Real News‎ > ‎2014‎ > ‎September 2014‎ > ‎

30th September 2014

Top Story

Vivian: Innovation offers strategic opportunities for property sector

Minister also highlights adverse effect of ageing of populations on real estate prices, economy

Source: Business Times / Singapore

HOW a slump in property prices coincided with changes in Japan's demographics offers sobering lessons for countries such as Singapore. But at the same time, mega-trends such as urbanisation and technological advances present strategic opportunities for the property sector.

Vivian Balakrishnan, Minister for the Environment and Water Resources, shared these observations on Monday at the 15th KPMG Global Real Estate and Construction Conference.

While the demographic dividend post-World War II positively impacted economic growth rates and land prices globally, the reverse is taking place now with an ageing population and declining old-age support ratios.

"Between now and 2040, ageing of the world's population will take place at thrice the historical speed observed between 1980 and 2010," Mr Balakrishnan added. "The number of people aged 65 and above will triple from half a billion to 1.5 billion in 2050."

-By Lynette Khoo

Real estate sector 'can help build sustainable cities'

Firms can take the lead, collaborate, and innovate, says Balakrishnan

Source: Straits Times / Money

THE real estate industry has a major part to play in building sustainable cities, said Environment and Water Resources Minister Vivian Balakrishnan yesterday.

Dr Balakrishnan said at the KPMG Global Real Estate and Construction Conference that companies in the sector can lead sustainability, collaborate and innovate and export solutions.

Making Singapore green and resource-efficient is important to sustain economic growth in the face of an ageing population, climate change, urbanisation and the depletion of resources, he added. 

"All key stakeholders - the Government, businesses and people - have their part to play in defining their cities."

The real estate industry is in a position to lead this thrust as buildings, which are constructed to last for decades, can "lock in a city's resource consumption patterns" and put it on track to sustainability, he noted.

The Government's target is to "green" 80 per cent of the building stock by 2030, with a quarter of all buildings already certified under the Building and Construction Authority's (BCA) Green Mark Scheme.

Dr Balakrishnan urged developers to incorporate environmental sustainability into the design and operation of buildings, which can make business sense as well as tenants desire energy efficiency.

The industry can also pursue wider collaboration and partnerships - with customers who buy or lease, within the industry and with academia to devise better solutions, he added.

Dr Balakrishnan said the BCA will set up a Green Building and Innovation Cluster that will facilitate academic and industry collaboration on energy efficiency innovations that can be test-bedded in buildings.

He also suggested to those at the event at W Hotel in Sentosa that building owners can consider becoming "stewards" of public space around them.

"Industry can conjure, share and shape discussion on how the built environment can be integrated and faded into the pockets of nature left around Singapore."

Constant innovation can turn areas of vulnerability into strategic opportunities, he said, as has been demonstrated in the water industry.

As Singapore was "painfully aware of its vulnerability in water", the country was quick to adopt technological developments in semi-permeable membranes and reverse osmosis.

Said Dr Balakrishnan: "(This) allowed us to not only take a step closer towards achieving water self-sufficiency, but also create business opportunities and export them to the world...

"Singapore can therefore become a leader and exporter of expertise and technology in the built environment, leading a network of sustainable and liveable cities."

-By Rennie Whang

Singapore Real Estate

August resale prices of condos stay flat

Source: Business Times / Property

[SINGAPORE] Resale prices of completed private apartments and condos in Singapore stayed flat in August, based on flash estimates from the National University of Singapore's Singapore Residential Price Index (NUS SRPI).

Both prices for the overall market as well as the central region (defined as districts 1-4 including the financial district and Sentosa Cove, and the traditional prime districts 9, 10 and 11) were unchanged in August compared with July. Their price indices excluded small units of up to 506 sq ft.

Bucking the trend slightly were prices in the non-central region as well as those of small apartments, both of which edged up a marginal 0.1 per cent in August.

"The flash NUS SRPI numbers indicate that resale prices have remained rather flat in August on the back of low volumes," said associate professor Lum Sau Kim of the NUS Institute of Real Estate Studies.

-By Lee Meixian

Resale home prices unchanged in August

Source: Straits Times / Money

THE Hungry Ghost Festival brought property buying to a standstill last month and left resale home prices flat.

Developers also shied away from launching projects while buyers pulled back in anticipation of attractive discounts at upcoming launches, market watchers said.

Prices were unchanged last month after a slight rebound in July, when private home resale values inched up 0.1 per cent from June, according to the National University of Singapore's Institute of Real Estate Studies price index yesterday. Earlier estimates had indicated a slip of 0.3 per cent.

Mr Nicholas Mak, research head at SLP International, said: "The 'ghost month' could have resulted in a reduction in the number of buyers and sellers in the secondary market."

A dearth of new residential projects also had a flow-on effect in the resale market, as buyers typically take an interest in surrounding property following the launch of a new condominium, he said. "The low volume caused property prices to move sideways."

The price index comprises sub-indexes tracking resale home prices across the property market. Prices of suburban units rose by just 0.1 per cent, compared with an increase of 0.3 per cent from June to July. Values of small resale private homes - those with floor areas of up to 506 sq ft - eked out a 0.1 per cent rise last month. They had slipped by 0.4 per cent from June to July.

Resale prices of city centre homes remained unchanged, an improvement from the 0.1 per cent dip from June to July.

Mr Ong Kah Seng, director of R'ST Research, said yesterday's data does not point to a recovery in the resale market, which has been buckling under the weight of several rounds of cooling measures and mortgage lending restrictions.

Luxury units in the city centre have been the hardest hit. "Owners putting up their high-end residential units for resale are feeling the strain of competing with developers with ample unsold stock. Developers are offering attractive price discounts," said Mr Ong.

Mr Mak predicted that resale home prices could dip by 5 to 10 per cent over the next year. "In the absence of fresh leads of changes to government policy for the private housing market, private real estate prices are likely to weaken gradually."

-By Cheryl Ong

Resale prices of private homes mostly unchanged: SRPI

Source: Channel News Asia / Business

SINGAPORE: Resale prices of private homes ended mostly unchanged in August according to Singapore Residential Price Index (SRPI) flash estimates, which were released on Monday (Sep 29).

The SRPI, compiled by the National University of Singapore's Institute of Real Estate Studies, showed overall prices had no change in August from the previous month. In July, prices went up 0.1 per cent from a month earlier.

Prices of small unit homes rose 0.1 per cent in August from the previous month. A small unit has a floor area of 506 square feet or below.

Prices of homes in the central region in August, excluding small units, remained unchanged compared to July. However, home prices in the non-central region dipped 0.1 per cent on-month. These figures exclude prices of small units in the non-central region.

- CNA/av

Strata-titled shops a 'good long-term bet'

Source: Straits Times / Money

RETAIL property is experiencing mixed fortunes these days, with prices holding firm amid investor demand while rents soften as consumer spending slows.

A state of the market report by consultancy DTZ suggests that buyers of shop space might be on to a long-term winner, given the limited supply of strata-titled units.

Only 10 per cent of the 5.5 million sq ft of retail space expected to come onstream from the last quarter of the year to 2019 is estimated to be strata-titled, said Ms Lee Lay Keng, regional research head at DTZ. 

"This limited supply supports the potential for capital appreciation in the long term, and is one of the reasons why investor interest in strata-titled retail units remains healthy despite yield compression," she added.

About 100 strata-titled shops were sold in the third quarter, according to Urban Redevelopment Authority data. In the second quarter, 128 units were sold.

But retailers are slowing their take-up of new shop space amid flagging sales and tighter labour policies. The completion of refurbishment work at malls such as Shaw Centre, Chjimes, Suntec City and HillV2 - a mixed development in Hillview - means a total of 924,300 sq ft of new retail space has been added since the start of the year.

But in the first half, only 62,400 sq ft of space was taken up - well down from the 326,000 sq ft in the same period last year, said DTZ.

The sluggish demand sent average rents in the prime shopping belt of Orchard Road and Scotts Road down 0.3 per cent from the second quarter to the third, their first decline in more than a year.

Average rents in the rest of the city fell by 1 per cent in the third quarter after slipping 0.3 per cent in the second. Suburban rents fell 0.5 per cent over the same period.

"Within shopping malls - both old and new - there is more available space, especially on the higher floors where catchment or footfall may be lower," said Ms Anna Lee, director of retail at DTZ.

Other than the manpower crunch, retailers also have to manage competition from e-commerce firms, said DTZ.

"Landlords are now more flexible on asking rents by providing various incentives in their rental packages," added Ms Lee. "Retailers, on the other hand, continue to focus their efforts and resources on outlets that are more successful, putting off expansion plans in the interim."

DTZ also warned investors keen on smaller strata-titled units that rental demand from small retailers could be weaker in today's challenging shopping scene.

-By Cheryl Ong

RB Capital appoints InterContinental for its revamped hotel

Source: Business Times / Top Stories

[SINGAPORE] The Gallery Hotel in Robertson Quay will make way for a luxury property under the InterContinental brand. RB Capital, which owns the Gallery Hotel, has appointed InterContinental Hotels Group (IHG) to manage the property under the chain's top-tier brand after it undergoes a major refurbishment and re-opens in 2016.

InterContinental Singapore Robertson Quay will have 225 rooms, starting at 300 square feet each; about 10 per cent of the rooms will be suites above 500 sq ft. This will be IHG's second InterContinental hotel in Singapore after the one in Bugis Junction. The existing Gallery Hotel, which RB Capital bought in late-2013 for S$232.5 million, will close its doors in November for the renovations, expected to cost around S$70 milion.

More than half the building's structure will be brought down, and the rest stripped to floor slab and pillar for the conversion of the property into a luxury hotel. The first three levels of this 10-storey property will be converted to 63,000 sq ft in lettable area for retail space, primarily driven by F&B outlets and food-related retail. The first level will also house the hotel's arrival lobby, concierge services and the hotel's flagship restaurant.

The hotel reception/check-in will be on Level 4, which will also have meeting rooms and function space, the club lounge, a swimming pool, and bar and dining facilities. Rooms will be located from Level 5.

-By Kalpana Rashiwala

Lake Life first EC to beat 15-month sale-launch rule

Source: Business Times / Property

[SINGAPORE] The Lake Life executive condominium (EC) in Jurong, which is to be launched for sale by e-applications on Oct 4, is set to become the first EC to beat the 15-month period stipulated by the government to launch units for sale.

According to a government ruling introduced last year, developers who acquired EC land parcels after Jan 12, 2013, can launch units for sale only after 15 months from the date of award of the sites or after the completion of foundation works, whichever is earlier.

For the consortium led by Evia Real Estate, the completion of foundation works came earlier, slightly over 14 months from the date of award of the site.

Vincent Ong, co-managing partner of Evia Real Estate, said the developers drew up the design and drawing plans even before tendering for the land, which allowed it to turn around the submission of its plans much faster.

-By Lee Meixian

JTC launches three sites for sale

Source: Channel News Asia / Business

SINGAPORE: JTC Corporation on Monday (Sep 29) launched two Confirmed List sites at Tuas South Street 9 and Tampines North Drive 1, as well as one Reserve List site at Tuas South Street 6, for sale.

The land sales were launched under the second half of the 2014 Industrial Government Land Sales (IGLS) Programme, it announced in a news release on Monday. 

The two Confirmed List sites are zoned for Business-2 development. The site at Tues South Street 9 (Plot 50) has a 20-year 8-month tenure with a maximum permissible gross plot ratio of 1.0, and measures 0.8 hectare (ha). The site at Tampines North Drive 1 (Plot 1) has a lease of 30 years and a maximum permissible gross plot ratio of 2.5. The site measures 2.7 ha, according to JTC.

The tenders for both sites close on Nov 24 at 11am, it added.

Separately, the site at Tues South Street 6 (Plot 46) was released for application under the Reserve List. Zoned for Business-2 development, the site has a 20-year 4-month tenure and a maximum permissible gross plot ratio of 1.0, JTC says.

Confirmed List sites go on sale regardless of interest from developers, while Reserve List sites are triggered for a public tender only if a developer makes an acceptable opening offer. 

- CNA/dl

Tuas and Tampines industrial sites launched for sale

Source: Business Times / Singapore

JTC Corporation on Monday launched two confirmed-list sites in Tuas South and Tampines North for sale, along with another reserve-list site in Tuas South.

All three sites are zoned for Business-2 development, that is, heavier and more pollutive industrial use.

The 2.7-ha site in Tampines North Drive 1 (Plot 1) is the largest site on the second half 2014 industrial government land sales (IGLS) confirmed list.

It has a lease of 30 years and a maximum gross plot ratio of 2.5, which means it will most likely be developed into a multiple-user industrial site, said SLP International executive director Nicholas Mak.

-By Lee Meixian

Three industrial sites up for sale

Source: Straits Times / Money

THREE industrial plots tailored mainly to meet the demands of smaller business operators have been put up for sale.

Two sites are on the confirmed list - a 0.8ha parcel in Tuas South Street 9 that has been designated as Plot 50, and a 2.7ha plot in Tampines North Drive 1 (Plot 1).

The third site is a 0.7ha plot in Tuas South Street 6 (Plot 46), which is on the reserve list on the Industrial Government Land Sales programme. Reserve list sites are triggered for tender once an acceptable bid is lodged, while confirmed sites are rolled out regardless of demand.

All three sites have been zoned for "Business 2" (B2) development, which means they are suitable for heavy and more pollutive industrial use.

Plot 50, which has a lease of 20 years and eight months and a maximum gross plot ratio of 1.0, is expected to draw five to 10 bids, said R'ST Research director Ong Kah Seng. He expects the highest bid to come in at between $65 and $75 per square foot per plot ratio (psf ppr).

The plot comes in an "ideal" size to meet the needs of average-scale industrialists and contractor-developers looking for multi-purpose space, said Mr Ong.

"Those who have missed the boat previously (when sites of a similar size were available) will offer a high enough tender price if they are set on winning this 'right-sized' plot," he added.

Plot 1 has a tenure of 30 years and a maximum gross plot ratio of 2.5. It is likely to draw about four to seven bidders and a winning offer from $70 to $82 psf ppr, said Mr Nicholas Mak, executive director of research and consultancy at SLP International.

He pointed to its "attractive" location - in close proximity to the Tampines Expressway and facing the Sungai Api Api River - and the limited supply of B2 industrial space in the eastern part of Singapore.

"However, the large size of this project and the current softer market sentiments could taper developers' interest in this site."

Plot 46, which comes with a lease term of 20 years and four months and a maximum gross plot ratio of 1.0, could earn a top bid of $65 to $75 psf ppr.

"Buyers of sites in Tuas are seeing it shape well into a speculation-free industrial property enclave that caters mainly to end- users," noted Mr Ong.

JTC Corporation said in a statement that the three sites were launched as part of the Government's efforts to "offer more choices for industrial development".

"The different land tenures and sizes cater to industrialists who prefer to purchase strata-titled industrial property as well as those who prefer to have the flexibility to custom-build their own facilities."

The tenders for the two confirmed list sites close at 11am on Nov 24.

-By Jacqueline Woo

Guthrie sells half of the 100 units released at Havelock II

70% of buyers of the 50 retail and office units are owner occupiers

Source: Business Times / Property

[SINGAPORE] Some 70 per cent of the 50 units at Havelock II that Guthrie GTS has sold since the project was soft launched in mid-July were picked up by buyers for their own use.

This is a significantly higher proportion compared with a share of 30-45 per cent for owner occupiers among buyers of strata commercial units in Guthrie's ventures in recent years, such as Paya Lebar Square, The Adelphi near City Hall MRT Station and Burlington Square along Bencoolen Street.

In an interview with BT, Guthrie GTS director Michael Leong described the higher proportion of end users in Havelock II as a "healthy trend" reflecting the drop in speculative fervour.

The 50 units Guthrie has sold in Havelock II make up half of the 100 office and retail units released in the project, which will be the revamped 2HR building the group acquired in March 2013. In all, the project will have 245 units comprising 151 retail units and 94 office units.

-By Kalpana Rashiwala

Experienced crane operators wanted

More new hires but they lack experience needed for complex jobs

Source: Straits Times / Singapore

THE number of crane operators has nearly doubled in the past year, but construction projects may still be delayed as many new hires do not have the experience needed for complex jobs.

And while the rules allow for four foreign hires to every one local hire today, they will be tightened to a ratio of two to one by 2017, and that could worsen the crunch, said Singapore Crane Association chairman Alan Chan.

There are about 6,000 crane operators today, almost twice the 3,600 reported by National Development Minister Khaw Boon Wan in a blog post he wrote last year about the manpower shortage for building new Housing Board flats.

But while the increase in operator numbers is encouraging, construction companies told The Straits Times a "gaping" need remains for workers with at least five years' experience, an industry standard.

This is because high-risk projects, particularly those in populated areas, require "much more careful handling", said Mr Belvin Tan, 47, safety manager of Yau Lee Construction. It will take time to bring the new pool of hires up to standard, he added.

The need is made even more pressing by the ageing pool of operators, more than 40 per cent of whom are above the age of 50.

Many will find it hard to continue working with increasing age and its impact on eyesight, and chronic illnesses like heart conditions and high blood pressure, said Mr Chan.

Though the association does not have concrete figures, Mr Chan said the attrition rate due to health conditions is "quite high".

Ageing crane operators may also find it harder to renew their Class 5 driving licences needed to operate mobile cranes after the age of 65, which would further shrink the pool.

Though the Monetary Authority of Singapore lowered its forecast for the growth of the construction sector earlier this month after an industry poll, insiders say about 800 to 1,200 more crane operators are still needed.

The good news is that 1,500 people attended the second annual crane carnival held on Sunday and 226 people registered their interest in joining the profession.

Last year, fewer than 200 people out of 800 who attended the carnival signed up for interviews with crane renting companies and the Building and Construction Authority's Crane Apprenticeship Programme.

Until now, Singaporeans have not been willing to step into the breach, because of the tough working environment of construction sites, society's perception of crane operators as manual labourers and safety concerns.

"But today's operators work in a high-tech environment with air-conditioned cabins and touchscreens," said Mr Chan.

Something else that might help the search for qualified operators is a registry and accreditation system, said Huationg general manager Jimmy Chua, 54.

The registry would include details on licensed operators' training records and the number of hours they have worked on sites.

This could help change the mindset that a crane operator who has held a licence longer is more experienced.

According to Mr Chua, there are some operators who have fewer than five years' working experience who have clocked more hours than their seniors.

-By Aw Cheng Wei

Regional chapter beckons for local urban planners

The mega-merger of Singapore's urban planning firms will give them an edge in leading urbanisation efforts in Asia. But size is not the only factor that matters in this potentially game-changing deal involving Ascendas, Jurong International, Surbana and Singbridge.

Source: Straits Times / Opinion

THE recently proposed merger of four of Singapore's architecture, urban design and planning firms - Ascendas, Jurong International, Surbana and Singbridge - would dwarf the world's largest existing comparable firms.

Currently, the biggest firms of this kind are the United States' Gensler and Aecom and Japan's Nikken Sekkei, each with about 1,400 employees, and around US$400 million (S$510 million) in income. The merged Singapore firm, which by comparison could boast over 3,000 employees and more than US$1 billion in revenue, would be a pretty big beast in the global market.

Size has its advantages. A large firm can convene diverse specialist skills - such as architectural design, urban planning, engineering, project management, environmental engineering and economic planning - to tackle the complex, multi-disciplinary projects that contemporary cities require.

Large firms can also be good at putting new city planning and urban design research into action. The risks in building with a new sustainable material or energy system, for example, are often best borne by firms with sufficient scale and robustness.

But size isn't everything. To consider this merger as merely a matter of economic muscle would be to miss the more significant point about Singapore's growing role in the urbanisation of Asia.

The merger represents a significant culmination of Singapore's own history. It could catapult the Republic's planning agencies into a much larger regional role, with an opportunity to shape Asia's future cities.

Ascendas, Jurong International and Surbana each emerged from a government agency - the first two from JTC Corporation and the latter from the Housing Board - while Singbridge is wholly owned by Temasek Holdings.

Each found its raison d'être in promoting and supporting Singapore's development and urbanisation. As the city reached First World standards in housing, urban planning and industrial planning, these firms began to export their expertise to neighbouring countries in Asean and beyond from the early 2000s.

Their merger would be a clear sign that knowledge and skills developed in Singapore can be confidently exported in more integrated and comprehensive ways.

It would combine the expertise of the four firms: Ascendas' know-how in developing business parks and industrial land; Jurong International's specialisation in the high-tech, bioscience, marine and infrastructure industries; Singbridge's skill in economic zones and integrated and sustainable cities; and Surbana's track record in residential and mixed- use precincts, towns and cities.

When packaged together, this remarkable collection of skills could make for a very powerful, perhaps unique, vehicle for responsible urbanisation. The capacity to consider a city's hardware - buildings, infrastructure, resources and land - in a more integrated way is one pathway to more sustainable forms of urbanisation.

Singapore sits smack in the middle of one of the world's most rapidly urbanising areas. Half the world's population is contained in a territory within a six-hour flight from Singapore. The majority of that population, currently rural, will reside in cities by 2050.

Cities are needed to house these future urbanites. How will they be planned? How will electricity, water and waste be managed? How best to integrate and manage everyday technologies - air conditioners, refrigerators, computers, motorcycles and cars? Who will plan the rail, road, pedestrian and cycling networks that connect them?

Singaporean firms and government agencies have very good answers to many of these questions, as evidenced in their track record of producing integrated townships and industrial centres that are served by efficient utilities and public transport systems.

But what kind of urbanisation would result from the export of Singaporean planning and design knowledge? Would future Asian cities look like mini-Singapores, with their neighbourhoods resembling Ang Mo Kio or Toa Payoh?

The challenge would be to understand how to use Singapore's experience and adapt it for each new city. The likely ideal would be a mix, resulting in a series of unique hybrids in each new city where local forms, practices and traditions of city-making combine with modern principles tried and tested in Singapore.

Emerging examples of this kind include the Mahindra World City project in Chennai, India; an 11,800-unit public housing township in Bandar Cassia in Penang, Malaysia; the Singapore-Sichuan Hi-Tech Innovation Park in China; and the Ascendas-Protrade Singapore Tech Park in Binh Duong, Vietnam.

These developments, each planned with expertise from Jurong International, Surbana, Singbridge and Ascendas respectively, variously incorporate mixed-use, work-live arrangements that aim to catalyse local economies, cultures and environments. They work to integrate transportation infrastructure, local natural landscapes, recreational spaces and cultural facilities, some of which take their architectural cues from regional precedents.

The importance of adapting to local cultures and contexts should not be underestimated. Any successful urban planning firm must be able to connect with the future residents and communities of their developments.

This involves consulting and collaborating with community groups too, which requires expertise not always associated with architecture and planning: such as anthropology, psychology, sociology and history.

Responding effectively to the unprecedented challenges of urbanisation depends heavily on how large planning and design firms are organised, how the available expertise is marshalled, what culture of design they promote, and how they integrate the latest research.

In this sense, the merged entity could be one of the lead authors in a second chapter in Singapore's story of national development. But, this time, the characters are not only Singaporeans, but also the millions of people who aspire to improve their lives by moving to cities in India, China and Asean.

-By Stephens Cairns

Recognise good bosses in construction sector

Source: Straits Times / Forum Letters

MR RAYMOND Anthony Fernando ("Reward 'role model' maids and their employers"; Forum Online, Sept 18) and Mr Seah Seng Choon ("Recognition of outstanding maids, employers"; Forum Online, Sept 20) wrote about initiatives to recognise exemplary foreign domestic workers and employers.

We should also not overlook the good practices of employers in the construction sector.

One often hears of construction companies cutting costs and speeding up projects, resulting in unsafe practices that endanger workers. 

Responsible bosses and model workers should be singled out for their efforts to maintain safe and accident-free worksites. Employers who pay their foreign workers on time and provide decent accommodation for them should also be commended.

The relevant authorities could set up public awards for this purpose. This would spur others in the industry to emulate the "model" employers.

Enough has been said about errant employers. We should now acknowledge good bosses in the sector.

-By Ada Chan Siew Foen

Water leakage: Strata Titles Boards replies

Source: Straits Times / Forum Letters

WE REFER to Mr Chiu Mung Hing's letter ("In a bind over water leakage"; last Tuesday).

The Building Maintenance and Strata Management Act presumes the defect is within the upper unit when there is water leakage from it into the lower unit, unless there is proof to the contrary. Therefore, it is prudent for the owner of the upper unit to investigate.

If it is found that the leakage is from the upper unit, the owner should take immediate steps to rectify it. 

Under the Act, if the owners of both units are unable to resolve the dispute amicably, the aggrieved party has the option to make an application to the Strata Titles Boards (STB).

The STB is a tribunal providing a less costly alternative where proceedings are not as complex or protracted as in the courts.

The STB Board will make an order based on the evidence and merits of the case, and the order is enforceable in the State Courts.

The STB's application fee of $500 covers two mediation sessions. The mediation and hearings are conducted by industry experts appointed depending on the nature of the case and the required expertise.

The applicant may apply to the STB for the $500 fee to be paid by the other party, and the STB may make an order if it considers this to be justified.

-By Sylvia Jackson Yap (Ms)


Strata Titles Boards

Iskandar housing glut may hit rental yields: Rehda chief

Investors told not to snub region, look at quality of developers

Source: Business Times / Singapore

A LOOMING housing glut in Iskandar Malaysia may weigh down rental yields in the economic zone, with homes being left empty.

The warning this time came from Malaysia's national organisation of developers, the Real Estate & Housing Developers Association (Rehda).

FD Iskandar, president of Rehda, noted that some 30,000 homes could be completed by 2016 or early 2017 in Iskandar.

If these are mainly sold to buyers outside Malaysia and Singapore, "then you will see that these units will be empty and once they are put up for rent and there are so many units available, that will put pressures on rental yields", he said.

Malaysia's federal government is "actually looking seriously" at this issue, Mr Iskandar added. But land administration in Malaysia lies within the authority of the state government.

In the past 12 to 18 months, the deluge of homes launched or in the pipeline by China developers, including Country Gardens and Guangzhou R&F Properties, has stoked concerns over a looming housing glut in the Iskandar region, which encompasses an area of more than 2,000 square kilometres in Johor.

"Obviously, we have seen developers from China launching a few thousand units at one go," Mr Iskandar said, adding that Malaysian or Singaporean developers would typically have 400-600 units in one project.

Most of the buyers of these Chinese projects come from mainland China, he observed. "Upon completion, of course obviously, they will not use this as their main home, there will be some concerns about these residential units being empty."

But Iskandar is bigger than Nusajaya or Danga Bay, he said, adding that demand for landed homes still "looks very strong".

Mr Iskandar noted that many Singaporean buyers prefer to buy from Singapore developers or reputable Malaysian developers.

There has also been much interest from Singaporean investors in industrial as well as commercial properties.

Meanwhile, other hot property spots in Malaysia such as Penang and Greater Kuala Lumpur are likely to be shielded from the supply glut in Iskandar as strong population growth in these areas is still supporting fundamental demand for housing, according to Mr Iskandar.

Kuala Lumpur's population is six million and could grow to 10 million by 2020 through demographic growth, urbanisation and intra-state migration.

Mr Iskandar estimated that this would translate to some 170,000 homes to be built each year, based on the assumption of four persons per household.

Investment yields from residential properties in Penang and Kuala Lumpur are likely to hold up in the region of 5 to 8 per cent while commercial properties could reap higher yields, Mr Iskandar projected.

The retail segment has also emerged as a strong component, with Kuala Lumpur being ranked by global news network CNN as the fourth-best city in the world for shopping after New York, London and Tokyo.

With the upcoming high-speed rail between Singapore and Malaysia expected to cut travelling time from 51/2 hours to just 90 minutes, both Kuala Lumpur and Singapore will benefit from greater inter-city travelling and cross-border investments, Mr Iskandar said.

Still, he is not asking potential buyers to completely snub Iskandar that he believes to be a "highly investable location".

But Mr Iskandar has a piece of advice: "Please look at the quality of the developers. Be savvy investors. If it's for owner-occupation, there's no worry whatsoever but if it is for investment, you need to do due diligence before buying."

-By Lynette Khoo

Concern over China firms' launches in Iskandar

Source: Straits Times / Money

THE huge number of units being launched by Chinese developers in Iskandar could affect rental yields, Datuk FD Iskandar, the president of the Real Estate and Housing Developers' Association Malaysia, warned yesterday.

"Iskandar is very exciting for Malaysia and we are looking at developers which have never been introduced to the Johor state," he said on the sidelines of the KPMG conference.

Chinese developers opt to launch a few thousand units at one go while Malaysian or Singaporean developers tend to release 400 to 600 units at a time.

"Even though we've been told the take-up rate is quite steady and most buyers come from mainland China, there will be some concern upon completion. (Such buyers) won't be using this as their main home, so there is concern about these units (possibly) being empty and whether yields can be supported," he said.

There could be about 30,000 strata-titled residential units that have largely been sold and are scheduled for completion by the end of 2016 or early 2017, according to market estimates, he said.

A few thousand more will be launched in phases, he noted, adding that home prices in Iskandar rose quickly, given that they started from a low base, and responded to pent-up demand, but they have stabilised in the past six months.

Demand for landed property also remains "very strong", he said.

"Iskandar is still a highly investable location... I think Singaporean investors are savvy and will look at the right location.

"If it's for owner occupation there's no worry whatsoever. If it's for investment. they will do their due diligence, he said."

-By Rennie Whang

Oversupply by China developers sparks uncertainty over Iskandar’s rental yield

But blaming them is unfair as there is already a glut in the market, says analyst

Source: Today Online / Business

SINGAPORE — The Iskandar region is facing a home supply glut due to a large number of projects led by Chinese developers, which could compress rental yields down the line, said the head of Malaysia’s national representative body for property developers.

“Over the past 12 to 18 months, we’ve seen developers from a certain country introducing a lot more units than Malaysian and Singaporean developers usually introduce,” said Mr FD Iskandar, president of Malaysia’s Real Estate and Housing Developers’ Association at KPMG’s Global Real Estate and Construction Conference yesterday.

“On average, Singapore and Malaysian developers will launch between 400 and 600 units, but we’ve seen developers from China launching a few thousand units at one go,” he elaborated.

Last month, Guangzhou R&F Properties launched more than 3,000 units at its Princess Cove development near the Causeway. This followed Country Garden’s launch of more than 9,000 homes at its Danga Bay project last year.

“I understand that close to 30,000 strata units have already been sold (across Iskandar) and are now under construction, and a few thousand more will be launched in phases,” Mr Iskandar noted. “Most of the buyers are from China … so there will be some concern about these units being empty and whether there will be sufficient yield to sustain the rental market.”

Mr Iskandar’s comments came as uncertainties continue to surface over the residential landscape in Iskandar Malaysia, with CapitaLand reportedly delaying its S$3.2 billion joint-venture project at Danga Bay. Bilateral bickering over Causeway toll charges and vehicle entry permit fees has also complicated Iskandar’s outlook as a viable residential property market for Singaporeans.

But blaming the Chinese developers is unfair, said Century 21 Singapore chief executive Ku Swee Yong, “because there’s already an untenable oversupply situation even if you exclude the Chinese developers, with housing supply coming in ahead of actual job growth. I don’t see a robust growth of economic activity, which means rental demand simply isn’t there”.

He added: “Right now, the rental yield is hovering at around 4 to 5 per cent. I’m not sure how it’ll dip going forward, but even at this level, it’s already not worth it, considering the 4.5 per cent interest costs when you borrow in Malaysia.”

Meanwhile, Singapore’s property market is facing risks of its own, other speakers at yesterday’s conference cautioned. “The residential segment in Singapore is at the top of its cycle … we’re looking at a 10 to 15 per cent price drop over the next three years,” said Ms Kim Wright, global real estate strategist and head of Asia real estate research at UBS, adding that the normalisation of interest rates as the United States tapers its quantitative easing policies might hit housing markets across Asia, where household leverage is at a high level.

-By Wong Wei Han

Why billionaire is building own house in Tokyo

City sees a luxury housing shortage amid a wealth boom

Source: Business Times / Property

[TOKYO] Billionaire Hiroshi Mikitani, Japan's fourth- richest man, is building a house in central Tokyo that is estimated to cost at least 2.3 billion yen (S$26.8 million), underscoring a shortage in the city's luxury housing market.

The two-storey house is on an 880-square-metre (9,472-square-foot) site in an exclusive neighbourhood in Shibuya ward, according to a registration filing with the Legal Affairs Bureau. Land prices in the neighbourhood have risen 20 per cent this year, broker Century 21 Sky Realty estimated.

"There are few luxury homes for sale at the moment," said Yukiko Takano, manager of international sales at List Sotheby's International Realty, a real estate brokerage unit of the New York-based auction house. "Demand is rising at a time when supply remains unchanged."

Luxury home prices in Tokyo have climbed as household wealth hit a record this year amid Prime Minister Shinzo Abe's efforts to reflate the economy. Japan's high- net-worth individual population growth rate surged to a record in 2013, according to Capgemini and RBC Wealth Management. Prices for luxury units in central Tokyo have increased 20 per cent since October 2013 and are at the highest since 2007, according to an estimate by Sotheby's.

-From Tokyo, Japan

Pending Sales of U.S. Existing Homes Fell 1% in August

Source: Bloomberg / Luxury

Contracts to purchase previously owned homes declined in August as tighter credit and limited wage growth weigh on potential buyers.

The pending home sales index dropped 1 percent after a 3.2 percent increase in July, the National Association of Realtors said today in Washington. The median projection in a Bloomberg survey of economists called for the index to drop 0.5 percent.

Stricter lending practices since the housing crisis and still-stagnant salary increases are keeping downward pressure on sales activity, particularly for those eyeing properties for the first time. Further payrolls gains, on track for their best year since 1999, could help spur the wage pickup needed to bring more buyers into the housing market.

“Housing overall is growing, but it plunged in the recession and it’s never really started to re-surge,” said David Sloan, a senior economist at 4Cast Inc. in New York, who projected a decline in purchase contracts.

Another report today showed consumer spending rebounded in August as job gains encouraged households to loosen their purse strings. Purchases increased 0.5 percent last month after being little changed in July, according to figures from the Commerce Department. The report also showed incomes rose 0.3 percent.

Stocks fell, after the worst week in almost two months for the Standard & Poor’s 500 Index, as protests in Hong Kong added to geopolitical concerns. The S&P 500 dropped 0.4 percent to 1,974.59 at 10:23 a.m. in New York.

Survey Results

Estimates in the Bloomberg survey of 35 economists forecasting pending home sales ranged from a decline of 2.9 percent to a 2 percent advance.

Purchase contracts declined 4.1 percent in the 12 months ending in August after a 2.8 percent annual decline in July, the NAR report showed. August marked the 11th month of year-over-year decreases.

The pending sales index was 104.7 on a seasonally adjusted basis. A reading of 100 corresponds to the average level of contract activity in 2001, or “historically healthy” home-buying traffic, according to the NAR.

Pending sales declined in three of four regions, led by a 3 percent drop in the Northeast. Purchases were down 2.1 percent in the Midwest and 1.4 percent in the South. They rose 2.6 percent in the West.

Leading Indicator

Economists consider pending sales a leading indicator because they track new purchase contracts.Existing-home sales are tabulated when a deal closes, usually a month or two later.

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

A sustained pace of hiring may help lift homes sales through year-end. Employers have added an average 215,380 to payrolls a month so far this year, the strongest pace since 1999. Economists project job gains to average 216,000 for all of 2014, according to the median in a Bloomberg survey conducted Sept. 5-10. The Labor Department will release September figures on Oct. 3.

Young Americans, burdened with having to repay school loans, are among those who will benefit most from an improving job market, the real-estate agent’s group said.

Student Debt

“Jobs and income gains will help repay student debt and better position first-time buyers, setting the stage for improved sales growth in upcoming years,” NAR chief economist Lawrence Yun said in a statement.

At the same time, limited wage gains are giving Americans reason to temper enthusiasm. Average hourly earnings rose 2.1 percent in August from a year earlier, little changed from the 2 percent average since the last recession ended in June 2009.

The uneven progress in the labor market has kept homebuilders such as Los Angeles-based KB Home from declaring the housing rebound will gain speed.

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

-By Michelle Jamrisko

ClubCorp Urged by Shareholders to Pursue REIT Conversion

Source: Bloomberg / News

ClubCorp Holdings Inc. (MYCC), the largest owner of private golf and country clubs in the U.S., is being urged by shareholders Red Alder LLC and ADW Capital Partners LP to convert itself into a real estate investment trust.

Red Alder and ADW Capital are pushing ClubCorp, which went public a year ago and is still controlled by private equity firm KSL Capital Partners LLC, to form a special board committee to explore all alternatives, the funds said today in a letter to independent board members. The funds have amassed a combined stake of less than 5 percent and formed a group that has held talks with ClubCorp’s management as well as other investors, said people familiar with the holdings, who asked not to be identified because the details aren’t public.

Spinning off real estate into a separate property company or converting into a REIT holding company would enable ClubCorp to boost dividends and lower its interest costs, and could put it in a better position to buy other clubs and courses, according to the letter. ClubCorp’s shares could be worth $31 to $36 apiece, and low interest rates and tax advantages make exploring the possibility urgent, the funds said.

The shares rose 5.2 percent to $19.71 as of 2:36 p.m. in New York trading today, giving the company a market value of about $1.3 billion.

ClubCorp last month announced it agreed to buy Sequoia Golf Holdings LLC, a deal that will add 50 clubs.

REITs, which get their primary income from real estate, generally trade at higher valuations because of tax benefits, and because they’re required to distribute almost all earnings to shareholders as dividends. A REIT would allow the company to unlock the value of its real estate, diversify its holdings and pursue additional partnerships, according to the letter.

Leisure REITs

Activist investors are increasingly targeting leisure companies and other firms with large real-estate holdings for similar changes. Marcato Capital Management LP in May disclosed a stake in gym operator Life Time Fitness Inc., and Orange Capital LLC amassed a position in casino owner Pinnacle Entertainment Inc. (PNK) in April, urging it to pursue a REIT structure. Penn National Gaming Inc. last year spun off most of its real estate into a REIT similar to what is being proposed by Red Alder and ADW Capital, creating Gaming & Leisure Properties Inc., the first casino real estate investment trust.

Frank Molina, a spokesman for ClubCorp, said the company told investors on its last two earnings calls that it “continues to evaluate REIT strategies” and will make decisions based on the interests of all shareholders. ClubCorp doesn’t have any further updates at this time, Molina said.

Retail Targets

Red Alder is also waging an activist campaign at retailer Ann Inc. (ANN), where together with Engine Capital LP it’s urging the owner of the Ann Taylor and Loft chains to review its strategic options including a sale. ADW Capital, a hedge fund founded in January 2011, has previously targeted companies including Lorex Technology Inc. and USA Truck Inc.

KSL Capital, a private-equity firm focused on travel and leisure that acquired ClubCorp in December 2006, owns about 51 percent of the Dallas-based company. Founded in 1957 with one country club in Dallas, ClubCorp today owns or operates 160 clubs in 26 states, the District of Columbia and two other countries that combine to serve 370,000 members.

-By Beth Jinks

Civeo Plunges After Choosing Move Over REIT Conversion

Source: Bloomberg / News

Civeo Corp. (CVEO), a Houston-based owner of worker housing in Canada and Australia, lost about half of its market value after saying it won’t seek to become a real estate investment trust.

Changing the company’s tax address to Canada instead of pursuing a REIT conversion is in the best interest of shareholders, Civeo said in a statement today. Civeo, which was spun off this year from Oil States International Inc. (OIS), also said it expects weaker results in its Canadian operations in the fourth quarter and that revenue and margins “are expected to be materially lower in 2015.”

Companies that own property or have real estate operations have surged after disclosing they’re looking at becoming REITs, which pay no U.S. corporate income tax in exchange for distributing 90 percent of taxable income to shareholders. Civeo, which generates 90 percent of its earnings outside the U.S., said conversion wouldn’t cut its levies in Canada and Australia, where it has most of its business.

“The board unanimously concluded that a number of factors would make a REIT conversion less attractive for Civeo and its shareholders, given the significant upfront costs of a REIT conversion and the financial and operational efficiencies that could be gained through the migration of the company to Canada,” Chairman Douglas Swanson said in the statement.

Civeo fell 50 percent to $12.84, the most since the shares began trading in May. The company’s market value plunged to $1.37 billion from $2.72 billion last week, according to data compiled by Bloomberg.

REIT Qualifications

Civeo said a REIT conversion would cost $720 million. To qualify as a REIT, a company must invest at least 75 percent of its assets in real estate and obtain 75 percent of its gross income from rents or interest on mortgages from financing property, according to the National Association of Real Estate Investment Trusts, a Washington-based trade group.

U.S. tax laws allow a company to move its address out of the country without penalty if the company has substantial business activities in the other area. In its statement, Civeo described the move as a “self-directed redomiciling.” The company also said the Treasury Department’s recent proposed limits on corporate address changes known as inversions aren’t expected to affect Civeo’s move.

Civeo estimated revenue of $200 million to $210 million for the fourth quarter, and $900 million to $920 million for the full year.

-By Brian Louis

Emaar Plans Hotel IPO After Dubai’s Biggest Sale Since 2007

Source: Bloomberg / Personal Finance

Emaar Properties PJSC (EMAAR), Dubai’s only listed developer to survive the property crash without an annual loss, plans to sell shares in its hotel business after its malls unit became the emirate’s biggest public offering since 2007.

The company will announce the hotel sale “in the next few months,” Chairman Mohamed Alabbar said at a conference in Dubai today, less than seven hours after Emaar said it raised $1.6 billion from the share sale of its malls unit. Alabbar declined to provide more details on the IPO.

These companies “reflect the true contributing sectors of Dubai’s economy,” Tariq Qaqish, head of asset management at Dubai-based Al Mal Capital PSC, said by phone from Dubai. Because of high occupancy levels and “proximity to malls, Emaar Hotels translates to solid revenue per room,” he said.

The Emaar Malls IPO was the largest in the United Arab Emirates since port operator DP World Ltd.’s $4.96 billion offering in 2007. A retail boom spurred by an increase in tourist arrivals is helping propel growth in Dubai. About 75 million visitors passed through Emaar’s flagship Dubai Mall last year, while the emirate’s economy is forecast by the International Monetary Fund to expand about 5 percent this year.

Investor Demand

Emaar Malls Group shares were priced at 2.9 dirhams, at the top end of the range. The order book was more than 30 times oversubscribed for the institutional segment, and more than 20 times for the shares sold to individuals even at its most expensive, according to an e-mailed statement earlier today.

“There’s definite interest in Dubai’s retail sector, hence a lot of institutional interest from outside the region,” Saleem Khokhar, head of equities at NBAD Asset Management Group, which oversees about $2.5 billion, said by phone from Abu Dhabi. “I’m very confident that secondary market trading will be very positive.”

The developer of the world’s tallest tower, which sold 15.4 percent of the unit in the IPO, plans to distribute 5.3 billion dirhams ($1.44 billion) of the sale proceeds as dividend to its shareholders, including Dubai’s government. The company’s shares dropped 0.9 percent to 11.45 dirhams at the close in Dubai.

Emaar Malls’ market capitalization at listing will be about 37.7 billion dirhams, the company said. Its estimated investment properties is 20.4 billion dirhams as of the end of September, with a share capital of 13 billion dirhams, it said in the statement. The unit’s stock will start trading in Dubai on Oct. 2.

Rising Index

Emaar’s malls, retail and hospitality units combined contributed 2.65 billion dirhams in the first half of this year, accounting for more than half of Emaar’s total revenues. Revenue for the hotels and leisure unit was 893 million dirhams, a 16 percent jump from a year earlier after its flagship Address Hotels + Resorts posted an occupancy rate of 89 percent for the period, the company said on Aug. 4.

Dubai’s benchmark stock index is the second-best performer globally, rising 48 percent this year, prompting share sales by companies such as Marka PJSC, which started trading last week. Emaar received orders to cover the stock allocated to institutional investors within the first two days of the offering, while individuals queued at the exchange for hours to submit their bids.

Bank of America Merrill Lynch, JPMorgan Chase & Co. and Morgan Stanley were the joint global coordinators and bookrunners on the deal. HSBC Holdings Plc, EFG-Hermes Holding SAE, National Bank of Abu Dhabi PJSC, Emirates NBD PJSC, Emirates Financial Services PSC and Rothschild also helped manage the sale.

-By Sarmad Khan, Arif Sharif and Deena Kamel Yousef

Iran-Born Billionaire Hakim Emerges With NYC Properties

Source: Bloomberg / Luxury

Billionaire Kamran Hakim was late, and New York Supreme Court Justice Eileen Bransten wanted to know where he was.

“They’re coming up,” Hakim’s attorney, Leo Fox, said to Bransten, according to a court transcript. “In fact, he just asked me what room number it was.”

Hakim arrived to find two of his brothers and their attorneys waiting in the downtown Manhattan court room. Bransten asked him to remove his hat.

It was Friday, Jan. 24, 2014, eight years, five months and five days since Said Hakim, Kamran’s brother, had filed a lawsuit accusing Kamran of hoarding income from four properties they jointly owned with their brother Masud, and of selling three of those buildings without his consent.

The case touched on a sliver of Kamran Hakim’s Manhattan real estate empire that’s more than 40 years in the making. Since emigrating from Iran, he’s come to control through limited liability corporations at least 129 buildings with 2.7 million square feet valued at $1.8 billion, according to the Bloomberg Billionaires Index. The 73-year-old has never appeared on an international wealth ranking.

Hakim said in a sworn affidavit that Said contributed nothing to the purchase or maintenance of the buildings and received income from them because Kamran wanted to help him in his transition to the U.S.

High Stakes

“He is a ‘partner’ only because of my commitment to him as my brother,” Kamran said of Said in the November 2005 affidavit.

Said was unable to produce some documents the court said that he needed to prove portions of his case. They were lost when he fled Iran during the revolution in 1979, according to testimony from Ian L. Blant, who represented him in the case in 2005.

By the time they reached the courtroom in January, Said’s case was limited to a dispute over 536 East 89th Street, a brown-painted, five-story, 25-unit apartment building with a floral still life in its narrow entryway in New York City’s Upper East Side. Claim to the other properties had been tossed out by another judge, Karla Moskowitz, who told attorneys in the case that the fight shouldn’t be in court at all, according to a Dec. 15, 2005, transcript.

Family Feuds

“This is all family,” Moskowitz said.

Judge Bransten, noting how much they were spending in attorneys fees, also encouraged the brothers to settle.

“My jury room is heated,” Bransten said. “I should have made it freezing to make you get it done quicker.”

Kamran and Said failed to reach a deal. Masud agreed to sell his stake in the building to Kamran for an undisclosed sum, removing himself from the suit.

Family feuds have been a theme for the billionaire. He was sued by Said’s son Isaac in 2010. His son-in-law Robert Jaffe, who’s in divorce proceedings with his daughter Wendy, served 37 subpoenas to Kamran’s LLCs -- 32 of which were quashed -- in an effort to determine her ownership interests in the companies. All the cases touch on his collection of properties, mostly walk-up apartment buildings shorter than six stories, in Manhattan’s Upper East Side, Upper West Side and Midtown neighborhoods.

Manocherian Family

“There is no desire on our part to comment further on these family matters,” Charles A. Stillman, an attorney for Kamran at Ballard Spahr Stillman & Friedman LLP, said in a phone interview. “We have no interest in talking publicly about the valuation of the portfolio.”

Calls to Said’s office at SM Management in Beverly Hills and his attorney at CPS&S LLP in New York weren’t returned.

Prior to the revolution in 1979, the three Hakim brothers owned importing businesses and a refrigerator factory in Iran, according to Masud’s testimony. Letters between Said and Kamran show they both lost assets in the revolution.

In 1998, after spending $1 million on lawyer fees, Kamran was awarded $1,582,569 for damages by the Iran-United States Claims Tribunal, according to his sworn affidavit in Said’s case. Said’s original complaint also laid claim to the funds.

“After deducting the fees and expenses, there are no real amounts of any significance that are available to be disbursed to Said,” Kamran said in his affidavit.

Kamran is married to Ellen Manocherian, a member of the Manocherian family that controls at least 85 buildings in Manhattan through companies named Pan Am Equities and Manocherian Brothers, according to public records. The family’s properties include The Langham, a 13-story building at 135 Central Park West, which they purchased in 1952.

Amsterdam Avenue

The luxury building’s apartments occupy the entire park-facing side of the block between 73rd and 74th streets. Ellen owned 16 percent of the building through Langham Mansions Co., a family partnership, according to 1998 financial statements.

He began purchasing Manhattan real estate as early as 1969, according to his deposition in Said’s case. Of the properties owned by his LLCs, at least three were obtained as early as 1972. The four-, five-, and six-story residential buildings in Manhattan’s Upper East Side neighborhood were bought for prices ranging from $13 to $23 a square foot. Residential real estate in Manhattan now sells at an average of $1,268 per square foot, according to a research report by Douglas Elliman.

Central Park

Kamran’s LLCs own every property on the west side of Amsterdam Avenue between 91st and 92nd streets: seven ornately-decorated five-story apartment buildings with storefronts on the ground floor. They were purchased in 1998 for $53.6 million at an average of $730 per square foot.

On the other side of Central Park, the LLCs own seven more five-story walk-ups with ground-level stores between 90th and 91st Streets on the east side of 1st Avenue. Five of those were purchased at an average of $25 per square foot in 1979. Another, purchased in 1988, went for $101 per square foot, and another in 1997 at $84 per square foot. Kamran is one building short of controlling the full block.

On the south side of East 34th Street between 2nd and 3rd Avenues, Kamran demolished a tranche of buildings to construct the 21-story, 483-unit, 506,520-square-foot Anthem. He spent $150 million to develop the luxury elevator building, according to a 2003 report from the New York Times. He still owns three red five-story walk-ups adjacent to the tower.

‘Family Man’

“He’s a powerful guy,” said Jim Marinaccio, the owner of Naga Antiques which had occupied the storefront at 145 East 61st Street, a Hakim building, for 32 years through August. “He’s extremely charming, extremely fair, he loves the arts and he’s a real family man.”

Kamran personally negotiated Naga’s rent, Marinaccio said.

The billionaire and his wife live in Chappaqua, New York, a wooded hamlet north of New York City. They also own two horse-show venues, Old Salem Farm and Grand Central Farm, with their son Scott. The couple run the Old Salem Farm Foundation, which had $117,590 in assets in 2012, according to a tax filing. Donors including billionaire John Catsimatidis and JP Morgan Chase & Co. gave a combined $89,000 during the year.

The foundation, started in 2011, made no charitable contributions in 2012 and spent $179,680 on tent rentals and $9,461 on catering, according to the filing. It will support the Voss Foundation, Pegasus Therapeutic Riding, ASPCA and Just World International this year, according to its website.

Opportunity Knocks

While Said’s case was being argued in 2008, his son Isaac received a letter from Ronald S. Greenberg, an attorney for Kamran.

“You are not now, never have been, and never will be a member of the LLC,” Greenberg said.

The LLC in question was formed to manage 41 West 57th Street, an eight-story office building two blocks south of Central Park. Isaac identified an opportunity to manage the property and brought it to his uncle, who created a company to pursue the deal, judge Shirley Werner Kornreich of the New York Supreme Court said in a case Isaac brought against Kamran in 2010.

Kamran and Isaac set up an arrangement whereby Isaac could purchase one-third of the company within the next two years. Isaac sent a letter to his uncle by overnight delivery exercising his ownership option two years later. Kamran’s representatives stalled the process, Issac alleged in his lawsuit, and he never got his shares.

‘Foolish Litigation’

While he waited, “he located tenants, negotiated subleases, and managed the day-to-day operation of the property,” according to a May 2011 decision by Kornreich.

“Your father commenced foolish litigation against Kamran,” Greenberg’s 2008 letter to Isaac said. “Surely, if you choose to commence litigation here, you will follow precisely in your father’s misguided footsteps.”

Isaac sued anyway, waiting two years because Kamran had been a father figure and mentor to him, and he loves and respects him, he said in a phone interview. It also appeared the matter would be resolved, according to his attorney, Cabot Marks.

Kornreich ruled that Isaac’s claim to his shares was still valid because of e-mails sent by Kamran’s lawyers in 2005 and 2008, and that he could sue the LLC.

On Aug. 5, Kamran and Isaac signed a confidentiality agreement. The case is still being argued, Marks said.

“I think the last thing you would ever want to do is to get into any type of litigation with someone you respect so much,” Isaac said.

-By Caleb Melby

New Mortgage Rules in Sweden Provoke State Bank Backlash

Source: Bloomberg / News

SBAB, Sweden’s state-owned mortgage lender, said new rules forcing banks to disclose their average mortgage rate could distort competition in the market.

The bank, which controls about 7 percent of Sweden’s mortgage market, is pitting itself against a rule change it says fails to take into account how its popularity among first-time buyers will skew cross-lender comparisons. Such borrowers typically pay higher rates, meaning any bank that lends more to the first-time buyer segment will per definition have higher average rates, according to Chief Executive Officer Klas Danielsson.

“We will now have to start to publish our exact rates and will then be compared with our competitors only on the rate and that might not be right,” he said in an interview in Stockholm last week.

Regulators are pushing for increased transparency in Sweden’s mortgage market to help homebuyers shop around for the best rate. The Swedish Financial Supervisory Authority on Sept. 19 said it will force banks to publish the average rate their clients have paid for mortgages in the past month, rather than the list price. Banks are also obliged to tell customers how their financial situation, including the size of their incomes or savings, will affect their mortgage costs.

Rate Map

“For most people, purchasing a home and taking out a mortgage is the biggest banking transaction of their lives,” the FSA said. “But there is a lack of basic information today about what a loan costs because the banks do not report which interest rates they actually offer their customers. The current system makes it difficult for customers to compare banks or understand how interest rates are determined.”

The lack of transparency has been a hot topic in Swedish media this year with newspaper Svenska Dagbladet publishing a “rate map,” based on rates supplied by its readers. The data collected show that the average three-month adjustable rate at Swedbank AB, Sweden’s biggest mortgage lender, was 2.01 percent in September, compared with a list price of 2.44 percent. At SBAB, the equivalent rate was 2.23 percent, versus a list price of 2.42 percent.

Danielsson said comparing averages can be misleading because the figures don’t take into account client profiles such as personal finances and loan-to-value ratios.

Apples, Pears

SBAB caters to a lot of first-time buyers in big cities who lack the cash needed for a down payment. These typically have a higher loan-to-value ratio and are perceived as riskier, giving them a higher mortgage rate than a customer who has owned property before and doesn’t need to borrow as much, Danielsson said.

The data can also be skewed by the fact that some banks only cover 70 percent to 75 percent of the property with a regular mortgage and then offer a top-up loan with a higher rate, according to Danielsson. If the top-up loan isn’t included in the average, the cost will seem lower than it in fact is, he said.

“We like transparency and should become even more customer-friendly -- one can’t argue against transparency, Danielsson said. ‘‘But it’s very important that we compare apples with apples and don’t compare apples with pears.”

The regulator doesn’t agree, saying that if “competition is based on banks giving misleading information, that is a more serious problem,” according to an e-mailed reply to questions.


“Rather, this should allow for increasing competition as customers get a better and more reality-based basis to compare the banks on,” the watchdog said. “That strengthens the consumers and leads to them being able to put more pressure on the banks to compete about new mortgage clients.”

An increase in competition in the mortgage market as a result of the changes would come amid warnings from the regulator and the central bank that Sweden needs to do more to contain its record household debt burden. Requirements to keep mortgage rates transparent aren’t in conflict with the goal of reducing consumer debt, the regulator said.

“Household debt is something that the FSA has kept a big focus on for several years -- households have large debt and that must be addressed through a raft of measures,” it said. “Still, it doesn’t mean mortgages should be excluded from basic information rules that apply to most other financial products. It is, after all, perhaps the biggest bank deal you do in your life.”

-By Niklas Magnusson and Johan Carlstrom

Property Tycoon Revealing $20 Billion Solar-Led Portfolio

Source: Bloomberg / Sustainability

The Hong Kong property tycoon who gathered almost $20 billion in Chinese solar manufacturing assets is expanding his reach in other green energy technologies and may seek Wall Street money to do it.

Zheng Jianming, chairman and founder of Asia Pacific Resources Development Investment Ltd., is considering a public listing for the holding company he created to manage what may be the biggest collection of solar-manufacturing businesses.

The Hong Kong-based company is also investing in battery technology, electric cars, geothermal systems and even units that use seawater to store electricity. The goal is to supply clean energy for almost every aspect of daily life, “from the power source to heating and cooling, lighting and vehicles,” Zheng said.

“If a city were to implement all of these technologies it would basically be low-carbon,” he said in an interview in New York. “My vision for this company isn’t just for China. I want to create a global company.”

Zheng, 50, estimates he’s invested $2.5 billion to $3 billion in clean power over the past decade. That includes almost $1 billion to become the largest shareholder in Shunfeng Photovoltaic International Ltd. (1165), a panel maker and power-plant developer based in Changzhou, China, with shares listed in Hong Kong.

This is the first time Zheng has spoken publicly since he began quietly expanding his efforts to acquire assets and stakes in Chinese solar companies in 2012. He’s avoided public appearances and has declined to answer questions delivered in writing until now. Yesterday, he broke his silence, meeting with potential investors at a conference in New York.

‘Suitable Time’

“For many years I watched the industry’s development and waited for the most suitable time to invest,” said Zheng, who is also known in Cantonese as Cheng Kin Ming.

Shunfeng has become the flagship for his renewable-energy aspirations. It acquired in April the main manufacturing unit of Suntech Power Holdings Co. (STPFQ), which was once the world’s biggest solar panel maker. The corporate parent failed to pay $541 million in U.S. bonds last year. Its Wuxi, China, production operations were pulled into bankruptcy in China.

Shunfeng agreed in May to purchase the insolvent German solar inverter producer Sunways AG (SWW) for 2.2 million euros ($2.8 million) and is buying the assets of S.A.G. Solarstrom AG, a solar developer that’s also insolvent, for 65 million euros.

Another Zheng holding company acquired in 2013 as much as 25 percent of LDK Solar Co. (LDKSY), the second-biggest photovoltaic wafer producer. It has since defaulted on 1.7 billion yuan ($276 million) of notes that matured in February.

Solar Slump

He was buying into solar as the industry was mired in a slump triggered by a global oversupply of panels. Shunfeng shares were at 30 Hong Kong cents in November 2012, when Zheng took over. They have increased to HK$7.24 yesterday, and the company now has a market value of HK$17.3 billion ($2.2 billion).

Zheng expects Suntech to triple shipments of solar panels this year to 2.4 gigawatts, from about 800 megawatts last year. Including his other clean energy assets, he expects to develop power plants with a capacity to generate 50 gigawatts of power. That’s enough when the sun is shining to supply all of South Africa, where the state-owned utility has about 42 gigawatts of installed capacity.

“Shunfeng will be a pure clean energy provider,” Zheng said in the interview at the Next Generation Solar PV Finance Conference.

Energy Storage

Shunfeng has also made investments in the energy-storage company Powin Energy Corp. and Boston Power Inc., which is developing batteries for electric vehicles.

It’s backing Taiwan Carbon Nanotube Technology Corp., which is using nanotechnology in battery systems based on seawater, and Green Wheel Electric Vehicles, a Chinese supplier of electric cars and buses.

Asia Pacific Resources’ various holdings may be difficult to stitch together into a coherent clean-energy powerhouse, said Shyam Mehta, an analyst at Boston-based GTM Research, said in an interview.

“It could be that there is some strategy behind this, of actually rebuilding these companies and getting them to work together in a way that enhances both their value and builds up some sort of mega solar company,” Mehta said. “Maybe it’s nothing that exceptional. He just has a lot of holdings in several different solar companies.”

Public Offerings

Zheng said he may pursue initial public offerings for some of the individual businesses, such as Boston Power or Lattice Power Corp., a Chinese producer of energy-efficient lighting. Eventually, he would consider a public listing for the parent company Asia Pacific Resources, he said, without providing additional details.

He got his start investing in real estate in China, and later expanded into technology. Zheng said his ventures have mirrored China’s development, and clean energy is what the country needs now.

“In my many years of investment, I’ve been focused on the development of the industry’s value chain,” said Zheng. “That is why I’ve never made a mistake.”

-By Ehren Goossens