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3rd January 2015

Singapore Real Estate

Private residential property prices down 4% in 2014: URA

Q4, 2014, marked the fifth straight quarter of declining prices, according to Urban Redevelopment Authority flash estimates.

Source: Channel News Asia / Singapore

SINGAPORE: Private residential property prices fell 1 per cent in the fourth quarter of 2014, according to Urban Redevelopment Authority (URA) flash estimates released on Friday (Jan 2) - a larger decline than the 0.7 per cent slide in the previous quarter, and the fifth consecutive quarters of price decreases.

For the whole of 2014, prices have fallen by 4 per cent, the URA said.

Overall, the private residential property index fell 2.1 points from 207.9 points in the third quarter to 205.8 points in the fourth quarter.


Prices of non-landed private residential properties declined in all market segments. In the Core Central Region (CCR), prices fell 0.9 per cent, higher than the 0.8 per cent decline in the previous quarter. Prices in Rest of Central Region (RCR) fell 1.2 per cent, compared to the 0.4 per cent decline in the previous quarter. In Outside Central Region (OCR), prices fell 0.9 per cent, a greater slide than the 0.3 per cent decline in the previous quarter, according to the URA.


For the whole of 2014, prices in CCR, RCR and OCR have fallen by 4.1 per cent, 5.2 per cent and 2.2 per cent, respectively. Prices of landed properties fell 1.1 per cent compared to the 1.8 per cent decline in the previous quarter. For the whole of 2014, prices of landed properties fell by 5.2 per cent, the URA said.

The flash estimates are compiled based on transaction prices given in caveats lodged and survey data on new units sold by developers during the first ten weeks of the quarter.

The statistics will be updated four weeks later, when the full real estate statistics for the quarter are released by the URA. "Past data have shown that the difference between the quarterly price changes indicated by the flash estimate and the actual price changes could be significant when the change is small. The public is advised to interpret the flash estimates with caution," said the URA.

- CNA/ek

http://www.channelnewsasia.com/news/singapore/private-residential/1563118.html


Single-digit price slide set to continue for private homes

Much will depend on when and how the authorities will lift cooling measures and the interest rate scenario: consultants

Source: Business Times / Real Estate

MOST property market watchers expect private home prices to continue slipping in the single-digit percentage range this year, following the 4 per cent full-year drop last year, although much will depend on when and how the government starts to roll back some of the cooling measures and how interest rates pan out, among other factors (see infographic).

Last year's 4 per cent drop in the widely-watched overall private residential property price index of the Urban Redevelopment Authority (URA) factored in a one per cent quarter-on-quarter decline in the fourth quarter, reflected in Friday's flash estimate, and marked the first full-year decline in the index after five consecutive full-year rises. In 2008, the index fell 4.7 per cent.

From its global crisis trough in Q2 2009 to the recent peak in Q3 2013, the benchmark index rose 62.3 per cent.

Price declines from that peak induced by the rollout of the total debt servicing ratio (TDSR) framework in late-June 2013 have been relatively mild.

JLL national director Ong Teck Hui said: "A lot of developers have been holding back on launches and avoiding substantial price discounts - in anticipation of a relaxation of cooling measures.

"Going ahead, we are likely to see more flexibility on pricing from sellers. The softening rental market will also affect the loan repayment for some investors and that will lead to some pressured selling in the secondary market."

The one per cent dip in the Q4 2014 flash estimate for URA's overall private home price index was the fifth consecutive quarter-on-quarter decline; the 4 per cent full-year drop contrasted with a 1.1 per cent rise in 2013.

URA's flash estimates for Q4 non-landed private residential properties by geographical regions showed that prices in the city-fringe or Rest of Central Region (RCR) posted the biggest full-year decline of 5.2 per cent.

In 2013, the decrease was just 0.1 per cent.

In the Core Central Region (CCR), prices shed 4.1 per cent in 2014, after easing 1.9 per cent in 2013. CCR covers the Downtown Core planning area, Sentosa and the traditional prime districts 9, 10 and 11.

Suburban locations, or Outside Central Region (OCR), recorded the mildest price erosion - 2.2 per cent last year. In 2013, the sub-index for this region had gone up 6.5 per cent.

Mr Ong said: "OCR has held up as the most resilient sub-market as it has relatively better fundamentals, being supported by upgraders and having more affordable prices."

URA's price index for landed homes fell 1.1 per cent quarter on quarter in the fourth quarter, a smaller depreciation than the 1.8 per cent drop in Q3. Full-year, the landed index was down 5.2 per cent after having remained unchanged in 2013.

The declines in prices of private homes last year were due mainly to the lingering effects of the cooling measures and TDSR framework, which weakened buying demand, especially investment demand, said SLP International executive director Nicholas Mak.

Singapore's slow economic growth rate was also a dampener.

South-east Asia head of CBRE Research Desmond Sim said: "We expect the current market sentiment to prevail in 2015. Developers will monitor the market and price units at affordable levels, applying the same approach that they used for the past few quarters."

Many property consultants expect developers' sales of new private homes (excluding executive condos) to languish at around 7,000 to 8,000 units this year.

The estimate for 2014 was around 7,300 to 7,500 units - half the 14,948 units sold in 2013, which in turn was a big drop from the record 22,197 units in 2012.

SLP's Mr Mak forecasts developers' sales of between 7,000 and 9,000 private homes this year, assuming no change in housing policies.

"However, sales volume could exceed 9,000 units and potentially touch 11,000 units if the authorities were to lighten the current property curbs," he said.

Private home transactions in the secondary market were also quiet last year.

Colliers International director Chia Siew Chuin's preliminary analysis shows that 4,701 private homes changed hands in the resale market in 2014, based on caveats data as of Friday, down from 6,678 units in 2013 and 13,214 units in 2012.

Subsales also dwindled to 528 units last year from 1,102 units in 2013 and 2,462 units in 2012. As a result, total island-wide private home transactions in both primary and secondary markets are estimated to have shrunk to nearly 12,400 units last year, from 22,728 units in 2013 and 37,873 units in 2012.

Savills Singapore research head Alan Cheong warned that ". . . if activity continues to shrink and with the economy still growing in a low-unemployment environment, strong holders will not give in to even marginally lower asking prices".

He added: "So what's left over will be an increasing number of forced-sale properties. Once the latter starts to build in numbers, the price index could suddenly tip over and collapse."

-By Kalpana Rashiwala

http://www.businesstimes.com.sg/real-estate/single-digit-price-slide-set-to-continue-for-private-homes


Private and HDB home markets slip further in Q4

Price falls confirm trend, experts expect it to continue in 2015

Source: Straits Times / Top of The News

SINGAPORE'S cooling property market ended 2014 with fresh evidence of tumbling prices in both the private and public markets.

Analysts expect more of the same for this year.

Private home prices fell 4 per cent over the past 12 months, the first full-year decline since 2008. And HDB flat prices sank by an estimated 6.1 per cent for last year.

The figures for the final three months of the year confirmed a trend brought on by a slew of government cooling measures and borrowing restrictions.

In the three months to Dec 31, HDB resale prices dipped 1.4 per cent, flash figures showed, using a revised method that takes into account flat characteristics, to better reflect prices changes over time. That compared with a 1.7 per cent decline in the preceding quarter, using the adjusted figures.

HDB prices are now down 7.7 per cent over five straight quarters since the fourth quarter of 2013. They also fell 0.9 per cent in the third quarter of 2013, but the HDB did not give a revised figure for that period.

In the private market, prices sank 1 per cent in the fourth quarter, exceeding the 0.7 per cent dip in the preceding three months.

Last quarter's results also marked the fifth straight quarter of tumbling home values - the longest losing streak in 10 years.

The latest figures came as no surprise, given the noticeable downtrend even before the start of 2014, as the various government measures hammered the market. Ms Christine Li, research head at OrangeTee, attributed the sluggish market to "mismatched price expectations".

Despite rising mortgagee sales, most home owners and developers are holding firm to their selling expectations amid low interest rates, say experts. Buyers, however, are staying away, amid fears of catching a falling knife.

Ms Chia Siew Chuin, head of research and advisory at Colliers, said the moderation in private home prices was "better aligned" with slower economic growth.

"It is an indication the market is being steered from a state of excess exuberance... towards greater stability and sustainability."

The pace of decline also seems "measured", given the 62.3 per cent run-up since the second quarter of 2009, experts added.

Analysts bandied around forecasts of an 8 per cent to 10 per cent fall at the start of 2014, but yesterday's figures were well below those predictions.

Further slides of 5 per cent to 8 per cent for the public and private markets are expected this year, given a record 23,769 units to be completed this year.

The HDB said it will have four Built-To-Order (BTO) exercises this year, which will add 16,900 units to the supply. They include non-mature estates, such as Bidadari and Punggol Northshore, as well as mature estates, including Bukit Batok, Geylang and Hougang, which are nearer the city.

The first BTO exercise, next month, will offer 3,940 new flats.

-By Cheryl Ong

http://www.straitstimes.com/archive/saturday/premium/top-the-news/story/private-and-hdb-home-markets-slip-further-q4-20150103


Private homes prices down 1% in Q4 2014: URA

Source: Today Online / Business

SINGAPORE — The Republic’s private home prices softened further in the last three months of 2014 to hit the lowest level in more than three years, flash estimates by the Urban Redevelopment Authority (URA) showed today (Jan 2).

The 1 per cent dip in overall prices, based on transactions in the first 10 weeks of the October-December period, was steeper than the 0.7 per cent fall seen in the previous three months. This also represents the fifth consecutive quarterly decline, according to URA.

Property analysts noted that the fourth quarter price levels have fallen to those seen in the second half of 2011, and bring the decline for the whole of 2014 to 4 per cent, the first annual decline since 2008.

“The 1 per cent quarterly fall is not unexpected… Market watchers are now largely in agreement that the TDSR (Total Debt Servicing Ratio) framework, which takes into account all loan obligations, has served its purpose in bringing down sales volume and cooling prices and at the same time ensuring the health of the market,” said Mr Desmond Sim, head of CBRE Research, Southeast Asia.

The effects of TDSR, as well as cooling measures such as Additional Buyer’s Stamp Duty (ABSD), once again caused prices to fall across all market segments in the fourth quarter of last year.

In the non-landed private housing market, the Core Central Region (CCR) registered a steeper decline of 0.9 per cent, compared to the 0.8 per cent fall previously. In the Rest of Central Region (RCR), prices slipped 1.2 per cent, also quicker than the 0.4 per cent dip in the third quarter. The Outside Central Region (OCR) saw prices fall 0.9 per cent from the 0.3 per cent dip in the preceding three months.

Prices of landed properties fell by a relatively moderate 1.1 per cent, compared to the 1.8 per cent decline in the previous quarter.

Analysts expect the downtrend in prices to continue into the new year, as property curbs continue to keep buying sentiment subdued. Some warn that the anticipated supply glut of completed homes and interest rates normalisation may quicken the pace of price declines in 2015.

“The danger for the market is that if activity continues to shrink and with the economy still growing in a low unemployment environment, strong holders will not give in to even marginally lower asking prices and what’s left over will be an increasing number of forced sale properties. Once the latter start to build in numbers, the price index can suddenly tip over and collapse,” said Mr Alan Cheong, senior director of Savills Research.

However, Colliers International’s director of research and advisory Chia Siew Chuin said the Government’s move to trim supply of land for private housing development under its land sales programme could provide some support to the market.

Ms Chia projects prices to fall by 5-8 per cent for the whole of 2015, barring any external shocks and surprises.

-By Lee Yen Nee

http://www.todayonline.com/singapore/private-homes-prices-down-1-q4-2014-ura


Singapore Home Prices Post Longest Losing Streak in Decade

Source: Bloomberg / Luxury

Singapore’s home prices dropped for a fifth consecutive quarter, the longest losing streak in more than a decade, as tighter mortgage curbs cooled demand in Asia’s second-most expensive housing market.

An index tracking private residential prices fell 1 percent to 205.8 points in the three months ended Dec. 31, the longest stretch of declines since March 2004 and bringing the slide to 4.9 percent from the record high set in September 2013, according to preliminary data released by the Urban Redevelopment Authoritytoday.

Residential prices fell 4 percent in 2014, the URA figures showed, the first year-on-year fall since 2008, as the government’s five-year campaign to rein in property values curbed demand. The drop is now more prolonged than during the global financial crisis, when prices slid for four consecutive quarters between the middle of 2008 and mid-2009.

“The decline in the last quarter was quite sharp,” said Alan Cheong, a Singapore-based director at real estate broker Savills Plc. He said home prices may fall another 3 percent in 2015, while sales may remain at the low levels seen in 2014.

The government has imposed various curbs to cool the property market, including restrictions in June 2013 on the total loan amount for individuals. The measures prevent borrowers from taking on mortgages that push their total debt servicing costs above 60 percent of income.

‘Meaningful Correction’

Singapore is unlikely to ease curbs until “a meaningful correction” takes place, Finance Minister Tharman Shanmugaratnam said Oct. 28, suggesting prices have further to decline.

Apartment prices fell 0.9 percent in prime districts in the fourth quarter after sliding 0.8 percent in the previous three months, today’s URA data showed. Those in the suburbs dropped 0.9 percent, compared with a 0.3 percent decline in the previous quarter. Prices in areas near prime districts slipped 1.2 percent, more than the 0.4 percent decrease in the previous quarter, the data showed.

Mortgage loan growth of 6.2 percent in November was the slowest pace since May 2007, data compiled by Bloomberg based on MAS figures showed.

Developers sold 412 units in November, according to previously-released URA data, the fewest homes sold in any month last year. New private home sales may have fallen to about 7,500 units for all of last year, almost half the 14,948 units sold in 2013, according to Nicholas Mak, executive director at SLP International Property Consultants.

-By Pooja Thakur

http://www.bloomberg.com/news/2015-01-02/singapore-home-prices-post-longest-losing-streak-in-decade.html


Private home prices 'may fall by up to 8%'

Slide expected to mirror public housing market's

Source: Straits Times / Money

THE slide in private home prices will likely continue this year, possibly at an even greater pace than last year, say property consultants.

They noted that the falls could be as much as 8 per cent - markedly more than the estimated 4 per cent decline in the Urban Redevelopment Authority's private residential price index for the whole of last year.

The movement in the private sector is likely to mirror that of the public housing market, with National Development Minister Khaw Boon Wan saying earlier this week that he hopes last year's slow slide in HDB resale prices will continue this year at a single-digit rate.

Based on preliminary estimates yesterday, the Housing Board's Resale Price Index fell by 6 per cent for the whole of last year while the Urban Redevelopment Authority's private residential property index declined by 4 per cent.

Colliers International said the headwinds facing the private property market - continued enforcement of cooling measures amid the tightened credit environment, a mounting supply of new homes, a weak leasing market and the impending rise in interest rates - are expected to persist through the year.

It predicts that home prices will fall between 5 per cent and 8 per cent this year. This closely matches ERA's view of a 6 per cent to 8 per cent drop.

Other property consultants were less pessimistic, with Knight Frank and PropNex predicting a 4 per cent to 6 per cent drop and a 4 per cent to 5 per cent fall respectively.

Mr Ong Teck Hui, national director of research and consultancy at JLL, told The Straits Times that private home sellers will become "more flexible in their asking prices and, in some cases, face more pressured selling".

PropNex Realty chief executive officer Mohamed Ismail noted that many potential buyers are still "taking the wait-and-see approach, hoping that prices will come down further".

He cited prices for luxury condominium homes in Sentosa Cove that have plummeted to $1,600 to $1,700 per square foot (psf) from $2,200 to 2,500 psf about two to three years ago.

"Right now, the market is to the buyer's advantage. There are a lot of opportunities for them to buy a property at a fair price or even a discount," he said.

R'ST Research director Ong Kah Seng expects price cuts of as much as 5 per cent to 10 per cent at new projects this year as developers seek to move units.

"It's been a while since the Total Debt Servicing Ratio (TDSR) was implemented, and buyer sentiment has more or less stabilised," he said.

The TDSR, which came into effect last June, stipulates that a buyer's monthly debt repayments cannot exceed 60 per cent of his gross monthly income.

The new year spells gloom for landlords as well with a "substantial supply" of new homes slated to come onstream, said SLP International executive director Nicholas Mak.

Almost 21,000 units - landed and non-landed - will be completed this year, up from around 11,700 units in 2013.

Some of the bigger projects that are nearing completion are The Luxurie in Compassvale Road, which has 622 units, and the 590-unit Riversound Residence in Sengkang East Avenue.

"The Government isn't going to ease up on its quota for foreign talent, which means there will be fewer takers on the rental market," said Mr Mak, adding that supply looks set to overwhelm demand.

Consultants also said landed property, especially terrace and cluster homes, as well as developments in the core central region (CCR) are expected to stay weak.

"Those who buy good-class bungalows are mostly wealthy owners who do not need loans but those who buy terrace homes, for example, tend to still need loans to finance their purchases," said R'ST Research's Mr Ong.

"There are also more choices with modern condominiums that have better designs."

Properties in the CCR, which typically attract foreign buyers, have been languishing since the Additional Buyer's Stamp Duty (ABSD) was introduced in 2011, said Mr Ismail.

Under the ABSD, foreign buyers must pay an additional 10 per cent stamp duty on the purchase or acquisition of any residential property.

"Demand for mass-market private residential homes will be a little more resilient due to continued demand from HDB upgraders and sensitive pricing from developers," he said.

The Jurong district could be a bright spark, however, as it grows in popularity among home-dwellers thanks to plans to make the area a business and leisure centre, noted Mr Mak.

"But it is still unlikely to see a fantastic boom in prices, given that there will be few new launches (there) this year."

Other mass-market developments that are well-located - be it near MRT stations, popular schools or major shopping malls - will be the ones that do well, he added.

-By Jacqueline Woo

http://www.straitstimes.com/archive/saturday/premium/money/story/private-home-prices-may-fall-8-20150103#sthash.0Xj7iOMt.dpuf


Sharp drop in prices of city-fringe homes

Fall of 5.3% last year attributed to steep discounting of projects

Source: Straits Times / Money

STEEP discounting at city-fringe projects could be a reason that home prices in the segment fell by the most last year.

Values of apartments in city-fringe areas declined by a sharp 5.3 per cent last year, after registering a dip of 1.2 per cent in the fourth quarter, preliminary Urban Redevelopment Authority figures out yesterday showed.

This outstripped the 4.3 per cent slide in the city centre and the milder 2.2 per cent drop in the suburbs.

Demand for luxury homes in the city centre has languished since cooling measures such as the Additional Buyer's Stamp Duty weeded out foreign demand. Many observers were surprised this segment was not the worst performer last year.

Experts noted that city-fringe homes are in a segment "sandwiched" by luxury and mass-market homes and, as a result, could be more sensitive to factors such as a mounting number of cheaper homes in the suburbs.

There were also 2,411 new units launched in city-fringe

areas last year compared with 1,300 luxury units in the same period. "With the larger supply in the city fringes, there is more impetus for developers to offer discounts in the region to move sales," said Ms Chia Siew Chuin, director of research and advisory at Colliers International.

Mr Nicholas Mak, research head at SLP International, pointed out that price cuts at some city-fringe projects could have led to the price dives.

SLP data showed that at least three projects in this segment had lowered their median prices last year, causing a significant jump in sales.

At The Panorama in Ang Mo Kio, Wheelock Properties adjusted its median prices from $1,349 per sq ft (psf) to $1,236 psf in May - a drop of 8.4 per cent.

Developer CapitaLand also lowered median prices at its Sky Habitat condominium in Bishan from $1,566 psf to $1,364 psf in April.

It later trimmed prices for units at its D'Leedon project in Leedon Heights - from $1,633 psf to $1,559 psf - in October.

The sub-index for city-fringe prices recorded the steepest decline of 1.2 per cent in the fourth quarter, compared with a 0.9 per cent dip in both the city centre and suburbs.

Prices of city-centre homes fared better than city-fringe units given the stronger holding power of owners there, noted Ms Chia. "There is less urgency here for them to reduce prices," she said.

Mr Mak said that although transaction volumes have thinned in the luxury market, their prices will always be underpinned by city-fringe units.

"Home prices in the city centre cannot keep falling at the fastest rate or else they will end up lower than prices in the city-fringe areas," he pointed out.

-By Cheryl Ong

http://www.straitstimes.com/archive/saturday/premium/money/story/sharp-drop-prices-city-fringe-homes-20150103#sthash.3Kl17bgr.dpuf


Developers using innovative ways to sell

Qingjian Realty cutting S$25,000-S$45,000 off prices by offering apartments without interior fit-outs or floor finishing

Source: Business Times / Real Estate

Amid a sluggish property market, developers are cracking their brains for innovative ways to move their unsold units. Now, one has come up with the idea of shaving S$25,000 to S$45,000 off the usual selling prices, with a catch: by offering the apartments bare, without interior fit-outs or floor finishing. Market sources told The Business Times that Chinese developer Qingjian Realty is introducing a new "CoSpace flexi" concept for its Bellewoods and Bellewaters executive condominium projects (ECs), both launched last November.

-By Lee Meixian

http://www.businesstimes.com.sg/real-estate/developers-using-innovative-ways-to-sell


Property launches last year: What's hot, what's not

Source: Straits Times / Money

A DIFFICULT year for property developers has likely resulted in new home sales last year sinking to their lowest level in six years.

Consultants who spoke to The Straits Times said only 8,000 to 9,000 new units were likely to have been sold last year, well below the 17,590 deals in 2013.

Buyers stayed away as cooling measures hammered sentiment, dragging the property price index down 4 per cent for the full year, flash estimates for the fourth quarter showed yesterday. Still, some new condominiums beat expectations - and the gloomy market - to deliver healthy sales.

Here is a list of how some notable projects fared last year:

Hot

Lake Life at Yuan Ching Road

Crowds flocked to the first executive condominium to be built in the Jurong area in 17 years, snapping up 534 out of the project's 546 apartments on the first weekend of its launch in November.

The developer, Evia Real Estate, sold units at an average of $857 per sq ft (psf), lower than its indicative market price of $880 to $890 psf. Before sales started, it had received a record 1,853 applications for its apartments.

Mr Vincent Ong, managing partner of Evia, said the lower prices likely drew buyers.

The Hillford at Jalan Jurong Kechil

World Class Land's 281-unit project was another sell-out success last year, clearing all its units on the day that sales began last January.

It was touted as Singapore's first "retirement village".

While there is no age restriction on buyers, the Urban Redevelopment Authority (URA) recommended providing space for elder-friendly services, such as medical clinics, when it tendered out the site.

The Hillford is also the first 60-year leasehold condominium, which allowed the developer to price units more cheaply, at an average of $1,100 psf.

Healthy

Coco Palms in Pasir Ris

City Developments (CDL) managed to rack up healthy sales at its 944-unit condominium after lowering prices below their initial expectations.

Caveats lodged with the URA showed that 740 out of the 944 units at the project have been sold. At its launch, more than 490 units were snapped up at an average price of $980 psf in May.

CDL said at that time that the firm had intended to sell units at between $1,100 psf and $1,200 psf but lowered prices because it had acquired the site for a historically low price. Its one-bedder units - about 463 sq ft - were the most popular.

Seventy Saint Patrick's in East Coast

The 186-unit freehold condo by UOL Group sold 100 units during its weekend launch, at an average price of $1,630 psf.

About 16 of its 36 penthouses were sold, and 52 units were unsold as at November.

Lukewarm

Highline Residences in Kim Tian Road

Keppel Land released 160 units out of the project's total 500 in a closed-door sales event over a weekend in mid-September, and sold about 130.

The units went for an average price of $1,900 psf after discounts of $28,000 to $68,000 were offered. It had 353 unsold units by November. Before Highline was launched, nearby project The Crest had also seen sluggish sales, with just 63 out of 469 units pushed within months of its launch.

Cluny Park Residence in Bukit Timah

With just 52 units available at this freehold project facing the Botanic Gardens, analysts had expected it to do well enough to lift the moribund high-end market when it was launched in March. However, by November, it still had 34 units unsold.

Still, the fact that it had sold 20 units before its official launch was seen as a "surprisingly strong" performance by analysts, who said the project likely drew ultra-rich buyers looking to invest in a bottoming market.

Prices at the luxe development began at $2.3 million for a 754 sq ft two-bedder and went up to $8.3 million for a 2,842 sq ft four-bedroom penthouse.

Cool

Bellewoods in Woodlands

The executive condo drew 1,000 e-applications for its 561 units before its launch on Nov 1, as developer Qingjian Realty offered 20 one-carat diamonds in a lucky draw for valid e-applicants.

By the end of the month, however, the project had sold only 79 units, at $800 psf on average.

Sophia Hills in Dhoby Ghaut

The condo sold only nine of its 493 units in November when it was launched, at S$2,292 psf.

Its units range from 463 sq ft one-bedders to 1,539 sq ft four-bedders. The project also includes dual-key apartments.

-By Cheryl Ong

http://www.straitstimes.com/archive/saturday/premium/money/story/property-launches-last-year-whats-hot-whats-not-20150103#sthash.CUcq0duK.dpuf


Condo residents fail to get more money from Govt

Appeal to up $556k payout for acquired land rejected

Source: Straits Times / Singapore

THE owners of a high-end condominium in Thomson Road have failed to convince the authorities to increase the $556,000 compensation offered when a slice of its land was acquired for road development.

The Appeals Board (Land Acquisition) rejected the appeal by the Thomson 800 owners on Monday and ordered them to pay $53,000 in legal costs, making it clear they had not proved the compensation was inadequate.

The Appeals Board, comprising Commissioner of Appeals Foo Tuat Yien, Singapore Institute of Architects president Rita Soh and Associate Professor Sing Tien Foo from the National University of Singapore, had held hearings over three days in July.

Residents of the condo opposite MacRitchie Reservoir had argued that the 600.9 sq m piece of land acquired by the Government was worth at least $5.8 million.

But the Collector of Land Revenue awarded some $556,000 in compensation in July 2012.

The 10m-wide plot was acquired by the Government in 2011 as part of the construction of the North South Expressway Stage 1 from Admiralty Road to Toa Payoh Rise and redevelopment.

It is currently used for 13 carpark spaces and an electrical substation, and is fringed by trees and drains.

The plot, close to Marymount Road, forms 2.1 per cent of the 28,573 sq m of freehold land making up Thomson 800.

Completed in 1999, the development was Hong Kong tycoon Li Ka Shing's maiden residential project in Singapore. It has a four-storey apartment block and three 20-storey blocks containing a total of 390 units. Facilities include swimming pools, tennis courts and a clubhouse.

Valuers from opposing sides had agreed that the market value, based on the residential zoning and plot ratio, was about $11 million but differed on the amount to be discounted and the adjustment factor to be applied to the market value, such as constraints on its use.

Valuers for the authorities argued that the affected land is part of a road and green buffer zone, which meant its use was very limited. The sum payable was worked out using the rent paid for a playing field in Upper Thomson Road as a benchmark.

But lawyers from Infinitus Law Corporation, representing Thomson 800 residents, had taken issue with this and suggested alternative ways with reference to Singapore Land Authority rates for "remnant land", or small plots of land left over after development.

Expressing disappointment at the outcome, Thomson 800 resident Steven Sobak, who is treasurer of the condo's management committee, said they would be consulting their lawyers on the decision.

-By K.C. Vijayan Senior Law Correspondent

http://www.straitstimes.com/archive/saturday/premium/singapore/story/condo-residents-fail-get-more-money-govt-20150103#sthash.rHPIy7Yg.dpuf


HDB resale prices down 1.4% in Q4, based on new calculation method

HDB adds that a total of 16,900 new flats - including in Bidadari and Punggol Northshore - will be launched in BTO exercises in 2015.

Source: Channel News Asia / Singapore

SINGAPORE: Flash estimates of the fourth quarter Resale Price Index - the first estimates based on a new method of calculation - showed a 1.4 per cent decline in the prices of Housing and Development Board flats over the previous quarter, the HDB announced on Friday (Jan 2).

The newly-adopted Stratified Hedonic Regression method "will control for variations in flat attributes of the resale flats transacted, thus better reflecting price changes over time", the HDB said. "This allows the index to continue serving its purpose of providing timely and reliable information on resale market movements."

Previous quarterly percentage changes remain unchanged under the new methodology, although the previous RPI from the start of 1990 to the third quarter of 2014 have been rescaled to the new base period of 2014.

The full-quarter RPI - which provides an indication of general resale flat price trends - will be released on Jan 23, HDB said.

In the same press release, the housing agency said it plans to launch 16,900 new flats over four Build-to-Order exercises in 2015, including flats in news areas such as Bidadari and Punggol Northshore. The first BTO exercise will be held in February, where about 3,940 new flats in Bukit Batok, Geylang and Hougang will be offered, it added.

- CNA/es

http://www.channelnewsasia.com/news/singapore/hdb-resale-prices-down-1/1563104.html


HDB resale flat prices down 6% for the year

But shift from seller's market to buyer's market not over yet: property consultants

Source: Business Times / Real Estate

http://www.businesstimes.com.sg/real-estate/hdb-resale-flat-prices-down-6-for-the-year


HDB resale prices fall 1.4% in Q4 2014

Source: Today Online / Business

SINGAPORE — Property cooling measures continued to work their way through the public housing market, as resale prices registered another quarter of decline to end 2014 with the largest annual fall in 13 years.

Latest flash estimates by the Housing and Development Board (HDB) released today (Jan 2) showed that resale flat prices were down 1.4 per cent in the last three months of 2014, the six consecutive quarter of decline and milder than the 1.7 per cent fall recorded in the third quarter of last year.

This brings the dip for the whole of 2014 to 6.1 per cent, the steepest decline since 2001 when the resale price index fell 8.2 per cent, noted Mr Ismail Gafoor, chief executive of PropNex Realty.

“The falling resale prices are due to the potent combination of the government’s measures to stabilise the public housing market, such a, reducing the Mortgage Servicing Ratio (MSR) cap of 30 per cent and the maximum loan term of 25 years for HDB mortgage loans, three-year wait for new permanent residents before they can buy resale HDB flats, and allowing singles to buy two-room BTO flats in non-mature estates,” Mr Ismail said.

“In addition, since March, the buyer can only obtain the valuation report after the deal is sealed and the Option to Purchase has been granted to him. This has also created a more cautious approach from buyers, as they are more careful when giving an offer for a particular flat,” he added.

With the Government showing no intentions to scale back or revise the cooling measures, analysts expect HDB resale prices to continue to slide in 2015. However, lower Build-to-Order (BTO) supply planned for this year could help to direct some demand to the resale market.

Mr Eugene Lim, key executive officer of ERA, said: “Resale volume has taken a beating in 2014 as the Government’s demand and supply side measures continue to bite. ERA is expecting the overall resale HDB transaction volume for 2014 to be in the region of 17,000 units. Historically, this will be lowest level for resale transaction volume.”

“We are hopeful that as HDB scales down the Build-To-Order (BTO) programme… coupled with the continued stabilization of resale HDB prices, we may see some rebound in the number of resale transactions for 2015,” he added.

HDB said it will launch 16,900 BTO flats through four exercises this year, down from this year’s six exercises with a total of 22,400 units. The first exercise of 2015 to be held in February will offer 3,940 new flats in Bukit Batok, Geylang and Hougang.

The flash estimates released today also marks the first time the HDB resale price index is computed using the Stratifies Hedonic Regression method to better reflect price changes over time by taking into account more attributes such as age of flat, which floor it is on and proximity to amenities.

HDB has also re-scaled previous price indexes to the new base period of first quarter of 2009 from the previously used fourth quarter of 1998. However, the quarterly percentage changes remain unchanged.

-By Lee Yen Nee

http://www.todayonline.com/singapore/hdb-resale-prices-fall-14-q4-2014


Duxton flat fetches resale price of $900,000

Source: Straits Times / Top of The News

THE first Pinnacle@Duxton flat to be sold on the resale market has gone for a princely price, less than a month after most home owners of the iconic Housing Board project were allowed to put their units up for sale.

The four-room flat, located somewhere from the 34th to 36th floors, was sold on Monday for a hefty $900,000.

Savills property agent Ron Chong, who handled the transaction, said the corner unit's price was not surprising, given its central location, high floor and well-designed interior.

"It has superb views. You can see Sentosa from the balcony, and Orchard from the corner bedroom," he said. "A lot of potential buyers said it looks like a show-flat."

Older, same-size HDB units in the area, such as those on lower floors in neighbouring Cantonment Close, are already fetching about $750,000, he added.

The Pinnacle@Duxton unit's original owners, a Singaporean couple who wanted to be known only as Mr and Mrs Ng, bought the 95 sq m flat for about $340,000 at its launch in 2004.

Their five-year minimum occupation period ended on Dec 16 last year, meaning they were finally able to sell the flat.

"Of course, it's a pity to let this flat go, but my wife and I are very happy with the price. We were expecting only about $850,000 to $880,000," said Mr Ng, 38, a health-care professional. They are looking for a new place in the west to be closer to work.

The buyers are a married couple in their mid-30s who live in Aljunied. The husband, who gave his name only as Mr Lee, said they chose the flat for its unblocked views and convenient location near the Central Business District, where he works.

This $900,000 deal sets a precedent for the Pinnacle@Duxton's other four-room units, and paves the way for its five-roomers to fetch over $1 million, said experts.

But they do not expect any impact on the wider resale market.

The benchmark it sets is for Duxton only, said SLP International Property Consultants head of research Nicholas Mak.

OrangeTee managing director Steven Tan said: "We have to take this project as a unique development. In terms of location, the design, even the view, it's something you don't get elsewhere."

He expects its five-room units to be sold for just over $1 million.

As these range from 105 to 108 sq m - or 1,130 to 1,162 sq ft - such a selling price would still be far from the psychologically significant $1,000 per sq ft mark.

Resale prices will vary by floor, said Mr Mak. On low floors, four-roomers might sell for less than $850,000, and five-roomers for under $900,000, he added.

But Century21 chief executive Ku Swee Yong thinks the $1,000 psf figure is not impossible.

The small pool of buyers for these premium units will have the money to spare, he said. And even at $1,000 psf, a Pinnacle@Duxton unit will be worth it, he added.

"For over $1 million, in the private market, you can get only half the space and you may not even get a view."

-By Yeo Sam Jo & Janice Heng

http://www.straitstimes.com/archive/saturday/premium/top-the-news/story/duxton-flat-fetches-resale-price-900000-20150103#sthash.trmfE7Wk.dpuf


Companies' Brief

PCI to buy property from Amtek for S$22.5m

Source: Business Times / Companies & Markets

PCI Ltd has entered into a conditional sale and purchase agreement with Amtek Precision Technology Pte Ltd to acquire a piece of land, including the building on the site and the equipment installed in the warehouse for S$22.5 million.

http://www.businesstimes.com.sg/companies-markets/business-briefing-42


Keppel buys 75% stake in mall manager for S$4.5m

Source: Business Times / Companies & Markets

Keppel Land said its wholly-owned unit Straits Property Management Pte Ltd (SPM) has acquired a 75 per cent stake in Array Real Estate Pte Ltd (Array) from Array Holdings Pte Ltd (AHPL) for S$4.5 million. The remaining 25 per cent of the issued and paid-up share capital of Array is held by AHPL.

http://www.businesstimes.com.sg/companies-markets/business-briefing-42


Views, Reviews & Forum

Social impact of subletting flats

Source: Straits Times / Forum Letters

I AGREE with Mr Francis Cheng that "the Housing Board should review its rules to prevent master tenants from subletting their flats to other tenants" ("Step up checks on flat subletting"; Thursday).

Master tenants who choose to sublet part of their rented flats may not exercise due diligence when checking the immigration status of foreign sub-tenants, to ensure they are in Singapore legally.

This can carry an element of risk.

For instance, in a recent court case, it was revealed that two flats in Woodlands were used as "brothels" for prostitutes from China ("Four jailed for vice offences in HDB flats"; Dec 13).

Also, tenants living in a cluttered flat can create tensions, noise and security concerns for other HDB dwellers.

It is timely for the HDB to consider evaluating the grave consequences and social impact of master tenants or owners subletting their flats on a short-term basis.

-By Ada Chan Siew Foen

http://www.straitstimes.com/archive/saturday/premium/forum-letters/story/social-impact-subletting-flats-20150103#sthash.y28QszM8.dpuf


NY skyline set to change with rise of pencil towers

Source: Business Times / Real Estate

http://www.businesstimes.com.sg/real-estate/ny-skyline-set-to-change-with-rise-of-pencil-towers


China developer faces HK$400m loan default

Source: Business Times / Real Estate

http://www.businesstimes.com.sg/real-estate/china-developer-faces-hk400m-loan-default


China Developer Kaisa’s Bonds Plunge After Loan Default

Source: Bloomberg / News

Bonds of Kaisa Group Holdings Ltd. (1638), a developer based in the southern Chinese city of Shenzhen, plunged to record lows after the resignation of its chairman triggered a default on one of its loans.

The developer’s $800 million of 8.875 percent notes due 2018 and sold to investors at par in March 2013 tumbled to 40.9 cents on the dollar as of 5:02 p.m. in Hong Kong, from 66.3 cents on Dec. 31, sending yields to 45.7 percent. Kaisa was unable to repay a HK$400 million ($51.6 million) loan from HSBC Holdings Plc on Dec. 31, a deadline triggered by the resignation of Chairman Kwok Ying Shing, the developer said in a Hong Kong stock exchange filing yesterday.

The non-payment is the latest setback for Kaisa after other key executives quit and authorities in Shenzhen blocked several of its projects. Its shares slumped 47 percent in December before being suspended from trade. If Kaisa can’t either make the payment or negotiate a waiver with its bankers, then cross defaults may be triggered, tipping other bonds and loans into default, according to CreditSights Inc.

“I think this is an isolated case at the moment that has to do with the resignation of Kaisa’s chairman,” said Cheong Yin Chin, an analyst at CreditSights in Singapore. The key-person covenant that triggered the default is “quite typical for bank loans and in normal circumstances, they’ll usually waive it.”

Home Prices

Calls to Kaisa’s office in Shenzhen weren’t answered. The company has no supplementary information beyond its official statement to the stock exchange, Natalie Tam, an outside consultant at IPR Ogilvy & Mather, said by phone today.

Kaisa’s woes don’t appear to have had a material impact on the debt of other Chinese developers with the dollar notes of several trading only marginally lower and shares of some mainland developers rallying today in Hong Kong. New-home prices fell in fewer Chinese cities in November, official statistics released by the National Bureau of Statistics Dec. 18 showed, after the government eased property curbs and cut interest rates for the first time since 2012, boosting demand.

Property development contributed 16 percent to the country’s economic growth in 2013, according to World Bank estimates. Dollar-denominated bonds from the nation’s builders gained 2.7 percent last year, worse than notes of technology and services companies but better than energy and consumer goods, a Bank of America Merrill Lynch index shows.

‘Cautious Approach’

“One or two isolated cases won’t result in imminent contamination to the Chinese bond market,” said Kim Jin Ha, the head of global fixed income in Seoul at Mirae Asset Global Investments Co., which doesn’t own Kaisa notes. “Institutional investors have maintained a defensive position and the Kaisa case will definitely bring a more cautious approach to developers.”

Kaisa said in its Jan. 1 statement that it is assessing whether its failure to immediately pay the HSBC loan plus interest may trigger cross defaults, and have a material adverse impact on the company. HSBC declined to comment due to client confidentiality, Hong Kong-based spokesman Adam Harper said by phone today.

Kaisa’s $500 million of 10.25 percent debentures due 2020 slid to 39.3 cents on the dollar to yield 38.4 percent. The securities were sold to investors at 100 cents on the dollar in January 2013.

Executives Quit

The builder announced Dec. 10 that Chairman Kwok, a co-founder, would resign for health reasons at the end of the month. Its stock was halted from trade Dec. 29, the day after Chief Financial Officer Cheung Hung Kwong and Vice Chairman Tam Lai Ling also resigned.

“The trouble is I don’t even know who will be negotiating with the banks since the CFO and the chairman have resigned,” Cheong said. She said that while Kaisa’s case may be a unique one, the “recent negative headlines on Chinese developers might cause some investors to pare down their positions. This could in turn cause some corrections in China property bonds.”

The 2018 8.75 percent notes of Evergrande Real Estate Group Ltd., the Chinese developer with the industry’s biggest single dollar bond outstanding, slipped to 91.9 cents on the dollar from 92.3 cents, Bloomberg-compiled prices show. Dollar-denominated notes of Country Garden Holdings Co. due 2021 traded at 95 cents on the dollar, down from 95.7 cents.

Equity Moves

Golden Eagle Retail Group Ltd., which operates department stores in China, had its credit outlook changed to negative from stable today by Moody’s Investors Service after it acquired a property project in Suzhou that will increase its financial leverage. Its 4.625 percent dollar bonds due 2023 slipped to 91.5 cents from 92.6 cents.

Kaisa’s shares will remain suspended until any further announcement is made by the company, according to the Jan. 1 statement. Stock of China Overseas Land & Investment Ltd. rose 8.5 percent today while China Resources Land Ltd. gained 7.1 percent. The Hong Kong Hang Seng Properties Index increased 2.1 percent.

Real-estate companies are benefiting from China’s decision to ease monetary policy several month ago, according to Francis Lun, the chief executive officer of Geo Securities Ltd.

Monetary Easing

The People’s Bank of China cut benchmark interest rates on Nov. 21 for the first time since July 2012. It further added liquidity last month by temporarily waiving the reserve requirement for savings of non-deposit-taking financial institutions held at lenders, encouraging investors to buy mainland developers, Lun said.

Moody’s cut Kaisa’s credit score to B3 from B1 on Dec. 30, citing, among other things, challenges over its ability to manage operational disruptions arising from restrictions and suspensions of its projects in Shenzhen just north of Hong Kong. B3 is the rating company’s sixth-lowest non-investment grade.

According to the sale prospectus for Kaisa’s 2018 bonds, a default on its other bonds or loans would allow investors to demand immediate repayment of its debt “after any applicable notice or grace periods” which, in the case of the 8.875 percent notes, is 30 days.

Holders of at least 25 percent of the outstanding bonds have to then jointly request so-called accelerated repayment, the offer document states.

High-End Apartments

Kaisa has about $2.48 billion of bonds outstanding and about $2.82 billion including loans, according to data compiled by Bloomberg. It sold an equity interest in some land in Shanghai to fellow developer China Vanke Co. last month, helping to raise about 1.2 billion yuan ($193 million).

Kaisa has projects in more than 30 cities including Shenzhen as well as neighboring Guangzhou and Dongguan, according to its website. Developments include large-scale residential communities, high-end apartments and industrial parks.

The company had a total land bank of approximately 23.6 million square meters (254 million square feet) as of June 30, sufficient for the group’s development needs for the next five years, according to its interim report last year.

Debt at the developer exceeds its equity by 1.2 times, according to data compiled by Bloomberg. It had negative cash from operations of 9.4 billion yuan as of June 30, the data show.

Another developer, Agile Property Holdings Ltd., faced a similar situation last year when its chairman was placed under the control of Chinese prosecutors in September, toppling its perpetual dollar-denominated notes.

In October, Agile obtained approval from Standard Chartered Plc, Hang Seng Bank Ltd. and HSBC for a 12 month extension on some $265 million of bank loans, and a waiver to the requirement that Chen Zhuo Lin be in command.

Agile’s $700 million of 8.25 percent notes that have no fixed maturity were trading at 73.4 cents on the dollar today. They dropped as low as 65.8 cents on the dollar in October.

-By Christopher Langner and David Yong

http://www.bloomberg.com/news/2015-01-02/kaisa-bonds-plunge-as-non-payment-risk-spreads-post-loan-default.html


Indian Land-Acquisition Rules Eased by Modi Executive Order

Source: Bloomberg / News

The Indian government issued an executive order to make it easier for companies to buy land and eventually replace a law that has hindered manufacturing and constrained economic growth.

Prime Minister Narendra Modi’s administration yesterday promulgated the ordinance to spur infrastructure development in rural areas. It exempts at least five categories of land acquisition, including for industrial corridors, from rules that require the consent of at least 70 percent of potential sellers. The order will need to be approved in the next session of parliament, which starts in February, if it is to come into force permanently, according to PRS Legislative Research.

“It will definitely bring more clarity for investors,” said Dharmakirti Joshi, chief economist at Crisil Ltd. in Mumbai. “One of the main pain points has been the fuzziness of the land acquisition act. For any business to succeed, they want more clarity. Nobody wants to take a regulatory risk.”

The measure is intended to boost growth in Asia’s third-largest economy from near the slowest pace in a decade and accelerate Modi’s plan to urbanize the nation. Not one large tract of land has been acquired for development since the nation’s previous government passed an act in January 2014 that was supposed to make the process more transparent.

Bedeviled Investors

More than 1 trillion rupees ($15.7 billion) of projects are stalled as a result, including 600 billion rupees of roads, 20 new coal mines by state-run Coal India Ltd. and steel mills for ArcelorMittal and Jindal Steel & Power Ltd.

India’s land laws have bedeviled development for decades as consecutive governments courted votes from the nation’s 800 million rural residents. Previous rules forced owners to sell land if it was considered to be in the public interest. The laws were abused, leading to clashes between farmers and officials that fueled Maoist rebellions in some mineral-rich states.

Each of India’s 29 states now will have to adjust its own laws to conform with the new federal policy, Finance Minister Arun Jaitley said at a briefing in new Delhi yesterday.

Besides industrial corridors, other categories exempt from existing land-acquisition rules include: housing for the poor, rural infrastructure and defense.

The move will bring only partial relief as manufacturers would probably still have to adhere to the existing law and some conditions such as rehabilitation and resettlement remain on all projects, according to Pulkit Patni and Mohit Soni, Mumbai-based analysts at Goldman Sachs Group Inc.

Insurance, Coal

Power Grid Corp., Container Corp of India and Larsen & Toubro Ltd., India’s largest engineering business, stand to benefit, they wrote in a report yesterday.

Power Grid and Larsen rose 0.5 percent in Mumbai and Container Corp. climbed 1.3 percent, compared with little change in the benchmark S&P BSE Sensex (SENSEX) index. Reliance Industrial Infrastructure Ltd. jumped 6.2 percent today, Adani Ports and Special Economic Zone Ltd. increased 7.8 percent to a record.

This is the third time in December that Modi’s government has resorted to issuing an executive order to accomplish an objective after parliament’s session ended on Dec. 23 without votes on several key bills. Modi also has issued orders to permit more foreign investment in insurance and to make coal mining more transparent.

Modi’s Bharatiya Janata Party, which controls 52 percent of seats in the lower house, holds only 18 percent of the 245-member upper house. Since it’s improbable Modi will be able to control the upper house before 2018, he needs to find alternative ways to bring legislation into force.

-By Vrishti Beniwal and Abhijit Roy Chowdhury

http://www.bloomberg.com/news/2014-12-29/modi-issues-executive-order-to-ease-land-acquisition-in-india..html


Private Equity Not So Private as Fees Revealed at Blackstone

Source: Bloomberg / Personal Finance

Two of the biggest private-equity firms are disclosing fees that had largely been hidden as U.S. regulators demand increased transparency from the industry.

Blackstone Group LP said it could collect as much as $20 million annually from investors and companies in its next buyout fund, for services such as health care consulting and bulk purchasing. TPG Capital put the potential charge for similar services at as much as $10 million a year for its new fund, which is currently seeking to raise as much as $10 billion.

The fees, detailed in recent marketing materials obtained byBloomberg News, are on top of other monitoring and transaction fees and haven’t been disclosed in such detail in documents governing earlier funds. The U.S. Securities and Exchange Commission has criticized the industry for passing on charges to clients without their knowledge, and is trying to persuade the $3.5 trillion private-equity industry to improve disclosure.

“We’ve entered a new day,” said David Fann, chief executive officer of TorreyCove Capital Partners, which advises pension plans on private equity investments. “Most investors will request more robust disclosure surrounding fees being paid by portfolio companies to private equity funds.”

Buying Companies

Private equity firms buy companies using a combination of investor capital and debt, with the goal of selling them or taking them public for a profit. They typically charge annual management fees of 1.5 percent to 2 percent of committed funds and keep 20 percent of profits from investments. Buyout firms also charge the businesses for buying, selling and monitoring them, though firms have increasingly passed on these expenses to investors in the funds by reducing the management fee.

The fees questioned by regulators are for services provided by consultants, known as operating partners, who are paid by private equity firms for their expertise on various aspects of running a business including recruitment, procurement of goods and pricing strategy.

In a May speech, Andrew Bowden, head of the SEC’s inspections office, said he was concerned about improper fees and the allocation of expenses to investors that should be paid by the firms. He said more than half of the private equity firms examined to that point were either breaking the law or had “material weaknesses” in controls.

Common Deficiencies

One of the most common deficiencies found was the funds’ failure to tell investors about how operating partners were compensated and how those levies weren’t used to pay the management fee. Most limited partnership agreements require that fees produced by employees or affiliates of the private equity firm offset the management fee, Bowden said.

“Operating partners, however, are not usually treated as employees or affiliates of the manager, and the fees they receive rarely offset the management fees, even though in many cases the operating partners walk, talk, act and look like employees or affiliates,” Bowden said.

The SEC has backed Bowden’s tough talk with enforcement actions. In October, the agency fined Clean Energy Capital and its founder Scott Brittenham for misallocating funds and changing distribution calculations without adequate disclosure. Clean Energy didn’t admit or deny the SEC’s findings in the settlement.

‘Behind Us’

“We’re happy to get this behind us,” said Aegis Frumento, a partner at Stern Tannenbaum & Bell LLP in New York, who represents Brittenham and the firm.

In September, the SEC fined Lincolnshire Management $2.3 million for sharing expenses between portfolio companies in a way that benefited one fund over another. Lincolnshire, a New York-based private-equity firm, didn’t admit or deny the SEC’s allegations.

Robert Pommer III, a lawyer for Lincolnshire with Kirkland & Ellis LLP in Washington, didn’t reply to a voice-mail or e-mail for comment.

Many buyout firms, including KKR & Co (KKR), TPG and Blackstone, use consultants to help improve companies they own. TPG uses an in-house operations group of 47 professionals that offer advice. Blackstone’s portfolio operations group works with chief executive officers of companies the firm owns.

Prior Funds

In its recent marketing document, Blackstone disclosed some fees that weren’t listed under the prior fund’s limited partnership agreement, including those related to health-care consulting and group purchasing. These fees will also be subject to the $20 million cap, according to the document.

TPG has also increased transparency on fees it charges investors for services including information technology, public and government relations work, property management and customer service, according to the marketing document for its latest fund.

Peter Rose, a spokesman for Blackstone, declined to comment. Owen Blicksilver, a spokesman for Fort Worth, Texas-based TPG with Blicksilver Public Relations, declined to comment.

The hidden fees for services aren’t the only ones under SEC scrutiny. The regulator is also looking at accelerated-monitoring fees, which are lump-sum payments for future services that haven’t been provided, which private equity firms would otherwise lose when selling businesses. Private equity firms have taken in more than $1 billion in such fees from companies they’ve taken public since 2010, according to data compiled by Bloomberg.

Blackstone recently ceased taking these payments, a person with knowledge of the matter said in October. Blackstone took $46.3 million in these fees when it listed SeaWorld Entertainment Inc. last year and $26.2 million from pharmaceutical company Catalent Inc. (CTLT) this year. TPG provided additional disclosure in the marketing document for its latest buyout fund that it would receive such fees from companies, which “may be significant.”

-By Sabrina Willmer and Alan Katz

http://www.bloomberg.com/news/2014-12-31/blackstone-opens-up-about-hidden-fees-as-sec-pushes-transparency.html


Pending Sales of U.S. Existing Homes Increase 0.8% in November

Source: Bloomberg / Luxury

Contracts to purchase previously owned homes rose in November as employment gains and low borrowing costs helped bring potential buyers into the market.

The pending home sales index advanced 0.8 percent after a revised 1.2 percent decrease in October, the National Association of Realtors said today in Washington. The median projection in a Bloomberg survey of economists called for the index to rise 0.5 percent, with estimates ranging from a decline of 1.5 percent to an advance of 3.5 percent.

“The consistent economic growth and steady hiring we’ve seen in the second half of this year is giving buyers enough assurance to consider purchasing a home before year’s end,” NAR chief economist Lawrence Yun said in a statement. “With rents now rising at a seven-year high, historically low rates and moderating price growth are likely to entice more buyers.”

Purchase contracts climbed 1.7 percent in the 12 months ending in November after a 2.1 percent annual increase in October on an unadjusted basis, the NAR report showed. The three months of year-over-year advances follow a series of 11 straight declines.

The pending sales index was 104.8 on a seasonally adjusted basis. A reading of 100 corresponds to the average level of contract activity in 2001, or “historically healthy” home-buying traffic, according to the NAR.

Pending sales increased in three of four regions from the previous month, led by a 1.4 percent gain in the Northeast. Contract signings climbed 1.3 percent in the South and 0.4 percent in the West. They fell 0.4 percent in the Midwest.

Leading Indicator

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

Those re-sales dropped more than forecast last month to a 4.93 million annual pace, the weakest reading since May and down 6.1 percent from a 5.25 million pace in October, NAR data showed last week.

New-home construction exceeded a 1 million annualized pace in November for a third month. Housing starts declined 1.6 percent to a 1.03 million annualized rate, Commerce Department data showed.

-By Michelle Jamrisko

http://www.bloomberg.com/news/2014-12-31/pending-sales-of-u-s-existing-homes-increase-0-8-in-november.html


Additional Articles of Interests