Singapore Real Estate
Resale prices: The cost of a single-digit drop Source: Today Online / Business At a press conference in December last year, Minister for National Development Khaw Boon Wan told reporters that a single-digit fall in public housing resale prices this year would be manageable and “a very good development”. “A soft single digit is something the human mind, and employers, employees, the environment and the economy can adjust to,” he said then. But what would be the monetary impact of a single-digit fall in housing resale prices? A common way to answer this question is to calculate the change in measurable market value if prices were to decline by no more than a single digit, meaning 9 per cent. According to SRX Property, the cooling measures have already resulted in an estimated loss (see table) in Housing and Development Board resale market value of about S$6 billion since the peak of the SRX Property Index for HDB Resale in April 2013. A single-digit drop of 9 per cent this year would result in an additional loss of more than S$5 billion. In the private, non-landed market, the decline in market value has been more dramatic because it is more possible to measure its market value. Since the height of the SRX Property Index for Non-Landed Property in January last year, the measurable value of the private market has declined by more than S$15 billion. A single-digit drop of 9 per cent in private flat prices this year would see an additional loss of more than S$34 billion. This means the cooling measures have shrunk the resale market value for HDB and private flats by a measurable S$21 billion. An additional fall of 9 per cent in both markets would result in another S$39 billion in losses, for a total measurable loss of S$60 billion since their respective peaks. Some might argue that the decline in market value is a correction, while others would label it a loss. It depends on your perspective. Those who see it as a correction would argue that today’s total measurable loss of S$21 billion is not a real number because the market should not have been that high in the first place. People in this camp often tell me that they welcome the decline in prices because then they can upgrade at lower prices, by which they more likely mean fairer prices. The problem with this perspective is that it comes at the expense of people who have seen their homes devalued. Financial loss comes in several forms. There is the actual loss, but there is also the perceived loss. For example, a person who sells a home during the cooling measures could make a profit, but he or she can emotionally (and rationally) conclude that more profit should have been made. This is perceived loss. Perceived loss comes in other forms and can have significant economic ramifications. For example, when the value of one’s home declines, one feels less wealthy. When one feels less wealthy, the rational response is to cut discretionary spending. When enough households cut discretionary spending, retail suffers and, thus, the economy and jobs suffer. It is this perceived loss that Mr Khaw alluded to when he said that a soft single-digit decline is something people and the economy would be able to adjust to. In other words, the challenge for leaders is to determine when a prescribed policy has run its course and, if left in place, could result in more harm than good to the often fragile psyche of the economy and its people. Today, a measurable decline of S$21 billion in home value represents 5.4 per cent of SingStat’s estimated nominal gross domestic product of about S$390 billion last year. If prices this year decline by 9 per cent — this figure being the extreme end of a single-digit drop — this would result in S$60 billion in measurable losses and represent 15.4 per cent of Singapore’s estimated nominal GDP last year. At what point, then, will the human mind be unable to adjust to the decline in the measurable value of the property market? -By Sam Baker, Co-Founder, SRX http://www.todayonline.com/business/property/resale-prices-cost-single-digit-drop Strata office units at GSH Towers slated for sale soon Sizes to range from 440 sq ft to 1,600 sq ft; indicative pricing at S$2,900-3,600 psf Source: Business Times / Real Estate The GSH Corporation-led consortium that acquired the former Equity Plaza last year is getting ready to launch, in the next few weeks, strata office units in the 28-storey building. The property, located next to Republic Plaza and renamed GSH Plaza, will undergo a massive refu -By Kalpana Rashiwala http://www.businesstimes.com.sg/real-estate/strata-office-units-at-gsh-towers-slated-for-sale-soon UOL sees challenging Singapore outlook, diversifies overseas Source: Business Times / Companies & Markets UOL Group, which saw net profit for 2014 dragged by lower fair value gains, flagged a more challenging outlook this year for the residential and retail sectors in Singapore, citing it as a reason for its recent efforts to diversify its predominantly local portfolio. Group president (property) Liam Wee Sin told reporters and analysts on Thursday that the group will selectively increase its investments overseas, particularly in countries where it is already present, while continuing to tender for residential sites in good locations in Singapore. -By Lynette Khoo
UOL profit down as fair-value gains shrink Source: Straits Times / Money NET profit at UOL Group fell 13 per cent to $686 million, mostly because of lower fair-value gains from investment properties. Fair-value gains on the group's investment properties shrank 47 per cent to $217.8 million for the year ended Dec 31. Gains on those of associated companies fell 14 per cent to $78.4 million. Still, revenue rose 29 per cent to $1.36 billion, mainly from property development. The segment garnered $675.9 million, up 65 per cent, lifted by the sale of land in Jalan Conlay in Kuala Lumpur and completion of The Esplanade in Tianjin last year. This rise was offset partly by lower property development revenue in Singapore, as Waterbank at Dakota and Spottiswoode Residences were completed in May and December 2013 respectively. Hotel operations - UOL's No. 2 revenue earner - brought in $437.6 million, up 4 per cent, thanks to higher contributions from Parkroyal on Beach Road and Parkroyal on Pickering. Revenue from property investments increased 10 per cent to $198.2 million with the opening of One KM mall and full-year operations at Pan Pacific Serviced Suites Beach Road. Management services fared less well, as revenue dipped 1 per cent to $20.3 million. In contrast, revenue from investments was up 5 per cent at $28.8 million. A first and final dividend of 15 cents a share was recommended - unchanged from the previous year, although an additional special dividend of five cents was declared before. UOL aims to launch the 797-unit Botanique at Bartley in this quarter and a 663-unit project in Prince Charles Crescent in the second half. Overseas, it will launch a mixed development with 398 residential units and a net lettable area of 4,000 sq m at Changfeng in Shanghai in the second half. It expects to launch a mixed development with 109 residential units, 190 hotel rooms and a retail component at Bishopsgate in London in the first half of next year. Earnings per share came to 88 cents for the year, down from $1.02 in the previous year. Net asset value per share was $9.71 as of Dec 31, up from $8.77 before. The group said buying sentiment for new homes is expected to remain muted. Office rents are expected to keep increasing, given the limited supply this year, while retail rents may ease as occupancy costs rise and competition from online shopping grows. "On the hospitality front, we have already taken steps to upgrade and renovate our hotels to stay competitive in the face of new challenges," said group chief executive Gwee Lian Kheng. -By Rennie Whang http://www.straitstimes.com/premium/money/story/uol-profit-down-fair-value-gains-shrink-20150227 Allow flexibility in HDB shop rentals Source: Straits Times / Forum Letters THE Housing Board (HDB) should curb rising rental costs that are a result of the bidding system for commercial rental properties, in a bid to prevent "rent-pull" inflation. The HDB electronic bidding system promotes impulse bidding, as bidders are given 10 minutes to increase their bids for the rental premises of their choice. Keen bidders end up submitting inflated bids, which they eventually pass on to their customers. Also, new HDB estates have a limited number of commercial spaces and these are currently allocated to a few specific types of businesses. This, too, helps to encourage aggressive bidding. HDB should allow greater freedom in allowing the types of businesses that can lease these shop spaces, so as to increase competition and allow businesses to match demand and supply. There are many void-deck shops in mature HDB estates that have closed down shortly after opening, due to the restrictions in the types of trade allowed, and the setting of minimum bids. HDB should follow the National Environment Agency's lead and abolish minimum bids for the renting of commercial spaces. This may help lower bids and help defray operational costs, which will ultimately benefit the consumers. -By Heng Mok Hoon Companies' Brief
Evidence shows offer for Keppel Land is reasonable: KPMG Source: Business Times / Stocks INDEPENDENT financial adviser KPMG Corporate Finance says the offer by Keppel Corp to take its real estate subsidiary Keppel Land private is not fair on an intrinsic value basis but there is evidence to suggest the offer is reasonable. KPMG noted that based on its sum-of-the-parts (SOTP) valuation, the base price and higher offer price are at a "significant discount to the sum-of-the-parts estimated valuation range of between S$6.58 and S$6.79 per share". Market watchers note that the "fairness" aspect, which is computed based on the revalued net asset valuation (RNAV) of the company, is subjective. Within the research community alone, analysts recommendations have posited Keppel Land's RNAV to span from S$4.64 to S$6.64. "(The position of between S$6.58 and S$6.79) is at the higher end of what the research community has come back with," noted a market watcher. The independent financial adviser also qualified that the revaluation of properties, which forms a large part of the SOTP surplus value, has been done on an 'as is' basis which assumes that the properties will be disposed of at the assessed values and accordingly, has not considered any potential development profits should the properties be developed and completed. On the other hand, the offer can be deemed reasonable for a number of reasons. Keppel Corp on Jan 23 launched the offer to take its real estate subsidiary Keppel Land private at a base offer price of S$4.38 per share. This will be raised to S$4.60 per share if acceptance levels exceed the 90 per cent threshold that turns the offer into a compulsory acquisition. These reasons include the fact that the base offer price and higher offer price represent significant premiums to the median share price, and that given that Keppel Corp already owns and controls 54.6 per cent of the total issued share, this means it is unlikely that there will be another bidder offering better terms in the near term. "Even if the offer does not result in a delisting or compulsory acquisition of the offer shares, the offer itself may reduce the free float and trading liquidity of the shares," KPMG noted. The key valuation metrics, as implied by the base offer price and the higher offer price, also compare favourably to the median of Keppel Land's listed peers and to the median of precedent transactions involving Singapore property developers. "On an intrinsic value basis, the offer falls short of being 'fair' from a financial perspective, although we note that effort may have to be expended to dispose of the assets and realise the intrinsic value. However, there is evidence to suggest the offer is 'reasonable'," said KPMG. The independent directors concur with KPMG's assessment of the offer and its recommendation. Accordingly, they have recommended that shareholders take one of three routes:
Keppel Corp ended trading on Thursday up three cents at S$8.77 while Keppel Land lost one cent to end trading at S$4.53. -By Mindy Tan http://www.businesstimes.com.sg/stocks/evidence-shows-offer-for-keppel-land-is-reasonable-kpmg Centurion Corp's Q4 net profit swells to S$72.9m on fair value gains Source: Business Times / Companies & Markets Centurion Corporation's net profit for the fourth quarter ended December soared to S$72.9 million from S$26.9 million a year ago, bumped up by a S$40.3 million fair value gain on its investment properties. This was on the back of revenue jumping 74 per cent, from S$15.0 million to S$26.1 million. The boost in revenue was due in part to its four newly acquired student accommodation assets in the United Kingdom, and an increase in capacity of its workers accommodation. The group's revenue from its accommodation business grew by 90 per cent to hit S$24.1 million in Q4. -By Mindy Tan Revaluation gains lift Banyan's Q4 profit Revenue down 6% as fee-based and hotel investment segments post lower salesSource: Business Times / Companies & Markets Lifted by revaluation gains from its properties in Seychelles, resort operator Banyan Tree chalked up a 13 per cent year-on-year rise in net profit to S$4.13 million for the fourth quarter ended Dec 31, 2014. Revenue fell 6 per cent to S$91.83 million as both its fee-based and hotel investments segments recorded lower revenue. This was partially offset by higher revenue from its property sales division. -By Nisha Ramchandani http://www.businesstimes.com.sg/companies-markets/revaluation-gains-lift-banyans-q4-profit
Revenue down but Banyan Tree optimistic Source: Straits Times / Money THE toll falling oil prices have taken on the Russian economy also proved costly for Banyan Tree Holdings, with revenue down in the fourth quarter. Turnover for the international hospitality group fell 6 per cent to $91.8 million in the three months to Dec 31. Net profit actually rose 13 per cent to $4.13 million but this was attributed to the revaluation of investment properties in Seychelles. Full-year revenue fell 8 per cent to $327.4 million on the back of falling demand from Europe and reduced turnover in Thailand due to political unrest. Furthermore, the firm did not reap the one-off gains from the sale of Angsana Velavaru hotel the year before. As a result, profit for the full year fell 94 per cent to $1.03 million. Marketing and other expenses on new projects that have yet to generate revenue also contributed to this. But executive chairman Ho Kwon Ping told a briefing yesterday that the group was "cautiously optimistic" for the future. He said political stability in Thailand and the interest rate cuts in China are positive developments while the planned property sales of its Laguna Chengdu project in China look promising. Pre-launch booking deposits have been received for 71 per cent of units being released in the first phase, said Mr Ho, who also noted that the firm has bought land in Australia. "We do believe we've turned the corner." Earnings per share for the full year fell 94.6 per cent to 0.13 cent while net asset value per share rose from 0.72 cent a year earlier to 0.75 cent. A dividend of 0.13 cent a share will be paid out for the year, down from one cent the year before. Banyan Tree shares closed unchanged at 54 cents yesterday. -By Ong Kai Xuan http://www.straitstimes.com/premium/money/story/revenue-down-banyan-tree-optimistic-20150227 Amara full-year earnings up Source: Business Times / Companies & Markets Amara Holdings posted a net profit of S$35.3 million for the full year ended December 2014, up 32 per cent from a year ago. Revenue dipped 6 per cent to S$75.9 million. Fair-value gain on investment was 65 per cent higher at S$19 million. A dividend of 0.2 cent per share was recommended, compared with one cent a year ago. http://www.businesstimes.com.sg/companies-markets/in-brief-29 Hotel Royal Q4 profit higher Source: Business Times / Companies & Markets Hotel Royal's net profit for the fourth quarter ended December jumped from S$849,000 to S$2.82 million on the back of revenue increasing 27.2 per cent from S$12.6 million to S$16 million. This was mainly due to additional contribution from the newly acquired Burasari Resort in July 2014 and higher room revenue and food and beverage sales from Malaysia hotels offset by lower contribution from Singapore hotels. http://www.businesstimes.com.sg/companies-markets/in-brief-29 Views, Reviews & Forum
Tale of two cities holds lessons for Singapore Boston, a former port turned IT hub, shows the importance of economic complexity. Detroit, dependent on the car industry, is the flip side. Source: Straits Times / Opinion CITIES, like all human systems, are enormously complex. But it was not always so. Until about 12,000 years ago, people lived in small nomadic groups as hunter- gatherers. Then, during the Neolithic Revolution, agriculture emerged and people began to produce food, instead of just hunting for it. The nomadic life of the hunter-gatherers began to be replaced by more sedentary societies based in human settlements like villages and towns. Villages and towns grew into cities over time. The urban milieu became the catalyst for the development of a multitude of new human capabilities. Over time, people were no longer just hunters or farmers. They became builders, craftsmen, businessmen, entertainers, teachers, scholars, and so on. As inhabitants of towns and cities took on increasingly specialised roles, and as cities grew, social and economic complexity increased. But the human impulse is to reduce complexity. The complexity that began to emerge in towns and cities created an imperative for a new form of organisation - government - to manage it. An early, rudimentary form of government was the council of elders, which governed through consensus rather than imposed rules. But cities evolved, they grew larger and more complex. Furthermore, ambitious rulers began conquering other cities and extending their reach of power. The challenges of controlling geographically diverse and complex cities demanded a more sophisticated form of urban governance than just the council of elders. Establishing rules to manage complexity THE Code of Hammurabi, dating back to around 1754BC, provides clues as to how early civilisation managed urban complexity. The code comprised some 282 laws covering a variety of subjects. It prescribed punishments for those who flouted it. Through the code, King Hammurabi maintained political order and managed the complexity arising from the different practices, precedents and norms in the Babylonian empire. What is interesting is the way in which the code appears to have promoted economic freedom and diversity: the code paints a picture of an economy driven by private property, as the king did not own any land. The code was an instrument to manage an early form of capitalism. Today, we recognise in it many aspects of the modern economy: the enforcement of property rights, the protection of the weak against the strong, and the use of commodity as money and credit. The code freed up the economy, which in turn promoted long- term growth. Literacy, political structures, levels of industrialisation, and per capita income are conventional indicators of economic health. However, the economists Ricardo Hausmann and Cesar Hidalgo have suggested that the most important predictor of growth is economic complexity, or the diversity of products that an economy possesses. Countries with the most natural resources tend to have simple economies, as they do not produce unique goods. Thus, economies that are dependent on a particular kind of export - for example, oil or timber - may do well when demand for these products is high, but fail in the long run because they are not diversified and cannot compete in other sectors. A case in point is Detroit, a city that built its fortunes on the auto industry. Detroit became highly reliant on the auto industry. But after World War II, automakers began to move to suburban areas, outside the city proper. This in turn led to residential movement to the suburbs. From a peak of 1.85 million in 1950, Detroit's population today is less than 700,000, a decline of more than 60 per cent. Population flight led to a loss of tax base and jobs. Detroit declared bankruptcy in 2013, and its unemployment that year was 23.1 per cent. Catalysing complexity: the case of Boston THE ability to produce unique goods and services depends on the amount of "productive knowledge" in an economy. This is the kind of knowledge derived from experience and exposure to different sectors and domains of production. Invention and innovation occur when these bits of productive knowledge are connected. Improvements to economic growth can be achieved either by harnessing existing capabilities in new combinations, or by accruing new capabilities to expand the productive potential of the country. So, urban governance is not all about reducing complexity. Instead, in some cases, it should catalyse complexity, by creating more networks to connect multiple economic domains. For example, in contrast to Detroit, Boston is a city that was shocked and surprised, but then reinvented itself, at least three times in its 400-year history. Harvard economist Edward Glaeser tells of how Boston, in the 17th and 18th centuries, was the leading port in America. But by the mid-18th century, Boston as a port had been eclipsed, first by Philadelphia, then by New York. What saved Boston from the fate of other New England ports was a large population of Irish immigrants. By the late 19th century, Boston had transformed itself into a centre of manufacturing built on immigrant labour, and it prospered on the back of America's industrialisation. But Boston's heady period of growth was over by 1920. Population growth slowed and even began to shrink after 1950. However, in the last two decades of the 20th century, Boston again reinvented itself, this time from an industrial city in decline into a high-tech, service-based economy. Its population grew rapidly between 1980 and 2000, reversing 50 years of stagnation and shrinkage. Boston is now a centre of the information economy. Today, education is the dominant factor in Boston's economy. Boston ranks highly in its share of employees in managerial and professional jobs. Its top four export industries today are all skills-based: technology, finance, education and health care. Using the lens of economic complexity, the Boston case shows us that the ability to re-orientate and create new value hinges on economic complexity. From its earliest days, Boston was never just a port. Artisans manufactured some of the goods traded on Bostonian ships. Boston had banks, brokers and insurers from its seafaring days because shipping needed financial services. Education was always valued in the colony - Harvard University was founded in 1636 with government money. Its rich, complex strengths and competencies enabled Boston to reach within itself to find new connections and value propositions. These enabled Boston to reinvent itself time and again when other more brittle, less economically complex cities like Detroit, heavily dependent on manufacturing, went into terminal decline. Urban planning URBAN planning in Singapore needs to take into account the complexity of packing in housing, green space, industrial land, commercial and retail space, land for transportation needs, and military training areas, all within the confines of a small island of 718 sq km. In Singapore, the entire process, from the review of our strategic Concept Plan to the implementation of a detailed land-use Master Plan, involves close collaboration among economic, social and development ministries and agencies, as well as consultations with various stakeholders in the private sector and the public. This whole-of-government approach enables all stakeholders to better understand the interdependencies and implications of land use and strategic decisions. One example of the approach in coordinated and strategic land use is the Marina Barrage. It is a huge fresh-water reservoir created by damming the mouth of the Singapore River. It is located right in the middle of the Central Business District, an astonishing achievement considering Singapore's small size. Yet it had been planned more than 20 years ago, because the policymakers and urban planners understood even then that issues such as climate change and increasing demand for water would emerge in the future. Today, the Marina Barrage serves multiple functions. It alleviates flooding in low-lying city areas by keeping seawater out, and boosts Singapore's water supply by storing rainwater during the monsoon seasons. It is also used for recreational water activities. Big data and complexity science THE agents within a complex system like a city - the people, public and private institutions, markets and networks - all generate a lot of data, much of which is location-based. Combined, this constitutes what we now refer to as big data. Complexity science offers a way to marry different tools - such as agent-based modelling that is used inter alia for traffic flow dynamics, combined with insights from big data using data analytics - to gain a better understanding of the city in all its complexity. The tools of complexity science combined with the insights from big data can help us to "see" the city differently, through new lenses. What then are the fresh possibilities to "imagine" and "shape" a different and better city for the future? And if we can imagine a different city of the future, we can take active steps towards realising it. We could imagine driver-less taxis that allow shared trips to reduce pressure on the roads while meeting passengers' demand. We could also imagine traffic lights that change in response to traffic conditions that are monitored by sensors on the roads. In societies that are rapidly ageing, like in Singapore, this could mean placing a network of sensors in the elderly's homes, which could monitor and track their daily living movement and patterns, and send out alerts to family members or neighbours when they deviate from daily norms, such as the frequency of use of the toilet, fall detection, and so on. The complexity of cities needs to be managed. Too little complexity can lead to brittleness. The right level of economic and social complexity that gives a city the resilience of say, Boston, is partly due to good luck, but mostly due to good governance. The example of Boston teaches us that nothing is forever, and that the most adaptable and flexible cities are the ones that will survive and succeed over the long term. -By Peter Ho Global Economy & Global Real Estate
More Asians investing in European hotels CBRE research attributes this to a relaxation of domestic controls on outbound fundsSource: Business Times / Real Estate ASIAN investment in European hotels is forecast to rise by 58 per cent to hit US$22.7 billion (S$30.7 billion) this year, driven by the increasing liberalisation of domestic controls governing outbound investment, CBRE research has found. -By Fiona Lam http://www.businesstimes.com.sg/real-estate/more-asians-investing-in-european-hotels More Chinese developers to be downgraded: S&P Source: Business Times / Real Estate http://www.businesstimes.com.sg/real-estate/more-chinese-developers-to-be-downgraded-sp Malaysia to dish out more incentives for foreign investment Source: Business Times / Government & Economy Pure Iskandar developer on its way to list on SGX Its reverse takeover of E2 Capital is set to complete in Q2; first mixed-use project to finish by 2020Source: Business Times / Companies & Markets http://www.businesstimes.com.sg/companies-markets/pure-iskandar-developer-on-its-way-to-list-on-sgx US developers banking on buyers of million-dollar homes Source: Business Times / Real Estate http://www.businesstimes.com.sg/real-estate/us-developers-banking-on-buyers-of-million-dollar-homes The latest investment theme in Toronto is rental apartments Source: Business Times / Real Estate Billionaire's Moscow office block is two-thirds empty The Roman Abramovich-owned complex, like others, has been hit by economy's slumpSource: Business Times / Real Estate http://www.businesstimes.com.sg/real-estate/billionaires-moscow-office-block-is-two-thirds-empty Household mortgage loans grow record 10.2% in Korea Source: Business Times / Real Estate http://www.businesstimes.com.sg/real-estate/household-mortgage-loans-grow-record-102-in-korea NYC’s MetLife Tower Said in $1.4 Billion Refinancing Deal Source: Bloomberg (Bloomberg) -- Bank of America Corp. and Wells Fargo & Co. are providing new debt against Manhattan’s MetLife Building in a deal that values the tower at almost $3 billion, according to people familiar with the transaction. The $1.4 billion financing will pay down a mortgage taken on by Tishman Speyer when the real estate company bought the building from MetLife Inc. for $1.72 billion in 2005, said the people, who asked not to be identified because the details aren’t public. The banks plan to slice the 10-year debt into bonds and sell them to investors, Suzanne Halpin, a spokeswoman for Tishman Speyer, said in an e-mailed statement, without disclosing terms. The 58-story skyscraper, owned by Pan American World Airways when it was completed in 1963, sits over Park Avenue and Grand Central Terminal with the MetLife name across the top. A $3 billion value would make it one of the most expensive office buildings in New York. Manhattan’s General Motors Building set a record for a U.S. tower after a minority stake in the property was sold in 2013, valuing it at $3.4 billion, according to property-research firm Real Capital Analytics Inc. Zia Ahmed, a spokeswoman for Bank of America, and Jen Hibbard, a spokeswoman for Wells Fargo, declined to comment. On a per-square-foot basis, the valuation of about $1,000 a square foot is comparable to recent transactions for top-tier Manhattan towers, according to Real Capital. Other deals have been higher: Canada’s Ivanhoe Cambridge Inc. last month bought 1095 Avenue of the Americas for $2.2 billion, or about $2,136 a square foot, Real Capital data show. Rising ValuesCommercial-property values in New York are soaring to records as cash from around the globe floods the city in search of a safe haven and higher yields. Low interest rates engineered by the Federal Reserve to stimulate economic growth have helped fuel a recovery in U.S real estate that has lifted prices on top-tier properties in big cities 17 percent above peaks reached in November 2007, according to an index from Moody’s Investors Service and Real Capital.Lenders this year have arranged a total of about $5.4 billion of securities tied to individual loans as of Feb. 4, outpacing the tally at the same time in 2014, according to Jefferies Group LLC. Such deals, which are too large to be packaged together with other loans, are often linked to a single trophy asset like the MetLife Building.
-By Sarah Mulholland Abu Dhabi’s Eagle Hills Said to Be Developer of City Near Cairo Source: Bloomberg
(Bloomberg) -- Eagle Hills, an Abu Dhabi-based developer of international projects, plans to build a new city near Cairo with a large number of homes for low- and middle-income buyers, according to two people with knowledge of the matter. The project will be privately funded by an “investor developer” and possible international partners and will cost $75 billion to $80 billion over 12 years, Ashraf Salman, Egypt’s minister of investment, said in an interview with Bloomberg TV Thursday. Salman said the choice of developer has been narrowed down to two companies from the United Arab Emirates, which includes Dubai and Abu Dhabi, declining to name them. The new city will to include an airport, hotels, and a mall as well as amenities such as hospitals and schools, the people said, asking not to be identified because they weren’t authorized to speak on the matter. The project will be formally announced by Egypt’s government at an international investors conference next month, they said. The project will be built to the east of Cairo and form a natural progression toward a new development area on the Suez Canal, according to Salman. The city will be the same size as the New Cairo suburb, he said. New Cairo, set on 70,000 acres (28,000 hectares), has a target population of 6 million, according to the website of Egypt’s New Urban Communities Authority. International FocusEagle Hills has emerged as one of Middle East’s largest developers, with planned projects for Serbia, Nigeria and Bahrain. The Abu Dhabi company is led by a team of executives who worked at Emaar Properties PJSC, including Emaar’s current chairman, Mohamed Alabbar. A spokesman for Eagle Hills declined to comment when contacted by Bloomberg on Thursday. Phone calls to Egyptian Housing Minister Mostafa Madbouly weren’t returned and his spokeswoman said she doesn’t have any information on the project. Arabtec Holding Co., 36 percent owned by an Abu Dhabi government fund, announced plans in March to build 1 million affordable homes in Egypt with a total value of $40 billion. The project, which was expected to provide jobs for more than 1 million Egyptians, has yet to start. Egypt’s government will present 33 projects to investors in the March 13 to March 15 investors conference, including public-private partnerships, Minister of Planning Ashraf El-Arabi said in an interview Thursday. The country needs $60 billion in foreign direct investment in the next four years, he said. -By Zainab Fattah NorthStar Realty to Create European Real Estate Investment Trust Source: Bloomberg (Bloomberg) -- NorthStar Realty Finance Corp. plans to spin off its European property operation, which controls about $2 billion of assets, into a separate publicly traded real estate investment trust. NorthStar Realty Europe will be managed by NorthStar Asset Management Group Inc., the New York-based company said in a statement on Thursday. It expects the transaction to be completed in the second half. The portfolio is primarily in the U.K., France and Germany, and the company expects the new REIT will capitalize on improving European economies and property markets. -By David M Levitt Developer Talaat Moustafa, Egypt Sign Settlement Over Madinaty Source: Bloomberg (Bloomberg) -- Talaat Moustafa Group, Egypt’s biggest publicly traded developer, said it reached a settlement with the government over what the company agreed to pay for land it obtained during the rule of ex-President Hosni Mubarak. Talaat Moustafa will give the government 3.2 million square meters (34 million square feet) of completed homes, the company said in a filing. It will also pay 2.9 billion Egyptian pounds ($380 million) over 10 years to change parts of its development plan for Madinaty, a residential project spread over 33 million square meters on the eastern outskirts of Cairo. Egypt’s government has recently settled a number of disputes with developers over the price they paid for land prior to Mubarak’s 2011 overthrow. Six of October Development & Investment Co. agreed to pay 900-million pounds and Palm Hills Developments SAE will pay 96 million pounds. “It is positive news not only for Talaat Moustafa but for the whole real estate sector,” Harshjit Oza, an analyst at Naeem Holding, said by phone. He added that the agreement sends a message of “commitment” by the government to end disputes with developers ahead of an economic conference planned for March. A separate case against Talaat Moustafa regarding the company’s right to own of Madinaty, its biggest land asset, is awaiting a ruling from the constitutional court. -By Tamim
Elyan Additional Articles of Interests - Local & Overseas Real Estate
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