Real News‎ > ‎2015‎ > ‎January 2015‎ > ‎

7th January 2015

Singapore Real Estate

GLP in leasing deals with 6 logistics players

Source: Business Times / Companies & Markets

Global Logistics Properties Limited (GLP) has signed new leasing agreements totalling 84,000 square metres with six leading third-party logistics providers in China. One of the leases is with a new customer that is a "leading China state-owned logistics company", said GLP which provides modern logistics facilities across China, Japan and Brazil, yesterday. The customers are using the facilities to support distribution needs for e-commerce and food-related products, GLP added.

Retail rents to remain flat this year; premium for prime Orchard space shrinks

Prime retail rents throughout Singapore have generally stabilised, as demand is offset by resistance to rent hikes

Source: Business Times / Real Estate

The standstill in retail rents will likely continue into 2015, as positive interest from retail occupiers to set up shop or expand is matched by their equal resistance to rent increases in the challenging operating environment. Colliers is forecasting rental growth for prime ground floor retail space in Orchard Road to range between -1 per cent and 1 per cent this year, while that in the suburban areas and regional centres (eg heartland malls) could plateau between 0 per cent and 2 per cent.

-By Lee Meixian

Shopping mall rents likely to stay flat this year: Colliers

Colliers International expects rents for prime ground-floor retail space in the Orchard Road district to range between a drop of 1 per cent and a rise of 1 per cent for 2015, while those for regional centres could plateau at between 0 and 2 per cent.

Source: Channel News Asia / Business

SINGAPORE: Shopping mall rents in Singapore are likely to stay flat for a second year in a row, held down by strong resistance on the part of retailers already struggling with high costs, property services firm Colliers International said on Tuesday (Jan 6).

Colliers estimated that for the whole of 2014, the average monthly gross rents of prime retail space in Orchard Road slipped by 0.8 per cent year-on-year, while rents in regional centres edged up by 1.1 per cent year-on-year.  

Looking ahead, Colliers said it expects rents for prime ground-floor retail space in the Orchard Road district to range between a drop of 1 per cent and a rise of 1 per cent for 2015. As for regional centres, rents could plateau at between 0 per cent and 2 per cent.

"Retail rents are expected to continue to be at a standstill for 2015, as the positive interest from retailers to set up shop or expand will still be matched by retailers' resistance to any increases in their operation cost in a challenging operating environment," Colliers' Director of Research & Advisory Chia Siew Chuin said in a statement.

Calvin Yeo, the firm's deputy managing director, added that Singapore's retail scene has also changed, with more retailers and food and beverage (F&B) operators opting for niche locations such as the shophouse enclaves in Tanjong Pagar, Kampong Glam and Joo Chiat.  

Some firms have also chosen to operate from obscurely-located industrial buildings or remote and private sites away from the hustle and bustle of urban life, he added.

"Many of these hidden gems position themselves to provide an uncommon ethnic or relaxed ambience, and are unfazed by the fact that they are not located amid heavy pedestrian traffic." 

- CNA/kk

Sales of strata-titled retail units hit by curbs

Source: Straits Times / Money

SALES of strata-titled retail units plunged last year as tough lending curbs took effect, a new report showed yesterday.

Only 453 sales caveats were lodged in 2014 - 61 per cent down from the 1,163 registered in 2013.

Investor demand for such strata-titled outlets is likely to stay weak this year, added the report, due to the continued impact of the total debt servicing ratio and the spectre of higher interest rates.

Ms Chia Siew Chuin, director of research and advisory at Colliers International, which compiled the report, expects the average capital values of prime strata-titled space in Orchard Road and regional centres to remain flat for most of this year.

"Unit owners are expected to hold onto their price expectations, as such units remain rentable," she said.

The report found that prices have held steady, despite fewer transactions. Prime Orchard Road strata-titled retail space averaged $6,942 per sq ft (psf) as at Dec 31, unchanged over the year.

Prime retail space in decentralised locations also remained stable at $4,491 psf.

Average monthly gross rents for prime retail space in Orchard Road slipped by 0.8 per cent year-on-year while they edged up 1.1 per cent in regional centres.

Ms Chia expects prime rents to flatline this year. Rent movement for prime ground-floor retail space around Orchard Road is tipped to range between minus 1 per cent and 1 per cent, while regional centres could see rate growth plateau at 0 per cent to 2 per cent.

"The positive interest from retailers to set up shop or expand will still be matched by retailers' resistance to any increases in their operation cost in a challenging operating environment," she added.

"With approximately 1.2 million sq ft of retail space expected to be completed in 2015, the overall islandwide demand for retail space will continue to be supply-led."

Mr Calvin Yeo, deputy managing director at Colliers International, also noted that retail activities have "gained greater prominence in residential town centres islandwide and are no longer as heavily concentrated in central Orchard Road locations".

The report found that the rental premium that prime retail space in Orchard Road commands over similar space in the regional centres shrank to 6.9 per cent at the end of last year, from 9 per cent at the end of 2013.

He added that the retail real-estate landscape is slowly diversifying, with shops and eateries sprouting in niche locations such as shophouse enclaves or within Housing Board estates.

"Additionally, the occupation costs are typically lower when compared to malls," noted Mr Yeo. "Going forward, we expect that such alternatives will feature more in Singapore's retail landscape, alongside the ubiquitous shopping malls."

-By Jacqueline Woo

UOB sues Lippo Group subsidiary and 7 others

Bank alleges in $181m suit that they conspired to get inflated home loans

Source: Straits Times / Top of The News

UNITED Overseas Bank (UOB) has launched a $181-million suit against a subsidiary of Indonesia's Lippo Group and seven individuals, claiming they conspired to get inflated housing loans.

The loans were for the purchases of 38 condominium units at the high-end Marina Collection in Sentosa - developed by Lippo Marina Collection (LMC). Launched for sale in 2007, each apartment at the 124-unit development costs an average of $6 million.

UOB, in its statement of claim, alleges that while the development enjoyed "fairly strong" sales at the start, property cooling measures in 2009 and the additional buyers' stamp duty introduced in 2011 saw interest dip. From late 2011 to July 2013, UOB was approached to provide housing loans for the purchase of 38 units. Of these, 37 have defaulted.

The bank alleges that LMC and the other defendants failed to inform it of "very substantial" discounts of between 22 per cent and 34 per cent given to the buyers. That meant the buyers paid a lot less for the units than what was indicated on the loan forms.

The loans were therefore not just in breach of Monetary Authority of Singapore rules, but were even in excess of what the buyers actually had to pay for the 99-year leasehold units.

UOB says it gave out the loans after Lippo's lawyers confirmed that the buyers had paid the remainder of the purchase price - but this was untrue. The remainder was instead set off against discounts or "furniture rebates".

In addition, UOB alleges that many buyers were fronts and did not have the financial means to service the housing loans. Instead, the real buyers were five people who had links with the two property agents involved in the alleged scam - ERA housing agent Goh Buck Lim and freelance housing agent Aurellia Adrianus Ho.

UOB alleges that sums ranging from $200,000 to $1.2 million were transferred between bank accounts of the "buyers" and several defendants. This was to give the bank the impression that whoever was applying for a loan had at least $200,000 in their UOB accounts - one of the criteria for the loan to be granted.

According to UOB, one of the so-called buyers admitted being paid $100,000 to act as a proxy.

LMC denies being part of any conspiracy to cause loss to UOB and will vigorously defend the claims made against it. In its defence, LMC says the loans were a matter solely between the buyers and UOB, and that it had no knowledge of any alleged misrepresentation of the purchase price. It added that the bank should have done its own independent checks.

The developer also said it dealt with the buyers only through Mr Goh. It was the agent who asked if LMC could give a discount in the form of furniture rebates.

LMC agreed to give rebates of between 25 per cent and 34 per cent to promote the sale of units, adding that this was a "fairly common sales and marketing strategy".

The bank is represented by Tan Kok Quan Partnership and LMC by Premier Law. The other defendants are defended by Straits Law.

-By Elena Chong Court Correspondent

Mortgage payment hike likely as key rate rises

Source: Straits Times / Top of The News

HOME owners face the prospect of bigger mortgage payments, as a benchmark interest rate continues its relentless rise.

Many home loans here are pegged to the three-month Singapore Interbank Offered Rate (Sibor), which rose 7.4 per cent yesterday to 0.62052 per cent, a level not seen since April 2010.

The rise in Sibor followed Monday's 26.3 per cent jump to 0.57762 per cent from last Friday's 0.45738 per cent.

Rates have taken a sudden upturn this week, though they have been climbing since August as the US dollar gained value. Sibor stayed near 0.4 per cent from last January till August. At the end of August, it crept up to around the 0.41 per cent to 0.42 per cent level, before picking up speed last month to hit the 0.44 per cent to 0.45 per cent mark, after the US Federal Reserve's policy statement.

The Fed said last month that it would be patient in keeping monetary policy loose, though interest rate hikes would come eventually.

Another factor putting pressure on Sibor is that the Singdollar has been declining against the greenback, falling to 1.3217 last month.

Bank of America Merrill Lynch economist Chua Hak Bin said the "very sharp rise" in Sibor could be driven by factors such as an expected hike in the Fed funds rate, which is closely linked to Sibor. Also, since the start of this year, local banks have had to set aside more funds as a buffer, under the Basel III global banking rules.

Sibor, the rate at which financial institutions borrow from one another, could rise further.

Bank of America Merrill Lynch forecasts that the three-month Sibor will reach 0.7 per cent by the end of the year; Citi predicts it to be 0.8 per cent, while United Overseas Bank has it at 1 per cent.

"While an increase of 30 to 40 basis points is still manageable, it is a warning sign that households should be prepared for higher rates," said Dr Chua.

Mr Alfred Chia, chief executive of financial advisory firm SingCapital, which specialises in mortgage refinancing, said about 60 per cent of his clients are on floating mortgage rates; these are mostly pegged to Sibor, with a premium tacked on by banks.

Based on industry estimates of a premium of around 0.9 per cent for the first year, a 30-year $500,000 loan would see the monthly instalment rise $52.51 to $1,730.53, with Sibor up from 0.4 per cent to 0.62052 per cent.

"I don't think we have reached any panic level yet as those on floating rates are still seeing Sibor below 1 per cent, but this is a good time to relook options on refinancing," said Mr Chia.

New home owner Huang Sijia, 26, who took out a Sibor floating loan last year, is sticking to her package for now. "I am not too worried because the interest rates have been quite stable for the past three years," said the consultant.

-By Mok Fei Fei

Home owners face higher mortgage payments with rise in SIBOR

The three-month Singapore Interbank Offered Rate was fixed at 0.62 per cent on Tuesday, up from 0.57 per cent on Monday.

Source: Channel News Asia / Business

SINGAPORE: Home owners may face higher mortgage payments, following recent hikes in a key benchmark interest rate that housing loans in Singapore are based on.

According to data from Bloomberg, the three-month Singapore Interbank Offered Rate (SIBOR) was fixed at 0.62 per cent on Tuesday (Jan 6). This is up from 0.57 per cent on Monday. Last Friday, it was around 0.45 per cent, up from 0.4 per cent in October.

SIBOR is the rate at which banks lend to one another and it is a widely-used measure of the cost of funds.

Ms Selena Ling, head of treasury research and strategy at OCBC Bank, said: "Some of it is due to banks (competing) for deposits over the year-end, but the market is also starting to anticipate that the Fed will start to normalise interest rates somewhere in the middle of this year.

"So I think there is a little bit of preparation on that front. I think the rise in terms of the Sing dollar short-term rates will probably be more gradual than what we could potentially see from the US side."

Many housing loans are pegged to three-month SIBOR. For example, OCBC offers home loans at SIBOR plus 0.85 percentage points for the first three years. The lending rate is reviewed every three months.

The bank said the three-month SIBOR could reach close at about 0.7 per cent in June, with potential for further upside to about 1 to 1.2 per cent at the end of the year.


Let us assume an outstanding housing loan of S$500,000 and 20 years remaining. With the current interest rate of 1.5 per cent, this works out to a monthly payment of about S$2,410.

If the interest rate is increased to 2 per cent, the monthly payment would rise to around S$2,530. Should the rate rise to 3 per cent, the monthly payment would be S$2,770. 

- CNA/ms/el

Sengkang temple to cost $20m

Source: Straits Times / Singapore

BUILDING a temple with a columbarium in Sengkang will cost developer Life Corporation almost $20 million, according

to documents filed by the company.

The land tender bid cost $5 million and the construction itself will cost $15 million.

The Housing Board (HDB) launched the tender for the site in Fernvale Link, which was awarded to a Singapore company, Eternal Pure Land, last July.

The company is a wholly owned subsidiary of Life Corporation, which is listed on the Australian stock exchange.

Life Corporation is an Australian company which was originally set up as a cord blood banking company named Cordlife in 2001.

In 2013, Life Corporation sold off Cordlife and re-established itself under its current name, with a new focus on funeral services.

To that end, it acquired Singapore Funeral Services, which provides funeral and casket services, in December 2013 for $8 million, according to its annual report last year.

Life Corporation's chairman, Mr Kam Yuen, said in the report that "the private columbarium business will complement (its) existing funeral services".

Life Corporation chief executive Simon Hoo has said there will be no funeral services at the Sengkang site.

For the financial year ended June 30, 2014, the company reported a net loss of A$2.6 million (S$2.8 million), up 61 per cent from its A$1.6 million loss in 2013.

Data from the Accounting and Corporate Regulatory Authority shows Eternal Pure Land was registered on June 12 - 16 days after the tender was put up - for the "sales of bereavement products and services".

Its winning bid was $5.2 million, according to tender documents on the HDB website, almost three times as much as the lowest one.

The two other bidders, Peng Hong Association and Xing Guang Maitreya Society, bid $4 million and $1.8 million respectively.

-By Lester Hio

Columbarium builder committed to run temple

But faith groups say land bid from commercial entity was 'surprising'

Source: Straits Times / Singapore

THE company that is planning to build a columbarium in Fernvale Link has affirmed its commitment to running a Chinese temple at the site to serve the community, the authorities said yesterday.

In a statement yesterday, the Housing Board and Urban Redevelopment Authority said that the company must adhere strictly to the tender conditions and preserve the intent of the site as a Chinese temple.

The site has been zoned a "Place of Worship" since 2003. Guidelines allow space of up to 20 per cent of gross floor area at such places to be set aside for ancillary columbarium use. This must be located inside the main building, out of sight from the surrounding developments, the statement said.

Last July, Eternal Pure Land, which is owned by Life Corp, won a tender for the 2,000 sq m site for $5.2 million.

News that a columbarium will be built as part of the temple sparked an outcry from some nearby flat owners.

Faith associations and property experts said it is surprising that a commercial organisation was allowed to bid for land earmarked for religious use.

But they added that could become more common in the future as land gets more expensive.

Describing the practice as rare the Singapore Buddhist Fede-ration's Venerable Shi Chuan Guan, the chairman of its dharma propagation committee, said religious groups usually bid for land to serve the needs of their devotees and are "never commercial endeavours".

Singapore Taoist Federation's administrator, Master Wei Yi, said that temples usually run their own columbaria.

"We take it as a service to the community... It's not about making money," he said.

There are more than 60 columbaria in Singapore.

The Government runs four of them. They are in Mandai, Yishun, Choa Chu Kang and Upper Aljunied Road. The rest are mostly run by churches and temples.

Kong Meng San Phor Kark See Monastery houses a columbarium with more than 200,000 niches at Bright Hill Road. Prices range from $1,600 to $9,880 for a niche.

A niche at a Christian columbarium, the Garden of Remembrance in Choa Chu Kang, starts at $3,500 for a 60-year lease, while those at the privately owned Nirvana Memorial Garden next door average $6,000.

But real estate firms said corporate and religious partnerships could be the way forward as land and construction costs are steep.

R'ST Research director Ong Kah Seng said it could work for small and cash-strapped religious organisations.

"The commercial entity has the means to execute the end product. It can otherwise be a costly affair for a religious group with little expertise in the area," he said.

Amitabha Buddhist Society's secretary Ben Lee, 50, however, believes business should not be mixed with religion.

He said: "The needs of worshippers should be at the heart of any expansion effort. I don't think it is right for a company to profit from religious groups."

-By Melody Zaccheus

HDB, URA to ensure Fernvale Link temple integrates well with surroundings

The Housing and Development Board and Urban Redevelopment Authority indicated that plans for a columbarium at a Chinese temple planned in Sengkang can go ahead, despite objections from residents.

Source: Channel News Asia / Singapore

SINGAPORE: The Urban Redevelopment Authority (URA) and Housing and Development Board (HDB) will ensure that a proposed temple at Fernvale Link in Sengkang will "integrate well with the surrounding developments, the same way other existing places of worship have been integrated in many residential estates", both agencies said in a statement on Tuesday (Jan 6).

This follows an outcry by residents over plans for a columbarium at an upcoming Chinese temple at a plot of land surrounded by two Build-to-Order projects and an executive condominium development. Many say they were not aware of plans for the columbarium. Four hundred residents met with Sengkang West MP Lam Pin Min, officials from URA and HDB, and the temple developer on Sunday to discuss the issue.

In a joint statement, URA and HDB said the land had been zoned as a "place of worship" in URA's Master Plan since 2003. The agencies said Eternal Pure Land, which won the tender for the site, has affirmed to HDB its commitment to run a Chinese temple to serve the community.

URA and HDB said "most places of worship have some columbarium facilities and they are found islandwide". It cited examples such as Fo Guang Shan Chinese Temple along Punggol Walk, Seu Teck Sean Tong Temple at Lorong 6 Toa Payoh, and the Church of the St. Mary of the Angels at Bukit Batok East Avenue 6.

"URA works closely with HDB and other agencies to ensure that towns are planned comprehensively to be self-sufficient, with a wide range of facilities and amenities to serve the needs of residents. Places of worship can be successfully integrated into the design of residential estates to serve the needs of our people," HDB and URA stated.

The agencies also reiterated URA's guidelines that only 20 per cent of the total gross floor area for places of worship can be set aside for columbarium use. It must also be inside the main building and away from public view. This policy has been in place since 1999, they said.


Property watchers said with home prices still higher today than they were before, more home buyers are doing their ground work before committing on a property. These include assessing whether facilities or amenities in the area may affect the future resale value of their homes.

But some home buyers Channel NewsAsia spoke to said their research is usually focused on the shorter term.

A couple said: "We didn't really ask the property agent what the amenities are for the next 20 years, but we looked at the existing infrastructure - whether it's near the MRT, near the schools. Because we have one daughter. So as she grows up, we have to look for schools, so that's the most important thing."

Analysts said while the URA Masterplan is the most reliable source of information on future land use, not many know how to access or use the information.

Mr Eugene Lim, Key Executive Officer at ERA Realty, said: "While the Masterplan is made publicly available on the URA website, I think for members of the public, not many of them know how to use it.

"Even though you can check the Masterplan, the Masterplan only tells you about zoning and the density. You won't know what actually is going to be built until the tender specifications are put up by the URA or HDB . So there is still a certain element of risk involved because the exact look and feel of the end product you will not know," he said.

Property agents are another source of information – but their core duties still lie with informing clients about the projects they are selling.

Mr Thomas Tan, Executive Director at Re/Max said: "Where the agent is concerned, their duty will probably be surrounding information about the project itself. This forms part of the core duties of the agent. Anything offered outside of it will probably be goodwill – that means it's not part of the duty of the agent to necessarily reveal it.”

“Some areas - the surrounding plots of land tend to have worship zoning, or sometimes educational institutions. So these will impact parking and traffic around the area. These are things that, probably during the launch itself, the agents will probably highlight to the consumers before they actually make a purchase, because this could be an issue or a sticking point where the consumers may feel that the agents did not tell them critical information, before they make a decision. I think the agents are very wary of this and they will probably offer more than what you want,” he added.

Moving ahead, experts said authorities could convey information more clearly, and to help home hunters make more informed decisions.

Mr Lim said: "Perhaps we can improve on transparency. Though it is a known fact that if it is a designated religious use – for example, a religious building is coming up – there is always a possibility that it will include a columbarium. So, instead of just putting 'religious use' on the Masterplan zoning, why not put religious use and/or columbarium. That would allow the public to make a more informed decision of what will actually affect them in the area.”

- CNA/ly/dl/el

Urban farming takes root at SMU

Public can join staff, students in tending to 270 sq m garden

Source: Straits Times / Singapore

IN THE concrete jungle of the city centre, two nutmeg saplings nestle in fresh soil on a slender plot of land along bustling Queen Street.

The saplings hark back to the nutmeg plantations of Bras Basah's history. They are also the first seeds of a new garden that will flourish at Singapore Management University (SMU).

The 270 sq m garden is part of SMU Grow, a new urban farming initiative launched yesterday that encourages gardening and sustainable living in the heart of the city.

Located outside the School of Accountancy and School of Law building, it will be sown with about 50 plant varieties, including basil, spinach, chilli and guava. The garden will be tended to by students and staff, and will be open to the public - who can also join in the gardening, or even help themselves to a few herbs.

The idea for the project came from organiser Bernadette Toh, director of the SMU Office of Global Learning. She was inspired by local food movement Edible Gardens to start her own herb garden nine months ago. Soon, she was hooked.

"As I spent more time watching the plants, I began to realise the way they were growing was a reflection of the pedagogical style of SMU," said Ms Toh, who is in her 50s. She decided to get the rest of the university gardening too.

"We want learning to be experiential, self-reflexive and mindful of the larger community," she said. "This is not just a gardening project, but a way to take learning to a new level and be relevant to the neighbourhood around us."

Produce from the garden's harvests will be used in community service projects such as the annual SMU Challenge, in which students deliver food and household necessities to the elderly and low-income families living in Queenstown.

Under the project, 30 planter boxes containing plants such as herbs will also be put up for adoption at $80 a box. Staff and students can adopt and care for the boxes, which will be installed on the library balcony and at the administration building.

Some students welcomed the chance to get their hands dirty in a garden of their own. First-year economics student Mervin Soon, who is president of the university's environmental club, said he hoped the Grow project would be a refreshing experience for his peers. "They can use these

areas as unconventional spots to study or hang out, and get to be close to nature," said the 21-year-old.

-By Olivia Ho

Analysts favour developers, warn of Reit downside

They highlight low valuations of developer shares and risks facing real estate investment trusts

Source: Business Times / Companies & Markets

Not all fates are equal in Singapore's bleak real estate market. A gamut of risks confronting real estate investment trusts (Reits), coupled with low valuations and expectations of developer stocks, are leading brokerages to recommend buying the latter over the former.

-By Lee Meixian

Global Economy & Global Real Estate

Developer denies reports of shrinking size of Johor reclamation project

Source: Business Times / Real Estate

The developer of Malaysia's controversial Forest City in the Johor Straits has denied reports that the 1,600 hectare reclamation project has been shrunk to a quarter of its size following directions by the Department of Environment (DOE). Country Garden Pacific (CGP) View Sdn Bhd executive director Md Othman said in a statement on Monday that limiting the project's size was never discussed with the DOE.

Size of man-made island off Johor not slashed: Developer

It expects decision this week by govt on whether project can resume

Source: Straits Times / Top of The News

THE China-based developer of a contentious luxury housing project to be built on a man-made island off Johor, near the Second Link, has rejected reports that Malaysia has slashed the project's size.

But the developer, Country Garden Pacificview, said it expects a decision this week from Malaysia's Department of Environment (DoE) on whether construction of the project can resume.

Malaysian media had reported that the DoE verbally informed Country Garden Pacificview that the land development size of the Forest City project would be limited to 405ha - down from the original 1,623ha - with an official letter to come.

The developer has disputed this. "The discussions with DoE do not mean that the project size is to be limited or compromised in any way," Country Garden Pacificview executive director Mohamad Othman said in a media release on Monday evening.

If the reports are true, the new size would make the island slightly smaller than Singapore's Sentosa, at about 500ha.

When news emerged of the vast project in June last year, concerns about its environmental impact were raised on both sides of the border.

Country Garden Pacificview said it had voluntarily ceased all construction at the site on June 16 last year after the DoE requested a detailed environmental impact assessment on the project.

"Any modification or change to the landmass is not due to construction, but due to natural displacement," said Datuk Othman.

The developer said its staff had discussed only "assessment directives and compliance to high standards" in their most recent talks with the DoE last month.

"Country Garden Pacificview is fully compliant with the laws and regulations that govern the development of such projects."

The company is a joint venture between Chinese developer Country Garden Holdings and Esplanade Danga 88 as a major shareholder, while state investment agency Kumpulan Prasarana Rakyat Johor is a minor shareholder, said the media release. According to reports, Esplanade's main shareholder is the sultan of Johor.

The plan is to reclaim 1,623ha of sea to create land for a mixed luxury home and commercial development, with an expected gross development value of RM600 billion (S$226 billion) over 30 years.

In its media release, Country Garden Pacificview also vowed to provide "greater engagement" and transparency to allay all concerns by interested parties.

The company is developing an online query response platform, which it said would go live by Friday, where all questions will be answered within 48 hours, subject to volume.

"It is also our commitment that no question or post will be deleted, unless it is deemed to have abusive or offensive content," said Mr Othman.

-By Marissa Lee

Kaisa bonds sink to new lows on fresh default fears

Source: Business Times / Real Estate

Improved housing mood seen continuing in China this year

Source: Business Times / Real Estate

Manhattan apartment prices at 6-year high

Source: Business Times / Real Estate

U.S. REITs Seen as Ripe for Takeovers With More Activism

Source: Bloomberg / News

Takeovers among U.S. real estate investment trusts are poised to accelerate as shareholder activism increases and executives become more receptive to deals, according to research firm Green Street Advisors LLC.

The number of transactions involving sizable REITs, through mergers of public companies or privatizations, has plunged almost 80 percent in the past seven years compared with 2000 to mid-2007, when there were 32 deals, Newport Beach, California-based Green Street said in a report. Conditions “now appear ripe” to end the drought, the firm said.

The rise of activist investors in the industry, including hedge-fund manager Jonathan Litt of Land & Buildings Investment Management, is boosting the likelihood of more deals. REITs also may go private amid “insatiable demand” for U.S. real estate from buyers such as sovereign-wealth funds, Green Street said. Apartment landlord Associated Estates Realty Corp. (AEC) and mall owner Pennsylvania Real Estate Investment Trust (PEI), both targets of Litt’s, are top contenders for takeouts, the firm said.

“The biggest catalyst for revived activity is today’s new breed of activist investor,” Green Street Chairman Mike Kirby and analyst Peter Rothemund wrote in the report. “The recent activist-induced changing of the guard at Equity Commonwealth (the entire board and management team were replaced) was a bellwether deal for the industry, as decades have passed since activists have been so successful in forcing a change of control that would otherwise not have transpired.”

CommonWealth Ouster

The board of what was then known as CommonWealth REIT was ousted last year after a yearlong campaign by Related Cos. and Corvex Management LP. The investors claimed that the company had conflicts of interest and was making high-priced acquisitions while selling real estate at low prices. The company changed its name to Equity Commonwealth (EQC) after a new board was installed and elected billionaire investor Sam Zell as chairman.

Litt has been involved in pressuring for change at BRE Properties Inc., which later was taken over by Essex Property Trust Inc. (ESS) and Mack-Cali Realty Corp. (CLI), whose chief executive officer eventually resigned. Associated Estates, one of his targets, has about 90 percent odds of being taken over, while Penn REIT has about a 50 percent chance, Green Street said.

Associated Estates last month added a former top executive of Equity Residential to its board and said it hired an adviser to review its business as it seeks to fend off a proxy fight with Litt.

‘Swan Song’

“As a matter of policy, AEC does not engage in speculation, nor does the company comment on speculation by others,” Andrew Siegel, a spokesman for Associated Estates, said in an e-mail today.

Heather Crowell, a spokeswoman for Philadelphia-based Penn REIT, didn’t immediately respond to a voice mail seeking comment on the report.

The aging of company leaders and their firms who went public in the 1990s may lead some to be more open to selling “as a swan song takes on increased appeal,” according to the Green Street report. Private-market buyers also may be willing to pay premiums to net asset value, the firm said.

Blackstone Group LP (BX), the largest private-equity real estate investor, may be an indicator of such deals. The company late last year canceled plans to take its IndCor Properties Inc. warehouse unit public as a REIT and instead opted to sell it to investors including Singapore’s GIC Pte for $8.1 billion.

“In the U.S., I think when interest rates move up, you could easily see the stock prices of REITs trade off,” Jonathan Gray, Blackstone’s global head of real estate, said in a Nov. 13 interview on Bloomberg Television’s “Market Makers” program with Erik Schatzker and Stephanie Ruhle. “That could create privatization opportunities.”

-By Brian Louis

Trump Panama Hotel Developer Misses $23 Million Bond Payment

Source: Bloomberg / News

The developer of a Donald Trump-branded hotel and apartment complex in Panama missed a bond payment 18 months after issuing the notes when it emerged from bankruptcy.

Newland International Properties Corp. wasn’t able to make a $23.4 million principal payment due this week on its $200 million of notes due in 2017, according to a statement on the Panama stock exchange’s website. The real-estate developer said it did pay $9.4 million in interest. It reached an agreement with almost two-thirds of bondholders on Nov. 26 under which the non-payment of principal won’t lead to a violation of an indenture agreement, according to the statement.

Newland emerged from Chapter 11 protection in July 2013 after saying in its bankruptcy filing that the financial crisis had curbed sales at the Trump Ocean Club, a 70-story building on Panama Bay with more than 350 hotel rooms and 500 condos. Under its reorganization plan, holders of defaulted notes due November 2014 were given the new bonds that mature in July 2017.

While court documents show the company isn’t an affiliate of Trump Organization Inc., its website includes an endorsement from Donald Trump and a video tour narrated by his daughter Ivanka.

“We are very proud of being the number one preforming hotel in the city,” Eric Trump, Executive Vice President of Development and Acquisitions at Trump Organization, which manages the project, said in a phone interview from Panama City. “Trump Organization is not affiliated to the developer and has nothing to do with ownership of the project.”

Newland executives didn’t immediately return a call seeking comment.

Fitch Ratings said in an August 2014 statement that the company had to cut prices on its condo units.

“Since restructuring, the company has discounted prices in order to sell individual condo units, and executed two bulk sales at even larger discounts,” Fitch said.

The company’s bonds last traded Dec. 30 for 32 cents on the dollar, according to data compiled by Bloomberg.

-By Andrea Jaramillo and Michael McDonald

German City Rent Gains Slowed on Increased Construction

Source: Bloomberg / Luxury

German rent increases slowed for the first time since 2011 last year as more properties were built to ease a housing shortage.

Advertised rents for new homes in Germany’s biggest cities rose 2.8 percent in 2014, down from 4 percent a year earlier, Berlin-based research firm Empirica AG said in a statement today. Asking prices rose 6.6 percent, widening the gap between the cost of buying and renting. That’s increasing the risk of bubbles in some areas, Empirica said.

“Construction has picked up in the past two or three years in response to the demand,” Empirica economist Reiner Braun said by phone. “We’d also expected price gains to slow; we blame the jump on low interest rates and the lack of investment options.”

Rising rents in cities including Berlin, Frankfurt and Munich has led to protests, rising evictions and new laws. Record-low interest rates are making mortgages more affordable and encouraging tenants -- who may have otherwise put their savings in bonds -- to invest in real estate.

In October, Chancellor Angela Merkel’s cabinet backed legislation to curb rents as rising housing costs in Germany put pressure on her government to act. The draft law, which would take effect this year if passed by parliament, caps rents for new contracts in existing homes at 10 percent more than the local average in areas with tight supply.

‘Superfluous’ Controls

“The rent controls are superfluous now,” Braun said. “Rent increases have climaxed.”

In Munich, Germany’s most expensive city, homes cost an average of 14 euros ($17) a square meter to rent and more than 5,000 euros a square meter to buy, Empirica said. The next most-expensive cities for renters are Stuttgart, Frankfurt and Hamburg, while Freiburg, Stuttgart and Hamburg have the highest purchase prices.

Germany issued permits for the construction of 212,600 new homes in the first nine months of 2014, which is 5.2 percent more than a year earlier, according to the Federal Statistics Office.

Empirica’s study collected data from real estate ads in Germany’s 112 biggest cities.

-By Dalia Fahmy

L&G, PGGM Acquire U.K. Property Fund for $562 Million

Source: Bloomberg / News

Legal & General Group Plc teamed up with Dutch asset manager PGGM NV to buy 24 U.K. properties for about 370 million pounds ($562 million).

The buildings in the portfolio known as the Bishopsgate Long Term Property Fund Unit Trust generate annual rent of about 22 million pounds a year, according to a statement today from L&G’s real estate fund-management unit and PGGM. They didn’t disclose the seller.

“The portfolio comprises well located, high-quality U.K. assets, with significant opportunities to add value and to enhance the income return through asset management initiatives,” Mathieu Elshout, a senior investment manager at PGGM, said in the statement.

Commercial-property values are rising as the U.K. economy improves. The value of offices, warehouses and shops gained almost 20 percent in the 12 months through November, according to data compiled by research company IPD.

-By Patrick Gower

Manhattan Apartment Prices Reach Highest Since 2008 Peak

Source: Bloomberg / Luxury

Manhattan apartment prices jumped to the highest point since their 2008 peak as buyers competed for a limited supply of homes and deals were completed in new luxury developments.

The median price of all condominiums and co-ops that changed hands in the fourth quarter was $980,000, up 15 percent from a year earlier, according to a report today by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. The price was the second-highest in 25 years of data-keeping and the costliest since the second quarter of 2008, when the median for all transactions was $1.03 million.

“With the direction the market seems to be going, that record could be broken in 2015,” Jonathan Miller, president of New York-based Miller Samuel and a Bloomberg View contributor, said in an interview.

Price (SPCS20) gains are accelerating as demand from domestic and international buyers alike outpaces the number of properties for sale. There were 4,995 apartments on the market at the end of December, up 20 percent from an all-time low a year earlier. The inventory is still 30 percent below the 10-year average for the number of homes for sale in a quarter, Miller said.

Listings in newly constructed buildings, which tend to be larger and more expensive, more than doubled to 1,440 in the fourth quarter, while inventory in the resale market, where prices are lower by comparison, climbed only 2.9 percent to 3,555, according to Miller.

Resale Pressure

New developments accounted for 10 percent of all sales in the quarter, he said.

“Roughly 90 percent of the housing market is not seeing new housing stock,” Miller said. “The resale market is where inventory is probably going to remain inadequate and that’s where you’re going to see more of the price pressure.”

There were seven purchases the quarter for $30 million or more, compared to a single deal in that range a year earlier, Miller said. Sales for $10 million or more than doubled to 39.

About half of all buyers who completed deals in the quarter agreed to pay the asking price or higher, according to the report. The average amount paid over the listed price was 3.9 percent, Miller said.

Urban Compass

Brokerage Urban Compass, in its own report today, said the median price per square foot in the quarter reached an all-time high of $1,459, exceeding the peak in 2008 by 19 percent.

The record gains of 2014 mean that apartment prices will level off or decline in the coming year, with the median for deals that close in 2015 slipping as much as 3.7 percent, the brokerage projected.

“This type of price growth has not been sustainable in previous years,” Urban Compass, a startup where data scientists and engineers collaborate with agents on listings, said in its report. “Following huge gains, price growth has typically witnessed a return to normal growth rates, if not a price decline.”

For the owners of a co-op on the Upper East Side, the surging market meant they were able to sell their property for almost 10 percent more than what they paid just four months earlier. The couple, based in South Carolina, bought the apartment for $2.33 million in June, anticipating a move to Manhattan, said their broker, Linda Feder of Corcoran Group. When their plans changed and a move up north was off the table, Feder persuaded them to relist the home rather than rent it out.

Right Price

After a fresh coat of paint and a re-marketing of an office space as a third bedroom, Feder listed the co-op for $2.6 million in July. The price was right for Debra and Donald Duford from La Jolla,California, who were looking for a pied-a-terre in Manhattan after selling a condo in New Jersey, Debra Duford said in an interview.

Debra and her husband, who recently retired as the chief executive officer of workers-compensation contractor One Call Medical, set an initial budget of $2 million. They raised that limit after Debra spent hours searching online and found nothing suitable in that range.

“It was a shock,” she said in an interview. “A lot of dated interiors and that little galley kitchen that hadn’t been torn out.”

She kept coming back to Feder’s listing, and scheduled to see it. The Dufords put in their offer a few days later, didn’t seek financing, and closed the deal in October for $2.55 million. That the previous owners were able to resell at a 9.7 percent higher value after four months was evidence that they bought at a good time, Debra Duford said.

‘Get Moving’

“It told me that things are picking up and we’d better get moving,” she said. “It told me that it’s just a dynamic market now, and that you’d better grab what’s talking to you when you can.”

Co-ops accounted for 58 percent of all signed contracts in the fourth quarter, the highest share in more than five years and a reflection of the scarcity of affordable condos, Corcoran Group said today in a separate report on the Manhattan market. The number of co-ops listed for sale fell 4 percent from a year earlier as buyers kept pace with the new inventory, the brokerage said.

Prices across all property types and neighborhoods climbed 5 percent in the quarter to a median of $916,000, Corcoran Group said.

Widespread Demand

“Everybody wants in,” Pamela Liebman, president of Corcoran Group, said in an interview. “It doesn’t matter if you’re a single person, a couple, a family, someone from New York, someone from China, someone from Los Angeles, someone from the Midwest. This widespread demand has contributed to this run-up in prices.”

According to a joint report by Brown Harris Stevens and Halstead Group, the median sale price for all Manhattan apartments was $960,000, up 10 percent from the fourth quarter of 2013. The average price reached a record $1.73 million, the brokerages said.

For all Manhattan apartments, the absorption rate, or the time it would take to sell all the existing inventory at the current pace of deals, was 3.9 months in December, according to Brown Harris Stevens. A rate of six to nine months is considered a “balanced” market, the brokerage said.

-By Oshrat Carmiel

Canada Homebuyers Joining Real Estate Doubters: Nanos

Source: Bloomberg / Luxury

Canadians who last year brushed off predictions of a real estate slowdown and kept buying houses are increasingly joining the doubters.

The nation’s households are the least optimistic since May 2013 that home prices will keep rising, according to weekly polling data compiled by Nanos Research for Bloomberg. The share of survey respondents predicting higher prices fell to 31.1 percent last week, from as high as 47 percent in July.

The survey results suggest policy-maker warnings about overvalued home prices are starting to sink in, amplified by plunging prices for crude oil, the nation’s biggest export. The gloom may spell the end of a housing rally that helped pull the world’s 11th largest economy out of a 2009 recession.

“Any negative changes in real estate values coupled with low oil prices could be a one-two punch for Canadian consumer sentiment,” said Nik Nanos, Ottawa-based chairman of Nanos Research Group.

The Bank of Canada estimates that house prices are 10 percent to 30 percent overvalued. That didn’t stop sales and prices from rising through most of 2014, fueled by low mortgage rates and a shortage of single-family housing in some markets such as Vancouver, where the average price of a detached home reached a record C$1.36 million ($1.15 million) in February.

Through November, the average residential sales price in Canada rose 6.8 percent on an annual basis, putting 2014 on pace to be even stronger than 2013, when average prices rose 5.2 percent.

The survey of real estate expectations is part of polling for the Bloomberg Nanos Canadian Confidence Index and based on phone interviews with 1,000 people, using a four-week rolling average of 250 respondents. The results are accurate to within 3.1 percentage points, 19 times out of 20.

Respondents are also asked about their expectations for the economy, their job security and changes in the state of their personal finances.

The broad confidence index climbed to 55.8 in the week ended Jan. 2, the first increase in five readings, from 55.1 in the prior period.

-By Theophilos Argitis

Malibu Developers Say Streisand-Backed Measure Is Illegal

Source: Bloomberg / News

A local ordinance backed by actress Barbra Streisand and director Rob Reiner that puts restrictions on new retail stores in Malibu, California, is unconstitutional and should be blocked, real estate developers said in a lawsuit.

Voters in November approved an initiative requiring that commercial developments larger than 20,000 square feet be approved in a city referendum. It was prompted by a development plan to build a 25,000-square-foot Whole Foods market in the beach getaway for billionaires and celebrities. The developers today filed a federal complaint seeking a court order that the measure can’t be enforced.

The law, known as Measure R, “fails the most basic requirement of lawful legislation,” David Waite, a lawyer for the developers, said in a statement announcing the suit. “It is arbitrary, discriminatory and lacks a reasonable and rational relationship to a proper legislative purpose.”

Development restrictions have been popular in California beach cities such as Malibu, 28 miles (45 kilometers) west of downtown Los Angeles, where well-heeled homeowners have sought to use their influence to limit growth. The median price for a home in the 21-mile-long city was $2.09 million in November, according to CoreLogic DataQuick. The median household income is about $136,000.

“Measure R gives residents a stronger voice over the future of our community,” Rob and Michele Reiner, who led the campaign for the initiative and own a home in Malibu but aren’t residents there, said in a statement. “The lawsuit filed today seeks to do the exact opposite by eliminating the voice of local residents and increasing the power of developers. In filing their complaint, the out-of-town opponents of R have confirmed that they do not trust the democratic process or respect the opinion of thousands of residents across Malibu.”

Malibu City Attorney Christi Hogin said the municipality would prevail in the case.

“It’s a legitimate gripe that communities have about their commercial centers being turned essentially into anywhere USA with all the same retailers,” Hogin said in a phone interview. “And I think communities have a legitimate interest in developing some unique commercial part of their downtown centers.”

The case is The Park at Cross Creek LLC v. City of Malibu, 15-cv-00033, U.S. District Court, Central District of California (Los Angeles).

-By Edvard Pettersson and John Gittelsohn

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