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12th February 2015

Singapore Economy


2014 visitor figure misses STB forecast

Decline is first since 2009; tourism board says it will ramp up marketing efforts as uncertain global economy and currency volatility continue to impact tourism

Source: Business Times / Government & Economy

HEADWINDS on several fronts pushed Singapore's 2014 visitor arrivals down 3.1 per cent to 15.1 million, the first decline since 2009 and off the mark set by the Singapore Tourism Board (STB).

The consolation was that STB's quest for higher yield tourists could be paying off - tourism receipts were flat at S$23.5 billion as per capita spending rose.

Expectations were for 16.3-16.8 million visitors and tourism receipts of S$23.8-24.6 billion in 2014, both of which failed to materialise as arrivals from markets such as China took a tumble and certain regional currencies depreciated against the Singapore dollar.

This also suggests that an earlier target - set in 2004 - of 17 million visitors by 2015 would not be met.

At a press conference on Wednesday, STB chief Lionel Yeo highlighted that Singapore's tourism industry has grown by leaps and bounds over the last 10 years. "If we look at what has been achieved so far, we have been able to double visitor arrivals since 2004 (and) increase tourism receipts by two and a half times. To me, these are excellent results and testament to the efforts that have gone into growing the tourism scene over the last 10 years."

Unexpected events, such as the global financial crisis over 2008-2009, also threw Singapore off its growth trajectory along the way.

Last year, visitor arrivals from Singapore's second-biggest source market, China, plunged 24 per cent to 1.72 million as the disappearance of Malaysia Airlines' flight MH370 dampened travel demand to South-east Asia. China's clamping down on the sale of "zero-dollar" tours - cheap tour packages with surprise fees - via stricter laws in late 2013 has also had a significant impact on travel to the region.

Meanwhile, visitor volumes from Singapore's largest source of tourists, Indonesia, dipped 2 per cent to some 3.02 million on the back of the weaker rupiah, while traffic from Malaysia slipped 4 per cent to 1.23 million as the Superstar Virgo shifted its homeport to Hong Kong and the ringgit depreciated. Tourist volumes from Australia dropped 5 per cent to 1.07 million due to lower "twinning" traffic with Singapore's neighbouring countries and the UK.

On the other hand, arrivals from markets such as Hong Kong (17 per cent), South Korea (14 per cent) and Vietnam (11 per cent) all grew at a double-digit clip.

The data also showed that tourists from some key markets are also staying longer and spending more per person. In the case of China for instance, per capita expenditure - stripping out sightseeing, entertainment and gaming - for January-September 2014 climbed 29 per cent to S$1,600 while average length of stay was up 56 per cent to 4.4 days.

This year, CBRE Hotels expects a slight recovery, with visitor arrivals for 2015 to clock 15.7-16 million. The STB is expected to release its own targets in the coming weeks.

In the hotel industry, performance was largely flat last year, with average occupancy declining slightly by nearly one percentage point to 85 per cent, while average room rate was steady at S$258. This resulted in revenue per available room (RevPAR) sliding 1.1 per cent to S$220. Still, overall hotel revenue grew by 7.2 per cent to S$3.1 billion as room stock expanded 3.9 per cent to 57,172 rooms.

Citing URA data, the STB estimates that some 5,000 new rooms will be injected into the market this year from hotels such as Park Hotel Alexandra and The Patina.

According to CBRE Hotels, new supply coming into the market will have an impact on the industry, although many of the hotels will not be completed until later in the year.

Occupancy is expected to drop slightly "by a couple of percentage points at most", said CBRE executive director Robert McIntosh.

Looking forward, the STB acknowledges that the uncertain global economy and currency volatility will continue to have an impact on tourism, while competition from regional markets is also on the rise as some countries relax visa requirements to attract the tourist dollar.

To combat this, the STB will ramp up marketing efforts in major tourism markets - such as by targeting secondary cities in China and Indonesia - to drive demand. There are also plans to market Singapore more as a mono-destination, so there is less dependence on travellers who visit Singapore as part of a multi-tour destination.

As for business travel and MICE (meetings, incentive travel, conferences & exhibitions), the STB is trying to attract more attendees by focusing on 10 key markets in the Asia-Pacific region. For the first three quarters of 2014, BTMICE visitors dropped 13 per cent year on year to 2.3 million and spend by these visitors fell 5 per cent to S$3.89 billion.

And while 2014 wasn't the best year for the cruise industry, the STB projects that throughput will grow 10-15 per cent this year to take it closer to 2013 levels. Ship calls fell from 391 in 2013 to 372 in 2014, while cruise throughput dropped from 1.03 million to 890,000.

Chin Ying Duan, communications manager for Royal Caribbean Cruises, said that the group is basing more ships in Singapore this year in a nod to its bullishness on Asia's growth prospects for the cruise industry.

"This year, we're looking forward to stronger interest," she said, adding that some six different cruise ships will be deploying from Singapore over the course of this year. And from H2 2015, the cruise company will have one cruise ship with a year-long deployment out of Singapore.

-By Nisha Ramchandani


Tourist arrivals fall 3.1%; spending stable

Those who came stayed longer and spent more than in previous year

Source: Straits Times / Top of The News

THE number of tourists visiting Singapore fell for the first time since 2009 - though those who did come last year stayed longer and spent more on average than in the previous year.

The Singapore Tourism Board (STB) reported a 3.1 per cent fall in visitor arrivals to 15.1 million last year, having projected arrivals of 16.3 million to 16.8 million.

However, tourist spending remained stable at $23.5 billion, in its preliminary 2014 estimates.

This may be a good sign, but the long-established 2015 target of 17 million visitors and $30 billion in tourism receipts will not be met, STB chief executive Lionel Yeo said.

Those targets were set in 2004, after the 2003 severe acute respiratory syndrome outbreak. "It was a signal at that time to say we are going to embark on an ambitious programme to grow tourism," said Mr Yeo. The economic downturn in 2008 and 2009 was also a setback, he added. Last year was also a "stormy" year, he said.

Nine out of Singapore's top 15 visitor-generating markets - representing 85 per cent of all arrivals - took a dip.

China, Singapore's second largest market with 1.72 million visitors, recorded the biggest slide of 24 per cent. It followed the disappearance of Malaysia Airlines Flight MH370 and China's implementation of laws clamping down on "zero-dollar" tours - cheap packages that included fees travellers were not told about upfront.

Thailand's implementation of martial law last May also had a knock-on effect, meaning tourists avoiding the country bypassed Singapore as well.

There were also fewer visitors from Indonesia (down by 2 per cent) and Malaysia (down by 4 per cent), owing to the depreciating rupiah and ringgit, as well as a shorter Hari Raya weekend.

Meanwhile, travel from Hong Kong, South Korea and Vietnam was up by 17 per cent, 14 per cent and 11 per cent, respectively.

Last year, each tourist stayed an average of 3.7 days, up from 3.5 in 2013. Each spent an average of $1,556 - $48 more than in 2013.

In particular, the number of Chinese visitors who stayed for at least two days rose 20 per cent year-on-year. Each Chinese tourist stayed an average of 4.3 days last year, up from three in 2013.

The number of Chinese visitors who visited Singapore as their only destination also grew 22 per cent. Single-destination travel also grew by 8 per cent in the Australia market and 16 per cent in the India market.

The outlook appears brighter this year. CBRE Hotels forecast that visitor arrivals will increase on the back of growth in China's economy and tourism, and the National Association of Travel Agents Singapore (Natas) says things are picking up.

"Members say certain markets are doing very well, especially for travel to Singapore during the Chinese New Year long weekend," said Natas chief operating officer Anita Tan. "We are cautiously optimistic... The situation looks better than it did the same time last year."

She said several markets - including China, Vietnam and South Korea - have received strong forward bookings for inbound tourism this year.

-By Jessica Lim. Consumer Correspondent


Fewer tourists visited Singapore in 2014, but receipts hold firm

International tourist arrivals to Singapore dipped 3.1% in 2014, but tourism receipts held firm at S$23.5 billion, according to Singapore Tourism Board estimates.

Source: Channel News Asia / Singapore

SINGAPORE: Fewer tourists visited Singapore last year compared to 2013, though numbers continued to remain high, preliminary estimates from the Singapore Tourism Board (STB) showed.

International visitor arrivals totalled 15.1 million last year, a 3.1 per cent dip from 2013's 15.6 million, which was a record in visitor arrivals.

This was the first time since 2009 that visitor numbers fell.

Visitors from the top four markets - Indonesia, China, Malaysia and Australia - fell across the board. But the drop last year was especially prominent in the China market. The number of Chinese visitors last year fell 24 per cent from 2013. China was the only nation among the top 15 markets to record a double-digit fall.

STB said the drop was likely due to factors such as the implementation of China's Tourism Law, regional socio-political issues and recent aviation incidents in the region. But STB is still positive about the tourism sector as a whole.

Mr Lionel Yeo, CEO of STB, said: "A number of the headwinds are external and macroeconomic in nature. So one takes, for example, the uncertain global economic recovery - that is going to put a question mark on global outbound travel. But fundamentally, the health of the tourism sector is still good."

There are several numbers that seem to support Mr Yeo's view - despite the dip in the total number of visitors, each visitor spent marginally more compared to 2013, with tourism receipts for 2014 holding steady at S$23.5 billion.

STB's numbers showed that an average stay was 3.7 days last year, up from 3.5 days in 2013 and 2012.

Visitors from key markets such as Australia and China were also staying longer in Singapore. Chinese tourists stayed an average of 4.3 days in Singapore in 2014, up from three days in 2013, while the Australians were in the Republic for an average of 3.2 days last year, compared to about three days in 2013.

There was also good news on the visitor arrivals front from elsewhere in the region. On the back of a stronger Korean won against the Singapore dollar, 14 per cent more South Koreans visited Singapore last year compared to 2013. The Hong Kong and Vietnam markets also saw an increase in visitor arrivals of 17 and 11 per cent respectively, compared to 2013.

STB recognises that there are headwinds ahead, such as the strengthening of the Singapore dollar against its regional peers, and the uncertain global economic recovery. However, it believes that Singapore can continue to attract visitors from the region.

Mr Yeo added: "In the short term, I think it is really about giving a boost to our marketing efforts. And we talked about that for 2015. Over the medium term, it is about making sure our attractions remain attractive, both for leisure and for business visitors."

In January, STB announced details for a major makeover and expansion of the Mandai zoo precinct. The agency said it is also expanding marketing efforts to seven tier-two cities in China.

STB is projecting a growth of three to four per cent in visitor arrivals, over the next five to 10 years.

- CNA/av/ac

Singapore Real Estate


URA guidelines to offer more flexibility in design of landed homes

Source: Business Times / Real Estate

DEVELOPERS, architects, engineers and owners of landed homes in Singapore will have more design flexibility under a set of guidelines pushed out by the Urban Redevelopment Authority (URA).

Called the Envelope Control guidelines, they will be effective from May 11, said URA in a circular to professional institutes on Wednesday.

Under the existing guidelines, landed houses must adhere to certain floor-to-floor dimensions and basement protrusion limits. With the new guidelines, for example, floor-to-floor heights will no longer apply, though the overall height limit of homes will be reduced.

The guidelines apply to all landed properties in Singapore, but will be enforced only for new erections and reconstruction works.

A three-month grace period (between now and May 11) has been given for the industry to make the transition to the changed guidelines; individuals or parties who wish to adopt the guidelines during the grace period can make an application to the URA.

URA data puts the number of two-storey housing estates at 130, and three-storey estates, at 124. All in, there are 72,000 landed units, making up 23 per cent of total private housing units in Singapore.

In his blog on Wednesday, Minister for National Development Khaw Boon Wan noted that URA guidelines used to specify the height limits for each storey of a house. The new guidelines, however, only say that three-storey homes must not be more than 15.5 m in height in total, down from 17.7 m; two-storey homes are to be not more than 12 m, from 14.1 m.

Another change pertains to the "basement protrusion limit" of landed homes. Existing guidelines require such houses to have an additional one metre setback from the road and the rear for the third storey, compared to that of the first and the second-storey, and that the attic must be contained within a sloping roof.

The new guidelines do away with these requirements.

The changes thus give home owners, developers, architects and engineers more free play in the internal layering or configuration of the property, while preserving control over the maximum height of the property, thus safeguarding the low-rise character of landed housing estates.

Mr Khaw said the changes should be good news to those who want flexibility in interior design: "Owners can 'layer' their homes creatively, to bring in natural light and ventilation. (The changes) most likely benefit those who live in intermediate terraces."

The new guidelines are the result of community and industry feedback collected since 2007.

In 2009, URA applied the envelope control guidelines in the Sembawang Greenvale housing estate, under a pilot involving 65 landed houses - 55 terrace units and 10 detached ones.

A URA spokesman said construction of these units was completed as of last May, and the majority of the units have since been sold.

Referring to the guidelines' covering only new-builds and and reconstruction works, the URA spokesman said that addition and alteration works can continue to follow the conventional landed-housing guidelines: "Existing landed houses originally approved and built under the conventional landed housing guidelines may have difficulty complying with the new envelope control guidelines."

Under the existing Plan Lodgment Scheme for landed houses, home owners can submit their landed homes for lodgment without needing to apply for planning permission, as long as they comply with the lodgment criteria.

But from May 11, applicants may submit their lodgment proposals under the new guidelines, as long as the proposal satisfies new lodgment criteria, such as keeping within the allowable maximum height despite mezzanine or other floors being added.

Desmond Sim, head of CBRE Research, South-east Asia, said the new guidelines expand the design framework to allow more creativity in the design of landed houses in the future. "Undeniably, the design and layout will play a role in determining the price of a house . . . It will challenge architects and incentivise landed property owners to exercise more creativity with bespoke designs."

Bukit Sembawang Estates' executive director and chief executive Ng Chee Seng is of view that the reduction in maximum allowable height of landed houses under the new guidelines would not have much of an impact: "A lot of the height is currently taken by the sloped roof, which is now no longer a requirement," he said.

-By Chan Yi Wen


More room to shape landed homes

Greater leeway to alter interiors, as well as change outside area

Source: Straits Times / Top of The News

OWNERS and developers of landed homes will have more flexibility when it comes to redevelopment, under new rules announced yesterday.

The changes give greater leeway when it comes to altering the interiors of properties, but there will also be more scope to change the outside area as well, including making improvements to attics and basements.

The Urban Redevelopment Authority (URA) said the new rules, which kick in on May 11, "simplify the existing guidelines... while safeguarding the low-rise character of landed housing estates".

The changes will give architects more scope in the interior design as long as the overall external size of the home still fits within a three-dimensional limit, or "envelope".

One change is to the floor-to-floor height requirement, which is now 4.5m for the first storey, and 3.6m each for the second and third storeys. Under the new rules, this will be up to the owner's preferences.

This means owners can vary floor-to-ceiling height, add more mezzanine floors or have higher ceilings in living and dining areas, said W Architects managing director Mok Wei Wei.

The new guidelines also relax a rule that requires the third storey to be set back an additional 1m from the first and second storeys. This requirement will go so the third storey can align with the lower floors and be more spacious.

The URA will also do away with a rule requiring attic roofs to be pitched, while basements may protrude more than the 1m above ground level as allowed now.

This will mean better ventilation and light for houses with attics and basements, said Bukit Sembawang Estates executive director and chief executive Ng Chee Seng. The company will adopt the new guidelines for its landed house projects in Seletar Hills.

Mr Mok said: "It may overall be possible to achieve more built- up area. This is a much better set of guidelines to work with."

The new rules will also bring tighter restrictions on total maximum permissible heights.

These have been reduced for three-storey homes from 17.7m to 15.5m, and from 14.1m to 12m for two-storey ones. "This is the typical height that most landed houses are currently built up to under current guidelines and will respect the low-rise character of our landed housing estates," said a URA spokesman.

National Development Minister Khaw Boon Wan said in a blog post yesterday that the new guidelines will most likely benefit people in intermediate terraces.

Larger houses like good class bungalows tend to have enough space to play around with design, experts said.

The rules are being introduced following a pilot scheme at Sembawang Greenvale. Its 65 houses - 55 terraced and 10 detached homes - were completed last May under the new guidelines.

Landed home owner and Sembawang resident Tracy Low, 55, said: "There will be more variety in landed housing now."

But while the design of a house can influence its price, the value of a landed property is still derived predominantly from the location, age, tenure and type, said Mr Desmond Sim, CBRE research head for South-east Asia.

The URA said it will allow minor additions and alterations to landed houses under the current guidelines.

There are about 130 two-storey and 124 three-storey landed home estates in Singapore, comprising 72,000 houses, or about 23 per cent of total private housing units.

-By Rennie Whang

New URA guidelines for landed homes to take effect from May

Under the new guidelines, which come into effect on May 11, home owners of landed property can choose to vary the floor-to-ceiling height in their house, while the limits for the attic and basement have also been changed.

Source: Channel News Asia / Singapore

SINGAPORE: Home owners and developers will soon get to enjoy greater flexibility in configuring the interior space of their landed homes, after the Urban Redevelopment Authority (URA) on Wednesday (Feb 11) released a new set of guidelines for landed houses.

The new guidelines will come into effect on May 11 to give the industry sufficient notice of the change, said URA. The guidelines adopt an approach where the interior configuration of a house is determined by a combination of the allowable height of the house, distance from the road and common plot boundaries.

This serves as a three-dimensional limit - within which a landed house can be designed.

Under the new guidelines, the allowable overall height for a two-storey landed house will be 12 metres, down from the existing 14.1 metres. Meanwhile, the allowable overall height for a three-storey landed house will be 15.5 metres, down from the existing 17.7 metres. 

However, home owners will now be able to vary the floor-to-ceiling height in their home, giving them a mix of spacious and compact spaces. This is a departure from existing rules, where a height restriction is set for each floor. The various storeys in the house can also be layered creatively, even allowing an extra room to be set up in a mezzanine level. 

Under the new guidelines, the topmost floor, or the attic, will be limited to 3.5 metres in height and has to be set back from the front and rear of the building facade as defined by a 45 degree line. However, the attic can also be designed without a sloping roof, which is currently a requirement. 

The basement will also be allowed to protrude above ground beyond the current one-metre limit. This is expected to allow more ventilation and light to the basement space.

In a circular to professional institutes, URA said the new guidelines are a response to changing lifestyle needs, and are formulated with input from landed house owners and professionals from the building industry.

It added that the new guidelines will simplify existing rules and provide developers and home owners more flexibility in the design of landed housing, while also safeguarding the low-rise character of landed housing estates.

The new guidelines had been piloted by URA on a landed housing area in Sembawang Greenvale. The 55 terrace houses and 10 detached house units were completed last year.


In a blog post on Wednesday, National Development Minister Khaw Boon Wan said the results in the pilot were "positive".

"The new guidelines should be good news to those who want flexibility in interior design. Owners can ‘layer’ their homes creatively, to bring in natural light and ventilation, and are most likely to benefit those who live in intermediate terraces," he added.

A developer also welcomed the move.

"It will give the architect the flexibility to create an interesting internal space with various volumes and heights for different areas and rooms within the building envelope," said Mr Ng Chee Seng, CEO of Bukit Sembawang Estates.

"Externally, it will also enable architects to come up with more creative and interesting facade treatment. We can come up with new type of housing typology, different types of interesting designs that will be more enticing to the purchaser," he added.

Once the new guidelines kick in, they will apply to all relevant applications involving new erection or reconstruction of landed housing developments. URA said it can also accept development applications from those who wish to adopt the new guidelines during the three-month grace period. 

There are about 130 two-storey and 124 three-storey landed home estates in Singapore today. In total, there are about 72,000 landed units, which make up about 23 per cent of total private housing units in Singapore.

- CNA/av/xq

JTC launches integrated industrial devt

Source: Business Times / Real Estate

A visit to the manufacturing facility of Rohag Singapore featured heavy-duty machinery neatly arranged in different sections. Rohag, a provider of machining and fabrication works for the oilfield industry, has been enhancing productivity by improving the layout of its equipment. It hopes that it will be in a better position to do so as it moves into the new industrial facility at Tuas.

-By Prisca Ang       

JTC to integrate manufacturing value chain in single development

JTC Space @ Tuas will have seven land-based factories on the ground floor for heavy manufacturing activities such as those in the oil and gas sector, among other facilities.

Source: Channel News Asia / Business

SINGAPORE: JTC on Wednesday (Feb 11) broke ground for the first industrial development in the Republic that will house companies within the entire manufacturing value chain when it is completed in 2017.

The development, JTC Space @ Tuas, is sited on a 6.4-hectare land in Tuas, and will have seven land-based factories on the ground floor for heavy manufacturing activities such as those in the oil and gas sector. There will also be 36 ramp-up and 95 flatted factories on the upper levels catering to downstream partners or suppliers of the manufacturing industry.

The facility will also feature supporting infrastructure such as a 200-lot heavy vehicle parking facility, a 1,300-bed workers’ dormitory and an amenity centre.

JTC said that this will help to cut down on commuting time for workers, and reduce roadside congestion, especially illegal parking by heavy vehicles. The convenience of nearby amenities and living dormitories is also expected to help improve overall work productivity.

"Essentially it seeks to integrate the industry ecosystem, housing both the heavy vehicles and dormitories, together with production activities. We also have space for the heavy industry together with other supporting industries in one complex," said Mr Leow Thiam Seng, director of the Aerospace, Marine and CleanTech Cluster at JTC Corporation.

The project is expected to be completed in the third quarter of 2017 and will result in land savings of about 50 per cent.

“By combining different factory types in a single development, JTC Space @ Tuas is able to house different manufacturing activities in the value chain. Such integration will encourage more collaboration between companies in the value chain, raise their productivities and strengthen their overall competitiveness,” said JTC’s chief executive Png Cheong Boon.

Minister for Trade and Industry Lim Hng Kiang said having different factory types within a single development will enhance collaboration across industries.

For example, oil and gas companies require a complex array of precision engineering products and solutions to run their operations. Co-locating the two industries will not only reduce transportation costs but also offer the potential for companies to integrate their business processes and become more productive.

The manufacturing sector is a key engine of growth for Singapore’s economy. In 2013, it accounted for 20 per cent of GDP (S$71.5 billion) in value-added and employed over 540,000 workers.

Mr Lim said: "Looking ahead, the manufacturing sector will continue to offer good prospects for Singaporeans as it underpins the transformation of our economy into a knowledge-based and skills-intensive one. EDB’s Future of Manufacturing initiative will position Singapore as a major global hub for advanced manufacturing." 


Rents on private condos, HDB flats still under pressure: consultants

SRX flash estimates show a 0.2% m-o-m rise in private condo rents, 0.5% slide in HDB rents in January

Source: Business Times / Real Estate

RENTS for private non-landed residential units increased in January, reversing from the past 11 consecutive months of decline, but rents for public housing flats continued to slide, according to estimates by the Singapore Real Estate Exchange (SRX).

Consultants noted, however, that the January rise in the private homes rental market is no more than a blip due to monthly fluctuations, with no signs that rents are on a rebound.

The SRX rental index that tracks non-landed private residential units here posted a 0.2 per cent increase in January from a month ago. SRX said the rise in overall rents for private condominiums and apartments were driven mainly by the Rest of Central Region (RCR) that saw rents increase by 1.9 per cent.

Rents in the Outside Central Region (OCR) inched up 0.2 per cent while rents in the Core Central Region (CCR) decreased by 0.8 per cent.

"The basic market fundamentals have not changed in the last year nor would it change in 2015," said SLP International executive director Nicholas Mak, who is projecting a 4-7 per cent fall in rents for the full year.

"There will be a growing number of private and HDB units or rooms offered for lease in 2015 as more housing units are completed and more HDB flats meet the five-year minimum occupation period (MOP) rule," he noted.

With the government unlikely to raise the intake of foreigners and expatriates this year, residential leasing demand will remain muted since the increase in the expatriates population will not keep pace with the supply of housing units for lease, Mr Mak said.

An estimated 3,417 private condos were rented in January, representing a 13 per cent rise from 3,025 units rented in December and marking a 16.1 per cent year-on-year increase from the 2,944 units rented in January 2014.

While leasing activity is holding up as existing tenants relocate to better options, overall private non-landed residential rents are likely to fall 6-8 per cent for the whole year, said ERA Realty key executive officer Eugene Lim.

Under the current property tax regime, landlords are no longer allowed to apply for vacancy refund on their property tax should they fail to rent out their units. "As interest rates are also on the rise, there is a sense of urgency for landlords to quickly secure their tenants to negate holding costs," he said.

In the public housing market, rents for HDB flats continued to slide a further 0.5 per cent in January compared to December 2014, SRX rental index for HDB flats show. Four-room, five-room and executive flats posted declines of 1.3 per cent, 0.3 per cent and 1.6 per cent, respectively. Three-room HDB flats saw a 0.3 per cent pick-up in rents over the month.

Compared to a year ago, HDB flat rents were down 1.6 per cent in January. Rents of mature estates marked a bigger drop of 1.9 per cent, compared to non-mature estates where rents fell 1.4 per cent year on year.

SRX said that HDB rents of non-mature estates in December have dropped 6.9 per cent from its peak in October 2012, while rents of mature estates in December have dropped 4.4 per cent from its peak in February 2013.

But rental volumes of HDB flats rose 4.4 per cent month on month to an estimated 1,651 HDB flats in January - almost flat compared to a year ago. Mr Lim of ERA said that he expects overall HDB rents to slip 5-6 per cent for the whole year, as the decline in private residential rents is "keeping a lid on further price increase for HDB flat rents".

"Those with more than S$2,500 budget are likely to go for private non-landed units instead of HDB flats," he pointed out.

-By Lynette Khoo


Slight rise in private home rentals, HDB rents decline

Rental prices for Housing and Development Board (HDB) flats fell 0.5 per cent in January from the previous month, while rents for private homes rose 0.2 per cent, according to SRX Property.

Source: Channel News Asia / Singapore

SINGAPORE: Rental prices for Housing and Development Board (HDB) flats fell 0.5 per cent in January from the previous month, while rents for private homes rose 0.2 per cent, according to SRX Property.

Four-room, five-room and executive flats saw rental prices fall 1.3 per cent, 0.3 per cent and 1.6 per cent, respectively. Three-room flats, however, bucked the trend with rents rising by 0.3 per cent.

On-year, rents in January 2015 were down 1.6 per cent. Rents in both mature and non-mature estates fell, with rent of non-mature estates in December 2014 dropping 6.9 per cent from its peak in October 2012 while rents in mature estates fell 4.4 per cent in that same month from its peak in February 2013.

Rental volume for HDB flats also increased, with an estimated 1,651 flats rented in January 2015 - a 4.4 per cent increase from the 1,581 units rented in the previous month.


Rentals for non-landed private residences posted a 0.2 per cent increase in January 2015, after 11 consecutive months of decline.

Units in the Core Central Region saw rental prices decline by 0.8 per cent, but rents for units in the Rest of Central Region and Outside of Central Region rose 1.9 per cent and 0.2 per cent respectively.

Rents in January fell 5.9 per cent year-on-year, down 9.6 per cent from its peak in January 2013. 

An estimated 3,417 private units were rented in January 2015, a rise of 13 per cent from the 3,025 units rented last month. Year-on-year, rental volume rose 16.1 per cent from the 2,944 units rented in January 2014.

- CNA/ac

Shopping mall rents set to fall in 2015: Savills

Prime rents on Orchard Road are forecast to recede by 3 to 5 per cent, with rents in suburban malls set to fall by up to 3.0 per cent, said real estate services firm Savills.

Source: Channel News Asia / Business

SINGAPORE: Rents for shops and restaurants in Singapore are expected to fall this year, with prime rents on Orchard Road forecast to recede by 3 to 5 per cent and rents in suburban malls by up to 3.0 per cent, real estate services firm Savills said in a report on Wednesday (Feb 11).

"It appears that landlords in the prime shopping districts are beginning to hold out olive branches to retailers, many of whom are confronted with the twin woes of higher fixed costs and lower sales,” said Mr Alan Cheong, Savills Research senior director for Singapore, in the report.

Much of the new retail space coming onto the market in 2015 will be in central areas, unlike in 2014 when most of the new supply was in suburban areas.

Developments with large retail areas that are slated to open this year include Capitol, the National Gallery Singapore and South Beach.

Singapore retailers have been hurt by rising labour costs and falling visitor arrivals. The latest available data showed retail sales excluding motor vehicles dipping 0.4 per cent year-on-year in Nov 2013, while the Singapore Tourism Board said that international visitor arrivals totalled 15.1 million last year, a 3.1 per cent drop from 2013's record figure of 15.6 million.

Savills, however, expects vacancy rates at malls to remain low this year as any easing of rents would see revived interest from potential tenants.

For the fourth quarter of 2014, Savills estimates prime retail rents on Orchard Road will be moderated by 5.0 per cent from the third quarter to S$32.90 per square feet per month - the first decline after four consecutive lull quarters.

But prime suburban mall rents are expected to hold firm at S$31.10 per square feet per month, as businesses remain resilient in malls that serve a large population catchment. 

- CNA/ac

Booking an HDB flat? You'll need a loan eligibility letter

Source: Business Times / Real Estate

Applicants of Build-to-order (BTO) flats who intend to take out loans from the Housing and Development Board (HDB) will now need to produce a valid HDB loan eligibility (HLE) letter when they book the flat, said HDB on Wednesday, as it launched 3,995 new flats under the February 2015 BTO exercise. Previously, potential flat buyers were required to produce the HLE letter only when they signed the agreement for lease, four months after booking a flat.

-By Mindy Tan        


Buyers must get HDB loan letter earlier to book flat

Requiring eligibility letter at point of booking helps them plan finances

Source: Straits Times / Top of The News

PUBLIC flat buyers who want a Housing Board loan now have to get their official loan eligibility letter at an earlier stage.

This is to avoid situations when buyers book a flat first but are then unable to get a sufficient loan for it, said the HDB in a statement yesterday.

From this month's Build-to-Order (BTO) exercise, buyers must produce the HDB Loan Eligibility letter when they book their flat.

Previously, they had to do so only when signing the Agreement for Lease, which takes place four months after booking a flat.

The letter indicates the size of the loan for which buyers are eligible, and the monthly instalments required.

The aim of asking for this letter earlier is "to help flat buyers better plan their finances and flat purchase", said the HDB.

Said R'ST Research director Ong Kah Seng: "This new move ensures higher efficiency in allocating the flat, and saves time on applicant dropouts and disqualified applicants who cannot get the required loan."

He does not expect the move to affect the resale market.

But ERA Realty key executive officer Eugene Lim thinks it could nudge some BTO buyers into considering resale flats. "Some may actually consider resale flats after obtaining the HDB Loan Eligibility letter, as they would know that they qualify for a higher loan quantum," he said.

As for new flats, experts said that, with this move, the subscription rate for BTO flats might fall.

This is because it stops buyers from booking flats that are beyond their means, said Mr Lim, who called the change "a rational move".

Subscription rates for some flats in the latest BTO exercise, which began yesterday, are still likely to be high.

This month's launch of 3,995 new flats is comparable to last year's launches of about 3,000 to more than 4,000 flats at a time.

But unlike recent years, with BTO exercises every other month, there will be only four such exercises this year as the Government continues scaling down after three years of bumper launches.

Some 16,900 BTO flats will be launched this year, down from 22,455 last year, as well as from the peak in 2011 to 2013, when more than 25,000 new flats were launched each year.

On offer this month are flats across five projects, with two projects each in the non-mature estates of Bukit Batok and Hougang, and one in the mature estate of Geylang. The units include studio apartments and two- to five-room units.

In West Rock @ Bukit Batok, there are also 58 three-generation, or 3Gen, flats on offer.

These larger flats of about 115 sq m are meant for multiple generations living under one roof.

-By Janice Heng

MacPherson flats hot among BTO applicants

Source: Straits Times / Singapore 

AMONG the 3,995 flats on offer in this month's Build-to-Order exercise, those in the MacPherson Spring project are likely to be hottest, said experts.

This is because the project is located in Geylang, a mature town, and is within walking distance of MacPherson MRT station.

At 5pm yesterday, there were 386 applicants for the project's 378 four-roomers.

One of them is barber Shaik Hussein, 28, who applied with his fiancee. "We're hopeful because her parents live nearby and we can get priority," he said.

Since November, up to 30 per cent of new flats have been set aside for first-timers applying to live with or close to their parents or married children. There were also 59 applicants for 168 studio apartments and 51 applicants for 204 three-roomers in the project.

Also likely to be popular are the two projects in Hougang. They include two-room flats, which are sought after by singles. As at 5pm, there were 2.3 singles for each of the two-roomers available to them in Hougang, compared to 0.8 singles for each two-roomer in Bukit Batok.

Applications close at midnight on Tuesday. The next launch, in May, will feature 4,040 new flats in Punggol North and Sembawang, as well as in the mature estates of Clementi and Tampines. Another 4,000 to 5,000 balance flats will be offered as well.

-By Janice Heng


Almost 4,000 flats available in first BTO exercise of 2015

The 3,995 units in the February exercise consist of Studio Apartments, 2-room to 5-room flats, and Three-Generation or 3Gen flats in Bukit Batok, Hougang and Geylang.

Source: Channel News Asia /  Singapore 

SINGAPORE: The Housing and Development Board on Wednesday (Feb 11) launched its first Build-To-Order Exercise of the year, with 3,995 new flats in Bukit Batok, Hougang and Geylang made available.

This is the first tranche of a total of 16,900 BTO flats planned for release in 2015. HDB said that in May, it will offer about 4,040 BTO flats in Clementi, Punggol North, Sembawang and Tampines, while between 4,000 and 5,000 flats will be offered in a concurrent Sale of Balance Flats (SBF) exercise.

The 3,995 units in the February exercise consist of studio apartments, two-room to five-room flats, and three-generation (3Gen) flats.

At Bukit Batok, 2,042 flats comprising two- to five-room and 3Gen units are up for grabs. Meanwhile at Buangkok, 1,203 two- to four-room units are on offer. In the MacPherson area, 750 studio apartments, three- and four-room units are available.

"Married or courting couples who wish to live together with their parent(s) can apply for a 3Gen flat at West Rock @ Bukit Batok. This is the first time 3Gen flats are offered in Bukit Batok. Other multi-generation families who wish to live near each other in the same BTO project can apply for flats in West Edge @ Bukit Batok, MacPherson Spring, Buangkok ParkVista or Buangkok Tropica under the Multi-Generation Priority Scheme," said the HDB in a press release.

"Applicants are strongly advised to apply for a BTO flat in non-mature towns to enjoy a higher chance of success in securing a flat."

It added that eligible first-timer families can enjoy up to S$60,000 in housing grants, comprising the Additional CPF Housing Grant (AHG) of up to S$40,000 and the Special CPF Housing Grant (SHG), of up to S$20,000.

"With these grants, two-room, three-room, four-room and five-room flats can be purchased from S$13,000, S$108,000, S$220,000 and S$340,000, respectively," said the HDB.

The housing agency also noted that from the February sales exercise, flat applicants who intend to take out an HDB housing loan will need to produce a valid HDB Loan Eligibility (HLE) letter when booking a flat, instead of during the signing of the Agreement for Lease. 

"This move to bring forward the HLE requirement seeks to help flat buyers better plan their finances and flat purchase. It will minimise any disappointment should they be unable to obtain sufficient a loan to proceed with the flat purchase subsequently, resulting in cancellation of their flat application and forfeiture of the option fee paid," it said.

Real estate agency ERA Realty said the move will ensure that the flat buyer would not overstretch his financial resources.

"Some may book first and subsequently find out that they are not able to qualify for a loan quantum that they had hoped for. This is because the monthly instalment for all loans with regard to the purchase of a HDB flat must not exceed the 30 per cent Mortgage Servicing Ratio," said ERA's key executive officer Mr Eugene Lim.

"So, by requiring the purchaser to obtain the HLE letter before booking for the flat, it would ensure that the purchaser is able to purchase a flat that he can afford," he added.

Mr Lim also said the move may drive up subscription rates in non-mature towns, which are typically priced at a lower margin than flats in the mature towns.

Applications for a BTO flat under this exercise can be submitted at the HDB InfoWeb from Feb 11 to 17.

- CNA/es/ac


3,995 flats available in first BTO exercise this year

Source: Today Online / Singapore 

SINGAPORE — The first Build-to-Order (BTO) exercise of the year will see nearly 4,000 new flats up for sale in five projects located in Bukit Batok, Hougang and Geylang.

This is the first batch of the 16,900 BTO flats that the Housing and Development Board (HDB) has planned for this year, with the next launch in May offering another 4,040 flats in Clementi, Punggol North, Sembawang and Tampines. About 4,000 to 5,000 flats will also be available for sale at a concurrent Sale of Balance Flats (SBF) exercise in May, the HDB said yesterday.

From this month’s sales exercise onwards, flat applicants who intend to take a housing loan from the HDB will need to produce a valid HDB Loan Eligibility (HLE) Letter when they book a flat, instead of four months later during the signing of the Agreement for Lease. The move was introduced to help flat buyers better plan their finances.

“It will minimise any disappointment should they be unable to obtain a sufficient loan to proceed with the flat purchase subsequently, resulting in cancellation of their flat application and forfeiture of the option fee paid,” the HDB said.

The 3,995 flats in this exercise consist of studio apartments, two- to five-room flats, as well as Three-Generation (3Gen) flats. West Rock @ Bukit Batok will be the first project to offer 3Gen flats in the area for married or courting couples who wish to live with their parents. Multigenerational families who wish to live close to one another can also apply for flats in West Edge @ Bukit Batok, MacPherson Spring, Buangkok ParkVista or Buangkok Tropica, under the Multi-Generation Priority Scheme where flats have been set aside for this group.

ERA key executive officer Eugene Lim welcomed the new HLE Letter requirement, noting that some potential buyers book first only to find out later that they are not able to qualify for a loan quantum that they had hoped for. “This is because the monthly instalment for all loans with regard to the purchase of an HDB flat must not exceed the 30 per cent Mortgage Servicing Ratio,” he said.

The requirement could encourage buyers to buy flats in non-mature estates instead of those in mature estates, which may be beyond their means, and subscription rates for BTO flats may fall. “However, this is a rational move as it ensures that purchasers buy something within their budget,” Mr Lim said.

Online applications for flats in this month’s exercise can now be submitted on the HDB InfoWEB until next Tuesday.

-By Laura Elizabeth Philomin

Productivity push for process, construction & maintenance sector

Source: Business Times / Government & Economy

The process, construction and maintenance (PCM) sector - key to the support of the energy and chemicals sector in Singapore - is set to receive a boost with a productivity council being set up. The council - which includes plant owners, contractors and the Association for Process Industry (ASPRI) - will look to improve management practices, and put in place certification systems to encourage companies to adopt productivity and safety measures.

-By Andrea Soh       

Companies' Brief


Acquisitions to drive DPU growth for rest of FY2015: CRT

Croesus Retail Trust posts 3% rise in DPU in Q2 FY15, eyes positive rental reversions at Mallage Shobu

Source: Business Times / Companies & Markets

Yield-accretive acquisitions helped lift the distribution per unit (DPU) at Croesus Retail Trust (CRT) in its fiscal second quarter and fiscal first-half, and they look set to drive DPU growth for the rest of fiscal 2015.

CRT's DPU for the quarter ended Dec 31, 2014 rose 3 per cent from a year ago to 2.08 Singapore cents, the trust-manager of Japanese retail assets said on Wednesday.

-By Lynette Khoo

Far East H-Trust posts 9.9% drop in Q4 DPS

Source: Business Times / Companies & Markets

Weighed down by the softer performance of hotels and serviced residences, Far East Hospitality Trust (Far East H-Trust) reported a 9.9 per cent year-on-year slip in distribution per stapled security (DPS) to 1.28 Singapore cents for the fourth quarter ended Dec 31, 2014.

-By Lynette Khoo               


Far East Hospitality Trust's hotel occupancy, room rates fell in Q4

Far East Hospitality Trust (FEHT) posted gross revenue of S$30.3 million for Q4 2014, a drop 9.8% compared to the same period a year ago.

Source: Channel News Asia / Business


SINGAPORE: Far East Hospitality Trust (FEHT) posted lower revenue and earnings for the fourth quarter of 2014, hurt by lower occupancy and room rates at its hotels and serviced residences in Singapore.

FEHT, whose properties include the Rendezvous and Orchard Parade hotels, said on Wednesday (Feb 11) that it recorded gross revenue of S$30.3 million for the quarter - a drop of 9.8 per cent compared to the same period a year ago. The property trust will distribute 1.28 Singapore cents per stapled security for the last three months of 2014 compared to 1.42 Singapore cents for the same period in 2013.

Looking ahead, FEHT said the softness in corporate travel amid the uncertain economic environment could continue to weigh on the demand for accommodation. This weakness could, however, be partially mitigated by the hosting of major events such as 2015 Southeast Asian Games, the opening of new and diverse attractions such as Singapore Pinacothèque de Paris and the National Gallery Singapore.

"While there seemed to be some moderation in the decline in the Chinese arrivals in the recent months, it may take a while before visitorship from China returns to its previous level," the property trust added.

According to the Singapore Tourism Board (STB), international visitor arrivals to Singapore fell 3.1 per cent year-on-year in 2014.

The contributing factors included a sharp decrease in arrivals from China, which dropped 24 per cent, and the strong Singapore dollar, which hurt leisure traffic from some regional countries.

FEHT reported an average occupancy rate of 82.4 per cent for its hotels during the fourth quarter of last year, down from 86.0 per cent in the last three months of 2013. Its average daily room rate during this period was S$186, down from S$193 in the year-ago period.

- CNA/av

Cache Logistics Trust

Source: Business Times / Companies & Markets

Cache Logistics Trust has initiated presence into the warehouse market in Australia with the acquisition of three Australia warehouses for A$75.6 million (S$79.6 million). Reiterate "neutral" with a dividend discount model-derived target price of S$1.22. We think this acquisition is mildly yield-accretive and constitutes ~6 per cent of our estimated gross asset value. We adjust our FY15-17F DPU estimates by 0.1-2.1 per cent per annum and remain wary of a depreciating AUD.              

Sim Lian's Q2 earnings fall 61%; KSH Holdings posts 14.6% increase in Q3 profit

Source: Business Times / Companies & Markets

Sim Lian Group's net profit for the second quarter of fiscal year 2015 fell 61 per cent to S$25.5 million, from S$65.8 million in Q2FY14. Revenue fell 56 per cent, from S$207.3 million to S$91.4 million. This was in large part due to a fall in contribution from the property development division, which contributed S$26.3 million to the group's revenue in Q2FY15, compared to S$156.9 million in the year-ago period.

-By Mindy Tan

KepLand China, Vanke to develop prime Chengdu site

Source: Business Times / Companies & Markets

Keppel Land China has inked an agreement with a leading Chinese developer, China Vanke, to jointly develop a 16.7 hectare prime residential site in Chengdu. The collaboration follows the two companies' first joint venture on The Glades at Tanah Merah, a residential project in Singapore. It is also Keppel Land China's sixth project in Chengdu.

-By Fiona Lam

Fortune Reit sells Hong Kong property

Source: Business Times / Companies & Markets

Fortune Reit has sold Nob Hill Square, through the sale of the issued shares of Art Full, the legal and beneficial owner of the property, to Tower Key Limited for HK$648 million (S$113.3 million). This is a premium of about 47.9 per cent to the appraised value of HK$438 million. The manager said the sale will allow it to streamline operations and allocate resources more effectively. Upon completion, Fortune Reit is expected to recognise a gain of about HK$200 million.

Colliers Int'l names new CEO for Asia-Pacific ops

Source: Business Times / Real Estate

Colliers International has appointed David Hand as chief executive of its Asia-Pacific operations, responsible for the overall management of the real estate services firm's regional business and driving of strategic objectives. Mr Hand, who will be based in Hong Kong, joins Colliers after 18 years at JLL where he held a variety of leadership roles, most recently as international director of capital markets. He previously instructed on real estate at Harvard Graduate School of Design and was course leader for a similar course at Georgetown University School of Continuing Studies. He also lectured on China's property markets at Beijing's Tsinghua University and is a member of the Royal Institution of Chartered Surveyors.

Global Economy & Global Real Estate


Blackstone to Buy Stake in New York-Area RXR Buildings

Source: Bloomberg

(Bloomberg) -- Blackstone Group LP agreed to buy a roughly 50 percent stake in six New York-area office properties from RXR Realty, its largest acquisition yet in an expansion toward purchasing stable, well-leased real estate.

RXR plans to sell Blackstone part ownership in the 5.3 million-square-foot (492,000-square-meter) portfolio, valued at $4 billion, the companies said in a statement Wednesday. The deal involves Manhattan’s Starrett-Lehigh building; 1330, 620 and 1166 Avenue of the Americas; 340 Madison Ave.; and University Square Campus near Princeton, New Jersey.

RXR, a Uniondale, New York-based real estate company run by Scott Rechler, said it will continue to operate the properties.

RXR is “uniquely positioned to unlock the incremental upside in the portfolio,” Jon Gray, global head of real estate for Blackstone, said in the statement. “We look forward to finding more opportunities to work on together in the future.”

Blackstone, the world’s biggest private-equity investor in real estate, is raising a new fund to buy core-plus real estate, or prime properties that may require relatively minor leasing or renovations to boost returns. Chairman and Chief Executive Officer Stephen Schwarzman said last year the company could have $100 billion of such properties under management over the next decade.

For RXR, the deal offers the opportunity to “harvest value” from Manhattan properties acquired since 2009, as the market recovered from the global financial crisis, Rechler said in an interview. Prices for office buildings in New York have surpassed the prior peak, propelled by demand from both domestic and foreign investors seeking safety and steady growth.

“It’s a way of taking chips off the table, and allows us to invest in new opportunities to create value,” Rechler said. “That’s always been our mantra.”

RXR Deals

New York office rents and property values should continue to rise, Rechler said.

“If I thought we had hit the top, we would have sold 100 percent of our interests and we wouldn’t be buying 32 Old Slip, 61 Broadway, 530 Fifth,” he said, referring to recent RXR transactions.

The transaction is the first large-scale recapitalization of the RXR portfolio since the company was created in 2007, following the sale of Rechler’s Reckson Associates Realty Corp. to SL Green Realty Corp., he said.

Deal Compromise

The deal with Blackstone is “something of a hedge” by RXR, said Ben Carlos Thypin, director of market analysis at New York-based property-research firm Real Capital Analytics Inc.

“It’s a compromise between selling outright and calling a top, and continuing to ride things out,” he said. “It’s the best of both worlds.”

The transaction is scheduled to close in about 60 days. Blackstone and RXR were both represented by a team led by brokers Douglas Harmon and Adam Spies from Eastdil Secured, a unit of Wells Fargo & Co.

The largest asset, the Starrett-Lehigh building, accounts for almost half the portfolio’s holdings, at 2.3 million square feet. The property at 601 W. 26th St. occupies a full city block on Manhattan’s far west side and is one of the borough’s largest buildings. It is the headquarters for several design companies and Martha Stewart Living Omnimedia Inc.

“From RXR’s perspective, it seems smart to lock in some value appreciation by selling a stake to a reputable institutional partner,” said John Bejjani, an analyst at Green Street Advisors, a real estate research firm in Newport Beach, California. “From Blackstone’s perspective, the deal offers the opportunity to partner with an experienced, savvy player in a sizable, high-quality New York portfolio that could offer some additional upside.”

-By Hui-yong Yu & David M Levitt

Canadian Western Sees Growth Amid Oil Decline

Source: Bloomberg 

(Bloomberg) -- Canadian Western Bank, a regional lender based in oil-rich Alberta, will weather plunging crude prices by focusing on business banking and trying to take market share from larger rivals, Chief Executive Officer Chris Fowler said.

“We’ve been through a number of ups and downs in the commodity cycle and certainly managed our way through each of them and continued to grow,” Fowler, 55, said Wednesday in a telephone interview. “We’ve often found in downturns that other banks that don’t have their head office here become less aggressive,” allowing the lender to gain market share, he said.

Canadian Western agreed Tuesday to sell its Canadian Direct Insurance unit to Intact Financial Corp. for C$197 million ($158 million) to concentrate on business banking. The Edmonton-based bank will also focus on equipment finance and leasing, and is seeking takeovers in Vancouver to expand wealth management, according to Fowler.

The lender, which has posted 106 consecutive quarters of profit, has targeted loan growth of 10 percent to 12 percent in 2015, compared with a 12 percent increase last year, according to a December presentation.

“We’ve had double-digit loan growth in 24 of the last 25 years,” Fowler said.

The CEO has some convincing to do among investors who may see the lender as a proxy for the declining fortunes of Alberta. Canadian Western’s shares have gone from first to worst among the nation’s eight-largest publicly traded banks since June, with its stock price following oil’s plunge.

Alberta Slowdown

Canadian Western shares rose 0.3 percent to C$28.28 at 9:37 a.m. trading in Toronto. The stock had dropped 27 percent since June 20 to Wednesday’s close, compared with the 1.3 percent decline of the eight-member Standard & Poor’s/TSX Commercial Banks Index as North American crude oil fell 54 percent, data compiled by Bloomberg show. Before then, the bank led the index with a 41 percent gain over 12 months.

“The market is really looking at the geography more than the results,” Fowler said.

Economic growth in Alberta, where the bank has 41 percent of its loans, is estimated by BMO Capital Markets to slow to 0.5 percent this year from 3.5 percent in 2014. Energy firms including Suncor Energy Inc. have cut spending and eliminated jobs. Home sales have plunged.

‘Pure Play’

“For more than a decade the financial performance and investor sentiment towards Canadian Western benefited from the company being a ‘pure play’ on the strongest part of the domestic economy,” said Sumit Malhotra, an analyst with Scotia Capital in Toronto. Though the bank is not an ‘oil-only’ story, a slowdown in project activity in Alberta is likely to have a negative impact on earning drivers in the near term, he said.

Forty percent of the bank’s C$17.6 billion of loans were split between commercial mortgages and loans as of Oct. 31, with 19 percent in equipment financing and leasing, according to a bank presentation. Personal loans and mortgages made up 16 percent of overall loans, the same as real estate project loans. Corporate loans comprised 7 percent and the oil-and-gas industry was 2 percent.

“We’re a very credit-focused bank,” Fowler said. “We don’t look to change our credit standards by our wristwatch or by the headline news. We have very strong credit and underwriting principles that we follow.”

‘Be Boring’

Canadian Western said its insurance-unit sale will constrain this year’s return on equity, and earnings growth excluding the unit will be “consistent” with an industry average of 3 percent to 5 percent. The bank, which posted record profit of C$218.5 million last year, had set a target in December of 5 percent to 8 percent increase in per-share adjusted cash earnings for 2015.

The share drop is an overreaction, said Francis Radano, a Philadelphia-based fund manager with Aberdeen Asset Management Inc., which holds the stock among the $504 billion of assets it oversees. “Canadian Western obviously has some concentration in certain areas, Alberta being one of them, but this is clearly throwing the baby out with the bathwater.”

The bank is expected to post a 7.3 percent increase in per-share adjusted profit when it reports first-quarter results March 5, according to the average estimate of nine analysts surveyed by Bloomberg.

Canadian Western has a strong track record of continuing to loan money profitably to customers and grow their loan book, said Jeff Mo, a portfolio manager at Mawer Investment Management Ltd. in Calgary, which owns the bank’s shares.

“It’s a classic ‘be boring, make money’ company where, if you look at their historical track record, it’s been phenomenal,” Mo said.

-By Doug Alexander

Blackstone Said Near Deal for Stake in Six RXR Buildings

Source: Bloomberg 

(Bloomberg) -- Blackstone Group LP is close to a deal to buy a roughly 50 percent stake in Manhattan’s Starrett-Lehigh building and five other New York-area office properties from RXR Realty, said two people with knowledge of the transaction.

The investment values the buildings at a total of $4 billion, said the people, who asked not to be named because the deal isn’t public. All of the properties except one are in New York City, one of the people said. They include 340 Madison Ave., 620 Avenue of the Americas and 1330 Avenue of the Americas, according to the Wall Street Journal, which reported the agreement earlier Wednesday.

Blackstone, the world’s biggest private-equity investor in real estate, is making the deal as part of its expansion into owning high-quality, well-leased properties. The New York-based company is raising a new fund to buy core-plus real estate, or prime properties that may require relatively minor leasing up or renovations to boost returns.

Peter Rose, a spokesman for Blackstone, declined to comment, as did Ed Tagliaferri, a spokesman for RXR. The Uniondale, New York-based company, run by Scott Rechler, owns properties across New York’s tri-state area, including in Long Island, Connecticut and New Jersey.

Core Fund

Blackstone had commitments of about $1.5 billion for its core-plus fund as of November. The fund bought 1740 Broadway in midtown Manhattan from Vornado Realty Trust for $605 million in one of its first transactions.

“Our real estate core-plus strategy has already reached $4 billion in its first year,” Blackstone Chairman and CEO Stephen Schwarzman said on the company’s Jan. 29 earnings call. He said last year the company could have $100 billion of such properties under management over the next decade.

The Starrett-Lehigh building at 601 W. 26th St. occupies a full city block on Manhattan’s far west side and at 2.3 million square feet (213,700 square meters) is one of the borough’s largest buildings. The property is headquarters for several design companies and Martha Stewart Living Omnimedia Inc.

-By Hui-yong Yu & David M Levitt

Norway Fund Buys 45% of New York’s 11 Times Square Tower

Source: Bloomberg

(Bloomberg) -- Norway’s sovereign-wealth fund bought a stake in 11 Times Square, a 40-story office tower in midtown Manhattan, in a deal that values the building at $1.4 billion.

Norges Bank Investment Management purchased the 45 percent interest from developer SJP Properties and Prudential Financial Inc. for $401.9 million, the fund said in a statement.

Foreign investors are snapping up real estate in New York City, pushing prices to records. Construction of the 1.1 million-square-foot (102,000-square-meter) skyscraper in Times Square began before the property market collapsed in 2008, without any space leased. It landed its first tenant in 2010, when it was one month from completion. It is now about 85 percent occupied by tenants including law firm Proskauer Rose LLP and Microsoft Corp.

Norway made $4.4 billion of direct purchases of U.S. real estate last year, making it the biggest foreign buyer after Canada, according to commercial-property brokerage CBRE Group Inc.

The sovereign-wealth fund, with a market value of about $860 billion, has been pushing into real estate, with a target to invest 5 percent of its assets in properties. Norges Bank in September agreed to buy a 45 percent stake in each of three office buildings -- one in New York and two in Boston -- from Boston Properties Inc. for about $1.5 billion. The fund also agreed to purchase a 49.9 percent interest in San Francisco’s Orrick Building through a venture with asset manager TIAA-CREF.

Joint Venture

The owners of 11 Times Square formed a joint venture for the building, with SJP handling the property’s operations and leasing and Prudential Real Estate Investors responsible for asset management, according to Wednesday’s statement. Norges Bank will assume 45 percent of the $507 million mortgage on the tower, at the corner of Eighth Avenue and 41st Street.

In the same neighborhood, the fund owns a 45 percent interest in Boston Properties’ Times Square Tower. It bought the stake in 2013 for $684 million.

-By Sarah Mulholland

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