Yun and Jonathan Burgos

http://www.bloomberg.com/news/2014-09-22/agile-property-plunges-in-hong-kong-on-355-million-rights-offer.html