Real News‎ > ‎2014‎ > ‎September 2014‎ > ‎

6th September 2014

Singapore Real Estate

Flagging consumer sentiment can have broader economic impact

Redas wants to work with Govt, others to prevent a destabilising economic slowdown

Source: Business Times / SIngapore

AMID strong headwinds in the residential market, the property developers' industry body said there is fear that if consumer sentiments dive sharply as a result of measures designed to cool the market, there could be a broader impact on the economy.

The Real Estate Developers' Association of Singapore (Redas)is seeking to strengthen its partnership with the relevant authorities to "prevent a destabilising slowdown of the economy", said its president Chia Boon Kuah. "We want to pursue a stable and sustainable market," said Mr Chia, who is also GuocoLand Group president and CEO.

"In challenging times, like what we are facing today, it is critical that we not only work on common goals with our partners, but we also need to increase our joint discussion and dialogue, especially between industry and government."

Mr Chia was speaking at the Redas Mid-Autmun Festival Lunch on Friday, which was attended by developers, property consultancies, and government agencies.

-By Lynette Khoo

Waning property demand 'could damage economy'

Cooling measures may depress consumer sentiments excessively: Redas

Source: Straits Times / Money 

DEVELOPERS are keeping close tabs on the residential market, as waning property demand could pose a danger to the wider economy.

"The fear is that when consumer sentiment declines too much as a result of measures designed to cool the market, there could be a broader impact on the economy," said Mr Chia Boon Kuah, president of the Real Estate Developers' Association of Singapore (Redas).

He was speaking yesterday at the annual Mid-Autumn Festival lunch at the Grand Copthorne Waterfront Hotel.

Mr Desmond Lee, Minister of State for National Development, and City Developments chief Kwek Leng Beng also attended.

Mr Chia called for more dialogue between developers and the Government as the industry goes through "challenging times".

He pointed to the swelling stock of unsold units sitting on developers' balance sheets. Banks, which give out loans to developers and home buyers, are increasingly concerned, too.

A recent report from investment bank UBS said household balance sheets have been underpinned by high home prices and debt, and that a 10 per cent to 15 per cent dip in prices would badly affect consumer spending.

"This shows that even when a small segment of mortgages sours, it can have a negative impact on the broader market," Mr Chia said.

So far, in the first half of the year, prices of private condominiums have eased 2.3 per cent while prices of Housing Board resale flats are down 3 per cent, Urban Redevelopment Authority figures showed.

To prevent a destabilising economic slowdown, said Mr Chia, Redas "stands ready" for more collaboration with the authorities.

However, Mr Donald Han, managing director of Chestertons, noted that developers may be hit by thinning margins, but most have built up strong balance sheets during the bull run in the property market over the past three years. Banks are also in a much stronger state now, compared with the period of the global financial crisis.

Mr Alan Cheong, research head at Savills Singapore, said that while developers are concerned about how a slowing property market could affect the economy, the Government's primary concern is to ensure financial prudence among borrowers. But this seems to be at the expense of the growth in deposits, even as consumer loan levels have eased.

In July, deposits growth rose by just 0.1 per cent, down from 10 per cent a year ago - before the total debt servicing ratio kicked in, said Mr Cheong. In comparison, consumer loans grew at about 10.5 per cent in July, down from about 20 per cent a year earlier.

"The measures could have been calibrated at too high a level," noted Mr Cheong. "Singaporeans are put off by the total debt servicing ratio and foreigners are not bringing in the money because of the additional buyer's stamp duty. Money is flowing out."

-By Cheryl Ong

Return to seller

Exec condos form 30% of units given up in first 7 months of this year

Source: Straits Times / Money 

BUYERS of executive condominiums (ECs) are backing out of their purchases more than buyers of private properties, new data analysis shows.

Only a handful of ECs are on the market, compared with scores of private condos.

But units from just eight EC projects made up about 30 per cent of the 277 units returned to developers in the first seven months of the year.

The figures are based on an analysis of monthly data from property portal Square Foot Research.

ECs are a hybrid of public and private housing, sold with Housing Board restrictions.

At Skypark Residences, an EC in Sembawang, for instance, 22 units were returned - the highest number among the projects.

Forestville in Woodlands was next with 18. In Punggol, 14 units were given up at Ecopolitan while Waterwoods had 12 units returned. The Sea Horizon EC project in Pasir Ris had 10 units returned.

Consultants suggested that one reason could be that prices of ECs have risen to record levels, and that a lower mortgage servicing ratio (MSR) introduced last year limited the monthly housing payments at 30 per cent of the buyer's gross monthly income.

"The substantial (number of) units returned could be due to impulse buying, and buyers finding that they cannot secure a sufficient loan under the new MSR cap, or that the prices worked out to be in excess of their affordability," said Mr Ong Kah Seng, director of R'ST Research.

Weak market sentiment could also mean buyers expect property prices to correct further, and some might have decided to give up their units for other opportunities, said Mr Ong.

Another possibility is that some buyers did not meet the eligibility criteria set by HDB. For instance, EC buyers cannot have a combined gross monthly income of more than $12,000, and must have lived in their HDB flat for at least five years, if they are not first-time buyers.

But some returns could simply be because of cancelled marriage plans, since buyers must form a family unit to buy an EC unit, said Mr Nicholas Mak, research head at SLP International.

The penalty for returning a unit to developers who bought EC land after Dec 9 is 5 per cent of the property's price, after the sales agreement has been exercised. For all other EC projects, the penalty is 20 per cent of the unit's price tag. If the sales agreement has not been exercised, the penalty is typically about 1.25 per cent of the purchase price.

However, the number of EC units returned to developers is not alarming against the 3,337 EC units launched last year. No EC project was launched in the first seven months of the year.

Mr Steven Tan, managing director of OrangeTee, said the demand for ECs is still high, as they are much more affordable than private homes. "As the number of sales transactions increases, the likelihood of units being returned also increases," he said.

-By Cheryl Ong

Marina Bay taking on residential tone

Experts say restrained prices mean deals there will pay off in the long term

Source: Straits Times / Money 

THE appeal of living near the Central Business District (CBD) will get a major test next weekend with the launch of the 1,042-unit Marina One Residences.

The area, best known as a fast-growing office centre, is shaping up as a significant residential precinct as well.

And while rents in the vicinity have fallen over the past year, investors may find the area a good buy now that cooling measures have restrained overly high prices, consultants say.

Marina One Residences - with one-, two-, three- and four-bedders - is part of the larger Marina One development, also including Marina One offices and The Heart, a retail podium set around a 65,000 sq ft park.

Developer M+S said it is looking to price Marina One at an average of $2,600 per sq ft (psf).

"We believe that there will always be discerning buyers who will seize a good investment opportunity as long as a development offers quality attributes - even through the peaks and troughs of the market," said M+S chief operating officer Kemmy Tan.

"Given current market conditions, its initial selling price may crowd out a considerable group of potential buyers... (But) in the longer term, Marina One will likely see more active deals due to its advantageous location and good designs, which are highly valued by busy owners and tenants," said OrangeTee senior research analyst Wong Xian Yang.

Nearby project V on Shenton, launched in August 2012, sold 354 of 510 units as at the end of July.

In the past year, average resale prices in the area ranged from $1,945 psf at three-year-old One Shenton to $2,694 psf at one-year-old Marina Bay Suites.

On average, resale prices fell by about 8 per cent in the past year, said R'ST Research director Ong Kah Seng. A major reason for the fall is weakening leasing demand by expatriates, he said. "(They) have more or less decentralised to the city fringes to save on accommodation costs, as most companies have been strict in their housing allowances."

However, he said, investors, especially those owning small units in the area, can expect keen leasing interest from mid- to senior-level expats who may still want a conveniently located property.

With cooling measures such as the total debt servicing ratio (TDSR) framework, buyers may now find properties here at attractive prices, which could "allow them to have a share of future price appreciation or recovery", Mr Ong added.

"Prior to the TDSR, however, most locality upsides and rejuvenation plans were quickly priced in by owners and developers."

In the past year, average rents in the area ranged from $4.40 psf a month at Marina Bay Suites to $8.10 psf a month at three-year-old The Clift.

While rents have fallen by an average of 6 per cent over the past year, this is in line with weakening leasing conditions islandwide, especially rents of high-end residential properties, said Mr Ong.

But the investment outlook is promising beyond the short term, said Mr Wong.

Better infrastructure is expected in the next few years, such as the Thomson-East Coast Line which will be linked to Marina Bay MRT station.

"The precinct's unique setting and high accessibility will appeal to people working in the CBD who have tight daily schedules. Barring any major deterioration in the global economy, the rental market should also see good support in tandem with the maturation of adjacent office properties," said Mr Wong.

-By Rennie Whang

Serviced apartments gaining favour over hotels

Shrinking corporate-travel budgets, need for longer-term transient homes boost demand

Source: Business Times / Top Stories

SERVICED apartments are losing their stigma as the less glamorous and poorer cousins of hotels, as shrinking corporate budgets siphon business travellers away from hotels to them.

At the same time, a growing need for longer-term transient homes brought on by greater global mobility is feeding demand for serviced apartments, which are cheaper to stay in since residents don't have to pay for extras such as restaurants and bars, swimming pools, conference rooms and business services.

Serviced apartments also tend to feel more like home - larger and complete with a laundry area and fully equipped kitchen. This is good for the frugal and savvy business traveller because since the global financial crisis, companies have cut back on expatriates' housing allowances, preferring to give them a monthly lump sum to take charge of their own accommodation instead of hiring leasing agents to look after their needs.

-By Lee Meixian

Temasek, JTC say entities' merger unlikely to impact industrial rents

Source: Business Times / Top Stories

TEMASEK Holdings and JTC Corporation said on Friday the proposed merger of their entities involved in urban planning and development is not expected to affect industrial rents in Singapore.

Their comments came in response to media queries following an announcement on Thursday that they have entered into exclusive talks to explore the merger of Ascendas, Jurong International Holdings (JIH), Singbridge Group and Surbana International Consultants.

Ascendas and JIH are both JTC subsidiaries while Singbridge and Surbana are Temasek units.

-By Lynette Khoo

Merger 'unlikely to drive up industrial rents here'

Source: Straits Times / Top of The News

IT IS unlikely that industrial rents here will rise in the light of the proposed merger of four operating subsidiaries under industrial landlord JTC Corporation and Singapore investment firm Temasek Holdings, analysts said.

Talks are afoot to merge JTC's Ascendas and Jurong International Holdings (JIH) with Temasek's Singbridge Group and Surbana International Consultants Holdings.

"All four of these companies are very much into overseas play," said Mr Ong Teck Hui, national director of research and consultancy at Jones Lang Lasalle. "It is more likely that they are trying to synergise and capitalise on all their strengths to tap opportunities in the emerging markets, rather than the domestic one."

Executive director of research and consultancy at SLP International Nicholas Mak expects industrial rents here to "remain stable in the short term".

"Even if these companies were to raise their rents aggressively, tenants here can easily move to another place," he said.

Mr Mak pointed to the other industrial properties available, as well as the "steady stream of supply" set to enter the market in the next two to three years.

Businesses here are not ruffled by the news, said Mr Victor Tay, chief operating officer of the Singapore Business Federation.

He noted that each of the four companies targets different segments in the real estate market.

Ascendas, for instance, is a business real estate specialist, while Surbana is an urbanisation consultancy skilled in building homes and master planning.

"Even if they are amalgamated, their current specialisations help to supplement one another as part of a value chain for projects, rather than to dominate market share."

A spokesman for Temasek told The Straits Times yesterday that its portfolio companies are "independently managed and compete freely in the market".

Separately, JTC said it does not expect the proposed merger to have an impact on the industrial property market, which is "diverse and competitive".

The four entities in the proposed merger combined will form only 10.5 per cent of the market.

"There are also ample substitutes to their properties, which are made available by the other players in the market," said a JTC spokesman.

-By Jacqueline Woo

Sun Venture buys Straits Trading block for S$450m

Price of some S$2,800 psf said to be a 6-year high for an office block

Source: Business Times / Companies

THE Straits Trading Company is selling its office tower, Straits Trading Building, to Singapore-based Sun Venture Group for S$450 million.

The announcement of the sale agreement on Friday came shortly after BT first broke news of an impending sale of the Battery Road property. BT had reported that the building owner was in advanced discussions on the sale of the building for a price of slightly above S$2,800 per square foot (psf) which, at a net lettable area of about 159,000-plus sq ft, had worked out to a price tag of S$450 million for the 999-year leasehold building.

The sale announced on Friday is part of Straits Trading's move to reallocate capital from its portfolio of investment properties which are high in quality but low in yield to "potentially higher return real estate opportunities", the company said.

-By Joyce Hooi

Straits Trading to sell flagship building

$450m deal unlocks value, allows firm to redeploy capital for higher returns

Source: Straits Times / Money

THE Straits Trading Company has agreed to sell its Raffles Place flagship building to the Sun Venture Group for $450 million.

The 28-storey Straits Trading Building at 9, Battery Road has a distinctive trapezoidal shape that is designed to maximise the views.

The price tag works out to slightly more than $2,800 per sq ft (psf) based on the net lettable area of about 159,000-plus sq ft, analysts say.

In June, a consortium led by developer GSH Corporation said it was buying Equity Plaza building, also 28 storeys high, in Raffles Place for $550 million, or $2,181 per sq ft (psf) based on the net lettable area of 252,135 sq ft.

However, Equity Plaza is a 99-year leasehold office building with 74 years left on the lease. Straits Trading Building is on a 999-year lease.

Straits Trading Co said in a statement that the sale was in line with its strategy of redeploying capital from its portfolio of high-quality but low-yielding investment properties into potentially higher-return real estate opportunities.

The redeployment of the proceeds will also strengthen development of the group's real estate ecosystem, anchored by its 89.5 per cent interest in Straits Real Estate, its 20.1 per cent interest in ARA Asset Management and its 5.8 per cent aggregate interest in Suntec Reit, said the company.

Executive chairman Chew Gek Khim said the monetisation of the building was a significant step towards unlocking value from its property assets and transforming its real estate business into an engine of growth.

"In redeploying the proceeds, we will be able to pursue a wider spectrum of value-accretive real estate opportunities and also further the development of our real estate ecosystem," she said.

Straits Trading Co is expected to realise a capital gain of $39 million from the sale, based on its latest book value as at June 30.

Based on historical cost, the gain to the company would be $373 million.

Buyer Sun Venture is a Singapore-based property group that owns and manages commercial real estate, including an office building at 50, Scotts Road, four floors at Samsung Hub, Westgate Tower and Paya Lebar Square.

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

Straits Developments, a subsidiary of Straits Trading Co, currently occupies the 28th floor.

The buyer has agreed to lease the premises back to Straits Developments until the end of 2016, with an option to renew for a further year.

The current building sits on the site that housed the original Straits Trading Building, which was built back in 1972. It was torn down in 2007 and redeveloped.

-By Dennis Chan, Deputy Money Editor

Ascott's mission: 80,000 serviced apartments by 2020

CEO of CapitaLand outfit outlines plans to more than double current number

Source: Business Times / Companies

ASCOTT CEO Lee Chee Koon wants to more than double the group's number of serviced apartments to 80,000 by 2020, and he is banking on this hospitality-residential hybrid's growing favour with travellers.

"If we grow organically, every year we add about 4,000 units. Going just by that, by 2020 we should hit 60,000 ... but I am setting a more ambitious target for the team," Mr Lee told reporters in a recent interview.

This is despite a run-up in real-estate prices in first-tier Chinese cities and London, which has crimped its ability to acquire assets. At the same time, saturation and a lack of deals in the market in Paris and some German cities have also limited acquisition and development opportunities.

-By Lee Meixian

CEO aims for 80,000 apartment units by 2020

Alliances, franchising, acquisitions all part of Ascott's strategy to expand

Source: Straits Times / Money

THE Ascott hopes to manage 80,000 apartment units by 2020.

This represents a doubling of a longstanding goal to manage 40,000 apartment units by next year.

Ascott is well on course to meet its 2015 target, as it operates more than 36,000 units spanning 86 cities in 24 countries, prompting chief executive Lee Chee Koon to set an even more ambitious one.

"Growing organically, every year we can add about 4,000... by 2020, we should be able to hit 60,000," said the 39-year-old, who is an engineer by training.

"But I'm setting a slightly more ambitious target for the team. I hope to be able to (make) it to 80,000 apartments," he told the media at Ascott Raffles Place Singapore this week.

To do that, the company - already the world's largest owner-operator of serviced apartments under the Ascott, Citadines and Somerset brands - will have to crank up its property sourcing mode, including tie-ups with partners, either through management contract, equity or both.

"We need to work with strategic alliances. There are certain new markets we are exploring in the US and Africa, and even doing more in India," he said.

"Some you may not be able to do it all alone... If you can find strong partners to work with, developers with certain types of hospitality assets that we can manage or part-invest, this will be a much faster way for us to grow."

Mr Lee cited alliances with China developers such as Yuexiu Property and Vanke China.

"Because we have done well, they are willing to work with us to manage their hospitality asset, whenever they have a mixed-development asset," he said.

It is a similar story in India, where Ascott announced last week that it will manage its first Somerset-branded serviced residence in Gurgaon for Puri Constructions, a local company that focuses on real estate development in northern India.

Ascott's aggressive forays are reflected in the financial performance. Revenue for the first half of the year was up 8.1 per cent at $327.3 million, while earnings before interest and tax climbed by 15.8 per cent to $158.4 million.

Aside from management contracts, Ascott - a wholly owned subsidiary of CapitaLand - has also taken a new approach to growing its business by employing franchising.

In June, it secured its first franchise agreements in Laos capital Vientiane, and Bali in Indonesia.

The agreements are for a serviced residence in Vientiane that will be rebranded as 116-unit Somerset Vientiane in the fourth quarter, and for 194-unit Citadines Kuta Beach Bali that just opened.

"Franchising is an opportunity for us to help third-party owners to manage their properties, by using our brand. It allows us to (have a presence in) second- and third-tier cities that we may not want to go into because it is more a leisure than corporate destination," said Mr Alfred Ong, Ascott's managing director for Europe, in an interview last week.

He was developing the franchise model for Ascott prior to his Europe posting in January.

Now that he is overseeing the Europe market, he reckons there is scope to introduce the franchise model. This will help to grow the business, as big real estate deals are hard to come by in Europe.

Mr Lee believes Europe is a good prospect for franchising, given that there are many locals who own small hotels that they want to continue to operate.

"They want to be able to use your brand and leverage your sales and distribution system. We can deliver about 60 per cent to 70 per cent of direct sales because of our global sales and distribution network," he said.

Ascott is also beginning to deepen its presence in key cities it operates in.

"The bigger the scale we build in these cities, the bigger the flow through and the better our sales and distribution network can be," noted Mr Lee.

Ascott's game plan is that as long as there is a demand, it does not fear that a saturation of presence will lead to its properties cannibalising sales from one another.

Given the very Singaporean penchant for real estate ownership, acquisitions will remain an important part of growing the business.

"As much as possible, because we are part of CapitaLand, we also want to own real estate," said Mr Lee. "But over the last few years, in terms of ability to acquire properties, it has not been easy as real estate prices have run up tremendously in many of our markets."

But opportunities do crop up from time to time.

The company is aggressively pursuing a deal in Amsterdam.

Mr Ong said the city's local authorities are supportive of the company's bid to extend its footprint into the city, as the city is significantly underserved in terms of serviced apartments.

"This is a good opportunity for us to bring in an international serviced-residence brand. This is what the municipality is very interested in: a product that is a serviced apartment and not yet another hotel," he said.

Acquisition appears to be Ascott's preferred mode of expansion in thriving cities where the creation of new real estate space is limited, such as in London and Paris.

Mr Lee said the target of doubling the number of apartment units in London by 2020 is "not a problem". That will mean adding a further thousand units to its current stock.

He thinks there are opportunities to pick up "interesting deals that will come on board", possibly from distressed sale of assets by owners who became unstuck following the euro zone crisis.

On the other hand, there are plenty of competitors also eyeing assets in London.

They include several Singapore companies. Local construction group Lum Chang has added a London hotel to its portfolio, while last month, UOL Group made its maiden purchase in the city, snapping up a hotel site in Bishopsgate.

For Ascott, funding is not an issue; finding value is.

Aside from its own balance sheet, there is the option of acquiring properties through listed real estate trust, Ascott Residence Trust, or even private equity funds.

"If you have a good investment case and you can meet the investment returns, it's easy to find the money. Money will always chase good investment ideas," said Mr Lee.

Meanwhile, other Singapore firms want to have a bite of the serviced apartment pie. Banyan Tree Hotels & Resorts is launching a new brand, Cassia, in five Asian cities. In Singapore, some developers are considering converting their unsold residential inventory into serviced apartments.

Ascott management is unfazed by this development.

First, it is not easy to secure approval from the Urban Redevelopment Authority to change the use of a site.

Second, new operators will not have the track record to pull in global corporate clients.

"Imagine you sign a one-year corporate programme with an operator and, in six months' time, you are told to move elsewhere because the developer wants to sell the units," said Mr Ong.

Intangible barriers to entry in terms of know-how and sales distribution are also high for newcomers.

"We have over 70,000 accounts, out of which 20,000 are global accounts. That takes time to build," said Mr Lee.

-By Dennis Chan, Deputy Money Editor

SP Tao sells Belmont Road bungalow

Price works out to S$1,266 psf on freehold land of 26,456 sq ft

Source: Business Times / Wealth

FORMER Singapore Land chairman SP Tao has sold a Good Class Bungalow (GCB) on Belmont Road for S$33.5 million or S$1,266 per square foot of land area of 26,456 sq ft. As recently as a year ago, the asking price for the freehold property was around S$50 million.

BT understands that earlier this year, the price tag was lowered to S$39 million before last month's transaction at S$33.5 million. The existing property on the site was re-built in 2009 and comprises two levels and an attic. The main house is said to have five en suite bedrooms in addition to several function rooms; while a pool, entertainment room for guests and a maid's room are located in the annexe.

Mr Tao, a near centenarian, redeveloped the bungalow five years ago. He is now said to have a Singapore residence in a prime-district apartment.

-By Kalpana Rashiwala

Solar power use in Singapore poised for increase

Source: Channel News Asia / Singapore

SINGAPORE: As Singapore transforms its energy supply landscape, the use of solar power as a source of electricity is poised for a dramatic increase.

A roadmap on solar energy launched in July forecasts that the use of solar power could jump by almost 200 per cent by 2050 if certain conditions are met. However, experts and stakeholders Channel NewsAsia spoke with said several issues need to be addressed before this transformation can take place.

At the Solar Energy Research Institute of Singapore (SERIS) researchers measure the amount of sunlight that they see on the ground to make weather forecasts and record cloud formations and movement. And as solar photovoltaic (PV) systems, which produce electricity directly from sunlight, become more commonly used, a more accurate forecasting system is needed. Currently, the forecasting software has an error margin of about 30 per cent when forecasting weather up to 15 minutes in advance.

“Today, solar contributes only a small amount of electricity for the country, so the weather does not play a role as of now,” said Andre Nobre, Research Associate, Solar Energy Systems Cluster, SERIS. “In the future, when you have hundreds of megawatts of PV systems deployed, the weather will start to play a role, meaning if it's a sunny day, you would need fewer amounts of conventional power sources. On the other hand, if it's a rainy day, you would have to ramp up these conventional resources."

The power grid of the future would also need to perform several functions. "When you're not at home and your solar panel is producing electricity, it either gets stored and controlled in a smart manner or it is pumped back into the grid and that amount pumped is recorded by a smart meter,” said Professor Low Teck Seng, CEO of the National Research Foundation. “And in the evening, when their solar cells are not contributing to supplying power, they can actually drop out from the grid. So the simple meter being able to measure two-way flow of power is already a level of smartness”

At the moment, only 0.1 per cent of energy is supplied by solar power. Operators of some energy-intensive industrial facilities have said they are keen to explore installing solar panels on a larger scale.
But they cited two issues. The first is when solar panels do not produce enough energy, and companies have to look to the power grid to ramp up supply. But if this means going beyond a specified amount, companies would then have to pay a hefty sum.

Second, energy demands fluctuate for some companies, and solar panels are costly to set up. It takes years before companies can reap the benefits of their investments. Selling excess energy back to the power grid would allow them to recover some of their financial investments, but they face challenges in doing so.

"Removing some of these disincentives would be more attractive for companies to put more power generating facilities because energy cost is a huge cost to companies,” said George Lam, Director, Operations Excellence & Sustainability, GlaxoSmithKline. “So anything that would generate electricity without being too cumbersome will be a competitive advantage to companies."

In response, the Energy Market Authority said it is working with Singapore Power to "further simplify" processes. The Authority added it is further simplifying licensing requirements and the registration process that consumers have to comply with.

- CNA/rw

Jurong Lake Gardens hold much potential

Source: Straits Times / Forum Letters

I HAVE lived in Jurong for more than 30 years and have seen it change drastically over time. The serene areas have diminished significantly, which is why I agree that the upcoming Jurong Lake Gardens have to be planned carefully ("Jurong Lake Gardens will be developed sensitively" by the National Parks Board; last Saturday).

The new Gardens could feature educational themes to attract tourists and Singaporeans to visit the area and perhaps even stay in the hotels being planned.

For inspiration, we could look at Tokyo's Ueno Park, where there is a serene lake that visitors can take a boat out on while enjoying the surrounding flora and fauna.

In the park itself, there are world-class museums (including a natural science museum with an impressive collection of dinosaur fossils and stuffed animals), a cultural hall and a zoo.

Besides the new Science Centre, we could consider relocating the planned natural history museum to Jurong Lake Gardens.

Food and beverage outlets can be located along the shores of the lake, where visitors can take boat rides.

We could also bring in tropical trees and plants with beautiful flowers. In fact, a self-contained greenhouse could be built as an extension of the Science Centre, to let visitors view the different plants.

I hope we can have a world-class park that tourists around the world can remember.

Singapore's western region is known for its industries and air pollution. It would be a great achievement if the new Jurong Lake Gardens could change people's perception of the area.

-By Kevin Lee Cher Young

Real Estate Companies' Brief

Soilbuild bags S$47.6m contract

Source: Business Times / Companies

SOILBUILD Construction Group has landed a S$47.6 million Assisi Hospice contractto construct one block of a six-storey health and medical care building with a basement carpark for the new hospice at Thomson Road. The new contract brings the group's order book to S$703.9 million.

Soilbuild bags $47.6m Assisi Hospice contract

Source: Straits Times / Money

SOILBUILD Construction Group has won a $47.6 million contract from Assisi Hospice to erect a new hospice in Thomson Road.

The project will consist of a block of six-storey health and medical care building with a basement carpark.

"The contract has further diversified the group's construction project portfolio, which includes industrial buildings and residential developments both in the public and private sector," the company said.

The project is expected to start this month and will be completed by the second quarter of 2016.

It brings the group's latest order book to $703.9 million.

The new hospice is to increase the current capability of Assisi Hospice, a Catholic charity providing palliative care to adults and children through inpatient, home and day care services.

It will provide more adult inpatient wards and related facilities.

The project is the seventh contract the group has secured in the year to date.

In July, it secured a $168.4 million Housing Board contract to construct nine blocks of 13-storey residential buildings, a commercial building and two blocks of carpark and communal facilities in Yishun.

The hospice project is not expected to have any material impact on the group's net tangible assets or earnings per share for the financial year ending Dec 31.

-By Rennie Whang

Ying Li International Real Estate

Source: Straits Times / Money

Broker: Voyage Research

Call: Buy

Target price: 80 cents

YING Li International Real Estate announced on Tuesday that it has received approval from shareholders to issue new shares and perpetual subordinated convertible callable securities to China Everbright (CEL).

On completion, Ying Li will receive fresh funds of $284 million. What is new is that the company will be expanding into Tier 1 Chinese cities, with Beijing and Shanghai as potential first stops.

As a start, Ying Li will most likely consider commercial projects in Beijing and Shanghai where CEL will be in a good position to bring opportunities to Ying Li.

Other than cooperating on development projects, both companies may combine their retail properties into a real estate investment trust at a later stage.

Ying Li remains undervalued and its share price will allow investors to buy into the company at around the same price as CEL.

Global Economy & Global Real Estate

The Ascott thriving in European market

Company is enhancing its properties to further boost serviced apartment takings

Source: Straits Times / Money

EMERGING markets in Asia and the Middle East may provide rich pickings for The Ascott to build up its global empire, but it is in the old continent where the serviced apartment operator continues to prosper.

In the first six months of this year, the European business chalked up a 13 per cent growth in revenue per available unit (RevPau). This was bettered only by the China market, which saw a 15 per cent rise in the same period.

Considering that RevPau in Europe was 53 per cent higher than in China in Singapore-dollar terms, this is no mean feat.

Europe, China and Japan were singled out by CapitaLand, which owns The Ascott, for their strong performance at a results presentation last month.

Despite stagnant economic growth across the euro zone, business for The Ascott in the region has never been better.

"When you look at our RevPau, growth has gone the other round, up north instead of down south, underpinned by strong growth in tourism," Mr Alfred Ong, managing director for Europe, told visiting Singapore journalists in Paris last week.

No one needed to be convinced. Despite it being peak summer when many Parisians go away for a vacation, we had to jostle with throngs of people in the city, with many hotels and apartments registering near-full occupancy.

France is the world's top tourist destination, with 84.7 million foreign visitors last year.

According to a MasterCard survey, Paris was the third most-visited city. London was top.

This is good news for The Ascott, whose 45 European properties are concentrated in the two cities: 16 in Paris and seven in London.

To be sure, the company does not merely count on the tourist magnet these cities represent.

It has undertaken an asset-enhancement programme that will encompass all its properties by making more efficient use of space and adding rooms - or keys in hotelier parlance - while increasing the comfort level of guests.

By the end of this year, 22 properties will have been renovated at a cost of €91 million (S$148 million), said Mr Philippe de l'Espinay, the company's regional general manager.

The results have been spectacular.

Average daily rate (ADR) at two of its London properties - Holborn-Covent Garden and Trafalgar Square - rose by 45 per cent and 50 per cent respectively after their makeover.

It is a similar story elsewhere.

Following its conversion from a hotel into a five-star serviced apartment property, the Citadines Suites Louvre Paris has enjoyed a 72 per cent uplift in room rates since it reopened in March last year.

The property's ADR has climbed from below €200 to €400 after renovations, said Ascott chief executive Lee Chee Koon.

He is looking forward to the reopening of Citadines Suites Arc de Triomphe Paris, which comprises two buildings, one built in the 19th century.

Refurbishment is expected to be completed in time for an official opening on Dec 1.

Mr de l'Espinay reckoned the property can achieve an ADR of more than €350 once it reopens, from less than €300 previously.

The Cavendish, a London hotel that was bought in 2012, is next in line.

Mr Lee said regulatory approval for its conversion into a serviced apartment has been granted and work should begin by early next year.

He believes the upscale Mayfair area where the 230-unit hotel is located will be rejuvenated by local authority plans to transform it into a retail belt.

With a gross operating margin of 70 per cent, London will remain a key market for The Ascott, said Mr Ong.

"We thought that for properties with above 70 per cent margin - you can get them only in Asia. But you can get them in Europe, too, if you know how to operate them," he said.

-By Dennis Chan, Deputy Money Editor

Asia beats N America in property investment sustainability

Source: Business Times / Wealth

PROPERTY investment portfolios in Asia are more sustainable than those in North America, a survey by CBRE revealed.

Based on the findings of the Global Real Estate Sustainability Benchmark (GRESB) 2014 survey, the overall GRESB score for Asian participants was 46 per cent - surging 23 per cent over the past year.

And by overtaking North America's 44 per cent, Asia now ranks third, after Europe and the Pacific.

-By Chan Yi Wen

Immigration curbs may slow growth of Swiss real estate

Source: Business Times / World

SWISS curbs on immigration could threaten growth in the country's property market, which in the past has been supported by an influx of highly skilled foreign workers, according to Thomas Wolfensberger, chief executive officer of Peach Property Group AG.

"The laws related to mass immigration are more worrying in the long term" than items including stagnating short-term economic growth, Mr Wolfensberger said in Zurich, where the property development and investment company is based. "We would have preferred to see that the borders remain more open."

The Swiss government wants to limit the number of new immigrants from the European Union to implement the results of a vote on foreigners in February, even as a high inflow of foreign workers helped the economy compensate for anaemic growth in the euro area, it's biggest trading partner. An initiative on overcrowding in Switzerland scheduled for November would cap the immigration rate at 0.2 per cent of resident population.

-From Zurich, Switzerland

Homes for 300 Million Africans Boost Shelter Afrique Debt

Source: Bloomberg / Luxury

Shelter Afrique, which finances homes in the region with the world’s second-fastest growing economy, plans to sell debt in Kenya and Ivory Coast to fund more projects and meet rising demand for housing.

The Nairobi-based organization plans to sell more than 3 billion Kenyan shillings ($34 million) of bonds by early next year, Managing Director James Mugerwa said. Notes in CFA francs, the currency used by eight West African nations, will be sold on the region’s Abidjan, Ivory Coast-based bourse by June, he said, without giving details.

African cities will have to accommodate more than 300 million new residents over the next 25 years, according to the African Development Bank, opening a market for companies such as Shelter Afrique, which funds groups from national housing authorities to private lenders. More rural people are moving to cities with growth in sub-Saharan Africa projected to reach 5.4 percent in 2014, the fastest in the world after emerging Asia, according to the International Monetary Fund.

The money will be used for “affordable housing projects” in Kenya, East Africa’s biggest economy, and Ivory Coast, the world’s largest cocoa producer, Mugerwa said in an interview in Nairobi on Sept. 3.

Kenyan government shilling debt returned 7.8 percent this year, beating the 6.1 percent average return among 31 emerging markets, according to Bloomberg indexes. Ivory Coast plans to sell 810 billion francs ($1.6 billion) of notes this year for infrastructure projects including highways, railroads and bridges.

Angola Considering

About two-thirds of the continent’s population living in cities are accommodated in informal housing, where basic services are “poor or non-existent,” according to a report published on Tunis-based ADB’s website.

Shelter Afrique, which has funders including some of the continent’s governments and the ADB, is working with Kenyan cooperative Stima Sacco to build 156 houses on the outskirts of Nairobi, and the National Housing Corp. of Ivory Coast for 1,022 units in Abidjan, the commercial capital, Mugerwa said.

In September last year, Shelter Afrique sold 5 billion shillings of floating bonds and fixed-rate debt at 12.75 percent. Next year’s offer will be the second portion of the 2018 notes. Yields on 10-year government shilling bonds dropped 30 basis points, or 0.3 percentage point, since they were issued in January to 11.9 percent by 11:42 a.m. in Nairobi, according to data compiled by Bloomberg.

Established in 1982, Shelter Afrique has 44 African nations as members. Angola, Africa’s second-biggest oil producer and whose capital Luanda is the world’s most expensive city for expatriates, is considering membership, Mugerwa said.

“Angola has shown interest in joining the organization and discussions are ongoing,” Mugerwa said. “At the same time, we are considering opening up membership to countries based outside Africa who share the same vision as ourselves and who will help the organization to boost its equity.”

-By Charles Wachira

Uber to Develop San Francisco Offices With Alexandria

Source: Bloomberg / Tech

Uber Technologies Inc. and Alexandria Real Estate Equities Inc. (ARE) formed a joint venture to develop land in San Francisco’s Mission Bay neighborhood and build a new headquarters for the car-booking service.

The deal includes the acquisition of two parcels as well as parking spaces and permits, according to Alexandria Chief Executive Officer Joel Marcus. Uber plans to lease the almost 423,000 square feet (39,000 square meters) of offices that will be built on the properties, the Pasadena, California-based real estate company said today in a statement.

Uber, which landed a $17 billion valuation in a June financing, is adding to office space it currently has on Market Street as it rapidly grows. The development site is adjacent to land where a new Golden State Warriors arena is planned and in an area where Alexandria has about 1 million square feet of space focused on technology and life-science tenants.

“You are seeing a tremendous influx of technology and life sciences companies from suburban areas into rare urban neighborhoods,” Marcus said in a telephone interview. “It’s all about quality of life and recruitment.”

The venture, which took about three months to form, will be 51 percent owned by Alexandria and 49 percent by Uber, he said. The companies didn’t disclose its value.

Hot Market

San Francisco is poised to surpass Manhattan as the most expensive U.S. office market next year as technology companies extend a surge in leasing, according to an August report by brokerage CBRE Group Inc. Almost three-quarters of the city’s tenant deals this year through June were signed by tech firms.

In 2010, Alexandria had sold the land parcels at 1455 and 1515 Third Street to Inc. as part of a larger $278 million deal. Salesforce purchased the property with the intention of building a new headquarters before opting to lease space in downtown office towers instead. The National Basketball Association’s Warriors agreed in April to buy about 12 acres (4.9 hectares) of Salesforce’s undeveloped land for its new stadium.

Alexandria bought back the two lots for $125 million, according to Marcus.

The Uber project, which will feature steel and glass on the outside and be “creative, collaborative and innovative” on the inside, is expected to break ground in January and will be completed by the end of 2016, Marcus said.

-By Nadja Brandt