Real News‎ > ‎2015‎ > ‎January 2015‎ > ‎

15th January 2015

Singapore Real Estate

Non-landed private home rents down 6.4% in 2014

For HDB flats, SRX's rental index declines by 2.1 per cent for the whole of last year

Source: Business Times / Real Estate

Rents of non-landed private residential properties have shown continued decline since February last year, falling 0.8 per cent in December compared to November, flash estimates from Singapore Real Estate Exchange (SRX) showed on Wednesday. This translates to a 6.4 per cent fall since the start of the year, and a 10.1 per cent decline from the peak in January 2013.

-By Jamie Lee

http://www.businesstimes.com.sg/real-estate/non-landed-private-home-rents-down-64-in-2014


Condo rents fall for 11th month

Source: Straits Times / Money


PRIVATE condominium rentals continued to be hammered last month as weak leasing demand and a mounting supply of new apartments weighed on the market.

Rents of non-landed private apartments slid for the 11th month in a row, falling 0.8 per cent in December last year compared with the preceding month, SRX Property's flash estimates showed yesterday.

Compared with December 2013, rents were down 5.3 per cent last month, said SRX, which compiles its property price index with data from property agencies.

Rents have been falling since last February and have declined 10.1 per cent since their peak in January 2013.

Fewer leases were inked last month as well, with an estimated 2,968 units let out - down a slight 2 per cent from 3,026 in November. However, 14.1 per cent more leases were signed last month compared with the 2,601 units rented the same period a year earlier.

Apartments in prime central areas dragged overall rents down with the steepest drop at 1.2 per cent, compared with a 0.4 per cent slip in November, while those in the city-fringe areas fell by 0.6 per cent over a 1.1 per cent drop for the same period.

Suburban units held up better with a 0.3 per cent dip, after easing 0.9 per cent in November.

Ms Christine Li, research head at OrangeTee, said a sizeable number of shoebox units launched in 2010 are now being completed in city-fringe and central areas, while luxury units are facing high vacancy levels.

Of the 12,097 shoebox units sold since 2009, about 47 per cent were in city fringe areas and around 37 per cent in the suburbs.

"In the city centre, supply is abundant but demand is not as high as before because expatriates are not getting enough housing budgets," said Ms Li.

Demand for homes with rents in excess of $10,000 is "really bad", she said, such that the gap between rents in the city centre and city fringe is slowly narrowing.

But a looming supply glut is set to hit the suburbs this year, with more than half an estimated 25,000 new homes expected to be completed in the suburbs by the end of the year.

Owners at projects such as Parc Rosewood in Woodlands and Eight Courtyards in Yishun have recently been given the keys to their new homes, for instance.

"Owners of newly completed condominiums are expected to cut rents significantly to attract tenants, so there will be some flight to quality, (especially) within the same locality, said Mr Ong Kah Seng, director of R'ST Research.

"As there will be even more substantial private residential properties completed in 2015, it is expected that non-landed private residential rents will fall by up to 8 per cent for the whole of 2015."

-By Cheryl Ong

http://www.straitstimes.com/premium/money/story/condo-rents-fall-11th-month-20150115


HDB, private homes’ rental prices decline further in December: SRX Property

Housing and Development Board (HDB) flats saw a 0.4 per cent decline in rental prices in December compared with the previous month, while private homes saw a 0.8 per cent decline.

Source: Channel News Asia / Singapore

SINGAPORE: Rental prices for Housing and Development Board (HDB) flats fell 0.4 per cent in December from the previous month, while rents for private homes fell for the 11th consecutive month, according to SRX Property.

Four-room, five-room and executive flats saw rental prices decline by 0.7 per cent, 0.6 per cent and 0.3 per cent, respectively. Three-room flats, in contrast, saw a pick-up in rental prices by 0.4 per cent.

Year-on-year, rental prices for HDB flats in December were down 2.1 per cent, and were down 4.4 per cent compared with its peak in August 2013.

Non-mature estates saw a bigger decline in rents, with prices down 6.2 per cent from its peak in October 2012. Rental prices of mature estates in December were down 3.3 per cent from its peak in February 2013.

Rental volume also declined, with an estimated 1,619 flats rented last month, a 4 per cent decrease from the 1,687 units rented the previous month. However, on a year-on-year basis, rental volume increased 2.3 per cent compared with the 1,582 units rented in December 2013.

PRIVATE HOMES’ RENTS DOWN FOR 11TH MONTH

Rental prices in the non-landed private residential market fell 0.8 per cent on-month in December, the 11th consecutive month of decline, according to SRX Property.

Units in the Core Central Region, Rest of Central Region and Outside of Central Region saw rental prices decline by 1.2 per cent, 0.6 per cent and 0.3 per cent, respectively.

Year-on-year, rental prices for non-landed private homes were down 5.3 per cent, and were down 10.1 per cent from its peak in January 2013.

Rental volume fell 2 per cent on-month, with an estimated 2,968 units rented in December, down from the 3,026 units rented the previous month. On a year-on-year basis, rental volume was up 14.1 per cent compared with the 2,601 units rented in December 2013.

- CNA/cy

http://www.channelnewsasia.com/news/singapore/hdb-private-homes-rental/1588876.html


JTC launches cluster hub for niche semicon firms

Source: Business Times / Real Estate

JTC Corporation is building industrial space ahead of demand to avoid a repeat of the problem during 2010-2013, when supply lagged demand and led rents to spike about 20 per cent per year, CEO Png Cheong Boon told media on Wednesday on the sidelines of the launch of JTC nanoSpace@Tampines.

This is the state industrial landlord's 11th "innovative space" to date, which targets niche semiconductor firms.Facilities launched earlier catered to clusters including aerospace, biomedical and chemical.

Hot demand for smart sensors, device miniaturisation and energy-efficient devices, spurred by the Internet of Things, increasingly requires the expertise of companies in advanced packaging, compound semiconductors and micro-electro-mechanical systems, JTC said.

To be successful, these companies need to invest heavily in research and development as the focus is on high-mix products. And because the product life cycles are short, they need to bring them from lab to market quickly. They thus need to be able to set up their operations faster than the usual 11/2 to two years taken to set up a wafer fabrication plant.

JTC has thus worked with trade associations, industrialists and partner agencies to design this ready-built facility to enable companies to start up quickly, with the flexibility to customise their production and cleanroom space if they want.

The four-storey, multi-tenanted development also comes with vibration-controlled space. The shared common utilities such as bulk gases and chilled water will help lower companies' upfront capital costs by up to 20 per cent and operational costs by 10-15 per cent, JTC said.

The facility sits on a 1.31-hectare site in Tampines High Tech Park. Its total gross floor area of 22,700 square metres achieves a plot ratio of 1.7 - higher than that of a typical single-user semiconductor fabrication plant of 1.1. This intensified land use represents land savings of up to 30 per cent. The facility is expected to be completed in early 2017.

JTC has been developing a number of "innovative spaces" that aim to boost industries' productivity and competitiveness (see table). Mr Png told reporters that at least six more of such innovative spaces will be coming up. Of these, three - catering to logistics, furniture making and poultry processing - will be launched this year.

Describing the situation when industrial rents spiked from 2010 to 2013, he said: "Industrialists were all crying foul. Although during the same period the government had released more land, but that is land. Translating to space took another three years."

Some of that space supply started coming onstream last year, resulting in lower occupancy levels and, consequently, lower prices and rentals.

Market talk is that there will be a slight oversupply this year, but a moderation in prices and rentals is precisely what JTC is trying to achieve, Mr Png said.

The trickiness in building ahead of space is timing the space availability with industrialists' expansion or relocation plans, he added. And the challenge of developing such cluster hubs is understanding the diverse needs of manufacturers and, in some cases, getting them to be willing to tap shared services, as it may require some change in the companies' business models.

Occupancy level at JTC Surface Engineering Hub, the only completed cluster hub so far, stands at 30-odd per cent, after its opening last October. This is slow by some measure, but Mr Png said it is in line with JTC's projections. He is targeting for the facility to be half filled by this year.

"If you look at (the surface engineering companies') facilities, they have their own plating line and waste treatment, so the challenge is to get them to move. We know the take-up will not be very fast because they want to see how the facility is like and whether any guinea pigs will try them out first before they follow suit," he said.

Chia Siew Chuin, director of research & advisory at Colliers, said that while it is a good move to help industrialists reduce costs, the real estate facilities of semiconductor firms are very specifically calibrated for their uses, so JTC nanoSpace may only be suited for those whose operations are more generic and do not entail very specialised processes.

"It may suit some, it may not suit others. If some companies have special requirements that cannot fit into those premises, you can't force it," she said.

But Victor Mills, chief executive of the Singapore International Chamber of Commerce, lauded JTC's move to build such cluster hubs as "very forward looking, even aggressive", and believes that it will keep Singapore attractive as a hub from which one manages its production facilities in the region.

-By Lee Meixian

http://www.businesstimes.com.sg/real-estate/jtc-launches-cluster-hub-for-niche-semicon-firms


JTC building semiconductor facility in Tampines

Source: Straits Times / Money

INDUSTRIAL landlord JTC is building a facility in Tampines to support the fast-growing semiconductor industry.

JTC nanoSpace, which is expected to be completed by the first half of 2017, is aimed at lifting productivity and competitiveness in the sector.

The four-storey building with shared facilities and utilities will be used by companies manufacturing in areas such as compound semiconductors, advanced packaging and micro-electro-mechanical systems.

JTC chief executive Png Cheong Boon said in a statement yesterday that the facility could allow companies a "faster time-to-market, lower upfront capital costs by up to 20 per cent, and lower operational costs by between 10 per cent and 15 per cent".

"Globally, the semiconductor industry remains fast-growing, where 2014 saw the largest year-on-year increase in worldwide semiconductor sales over the past three years," he added, noting that demand is shifting in favour of "smarter, smaller and more energy-efficient devices, with diverse functionality".

While JTC has developed nine facilities to support sectors such as aviation, chemicals and biomed over the past year, the upcoming nanoSpace centre is its first initiative focused on developing suitable industrial infrastructure to boost the electronics and semiconductor industry.

Semiconductors are the largest segment within the electronics industry, which is a key pillar of the manufacturing sector.

The segment contributed more than half of the electronics industry's total value-added in 2012, according to the Economic Development Board.

It also provided 43,000 jobs, with workers earning about 22.8 per cent more than the manufacturing average.

"The Government and JTC remain committed to support the growth of the (semiconductor) industry and capture new opportunities in the global market, by providing various incentives and developing appropriate industrial infrastructure," Mr Png said.

-By Felicia Lee

http://www.straitstimes.com/premium/money/story/jtc-building-semiconductor-facility-tampines-20150115


JTC launches nanoSpace @ Tampines for niche semiconductor sector

The four-storey, multi-tenanted development will help to support the electronics and semiconductor industry in Singapore, JTC says.

Source: Channel News Asia / Business

SINGAPORE: A new ready-built facility to support growth in the niche semiconductor sector was launched by JTC Corp on Wednesday (Jan 14).

Located at Tampines Hi-Tech Park, JTC nanoSpace @ Tampines is a four-storey, multi-tenanted development that will provide centralised common utilities such as bulk gases and chilled water, as well as space for specialty chemical storage and wastewater treatment plants.  

Said JTC's CEO Png Cheong Boon: "These features provide a plug-and-play solution for niche semiconductor companies, enabling them to halve the time needed to set up their manufacturing facilities as they no longer need to build their own cleanroom. The shared facilities also lower the companies' upfront capital costs and allow them to enjoy greater economies of scale in their operating costs."

JTC said the project will allow companies to start with small production units with the flexibility to scale up their manufacturing capacities in the future. By tapping on the shared common utilities, companies could also lower upfront capital costs by up to 20 per cent and operational costs by between 10 and 15 per cent, it said. 

JTC added that the sharing of facilities has helped to intensify land use, generating a land savings of up to 30 per cent. To ensure the project meets the needs of companies, JTC consulted several industry players including the Singapore International Chamber of Commerce.

Said Mr Victor Mills, Chief Executive of the Singapore International Chamber of Commerce: "We have got finite space. What this building does is to try to optimise the utilisation of the land, and at the same time provide something that the industry wants. That is the key, and I think if we continue to do that, we will continue to attract business."

Good infrastructure, a stable political environment, access to finance, and low taxation are all factors that attract business, he said, and "Singapore ticks all those boxes. I think Singapore will remain attractive as it evolves". 

The facility - which has a total gross floor area of 22,700 square metres - is expected to be completed in 2017 and will help to support the electronics and semiconductor industry in Singapore. These include companies which produce micro components for products such as smartphones, inkjet printers, medical devices and motor vehicles. 

The electronics industry is a key pillar of Singapore's manufacturing sector, accounting for about 26 per cent of the country's total manufacturing value added in 2012, and providing 79,000 jobs. 

According to JTC, the semiconductor industry is the largest segment in the electronics industry. In 2012, it contributed more than half of the electronics industry's total value added and provided 43,000 jobs. The average remuneration per worker in the semiconductor industry is about 22.8 per cent above the manufacturing average, JTC said. 

JTC nanoSpace @ Tampines is one of 10 purpose-built facilities that JTC has launched in recent years. Over the next 12 months, JTC said it is looking at new developments to support the logistics, poultry and furniture industries.

- CNA/xk/dl

http://www.channelnewsasia.com/news/business/singapore/jtc-launches-nanospace/1588752.html


Hyatt could launch Andaz hotel at Duo project

It currently has 12 properties worldwide under the contemporary hotel brand

Source: Business Times / Real Estate

Andaz, a contemporary hotel brand of Hyatt, could make an appearance in Singapore in a couple of years' time. Market talk is that Hyatt may be inking a contract to manage a hotel under the Andaz brand on the island. Some observers suggest this could be at the hotel component of the Duo project, a mixed development along Beach Road/Ophir Road being developed by M+S Pte Ltd.

-By Kalpana Rashiwala

http://www.businesstimes.com.sg/real-estate/hyatt-could-launch-andaz-hotel-at-duo-project


Four People's Park Complex units go on sale as single entity 

Source: Straits Times / Money

FOUR adjoining strata retail units at People's Park Complex in Chinatown are up for sale.

The units, which are on the ground floor atrium of the 31-storey mixed development, are being sold as a single entity.

They span a total area of 5,081 sq ft and have column-free layouts with sizes ranging from 960 sq ft to 1,819 sq ft.

The units are at the mall's main entrance and "enjoy high shopper traffic", said DTZ Debenham Tie Leung (South-east Asia), the sole marketing agent.

It added that the indicative price for the four units in all is about $35.6 million, or $7,000 per sq ft on strata area.

Ground floor units in People's Park Complex have traded from $4,522 to $11,011 per sq ft on strata area based on caveats lodged over the past two years.

Other tenants on the ground floor include travel agencies, mobile and electronics shops, health and wellness centres and tattoo parlours.

"Given the rarity of having a ground floor retail unit for sale in such a prime locale, we expect interest from both retailers who are keen to purchase the space for owner occupation and investors who are keen to purchase investment properties with steady returns in place," said DTZ's investment advisory services division.

People's Park Complex, completed in 1970, comprises a 26-storey residential building on top of a five-storey commercial podium. It is one of Singapore's first shopping malls.

The building, which is next to Chinatown MRT station, has a prominent 120m frontage along Eu Tong Sen Street in Chinatown.

The Singapore Tourism Board works with bodies such as the Chinatown Business Association to improve amenities in the precinct. Some recent initiatives include reopening the Chinatown Food Street and introducing free Wi-Fi coverage for certain streets.

The sale by expression of interest closes at 3pm on March 3.

-By Jacqueline Woo

http://www.straitstimes.com/premium/money/story/four-peoples-park-complex-units-go-sale-single-entity-20150115#sthash.vYsLajVh.dpuf


Companies' Brief

FRS 110's impact on Reit sponsors muted

Earlier worries were that the larger balance sheets would result in higher gearing ratios and lower returns on assets

Source: Business Times / Companies & Markets

For most of the major sponsors that have started to adopt FRS 110 "Consolidated Financial Statements" in their quarterly results last year, they have done so without a glitch, despite earlier concerns that their larger balance sheets will result in higher gearing ratios and lower returns on assets. If that serves as any guide, one could expect a marginal impact of the new accounting rule in the full-year results as the earnings season enters full swing.

-By Lynette Khoo

http://www.businesstimes.com.sg/companies-markets/frs-110s-impact-on-reit-sponsors-muted


Keppel DC Reit 

Source: Business Times / Companies & Markets

We initiate coverage with an "Outperform", with a dividend discount model- or DDM-derived target price of S$1.10, implying 21 per cent total return. Keppel DC Reit trades at 6.6 per cent FY15 estimated yield. Key risks include macroeconomic, competition, relatively short land tenure for some assets, the interest rate and acquisition risks.

http://www.businesstimes.com.sg/companies-markets/brokers-take-43


Popular Holdings' CEO moves to take company private

Source: Business Times / Companies & Markets

Chou Cheng Ngok, the CEO and executive director of Singapore's beleaguered bookstore chain, Popular Holdings, is attempting to take the company private. The company, which is also in the publishing, property and education businesses, is expected to receive a voluntary conditional cash offer from Grand Apex Holdings, CIMB Bank Singapore announced on Wednesday, on behalf of the latter.

-By Chan Yi Wen

http://www.businesstimes.com.sg/companies-markets/popular-holdings-ceo-moves-to-take-company-private


Unsold units spur S'pore duo to privatise Popular

Source: Straits Times / Money

THE controlling shareholder of bookstore owner Popular Holdings intends to make a general offer for the firm so it can delist it.

Grand Apex Holdings, owned by Popular chief executive Chou Cheng Ngok and his wife, Ms Hu Nan Lee, will lodge a conditional cash offer to all shareholders of 32 cents a share. This is a 39 per cent premium over the 23-cent closing price on Tuesday, the last day the stock traded.

Popular shares have not traded at or above the offer price in seven years while trading volume has been "generally low", noted broker CIMB Bank in the announcement posted to the Singapore Exchange yesterday.

Popular's average daily turnover over the past 12 months has been at around 308,000 shares, only 0.1 per cent of the group's publicly held capital, and just 0.04 per cent of the total issued shares, said CIMB.

Mr Chou and his wife are the main shareholders of the firm, with a combined stake of 61.2 per cent held through their World Holdings company.

Grand Apex believes privatisation will relieve Popular of compliance costs that come with its listing status. Under weak market conditions, the group has had difficulties marketing and selling unsold units in its property developments within the timeframe required under the Government's Qualifying Certificate.

As at October 31 last year, 21 units of a total 26 units of the property Ei8ht Raja remained unsold. Popular would incur additional expenses for the extension of time to sell the unsold units, as the Qualifying Certificate (QC) stipulates all units must be sold within two years from May 28, 2013, the date of the issue of the Temporary Occupation Permit.

Once Popular is wholly owned by Singaporeans, it will be in a position to seek exemption from the QC rules.

Trading of Popular shares was halted yesterday. The offer announcement was made after the market closed.

-By Marissa Lee

http://www.straitstimes.com/premium/money/story/unsold-units-spur-spore-duo-privatise-popular-20150115


Views, Reviews & Forum

Each self-sufficient town could have columbarium

Source: Today Online / Voices

I agree that it is the duty of the Urban Redevelopment Authority (URA) to plan for columbaria. (“Planning of columbarium locations is URA’s duty”; Jan 12)

However, there are not many places such as Lim Chu Kang. And less populated areas may one day be redeveloped.

The provision of columbarium services in places of worship is not uncommon. It is also aligned with the planning of common places of worship.

In a modern city, each town would be self-sufficient, with facilities on one’s doorstep, including a resting place for our loved ones.

The right thing to do is to have guidelines for such developments in the heartlands so that columbaria are designed cleverly — with height and sound restrictions or a roof garden — or sited in the basement of worship places, with no cremation services. It may also be right to work out an inconvenience fee or subsidy for residents who have bought homes in the vicinity before the release of new URA plans.

But with Singapore’s limited land, it would be no surprise anymore to have one-stop facilities in a community.

-By James Poh Ching Ping

http://www.todayonline.com/voices/each-self-sufficient-town-could-have-columbarium


No room for ‘not in my backyard’ on this tiny island

Source: Today Online / Voices

In 2012, the proposed building of studio flats at Toh Yi Drive for senior citizens caused some residents angst. Now, the flats, collectively named Golden Kismis, are nearing completion.

The Housing and Development Board has acted on the feedback from residents and others who were concerned over the elderly occupants of these and surrounding flats having to walk up and down the slope leading to and from the flats.

There are now three covered pavilions with seats for whoever needs a brief break on the way up or down the path, as well as a covered walkway from each pavilion to the block of flats adjacent to the paths.

In a tiny island, it is not always possible or practical to site residences for seniors away from others. There are relational, financial and related factors that make it positive and necessary to have the elderly live near loved ones.

In a similar manner, columbaria within temples, churches, et cetera, should not raise the hackles of those living near the said buildings. (“Planning of columbarium locations is URA’s duty”; Jan 12)

-By Ho Kong Loon

http://www.todayonline.com/voices/no-room-not-my-backyard-tiny-island


Global Economy & Global Real Estate

Johor reclamation project gets go-ahead, but size reduced

Forest City will have an area of only 1,386ha instead of 1,600ha

Source: Straits Times / Money

MALAYSIAN environmental authorities have approved reclamation works for the Forest City project in Johor, but for a reduced 1,386ha development instead of the initial 1,600ha.

The project had faced resistance from Singapore and Malaysians living near the site, which is close to Tuas, over fears of damage to the ecology of the waterway between the two countries.

Country Garden Pacificview (CGPV), the master developer, said in a statement yesterday that the Department of Environment (DoE) granted approval after accepting proposals in a Detailed Environmental Impact Assessment to "minimise or mitigate environmental impacts through integrated and workable solutions".

"Our next step is to ensure that all compliance monitoring, in terms of air, noise, water quality and sediment, is robustly implemented and carried out," said Datuk Md Othman Yusof, executive director of the joint venture between Johor state and Chinese developer Country Garden Holdings. "This is one of our immediate priorities - minimising the impact on the local communities and ensuring that the surrounding ecology (is) well preserved," he said in the statement.

A source familiar with the development told The Straits Times that the land reclamation was reduced to improve environmental standards, with CGPV given land on the mainland instead.

"The approved size is smaller because some of the land is on solid ground," the source said of the project whose backers include the state's sultan.

According to reports, one-third of the joint venture belongs to Esplanade Danga 88, a company in which the state has a 20 per cent interest, with the rest belonging directly to Sultan Ibrahim Ismail and royal court member Daing A. Malek Daing A. Rahaman.

Country Garden, which is China's seventh-largest property developer, had voluntarily halted land reclamation last June following controversy over the mixed development project that would include luxury homes and a new stadium for the state football team.

Forest City, which has a gross development value of RM600 billion (S$223 billion), was originally conceived as four man-made islands amounting to 1,600ha, over three times the size of Sentosa.

Initial plans had the islands built in the waters in Tanjung Kupang between south-west Johor and the north-west of Singapore.

Singapore conveyed its concerns on a number of occasions to Malaysia, asking for more information on the reclamation and construction works in the Johor Strait and that work be stopped until full studies were done.

Fishermen and fish farm operators have blamed mass fish deaths in the area on the land reclamation works, but the developer has denied this.

Apart from Forest City, the royal family is also involved in a 1,410ha reclamation project for an oil and gas hub farther west, off Tanjung Piai.

-By Shannon Teoh, Malaysia Correspondent

http://www.straitstimes.com/premium/money/story/johor-reclamation-project-gets-go-ahead-size-reduced-20150115#sthash.nwO7bpit.dpuf


Ying Li plans mixed development in Chongqing

Source: Business Times / Companies & Markets 

http://www.businesstimes.com.sg/companies-markets/ying-li-plans-mixed-development-in-chongqing


AXA Real Estate sees Japan office property prices nearing peak

Source: Business Times / Real Estate

http://www.businesstimes.com.sg/real-estate/axa-real-estate-sees-japan-office-property-prices-nearing-peak


AXA Real Estate Sees Japan Commercial Property Prices Near Highs

Source: Bloomberg / News

AXA Real Estate, the world’s fifth-largest property fund, is growing concerned that Japanese property prices are nearing their highs.

“I can see the top of the mountain,” said Tetsuya Karasawa, head at AXA Real Estate Investment Managers Japan KK, speaking about commercial real estate prices. “The question is do we have some way to go or we are already at the top?”

A recent increase in commercial real estate values, because of the government’s efforts to end deflation and boost economic growth, has prompted AXA to consider selling some properties in a fund it established in 2012, Karasawa said in an interview in Tokyo. The fund is now fully invested, the company said.

The fund, a joint venture with the property unit of Sumitomo Mitsui Trust Holdings Inc., has acquired 20 billion yen ($170 million) of assets, mainly medium-size office buildings in Tokyo. It can hold the assets to 2019, though it may take advantage of recent price increases to sell some of the properties earlier, he said.

“If you sell now, you can sell at a good price,” Karasawa said.

Falling Yields

The capitalization rate, a measure of investment yield, for office buildings in Tokyo fell to the lowest level since August 2009 in November, according to New York-based Real Capital Analytics Inc. The yield declined to 4.75 percent in November from around 5.3 percent two years earlier. When the yield declines, values rise.

Tokyo’s property market has been recovering since Prime Minister Shinzo Abe introduced his policy to revive the economy and end deflation two years ago, and may extend gains.

Prices of prime office buildings in Tokyo advanced more than 20 percent in 2014 and are set to increase at least 10 percent in 2015, helped by rising rents and low borrowing costs, said Takeshi Akagi, Jones Lang LaSalle Inc. (JLL)’s head of research in Tokyo. The vacancy rate for office space in Tokyo has improved to the level in 2009, according to Miki Shoji Co., a closely held office brokerage company in Tokyo.

Competitive Market

“The market is very, very competitive in terms of acquisitions,” Karasawa said. “What we don’t want to do is to launch a new fund, but can’t invest. We try to analyze our strategy very carefully; what is workable in this market or is it better to wait for a while?”

AXA’s caution about further investment in Japanese real estate prompted the recent departure of Hidetoshi Ono, the former head of the Japan Core Fund at AXA Real Estate Investment Managers in Singapore. Ono, who has returned to Japan, said he left the company at the end of December to “seek more challenging opportunities outside of AXA.”

AXA Real Estate is the world’s fifth-largest property fund manager with $65.7 billion of assets under management, according to a 2014 fund manager survey by Anrev and Inrev, associations for real estate investors.

It is part of AXA Investment Managers, a subsidiary of the French insurance and financial services company AXA SA. AXA Real Estate also manages a couple of debt funds, which lend to real estate buyers, and invests in Japanese real estate on behalf of AXA’s insurance division and other investors.

-By Kathleen Chu and Katsuyo Kuwako

http://www.bloomberg.com/news/2015-01-14/axa-real-estate-sees-japan-commercial-property-prices-near-highs.html


China housing inventories seen piling up in 2015 as supply grows

Source: Business Times / Real Estate

http://www.businesstimes.com..sg/real-estate/china-housing-inventories-seen-piling-up-in-2015-as-supply-grows


Thailand's Land & Houses raises 2015 investment budget

Source: Business Times / Real Estate

http://www.businesstimes.com.sg/real-estate/thailands-land-houses-raises-2015-investment-budget


South Korea to boost home lease with tax incentives

Source: Business Times / Real Estate

http://www.businesstimes.com.sg/real-estate/south-korea-to-boost-home-lease-with-tax-incentives


Dubai home sales fall 3.2% on cooling actions

Source: Business Times / Real Estate

http://www.businesstimes.com.sg/real-estate/dubai-home-sales-fall-32-on-cooling-actions


China to build diversified housing rental market in 3 years

Source: Business Times / Real Estate

http://www.businesstimes.com.sg/real-estate/china-to-build-diversified-housing-rental-market-in-3-years


Cutting luxury listings down to size

Real estate broker and brokerage firm caught in legal dispute over square footage, and what is - or is not - included in those measurements

Source: Business Times / Real Estate

http://www.businesstimes.com.sg/real-estate/cutting-luxury-listings-down-to-size


Country Garden looks to cut risk with more non-dollar debt

Source: Business Times / Real Estate

http://www.businesstimes.com.sg/real-estate/country-garden-looks-to-cut-risk-with-more-non-dollar-debt


David beats Goliath in LA's real estate battles

Community-based efforts to control development have increased in response to a Los Angeles construction revival

Source: Business Times / Real Estate

http://www.businesstimes.com.sg/real-estate/david-beats-goliath-in-las-real-estate-battles


Lower Manhattan Office Rents Rose to a Record in 2014

Source: Bloomberg / News

Lower Manhattan office rents rose to a record in 2014 as a space shortage in neighborhoods to the north drove tenants to area with the borough’s lowest leasing costs.

Asking rents downtown jumped 12 percent from the previous year to an average of $51.97 a square foot, CBRE Group Inc. reported today. The office-availability rate dropped to 11 percent from 13.5 percent, said CBRE, the world’s largest commercial real estate services company.

The rent increase was in part because of the introduction to the market of two new World Trade Center skyscrapers, which together have almost 2 million square feet (186,000 square meters) available and command some of lower Manhattan’s highest leasing costs. New agreements were signed for a total of 6.8 million square feet downtown last year, 20 percent more than in 2013, according to CBRE. (CBG)

“When you were training people in this business, you always said that midtown south and downtown were about price relief from Midtown,” said Mary Ann Tighe, chief executive officer of the New York/tri-state region for CBRE. “This was the year that ended that trend definitively.”

Manhattanwide, new office leases last year totaled 29.9 million square feet, up 20 percent, with rents climbing in all three of the submarkets. Rents across the borough increased 6 percent to $67.05, the highest since 2007, when the market peaked before the credit crisis caused office demand to plunge.

‘Really Good’

“This is the definition of a really good year,” Tighe said at a briefing. With 33 firms relocating to spaces of more than 100,000 square feet each, almost double 2013’s total of 17, she called it “the year of the large transaction.”

The biggest downtown deals in 2014 included leases by Time Inc. at Brookfield Place and a deal by advertising company GroupM to anchor 3 World Trade Center, now under construction.

“Here was the market where there was so much gloom and doom about what was going to happen,” as millions of square feet became available at the trade center and Brookfield Place, Tighe said. Now, “a number of our downtown agents are saying we’re moving our prices up. Prices that were in the $30s are now in the $40s and the ones that were in the $40s are now in the $50s.”

In Midtown, office rents last year averaged $74.92 a square foot, up 3 percent from 2013, with availability slipping to 10.5 percent from 11.7 percent. In Midtown south, the collection of neighborhoods from about 30th Street to Chambers Street that are popular with technology firms, rents climbed 3 percent to $66.38. Availability fell to 8.6 percent from 10.2 percent.

While New York’s large investment banks have been scaling back, small and mid-sized financial firms are becoming more active, signaling that leasing momentum in Manhattan will continue in the coming year, Tighe and Peter Turchin, CBRE vice chairman, said at the briefing.

-By David M. Levitt

http://www.bloomberg.com/news/2015-01-14/lower-manhattan-office-rents-rose-to-a-record-in-2014.html


Cheung Kong Seeks $7 Billion Loan for Property Asset Spinoff

Source: Bloomberg / News

Cheung Kong Holdings Ltd. is seeking a loan of as much as HK$55 billion ($7.1 billion) as billionaire Li Ka-shing reorganizes his corporate empire, according to five people familiar with the matter.

The funds will be used to acquire property assets after the 86-year-old tycoon proposed Jan. 9 to reorganize his two main companies, Cheung Kong and Hutchison Whampoa Ltd., according to the people, who asked not to be identified because they’re not authorized to speak publicly. As part of the changes, a newly formed company Cheung Kong Property Holdings Ltd. will obtain the real-estate assets of both firms for HK$55 billion, according to a Hong Kong Stock Exchange filing on Jan. 9.

The loan will be Hong Kong’s biggest syndicated deal since the $12 billion transaction used to back PCCW Ltd.’s takeover of Cable & Wireless HKT Ltd. in 2000, according to data compiled by Bloomberg. The Hong Kong-based real estate company is in talks with its relationship banks including Bank of America Corp., BNP Paribas SA, China Construction Bank Corp. and HSBC Holdings Plc for the loan, the people said.

CK Property will buy the assets using either a bridge facility, for which HSBC will pledge HK$45 billion and Bank of America HK$10 billion, or a syndicated loan, according to the Jan. 9 filing.

Cheung Kong is requesting banks to commit to a new, long-term loan through CK Property, according to the people. The company has conveyed some information to banks and is expected to send more specific instructions, the people said.

-By Foster Wong, Jacqueline Poh and Sally Bakewell

http://www.bloomberg.com/news/2015-01-14/cheung-kong-seeks-7-billion-loan-for-property-asset-spinoff.html


Russians Hit by Ruble Crisis Skip St. Moritz to Stay Home

Source: Bloomberg / Luxury

Sergey Kyuregyan, a 35-year-old manager of a Moscow energy company, decided to forgo a European ski vacation this winter and travel to the Black Sea instead.

“I wanted to spend my vacation in Russia,” he said, explaining that in the past he’d gone to Switzerland, Austria and Italy. “I decided that I would go skiing in Sochi.”

The number of Russians staying in Swiss hotels declined in 2014 as the ruble plummeted and President Vladimir Putin’s government urged vacations at home. That’s being felt in the Alpine town of St. Moritz, location of the 1928 and 1948 Winter Olympic games. Here, expensive cars ply the streets lined with boutiques such as Prada SpA (1913) and Hermes International. (RMS) Famous for its sunshine, annual polo-on-ice tournament and well-heeled clientele, the town, which is more upmarket than Davos, has recently proved a popular destination for wealthy Russians.

At the 126-room Kulm Hotel, which offered a dinner for Russian Orthodox Christmas Eve on Jan. 6 featuring an opera singer for 600 francs ($590) per person, bookings from Russians this winter are down by 8 percent to 10 percent.

“There’s not a waiting list as there was in years past,” Kulm CEO Heinz Hunkeler said, explaining that during the ski season Russians constitute about 13 percent of the clientele. “The ruble has a certain effect, but of course many of our clients have their money outside Russia. The nationalism phenomenon of Putin saying ‘stay in Russia’ shouldn’t be underestimated.”

Altered Environment

Energy manager Kyuregyan is one of those Russians, saying he chose not to travel abroad for “political reasons,” rather than for pecuniary considerations. “Skiing in Sochi wasn’t cheaper than in Europe but not more expensive either.”

Nearby, at the 5-star Carlton, which served as a home to the Greek royal family during World War I, “the current winter season has brought new challenges due to the altered political and economic environment” in Russia and surrounding countries, said Corinne Denzler, director of the Tschuggen Hotel Group that owns the hotel.

Since 2005, Russians have enjoyed an official 10-day holiday surrounding the Julian calendar’s Christmas on Jan. 7. Between 2005 and 2013, the number of Russian tourists coming to Switzerland doubled. They generated 133 million francs for the Swiss tourism sector in 2013, according to tourist office estimates.

Following Russia’s annexation of Crimea last year, the number of Russians arriving to stay in Swiss hotels dropped by a tenth between May and October.

Canceled Trip

Some Russians have chosen not to travel abroad after the European Union imposed a raft of sanctions. A 40 percent drop in the ruble against the euro last year has also pushed up the cost of foreign holidays and a raft of Russian travel agencies has foundered. The ruble slid 2 percent to 66.5870 versus the dollar by 4:55 p.m. in Moscow, the fourth day of declines.

While Switzerland is a neutral country and hasn’t formally joined the EU’s sanctions, it has taken measures to hinder their circumvention. The Swiss National Bank also has a minimum exchange rate of 1.20 per euro for the franc, meaning Russians feel the loss of purchasing power when in Switzerland.

“I canceled a trip to Europe during the holidays because of personal reasons and the tough financial situation only confirmed that my decision was correct,” said Moscow museum manager Dmitry Panov, 27. “I had planned to do a road-trip through Prague, Vienna and Budapest via Belarus and Poland.”

Fewer Visitors

Even though Russians ranked only tenth among foreign visitors to Switzerland in 2013, they are among the more avid shoppers: They spent 230 francs per day, compared with an average among foreigners of 180 francs, according to data from the tourism board.

In St. Moritz, which in the course of the 20th century counted Russian ballet dancer Vaslav Nijinsky and the Shah of Iran among its famous guests, the local tourism board expects a decline in the number of Russian visitors this winter. Roberto Rivola, spokesman for the association, said it wasn’t possible to predict how big the decline would be.

Other countries have been similarly affected: Russians stayed away from the French Riviera this summer, while in Finland Russians crossing the border to shop are spending less.

It’s not all gloom and doom in St. Moritz. Atop the Corviglia ski area at 2,500 meters, La Marmite restaurant is enjoying good demand. On the menu: Beef carpaccio with truffles and smoked salmon with caviar for 388 francs, or melted Brie with caviar for 225 francs.

“Both in terms of atmosphere and business, the situation is good,” owner Reto Mathis said. “The Russians are here -- I can’t see any evidence of a decline.”

Last-Minute Bookings

Meanwhile at the Kempinski, General Manager Reto Stoeckenius said there’s been no year-on-year decline in Russian guests, thanks to a flurry of last-minute bookings.

Natalya Novikova, a 34-year-old company manager from Moscow who has come to St. Moritz for the past six or seven years, said the ruble’s collapse has kept some of her friends away this year and led others to settle for cheaper accommodation. Most in her circle came nonetheless, she said.

“We couldn’t imagine not coming -- whatever happens,” Novikova said, enjoying a coffee with her husband in the morning sun. “It’s one of our favorite places on earth.”

-By Catherine Bosley and Ksenia Galouchko

http://www.bloomberg.com/news/2015-01-14/russia-crisis-touches-swiss-playground-of-wealthy-in-st-moritz.html


Hollywood Deals Stop as David Fights Goliath: Real Estate

Source: Bloomberg / Luxury

Target Corp. (TGT) stopped construction of a new store. Real estate investor CIM Group was ordered to suspend leasing at a 301-unit apartment tower. And Millennium Partners’ $664 million high-rise complex may never get off the ground.

All three projects, located in the Hollywood area of Los Angeles, were held up by Robert P. Silverstein, who has emerged as the go-to attorney for community groups seeking to slow growth in the second-largest U.S. metropolis.

“I use the David-versus-Goliath metaphor a lot, but it’s generally true,” Silverstein, 46, said in an interview. “It’s not an easy thing to fight government or big developers.”

Community-based efforts to control development have increased in response to a Los Angeles construction revival. The disputes are driving up project costs in a real estate market that’s already expensive, making it harder to add retail space and homes in the country’s least-affordable city for housing.

Silverstein uses the California Environmental Quality Act, or CEQA, along with open-meeting laws and public-record requests to find flaws in proposed projects, forcing developers to alter their plans or face costly delays and litigation. Development proponents argue that laws are being misused on behalf of well-heeled, not-in-my-backyard activists willing to sacrifice economic growth to protect their lifestyles and property values.

“The people who are most apt to fight things have six-figure incomes and nice houses and college and post-college degrees,” Mike Saint, a Nashville, Tennessee-based land-use consultant and co-author of the 2009 book “NIMBY Wars: The Politics of Land Use,” said in a telephone interview. “You can’t convince them to support a shopping center across the street from their house just because it’s going to create jobs and tax revenue.”

Bake Sales

Community groups usually cover Silverstein’s initial fees with money raised at bake sales and benefit dinners. His biggest payouts come after prevailing in lawsuits, which entitle him to cost reimbursements from adversaries under what are called “private attorney general” actions deemed to have a public benefit, he said. In June, the Los Angeles City Council agreed to award Silverstein $780,000 as part of $1.75 million in fees to attorneys who sued to block the Hollywood Community Plan, according to Rob Wilcox, a spokesman for the city attorney.

“Lawyers like Silverstein are really a symptom of the problem,” said Chris Thornberg, principal at Beacon Economics LLC, a Los Angeles-based research and consulting firm. “He’s just responding to the fact that the NIMBYs have been given these weapons.”

Silverstein Honored

The Federation of Hillside and Canyon Associations, a coalition of 44 Los Angeles-area community groups stretching from the mansions of Bel Air to gentrifying Echo Park, honored Silverstein at a Dec. 11 evening banquet at the Mulholland Tennis Club. The groups turn to Silverstein because it’s the only way to get the city to pay attention or abide by the rules, said Marian Dodge, the federation’s president.

“It’s unfortunate we have planning by litigation,” she said. “They’ll put in everything they can because they know the average Joe can’t afford to litigate. And most of the time they get away with it.”

Except when Silverstein is on the case. In October, Los Angeles Superior Court Judge James Chalfant ordered the city to revoke the certificate of occupancy and other permits for the 23-story Sunset and Gordon on Sunset Boulevard in Hollywood after Silverstein argued the apartment-tower developer had destroyed the facade of a historic building it agreed to preserve.

Ruling Appealed

The ruling has been appealed, staying the judge’s order, according to Luke Zamperini, a spokesman for the Los Angeles Department of Building and Safety. Apartments are still being leased and are currently available at prices ranging from $1,790 for studios to $7,900 for a penthouse, according to the project website.

“The city is playing fast and loose, as usual, with the law,” said Silverstein, who represents the La Mirada Avenue Neighborhood Association that sued to stop the project.

CIM Group, the developer, declined to comment, according to Karen Diehl, a spokeswoman for the Los Angeles-based builder of the tower.

Also in October, Judge Richard Fruin ordered construction halted at a Target store on Sunset, after Silverstein argued the city improperly granted such zoning variances as a 74-foot (23-meter) height for the building, more than twice the limit for the site.

‘Dangerous Development’

“We weren’t against the Target,” said Silverstein, who also represents the La Mirada community group in the dispute too. “We were against the law-breaking Target. We’re not against development in Hollywood, but we are against foolish and dangerous development.”

Target still plans to complete the store, according to Erika Winkels, a spokeswoman for the Minneapolis-based retailer.

“Due to pending litigation, we are unable to share specific details,” she said in an e-mail.

Neighborhood groups originally opposed the Millennium Hollywood, a proposed twin-tower hotel, residential and retail development, because it was more than twice the height of the nearby landmark Capitol Records building and threatened to block views and increase congestion. Then Silverstein learned of studies indicating the proposed project stood on an active earthquake fault. He sued in August 2013, alleging the city council violated CEQA in approving the massive project without weighing all of the facts. A state geologist’s report in November confirmed the Hollywood Fault runs through the site.

‘Ram Through’

“If Phil Aarons and the Millennium people had not been such over-reaching pigs in trying to ram through two skyscrapers, it would never have triggered the backlash that it did,” Silverstein said.

Aarons, principal and co-founder of Millennium, said he intends to proceed with his Hollywood plan.

“We look forward to continuing that work in Hollywood with a project that we have carefully designed,” Aarons, whose firm also has developments in Manhattan, Miami, Boston, Washington and San Francisco, said in an e-mail. “It’s unfortunate that a small group of very vocal hillside residents continue to press their opposition when so many people both in the local community and throughout Los Angeles share our vision of what Hollywood can and should be.”

The possibility of action by Silverstein deters some developers from working in Hollywood, said Jerold Neuman, an attorney with the Los Angeles firm of Liner LLP who has represented Millennium.

Challenge Posed

“It poses a challenge for developers who need to get these things done in a relatively short period of time,” Neuman said in a telephone interview.

Greenland Holding Group Ltd. steers clear of Hollywood and other communities where the company may face protracted opposition, said Ifei Chang, chief executive officer of the U.S. unit of the Shanghai-based development company.

“We want to invest in a city that’s more forward-thinking,” said Chang, whose projects include the $1 billion Metropolis in downtown Los Angeles and the $5 billion Atlantic Yards in Brooklyn. “Communities that say ‘not in my backyard’ might not welcome us. Those cities aren’t in the picture.”

Silverstein, a Los Angeles native, said he won his first judgment in 1991, before he was a lawyer, when he persuaded a magistrate in Mexico that he should be compensated by a hotel owner whose pet monkey, Rambo, bit his hand.

“It was worth about $45,” he said of the award.

‘Laser-Focused’

A graduate of the University of California Hastings College of the Law in San Francisco, Silverstein, who passed the bar in 1996, said he became interested in land-use law as a student while clerking for the California Supreme Court. He’s single and “laser-focused” on work at his Pasadena, California-based Silverstein Law Firm, he said. His only pastime is watching baseball.

“I’ll go to a game,” said Silverstein, whose firm also employs two full-time attorneys. “But the sad part is I always have a brief or a case with me.”

Los Angeles Mayor Eric Garcetti, who represented the Hollywood area when he was a city councilman, is a frequent Silverstein target. Garcetti was an architect of a 2012 Hollywood community plan that called for more high-rises and denser development near stops on the region’s subway line.

The city council rescinded the plan last April, after Los Angeles Superior Court Judge Allan Goodman ruled it was “fundamentally flawed, and fatally so” because it relied on outdated population estimates.

‘No Fear’

Garcetti is “constantly giving aid and comfort to those that would harm the environment and break the law with no fear of enforcement by the city,” said Silverstein, who represented some of the plaintiffs in the community plan suit.

Garcetti, who was elected mayor in 2013, said he doesn’t favor developers over other interests in Los Angeles.

“Let me be clear here: Bad development has no place in Los Angeles,” Garcetti said in an interview yesterday at his downtown office. “I’m not pro-development. I’m pro this city.”

Leron Gubler, president of the Hollywood Chamber of Commerce, points to the renaissance in his own neighborhood because of Garcetti’s support and an influx of developers.

“Twenty-two years ago, this area was in the dumps and businesses were leaving left and right,” he said. “At that time, the homeowners in the hills particularly were extremely supportive of anything that meant change in the flats -- the poorer areas in Hollywood -- as they also reflected poorly on their neighborhoods.”

Reforms Advocated

R.J. Comer, a land-use attorney with the Los Angeles firm of Armbruster Goldsmith & Delvac LLP, advocates reforms to make it harder for neighborhood groups to block projects. He and other development proponents propose changes such as limiting the number of challenges to a plan, stopping the invalidation of construction permits due to minor non-compliance issues and exempting projects with affordable housing from some CEQA rules.

Even if California laws are altered, conflicts are likely to multiply as an improving economy boosts development. In November, actor and director Rob Reiner helped push through an initiative in Malibu to require voter approval for commercial projects exceeding 20,000 square feet (1,860 square meters). Developers filed a court challenge to the measure this month. In New York, neighborhood groups are fighting the inclusion of affordable housing at New York’s 85-acre (34-hectare) Brooklyn Bridge Park.

“There will be more of that in Hollywood and other places,” Comer said. “I don’t want to invite sharks into tranquil waters, but it’s going to happen as cities get more dense.”

Silverstein said he already has more work than he can handle.

“There’s no shortage of government abuse, and there’s no shortage of people fighting government,” he said. “It’s like drinking from a fire hose.”

-By John Gittelsohn and Nadja Brandt

http://www.bloomberg.com/news/2015-01-14/hollywood-deals-stop-as-david-fights-goliath-real-estate.html


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