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Thursday, August 5, 2010

British Land NAV growth slows

(LONDON) British Land reported slowing growth in first quarter net asset value yesterday, amid fresh worry for the economy and fears that banks could choke a property market revival with tough lending restrictions.

The biggest office landlord in the City of London booked 2.2 per cent growth in net asset value to 515 pence (S$11) a share for the quarter to end-June, compared with 15.1 per cent growth in the previous quarter, as more investors cite the continued lack of finance for a slowdown in UK commercial property price growth.

The value of its portfolio rose 1.4 per cent to £8.68 billion.

Average commercial property values have risen by just 1.8 per cent in the second quarter, after gaining 3.9 per cent in the first three months of this year, data from Investment Property Databank shows. 'Overall, risks to the global economy seem to have increased in recent months and we remain alert to the potential impact of the fiscal measures needed to address budget deficits not only in the UK, but across Europe,' chief executive Chris Grigg said.

Despite caution about the near-term outlook, British Land said that its overall occupancy increased to 97.8 per cent in the period, reflecting strong London office leasing activity and demand for space in its prime retail real estate.

A Europe-wide health check on European banks on July 23 showed lenders had largely rehabilitated their battered balance sheets but few analysts expect a surge in commercial property lending soon, even though just seven of 91 banks were shown to have inadequate capital to withstand new financial market shocks.

Net mortgage lending growth - a key barometer for the future stability of the UK property market - contracted to £665 million pounds from £838 million in May, Bank of England data showed. -- Reuters

Source: Business Times, 5 Aug 2010

British home prices edge up in July

(LONDON) British house prices moved higher in July, but the market remains flat so far this year, data from top home-loans provider Halifax showed yesterday.

'House prices increased by 0.6 per cent in July, reversing the fall in June,' said Martin Ellis at Halifax. 'Overall, there has been little change in prices during 2010 so far,' he added. 'The mixed pattern of monthly rises and falls over the first seven months of the year is consistent with a slowing market. It is also in line with our view that house prices will be broadly unchanged over 2010 as a whole.'

Halifax, part of state-controlled Lloyds Banking Group (LBG), also revealed that the average house price in Britain stood at £167,425 (S$358,850).

In a separate statement, LBG said it bounced back into profit in the first half. Pre-tax profit stood at £1.6 billion in the six months to the end of June, which compared with a loss of about £4 billion in the same period of 2009. -- AFP

Source: Business Times, 5 Aug 2010

Nine Chow family properties sold for $175m

NINE properties owned by the companies of three feuding brothers have been sold for more than $175 million.

Chow House, the most prominent of the nine assets, went for more than $100 million and could be redeveloped into a residential project.

The nine assets were owned by Associated Development Pte Ltd, Chow Cho Poon (Pte) Ltd and Lee Tung Company (Pte) Ltd. Property investor Chow Cho Poon set up these firms and his three sons became directors and shareholders.

Mr Chow owed debts to the companies when he died in 1997. The debts could not be paid off as his estate's assets were mainly tied up as shares in the companies.

In 2007, eldest son Chow Kwok Chi asked the High Court to wind up the companies so the brothers could go their separate ways.

Deloitte & Touche's head of financial advisory services Tam Chee Chong was appointed liquidator to sell the companies' assets and distribute the proceeds among shareholders. DTZ handled the public tender for the nine properties.

According to DTZ, there were 'overwhelming responses from both local and foreign interested parties'.

The freehold Chow House drew nine bidders and was sold for just over $100 million. BT reported earlier that the buyer could be a group whose shareholders include WyWy Group founder YY Wong.

DTZ said the authorities have granted outline permission for the site to be developed into a new residential project with commercial space on the ground floor.

The other eight properties - at Lorong Telok, North Canal Road, Jalan Besar, Upper Serangoon Road and Lavender Street - went to various other investors.

Source: Business Times, 5 Aug 2010

Ayala Land pumping US$220m into China eco-city

Total foreign investment in Sino-S'pore project hits 28b yuan

(TIANJIN) The Philippines' largest property company, Ayala Land, has become the fourth foreign real estate developer to join an 'eco-city' development project in north China's Tianjin Municipality.

The company signed an agreement to invest US$220 million in the project on Tuesday, taking total foreign investment in the 'eco-city' to 28 billion yuan (S$5.6 billion).

Other foreign property developers involved include Mitsui Fudosan Group and Sunway Real Estate Investment Trust, said Wu Caiwen, president of the Sino-Singapore Tianjin Eco-City Investment and Development.

The Tianjin 'eco-city' development is the second of its kind between the Chinese and Singapore governments, following on from the China-Singapore Suzhou Industry Park.

Both projects feature cooperation in advanced technology and personnel exchange.

Located in the Tianjin Binhai New Area, the 30 square kilometre Tianjin Eco-City lies 150 km east of Beijing. It is hoped that the city would become a harmonious and sustainable community that meets the needs of China as it urbanises.

'The Tianjin Eco-city aims to be a model for the cities of China's future, as well as being a real international eco-city,' Mr Wu said.

The 'eco-city' is 50 km away from downtown Tianjin. It is designed to be a modern metropolis where 350,000 residents can live, work and play by the time it is completed in 2020.

Ayala Land has agreed to develop a 9.78 hectare residential complex in the city designed to accommodate 1,100 households by 2013.

Mr Wu said that all buildings in the eco-city conform with environmentally friendly standards in design, technology, construction and management. 'The foreign developers' experience in building environmentally friendly properties will help push forward the project and allow it to meet its eco-targets.' - Xinhua

Source: Business Times, 5 Aug 2010

Bullish condo sentiment in KL despite oversupply

AN OVERSUPPLY of high-end condominiums in Kuala Lumpur's most popular residential spots notwithstanding, developers are taking heart from strong uptake in recent launches and new benchmark prices.

While prices for landed residential property in the Klang Valley have remained robust, the interest in luxury condos, or rather those with a unique selling point, has been a surprise.

In June, Malaysia recorded what is believed to be its biggest condo transaction - that of a super penthouse in The Binjai On The Park for RM38 million (S$16 million). One of only two, the 14,300 sq ft triplex was sold at about the equivalent of RM2,660 psf to an unidentified corporate chieftain who owns properties worldwide, yet loved the unobstructed views of the Kuala Lumpur Convention Centre (KLCC) skyline afforded by the penthouse.

In nearby Mont Kiara, private developer Bukit Kiara Properties (BKP) has also been creating waves. Last month, it sold about four-fifths of the 200 plus units of its fourth and final block in the development called Verve Suites, at an average RM1,200 psf. Although the apartments come with fittings and furnishings, the cost per sq ft of the 'designer units' is close to prices in many developments in the Kuala Lumpur city centre.

Interestingly, secondary transactions have been much slower, a point that realtors attribute to BKP's easy financing scheme. A buyer need only pay 2.5 per cent in down-payment - or as little as RM20,000 - because of the developer's 5 per cent rebate and bank financing of up to 92.5 per cent. The developer also absorbs interest charges during the construction period as well as the legal fees for the sales and purchase and loan agreements.

Easy terms are a factor, but Verve Suites is very different from others in the market, BKP maintains. As with its previous blocks, the company 'sacrificed' the highest floor, which commands a premium, to build a common area for the use and enjoyment of residents. In its latest called the Vox Tower, the main pull is a sky beach, 37 storeys above ground 'with the magnificent view of the Kuala Lumpur skyline as the backdrop'.

Could buyers be planning to flip the property in three years when it is completed? BKP sales manager Jenny Phui tells BT with a shrug: 'I have a customer - just retired - who bought a unit in all four blocks. That's why he said he doesn't want to come here - because he will get tempted.'

The loyal customer would have purchased a unit in the first block at an average RM560 psf in 2006, rising to RM750 for the second block and to RM950 for the third.

Most of the purchasers, however, are yuppies aged 30-45 years keen on the lifestyle concept.

With liquidity swirling and yields on fixed deposits a mere 2.6-3.6 per cent, many prefer to invest in property despite supply outstripping demand in areas such as Mont Kiara, in which average occupancy has been pegged at about 75 per cent.

Increasing land scarcity notwithstanding, developers continue to maximise space by building more condominiums, perhaps buoyed by such sentiment.

Over the next few months, developer Mah Sing Properties will officially launch Icon Residence Mont Kiara, a 260-unit development whose modular design the company says is inspired by the Greek island of Santorini.

Despite indicative prices of RM1,100-RM1,200 psf, some 6,000 applicants - and counting - have registered their interest, drawn perhaps to the landscape and water features which hint of a 'Mediterranean feel'.

Source: Business Times, 5 Aug 2010

Global Orion makes first foray in residential market

Eyeing the mid-end segment, it will redevelop Balestier site for $80 million

(SINGAPORE) Industrial property developer Global Orion is making its first foray into the local private residential market with a freehold project at Balestier.

It is eyeing the mid-end segment, and hopes to establish itself by offering 'affordable luxury'.

Global Orion's director Satia Narjadin shared these plans with BT. The firm sealed the first collective sale of the year when it bought an industrial building at 6 Jalan Ampas in February, and it will be redeveloping the site into a new condominium.

The firm expects to invest a total of around $80 million in the yet unnamed project, which could have about 100 units. The launch is expected to take place in the first quarter of next year, and prices will be in line with those of new projects in the area.

According to caveats lodged with the authorities in June, units of upcoming developments nearby changed hands at $1,029-$1,506 psf.

Global Orion 'wants to be here for the long haul' and it is designing its first residential project in Singapore carefully, Mr Narjadin said. For starters, it is not keen to offer shoebox units - the smallest one at this development will measure at least 500 sq ft.

The firm also wants its projects to be both functional and aesthetically pleasing. 'I don't want to have to shield my eyes when I go past some of my projects,' he quipped.

Global Orion was incorporated in 2006 and is a family business. Mr Narjadin's father started out in the building materials industry more than 40 years ago, and the family has been developing residential and commercial projects as and when opportunities arose, in a few markets such as Indonesia and Australia.

It was on entering the Singapore market that the family decided to set up a vehicle to focus on property development.

Global Orion chose to get its feet wet in the industrial property sector. Compared with residential projects, industrial ones tend to involve fewer regulatory issues, and there are fewer details to take care of, Mr Narjadin said.

Entering the industrial sector was a way to 'get to know how things work, before we can confidently say ok, we're ready to do a residential project the right way,' he explained.

Global Orion has four industrial developments under its belt - the latest being Meissa at Pasir Panjang. It will launch the freehold 58-unit project in the third quarter.

The seven-storey building will be suitable for light industrial firms, and units range from 969-3,595 sq ft in size. Prices are likely to be around $700 per sq ft.

While Global Orion is using the industrial sector as a stepping stone to the residential sector, it will not be neglecting the former. The firm aims to have a balanced portfolio of projects, Mr Narjadin said.

Source: Business Times, 5 Aug 2010