Real News‎ > ‎2015‎ > ‎March 2015‎ > ‎

4th March 2015

Singapore Real Estate

Developers' FY14 results belie home sales softness

Performances were helped by "locked in" sales and one-time gains

Source: Business Times / Companies & Markets

The mixed crop of results produced by Singapore property developers in FY2014 belies the underlying softness of domestic home sales. Although performances have largely met market expectations, analysts attributed this to two factors.

-By Lee Meixian

S'pore room rates down 9% last year:

Source: Business Times / Real Estate

Hotel rates in Singapore fell 9 per cent last year on the back of geopolitical tensions and a series of aviation incidents, signifying more affordable holidays for travellers to the Republic. This is according to the most recent Hotel Price Index (HPI), which measures hotel room rates based on bookings made on the online accommodation booking website. The HPI tracks the actual prices paid per hotel room rather than their advertised rates.

-By Prisca Ang

EC prices 'may fall but not by a lot'

Source: Straits Times

Home hunters hoping for big falls in executive condominium (EC) prices will probably need to be more realistic. Experts expect prices to come under some downward pressure after recent low winning bids for EC sites by developers and weak sales in the segment. But the experts say the overall picture is more complex, and that prices may not drop by a lot.

Sentosa Cove bungalow 'sold for $22m'

Source: Straits Times 

Fruit and veggie tycoon Lim Chin Huat is believed to have sold a $22 million bungalow in Sentosa Cove last month in what is the first sale of a landed home on the island this year. The apparent sale represents a bright spark in what has been an otherwise bleak market on Sentosa. Only four bungalows were sold there last year at a total value of $56.5 million, down from 18 deals worth $366.76 million in 2013.

Worker hurt in Punggol crane accident

Source: Straits Times

A mobile crane toppled at the construction site of an executive condominium in Punggol yesterday evening. There were no fatalities, although a worker sustained minor injuries, said a Ministry of Manpower (MOM) spokesman.

Sino Construction shares take another hard knock

Source: Business Times / Companies & Markets

Sino Construction took another hit on Tuesday, with another 48.7 per cent of its value wiped off during the session. This comes after its share price had tumbled 55.8 per cent on Monday, after the company warned on Friday of an expected net loss for FY14 and a month-long extension to its financial results release.

-By Chan Yi Wen

IReit expects stiff property competition

Source: Business Times / Companies & Markets

Ireit Global, which has office properties in Germany, expects competition for commercial properties there to be "intense", due to the massive liquidity from the European Central Bank's easing stimulus as well as the weakened euro and low interest rates in Europe. But it says that such market conditions also provide IReit with opportunities to proactively pursue yield accretive acquisition deals.

-By Fiona Lam

Frasers Centrepoint in mega perpetual bond issue

Source: Business Times / Companies & Markets

Not only is Frasers Centrepoint's perpetual bond issue the first perpetual deal for 2015, it is a whopper at S$700 million. On Monday, Frasers Centrepoint sold S$700 million of perpetual bonds NC5 5 per cent, the biggest non-bank perpetual deal since 2012. NC 5 means that the bonds will not be called or redeemed before the fifth year.

-By Siow Li Sen

Apple heads for CapitaGreen with 35,000 sq ft lease

It also has options to lease more space in the recently completed Grade A office project on Market Street

Source: Business Times / Real Estate

Apple is on an expansion trail in Singapore. It is said to have inked a lease for 35,000 square feet of space spanning two floors at CapitaGreen along Market Street, with options to take up even more space in the building. The lease was signed late last year, probably at around S$11-12 psf monthly rent.

-By Kalpana Rashiwala

Australia orders China firm to sell Sydney mansion

Source: Business Times / Real Estate

When golden-visa buys may not be good buys

Source: Business Times / Real Estate

Brits lead charge as homes in Spain attract buyers again

Two-bedroom bungalows in gated estates going for as little as 75K euros

Source: Business Times / Real Estate

Mumbai property makeover set to please builders

City proposes changes to rules that may allow developers to raze slums and build taller towers

Source: Business Times / Real Estate

British Real Estate Is Safe Haven for Dirty Money, Report Says

Source: Bloomberg

(Bloomberg) -- Foreign companies that buy property in the U.K. should have to disclose who their real owners are to minimize the risk that dirty money is used for the purchase, according to a report from Transparency International UK.

That’s one of 10 ways the advocacy group recommended to stop criminals from laundering the proceeds of crime through British real estate. In addition, there should be a cap on buying property in cash, and estate agents should do background checks on the purchaser as well as the seller, Transparency International said Wednesday.

The United Nations has estimated that law enforcement only spots about 1 percent of total money-laundering flows, the group said. Even so, in the last decade British police have investigated more than 180 million pounds ($278 million) of property. A big challenge for authorities is that many luxury properties are owned by companies registered in tax havens that don’t disclose who their true owners are, making it hard to identify illegitimate investments.

“Our data suggests that the sources of foreign investment for the highest-value U.K. properties tend to be from the regions of the world with substantial domestic public-sector corruption challenges,” said Nick Maxwell, head of research at the group, a nonprofit that monitors corruption.

Investors from Eastern Europe and Russia are among the biggest buyers of high-end residential London properties, according to the report.

Criminal Attractions

The U.K.’s “political stability, light-touch regulations and privileged connections with well-known secrecy jurisdictions” once part of the British empire, make it a popular destination for ill-gotten wealth, the report said. Hundreds of billions of pounds are laundered through the U.K. every year, according to U.K. National Crime Agency estimates.

While the British government is drafting legislation requiring U.K. companies to disclose their true owners through a registry, it will have limited effect since overseas territories have so far refused to follow suit. More than 75 percent of the properties investigated since 2004 were owned by offshore companies that hid their true proprietors’ identities, the report said.

There are 40,725 properties in London that are owned by foreign companies, and 89 percent of those are based in tax havens such as the British Virgin Islands, Jersey and the Isle of Man. Offshore companies can be created for $1,000 in less than 48 hours, sometimes without identity documents, according to the research.

‘Transparency Gap’

The U.K. attracts the most foreign investment from all European real estate markets, according to KPMG, securing an estimated 24 billion pounds in the first half of 2014, compared with Germany’s 16.2 billion pounds as the second largest.

The NCA is investigating why a new tax of as much as 143,750 pounds a year that luxury-home owners pay to keep their names secret yielded 100 million pounds last year, almost five times more than expected. The government plans to publish its first national risk assessment of money laundering and terrorist financing this month, which will look at how estate agents can help more, according to a Treasury spokesman.

“The U.K. has undoubtedly made impressive strides to improve company transparency,” Maxwell said. “However, there remains a clear transparency gap in terms of offshore secret companies’” investments in property.

-By Suzi Ring & Neil Callanan

Macquarie to Buy Aircraft for $4 Billion, Raise Capital

Source: Bloomberg

(Bloomberg) -- Macquarie Group Ltd. is buying aircraft from AWAS Aviation Capital Ltd. for $4 billion, and raising at least A$500 million ($391 million) to fund the acquisition.

The purchase, comprising 90 passenger planes leased to 40 airlines, expands its portfolio to 220 aircraft, Macquarie said in a regulatory statement Wednesday. The transaction, which will settle over the next year, will add 5 percent to earnings per share in the first full year after acquisition, it said.

Buying the aircraft fits Chief Executive Officer Nicholas Moore’s strategy to move the company toward stable businesses such as leasing, funds management and lending and away from trading and advisory. AWAS, 75 percent owned by London-based Terra Firma Capital Partners Ltd., will explore opportunities to exit the remaining business in the coming years, Terra Firma’s Chairman Guy Hands said in an e-mailed statement.

“It is a business Macquarie knows and the acquisition is low risk,” said Don Williams, chief investment officer at Sydney-based Platypus Asset Management Ltd., which manages about A$1.6 billion including Macquarie shares. “The transaction fits in with Macquarie’s plan to expand its non-cyclical businesses.”

Capital Raising

The transaction will be funded through the capital raising, existing sources and third-party financing, Macquarie said. The acquisition will require A$600 million in capital, it said. An institutional share offering will raise A$500 million and there will be a separate stock purchase plan for Australian and New Zealand shareholders, it said, without elaborating.

Macquarie has indicated a A$71.30 to A$73.50 price range for the institutional book build, two people familiar with the matter said. The Australian Financial Review reported the range earlier. The bank’s shares, which were halted Wednesday, closed at A$73.52 Tuesday, having risen 26 percent this year.

On an investor call last month, CEO Moore said that while the firm’s capital was sufficient to cover “normal growth,” he also signaled a willingness to raise capital if necessary to finance expansion. Macquarie had A$1.4 billion in surplus capital as of Dec. 31, according to a February filing. It has sold A$2.78 billion in equity since 2001, with the last sale in May 2009, data compiled by Bloomberg show.

“In the event Macquarie wants to make other large acquisitions, they may need to raise more capital,” Brian Johnson, a Sydney-based analyst at CLSA Ltd., said by phone.

Aircraft leasing is part of Macquarie’s corporate and asset finance group, which had A$29 billion in assets as of Dec. 31, spanning planes, motor vehicles, mining equipment leases and real estate lending. Narrow-body aircraft comprise 90 percent of the planes purchased, Macquarie said.

Profit Increase

Through its Macquarie AirFinance unit, Macquarie purchased GATX Air in 2006. Macquarie bought 53 planes from International Lease Finance Corp. in 2010, according to a statement on its website.

Leasing, funds management and lending contributed about 75 percent of Macquarie’s earnings in the six months through September, compared with 20 percent in September 2008, filings show. Macquarie’s profit for the year ending March 31 may climb to the highest since 2008, according to the average estimate of 11 analysts surveyed by Bloomberg.

AWAS will continue to own and maintain a portfolio of more than 200 aircraft and will expand that fleet through sale and leaseback transactions with airlines and secondary aircraft purchases, it said in the statement. Canada Pension Plan Investment Board owns the other 25 percent of AWAS.

Billionaire Li

Lessors buy planes and then lease them to airlines for monthly fees, seeking to profit from the residual value by selling the aircraft after a few years. Companies including billionaire Li Ka-shing’s Cheung Kong Holdings Ltd. are expanding into the business as increasing urbanization and a growing middle class fuels a surge in travel demand in Asia.

Cheung Kong agreed in November to pay $1.89 billion to buy 45 planes from companies including General Electric Co.’s aviation services unit. In August, Cheung Kong submitted a non-binding bid to buy planes from AWAS.

Goldman Sachs Group Inc. and Deutsche Bank AG gave financial advice to AWAS on the transaction, it said.

-By Narayanan Somasundaram & Brett Foley

Real Estate Crowdfunding Seen Topping $2.5 Billion in ’15

Source: Bloomberg

(Bloomberg) -- Crowdfunding for real estate is likely to jump to $2.57 billion worldwide this year, two and a half times the total in 2014, as more people become comfortable with the investing model, research company Massolution said.

Property crowdfunding, in which large amounts of money are raised through small contributions, is probably going to climb from $1.01 billion last year and $396.4 million in 2013, Los Angeles-based Massolution said in a report released Tuesday. Individual fundraising campaigns ranged from less than $100,000 to more than $20 million last year, according to the crowdfunding research and advisory firm.

The real estate industry has about 85 active crowdfunding platforms, including companies such as Realty Mogul and Fundrise LLC that collect small contributions from investors, Massolution said. Low interest rates have made investments such as bonds relatively less attractive, driving those searching for yield to real estate and making it one of the fastest-growing segments in crowdfunding, according to the study.

“Real estate, in a rebound over the last five years, has become a much-sought-after asset class, largely due to the search for higher current income, shadowing a growing weariness of high-valued stocks and anemic fixed-income offerings,” Massolution said in the report.

Crowdfunding gained traction after the Jumpstart Our Business Startups Act went into effect in April 2012. Once final rules related to the JOBS Act are in place, restrictions will be eased on investments in closely held companies, including those set up to own commercial property, by people making less than $200,000 a year or with a net worth of less than $1 million.

Hard Rock

The owner of Southern California’s Hard Rock Hotel Palm Springs last year raised more than $1.5 million by selling stakes in the 163-room luxury resort through Realty Mogul. Investors received such benefits as improved bookings, room-rate discounts and free use of a poolside cabana set aside for hotel owners.

Other projects raising money through crowdfunding include the 3 World Trade Center tower in New York. Fundrise is inviting individual investors to put as little as $5,000 into bonds backing the 80-story skyscraper, the company said in January.

North America is the largest region for crowdfunding, with investments likely to climb 151 percent to $1.42 billion this year, Massolution said. Worldwide, total real estate crowdfunding investments are expected to grow to more than $250 billion by the end of 2020, according to the study.

-By Nadja Brandt