Buying land parcels overseas is risky, so investors must do proper due diligence
It sounds like a sure-fire winner - buy cheap land overseas and cash in big time once developers come calling - but big losses can also come with the territory, as many Singaporeans can attest.
The uncertainty and high risks of such investments seem obvious, yet many investors here come a cropper when their investments in overseas land turn sour.
Singapore's consumer watchdog has received 11 complaints this year about firms selling such land and 14 last year. There were only four each in 2008 and 2007.
Landbanking, as the process is called, involves firms buying large plots and subdividing them into smaller parcels, making it easier to sell to investors as they can be priced at affordable levels.
Some plots in Britain can be picked up for as little as $10,000 each.
Landbanking firms tell investors they can buy undeveloped plots, usually rural land overseas, and sell later for a profit. Investors are often told the land is on the outskirts of a city where urban development is likely.
When development plans are drawn up, investors can then sell their plots to developers who are willing to pay higher prices to secure the land.
To make the deal attractive, some landbanking firms promise regular payouts over a fixed period or a buy-back guarantee. Some offer the flexibility of allowing investors to switch their plots to ones that have already received development approval so they can enjoy faster gains.
It looks a winner, yet the pitfalls are plenty.
Recently, the case of 200 investors made headlines when their investments in plots in Britain headed south.
They had bought plots at various times near places like Swindon and Gatwick since 2006. Each plot cost $15,000.
In all, these purchases, which were done through local firm Land International (Far East), amounted to an estimated $6 million.
Initially, the investors received quarterly payouts of 8 per cent a year from 2007. But these dried up when the parent firm of Land International (Far East), Land International, was closed by the British government in 2008 following an insolvency probe.
Investors later learnt that the plots had been zoned as 'green belt' or protected land, on which no development is allowed.
In Singapore earlier this month, 40 disgruntled investors turned up at Speakers' Corner in Hong Lim Park to share their woes on their investments which included landbanking.
Many had invested in Singapore-based investment firm Profitable Group and have yet to see any returns. An unhappy Mr H. Yeo, 35, had invested £13,000 (S$27,000) in 2008 in land in the Philippines through Profitable Group. He claimed he was due to get his returns last year but they have not materialised.
Since late last year, the firm has been on the Monetary Authority of Singapore (MAS) Investor Alert list. The list includes entities that may be conducting activities regulated by MAS without authorisation.
The executive director of the Consumers' Association of Singapore (Case), Mr Seah Seng Choon, warned that buying overseas land is a 'very high risk' activity and consumers should be extremely careful. Simply, if you cannot stomach such high risks, do not get involved.
'No one can be sure of getting back their money in such a venture. It is a very high risk, particularly when the business offering such investment is unknown and has no track records,' he said.
Case has been fielding complaints about landbanking for the past four years but it does not have the authority to deal with them.
Despite the bad publicity, some people have profited from their landbanking investments, usually after a long wait.
For instance, Indonesian investor Ludwina Ismail, 52, made total gains of 14 per cent after buying a half acre (0.2ha) of Canadian land in Calgary from Canadian-based landbanking firm Walton International, in early 2005.
She managed to exit after a two-year wait, but that was because the land she bought for C$33,000 (S$44,000) was a resale deal from an earlier investor who had bought it five years ago.
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As with all investments, landbanking investors must do proper due diligence. Here are some considerations.
1 Risks
These are high as the land may not appreciate in value for a long time. There are no guarantees on how soon developers will buy over the land. For instance, investor Molly Tan, 40, was given an estimate of five years by the landbanking firm but she ended up waiting 10 years before making her exit with some gains. So be prepared to stay invested for a number of years.
The long gestation period means the money invested may be stuck for several years while generating no returns, which makes the investment very illiquid. Investors are also subject to exchange rate movements as the plots are on foreign land and bought with foreign currency.
Bear in mind there is a tax impact as well, as profits are subject to withholding tax of about 25 per cent on a tiered basis. Of course, there is always a risk that the land is never developed. And reselling the land, if possible, may result in losses.
In the event of company closures, consumers may be left with nothing. This was what happened in 2006 when Britain landbanking firm Land Heritage (UK) closed after an investigation. Its 700 investors were not refunded.
A key risk is that the firms soliciting landbanking investments are not regulated here so they do not have to adhere to strict investment rules such as those laid down by the MAS, said Case's Mr Seah.
Besides the lack of regulation on such investments, the absence of a track record is another big hurdle, said Mr Chris Firth, chief executive of wealth management firm dollarDex.
'Retail investors may find it hard to get independent inform-ation, and even if they do, they may not have the expertise to properly assess the opportunity and particularly the risks. If things go wrong, they may not be able to call on regulators,' added Mr Firth.
2 Background checks on the land
Before embarking on such a venture, Case urges consumers to get as much information on the land on offer as possible, such as its condition, leasehold, restriction of use and so on.
'Ask the embassy about the conditions and requirements of foreigners owning the land in their country. Also, check up the relevant laws that apply to ownership of land and find out the taxes or levies that apply to land ownership,' suggested Case's Mr Seah.
Another tip is to find out if the offer for that plot of land is a credible one.
You should also assess the likelihood of the land value rising.
dollarDex's Mr Firth advised investors to find out the mark-up on the offered plots.
For example, a piece of British land without planning permission could fetch as little as £15,000. The same plot with planning permission could be worth £150,000, or sometimes even more.
Small investors may end up paying a price somewhere between these two, yet have a small - or unknown - chance of seeing planning permission granted, he said.
'Potentially, that means a big loss if permission is not granted. Moreover, very small plots of land could be very hard to sell in isolation if collective sales efforts peter out.'
Sometimes, land that has good potential for planning permission may already have a vendor's lien on it.
When a landbanking firm buys the plot, it could come with a condition that the firm must pay some money to the seller if the land is on-sold within a specific number of years.
'Such a lien could wipe out any potential profit for the small investor, depending on the mark-up,' added Mr Firth.
3 Background checks on the firm
Do not let a professional-looking website or a formal-sounding name sway you from authenticating the firm.
If it is foreign or has a foreign parent, ensure it is valid by checking with the embassy to ensure the scheme is not a scam.
Find out the paid-up capital and date of existence of the landbanking firm. There should be a proper contractual agreement that spells out its obligations. One important consideration is the title deeds.
You should also determine if the firm is regulated in the country that it is operating in.
Imagine the worst-case scenario and find out what recourse options are available if you want to exit later. If that happens, what are the applicable laws in the event of disputes?
4 Resolution process
If a dispute arises, the process can be costly.
It may be necessary to engage foreign lawyers to deal with the matter and in some countries, it may take years before a case is resolved.
You should research the credibility of the country's legal processes and the integrity of people involved in the legal process.
Furthermore, as these are overseas land plots, consumers must factor in travelling and accommodation costs to deal with any dispute.
Source: Sunday Times, 27 Jun 2010
Showing posts with label Overseas Property. Show all posts
Showing posts with label Overseas Property. Show all posts
Sunday, June 27, 2010
Monday, May 17, 2010
Do your checks before investing in land abroad
I REFER to last Friday's report, '200 lose $6m in British land deals', which revealed that 200 persons have, at various times since 2006, purchased plots of land in rural places like Swindon and Gatwick in Britain through Land International (Far East), a Singapore company which is the subsidiary of parent Land International, shut down by the British government in 2008.
These 200 persons had been promised high returns with regular payouts for three years.
Singapore investors may wish to know that Britain's Land Registry published a guide in 2008 on 'land banking schemes' to alert the public on schemes often touted as offering huge returns on investment. Apparently, land sold in such schemes is usually in areas protected from development by planning law - that is, land in the 'green belt' or agricultural land where no development is ever likely to be permitted.
According to the guide, known in short as Public21, such land is first acquired at a low price and divided into smaller plots. The plots are then offered for sale (even online) to the public on the premise that when planning permission is secured in the future for the site for housing, the plots will be more valuable. Potential investors may be misled about the prospects of obtaining planning permission or redevelopment and this in turn may lead them into thinking that they will have the opportunity to sell the plots at even greater profit to developers in the future.
The guide mentions that those operating land banking schemes often claim that they have well-known banks, other lending institutions and established developers as their partners in the schemes when this may not be the case. In some extreme cases, forged Land Registry letters have been produced to suggest that there is official Land Registry planning approval.
Singapore investors keen on land in Britain should at least peruse such a guide, and make inquiries with the Land Registry or a credible international property firm based in Singapore with overseas networks in those countries of interest to them. Singapore Accredited Estate Agencies agrees with the Consumers Association of Singapore that due diligence and background checks of both the locally registered land banking company and its parent or counterpart in the country of origin must be stringent before investors part with their monies.
Dr Tan Tee Khoon
Chief Executive Officer
Singapore Accredited Estate Agencies
Source: Straits Times, 17 May 2010
These 200 persons had been promised high returns with regular payouts for three years.
Singapore investors may wish to know that Britain's Land Registry published a guide in 2008 on 'land banking schemes' to alert the public on schemes often touted as offering huge returns on investment. Apparently, land sold in such schemes is usually in areas protected from development by planning law - that is, land in the 'green belt' or agricultural land where no development is ever likely to be permitted.
According to the guide, known in short as Public21, such land is first acquired at a low price and divided into smaller plots. The plots are then offered for sale (even online) to the public on the premise that when planning permission is secured in the future for the site for housing, the plots will be more valuable. Potential investors may be misled about the prospects of obtaining planning permission or redevelopment and this in turn may lead them into thinking that they will have the opportunity to sell the plots at even greater profit to developers in the future.
The guide mentions that those operating land banking schemes often claim that they have well-known banks, other lending institutions and established developers as their partners in the schemes when this may not be the case. In some extreme cases, forged Land Registry letters have been produced to suggest that there is official Land Registry planning approval.
Singapore investors keen on land in Britain should at least peruse such a guide, and make inquiries with the Land Registry or a credible international property firm based in Singapore with overseas networks in those countries of interest to them. Singapore Accredited Estate Agencies agrees with the Consumers Association of Singapore that due diligence and background checks of both the locally registered land banking company and its parent or counterpart in the country of origin must be stringent before investors part with their monies.
Dr Tan Tee Khoon
Chief Executive Officer
Singapore Accredited Estate Agencies
Source: Straits Times, 17 May 2010
Thursday, March 18, 2010
Most Europeans prefer to invest nearer home
But for 21% of investors Asia is the target, says survey
European property investors are focusing on opportunities in their region in 2010, with many seeing the rising UK, German and French markets as the most attractive, a CB Richard Ellis survey said yesterday.
Of 271 investors polled, 60 per cent said they were planning to invest in Europe, 21 per cent are looking to Asia, and 12 per cent in North America, CBRE said in the report, released at the MIPIM property trade fair at Cannes, France.
‘This European preference is probably not surprising given that the vast majority of respondents are based in, and predominantly invest within, the region,’ Nick Axford, head of EMEA research and consulting at CBRE, said.
‘However, it is noteworthy that 40 per cent see the best opportunities lying elsewhere, with Asia a clear target for many,’ he said.
Of those investing within Europe, 31 per cent pick the UK as the most attractive market, with France and Germany equally preferred by 18 per cent. Another 17 per cent were looking further east, towards Central and Eastern Europe, the survey showed.
‘As yet, investors see fewer opportunities in the distressed Spanish market, perhaps believing that the window for entering this market will remain open for longer here than elsewhere,’ CBRE said.
Offices are the most attractive target to 39 per cent of investors, while 34 per cent preferred retail properties, in particular shopping centres.
The survey showed more than half of the respondents believed the risk of a ‘double dip’ recession or a weaker-than-expected recovery in occupier demand posed the biggest threats to the property market, CBRE said.
Fears of forced sales by banks and debtors – a key investor concern last year – appears to have ebbed however, it said.
‘Respondents are right not to be too concerned . . . the support . . . from governments and asset protection schemes will help to extend the period over which problem debt can be tackled,’ Philip Cropper, CBRE executive director of real estate finance, said.
Source: Business Times, 18 Mar 2010
European property investors are focusing on opportunities in their region in 2010, with many seeing the rising UK, German and French markets as the most attractive, a CB Richard Ellis survey said yesterday.
Of 271 investors polled, 60 per cent said they were planning to invest in Europe, 21 per cent are looking to Asia, and 12 per cent in North America, CBRE said in the report, released at the MIPIM property trade fair at Cannes, France.
‘This European preference is probably not surprising given that the vast majority of respondents are based in, and predominantly invest within, the region,’ Nick Axford, head of EMEA research and consulting at CBRE, said.
‘However, it is noteworthy that 40 per cent see the best opportunities lying elsewhere, with Asia a clear target for many,’ he said.
Of those investing within Europe, 31 per cent pick the UK as the most attractive market, with France and Germany equally preferred by 18 per cent. Another 17 per cent were looking further east, towards Central and Eastern Europe, the survey showed.
‘As yet, investors see fewer opportunities in the distressed Spanish market, perhaps believing that the window for entering this market will remain open for longer here than elsewhere,’ CBRE said.
Offices are the most attractive target to 39 per cent of investors, while 34 per cent preferred retail properties, in particular shopping centres.
The survey showed more than half of the respondents believed the risk of a ‘double dip’ recession or a weaker-than-expected recovery in occupier demand posed the biggest threats to the property market, CBRE said.
Fears of forced sales by banks and debtors – a key investor concern last year – appears to have ebbed however, it said.
‘Respondents are right not to be too concerned . . . the support . . . from governments and asset protection schemes will help to extend the period over which problem debt can be tackled,’ Philip Cropper, CBRE executive director of real estate finance, said.
Source: Business Times, 18 Mar 2010
Saturday, March 13, 2010
Destination Asia
ASIAN buyers of luxury real estate may be raising their profiles in New York and London by picking up luxury homes at eye-popping prices, but they haven’t been neglecting the property markets closer to home either.
While property prices in more mature Asian markets such as Singapore, Hong Kong and Thailand are still some way from their historical highs – courtesy of the beating they took due to global financial crisis – they have been moving up in tandem with stock markets, and attracting interest from individuals in the upper end of the high net-worth range.
‘The very affluent go where they choose to,’ says William E Heinecke, chief executive of Thai conglomerate The Minor Group, which among its diverse interests is a key player in the hospitality and lifestyle industries, with hotels, resorts and residential properties throughout the region. ‘A lot of people come to Thailand for the weather,’ he says. ‘As a result, if you can afford it, you have homes where you spend time.’
Minor launched its first high-end residential property project in 1995 at the Four Seasons Residences in Chiang Mai. Its growing portfolio of luxury developments includes The Estates Samui in Koh Samui, and the high-rise St Regis Residences in Bangkok is slated for completion next year. Prices for its various properties range between US$2 million and US$6 million.
Mr Heinecke says that Indian and Chinese nationals, who may have domicile in key major cities around the world, have emerged as strong players in the mega-luxury bracket, but traditional buyers from other Asian countries as well as Europeans and Americans are also active in the region. ‘As long as people have money and lifestyle is important, they are going to continue to buy in great locations,’ he says.
He adds that a significant new trend involves branded luxury residences which are located within a hotel property and can be part of the rental pool, commanding rates of several thousand dollars a night. ‘When owners visit their properties once or twice a year, it makes sense to have them professionally managed,’ says Mr Heinecke.
Mr Heinecke says that the quality at the luxe end of the market continues to improve, and there is also no shortage of high-end properties and people who are willing to buy them.
‘The bar continues to go up, and competition raises the bar,’ he says.
The luxury investment bar continues to go up as well in Singapore, where the recent launch of hotel and property developer YTL Corporation’s Kasara – The Lake collection at Sentosa Cove has yielded a highly positive result. The boutique development’s 13 villas have all been sold, at prices ranging from S$14 million to over S$25 million.
Of the buyers, seven were foreigners from Asia while six were locals. In general, there are several types of high-end buyers, says Kemmy Tan, director of international real estate at YTL Singapore.
Asian buyers are typically from Hongkong, Indonesia, Malaysia and China, with an increasing number of expatriate Indians as well. ‘American buyers may hold US passports but may not be living in the US, or they may be in places like Hongkong and have some interest in Asia,’ says Ms Tan. At the peak of the market, there were also investors from places such as Ireland. ‘When they invest, they invest with a longer-term view.’
Despite – or even because of – its restrictions on foreign ownership, Singapore has long been a significant target for investors. ‘They are property investors who own homes in key cities,’ she says. ‘If values are expensive in their home countries and Asia looks attractive, they will come here – these are definitely people with multiple homes in different cities and resorts.’
Buyers of properties in resort destinations are different from those who buy in Sentosa Cove, says Ms Tan. ‘They buy in Phuket and Bali for the resort lifestyle – those who buy here want the best of both worlds. They might have business interests and they want the comfort of city living. For wealthy investors, especially during the financial crisis, they are looking for good buys in ’safe’ locations.’
The proportion of foreign investors versus locals has increased tremendously in the past few years, she adds. And the good news is there is still some upside.
‘Real estate has always been a good hedge against inflation,’ says Ms Tan. ‘For luxury property, we are at least 10 to 15 per cent below the peak, so there’s room to move up.’
Elsewhere in Asia, there have been recent reports of a US$45 million riverfront mansion on the market in Shanghai’s financial district – an indication of the real estate boom in China. If those kinds of prices look a little scary, then there are always less heated up markets like Taiwan, where analysts report that foreign investors make up less than one per cent of the property market. Where opportunities go, of course, the money will always follow.
Source: Business Times, 13 Mar 2010
While property prices in more mature Asian markets such as Singapore, Hong Kong and Thailand are still some way from their historical highs – courtesy of the beating they took due to global financial crisis – they have been moving up in tandem with stock markets, and attracting interest from individuals in the upper end of the high net-worth range.
‘The very affluent go where they choose to,’ says William E Heinecke, chief executive of Thai conglomerate The Minor Group, which among its diverse interests is a key player in the hospitality and lifestyle industries, with hotels, resorts and residential properties throughout the region. ‘A lot of people come to Thailand for the weather,’ he says. ‘As a result, if you can afford it, you have homes where you spend time.’
Minor launched its first high-end residential property project in 1995 at the Four Seasons Residences in Chiang Mai. Its growing portfolio of luxury developments includes The Estates Samui in Koh Samui, and the high-rise St Regis Residences in Bangkok is slated for completion next year. Prices for its various properties range between US$2 million and US$6 million.
Mr Heinecke says that Indian and Chinese nationals, who may have domicile in key major cities around the world, have emerged as strong players in the mega-luxury bracket, but traditional buyers from other Asian countries as well as Europeans and Americans are also active in the region. ‘As long as people have money and lifestyle is important, they are going to continue to buy in great locations,’ he says.
He adds that a significant new trend involves branded luxury residences which are located within a hotel property and can be part of the rental pool, commanding rates of several thousand dollars a night. ‘When owners visit their properties once or twice a year, it makes sense to have them professionally managed,’ says Mr Heinecke.
Mr Heinecke says that the quality at the luxe end of the market continues to improve, and there is also no shortage of high-end properties and people who are willing to buy them.
‘The bar continues to go up, and competition raises the bar,’ he says.
The luxury investment bar continues to go up as well in Singapore, where the recent launch of hotel and property developer YTL Corporation’s Kasara – The Lake collection at Sentosa Cove has yielded a highly positive result. The boutique development’s 13 villas have all been sold, at prices ranging from S$14 million to over S$25 million.
Of the buyers, seven were foreigners from Asia while six were locals. In general, there are several types of high-end buyers, says Kemmy Tan, director of international real estate at YTL Singapore.
Asian buyers are typically from Hongkong, Indonesia, Malaysia and China, with an increasing number of expatriate Indians as well. ‘American buyers may hold US passports but may not be living in the US, or they may be in places like Hongkong and have some interest in Asia,’ says Ms Tan. At the peak of the market, there were also investors from places such as Ireland. ‘When they invest, they invest with a longer-term view.’
Despite – or even because of – its restrictions on foreign ownership, Singapore has long been a significant target for investors. ‘They are property investors who own homes in key cities,’ she says. ‘If values are expensive in their home countries and Asia looks attractive, they will come here – these are definitely people with multiple homes in different cities and resorts.’
Buyers of properties in resort destinations are different from those who buy in Sentosa Cove, says Ms Tan. ‘They buy in Phuket and Bali for the resort lifestyle – those who buy here want the best of both worlds. They might have business interests and they want the comfort of city living. For wealthy investors, especially during the financial crisis, they are looking for good buys in ’safe’ locations.’
The proportion of foreign investors versus locals has increased tremendously in the past few years, she adds. And the good news is there is still some upside.
‘Real estate has always been a good hedge against inflation,’ says Ms Tan. ‘For luxury property, we are at least 10 to 15 per cent below the peak, so there’s room to move up.’
Elsewhere in Asia, there have been recent reports of a US$45 million riverfront mansion on the market in Shanghai’s financial district – an indication of the real estate boom in China. If those kinds of prices look a little scary, then there are always less heated up markets like Taiwan, where analysts report that foreign investors make up less than one per cent of the property market. Where opportunities go, of course, the money will always follow.
Source: Business Times, 13 Mar 2010
Saturday, October 10, 2009
Ho Bee again looks abroad for growth
Developer sniffing for opportunities in China and London
HARD pressed to find land in Singapore, developer Ho Bee Investment again plans to beat a path overseas to places such as China and London to grow.
‘We are still sniffing for opportunities, but our next phase of growth will definitely not just be in Singapore but outside of Singapore,’ Ho Bee chairman and CEO Chua Thian Poh told BT in a recent interview.
Under a joint-venture agreement Ho Bee signed with high-end China residential developer Yanlord last month, the two Singapore-listed developers will join forces for a feasibility study on a project in China.
Ho Bee and Yanlord are also eyeing large sites in China’s second and third-tier cities to build mid and upmarket condos for locals.
Additionally, Ho Bee is scouting for residential development opportunities in Central London. ‘London was badly hurt during the financial turmoil, and the pound has also come down substantially,’ said Mr Chua. ‘Maybe it’s time for us to re-look at London again.’
Ho Bee is no stranger to London, having developed and sold Parliament View, comprising 190 apartments, along the River Thames facing Big Ben and the Houses of Parliament. The project, undertaken jointly with SsangYong Cement – now known as EnGro Corp – was completed in 2002. Ho Bee has retained four apartments in the development.
In China, too, Ho Bee has been involved in projects in Shanghai through joint ventures with Hong Kong partners, and with its new partner Yanlord hopes to secure several large land parcels to do phased development on each site.
‘Hopefully we’ll be be able to do something nice for the first phase and showcase our capabilities. This will help build up value for the remaining phases,’ said Ho Bee executive director Ong Chong Hua.
Through their alliance, Ho Bee and Yanlord will leverage on each other’s expertise and track record. ‘Yanlord is a high-end and reputable developer in China. Ho Bee has also made a name for itself, especially on Sentosa Cove. And I think projects by Singapore developers still command a price premium in China,’ Mr Ong said.
‘In China, you can get a big chunk of land and develop it over, say, a 10-year period. So things are much easier to plan. In Singapore, getting land is quite ad hoc.’
Mr Chua said securing land here through collective sales has become more difficult because of the more rigorous rules governing such sales to protect minority owners.
‘Looking for our raw material is the big challenge in Singapore,’ he said. ‘Every site that comes up (at state tenders) now attracts 12-15 tenderers. The pricing is also very competitive.’
‘Hopefully, when the government restarts the confirmed list next year, it will stabilise the market.’
A more positive note for Ho Bee in Singapore is that it has not exhausted its local land bank. Even after this week’s preview of the 205-unit Trilight condo on Newton Road, Ho Bee has three other Singapore condos that can generate a total of over 600 units. These include the 248-unit Parvis at Holland Hill, which is a joint venture with MCL Land, and two condos at Sentosa Cove – the 151-unit Seascape and a project of about 300 units on the Pinnacle Collection site.
Parvis may be previewed later this month or next, while the two Sentosa projects – to be developed jointly with Malaysia’s IOI Group – are slated for release next year to leverage on the opening of Sentosa’s integrated resort.
Ho Bee has been the predominant residential developer at Sentosa Cove, an upscale waterfront housing district emerging on 117ha of mostly reclaimed land on the east coast of Sentosa island. It clinched eight plots there, five of which it has completed developing. The other three are the two joint-venture sites with IOI and another plot on which Ho Bee is building Turquoise condo, which is about half-sold.
‘Most of our projects are close to nature – whether it’s a hill, nature reserve, river or the sea,’ said Mr Chua, who started Ho Bee in 1987 as a small developer focusing on industrial property. ‘In the 1990s, we became a decent-sized developer when we developed the Southaven I and II condos in Upper Bukit Timah at the foot of Bukit Timah hill,’ the 61-year-old said.
Even before the Singapore property market peaked in 1996, Ho Bee had turned its attention to London. Initially it bought several floors of apartments off-plan from London builders and later bought apartment blocks which it subsequently sold as the market went up.
‘When we understood the market better, we developed this trophy building opposite the Houses of Parliament,’ said Mr Chua, referring to the Parliament View project.
Things panned out well for Ho Bee as it managed to ride the jump in London property prices as well as the appreciation of the pound – in stark contrast to the lean times for Singapore’s property market during the Asian crisis.
‘Then around 2001-2002, we thought it was time to come back to Singapore,’ Mr Chua said. The company developed several projects such as Rio Vista condo at Hougang beside the Serangoon River, jointly with MCL, and Amaninda in Thomson Road, before it turned its attention to clinching sites at Sentosa Cove when these went up for sale from late 2003.
The rest, as they say, is history.
Source: Business Times, 10 Oct 2009
HARD pressed to find land in Singapore, developer Ho Bee Investment again plans to beat a path overseas to places such as China and London to grow.
‘We are still sniffing for opportunities, but our next phase of growth will definitely not just be in Singapore but outside of Singapore,’ Ho Bee chairman and CEO Chua Thian Poh told BT in a recent interview.
Under a joint-venture agreement Ho Bee signed with high-end China residential developer Yanlord last month, the two Singapore-listed developers will join forces for a feasibility study on a project in China.
Ho Bee and Yanlord are also eyeing large sites in China’s second and third-tier cities to build mid and upmarket condos for locals.
Additionally, Ho Bee is scouting for residential development opportunities in Central London. ‘London was badly hurt during the financial turmoil, and the pound has also come down substantially,’ said Mr Chua. ‘Maybe it’s time for us to re-look at London again.’
Ho Bee is no stranger to London, having developed and sold Parliament View, comprising 190 apartments, along the River Thames facing Big Ben and the Houses of Parliament. The project, undertaken jointly with SsangYong Cement – now known as EnGro Corp – was completed in 2002. Ho Bee has retained four apartments in the development.
In China, too, Ho Bee has been involved in projects in Shanghai through joint ventures with Hong Kong partners, and with its new partner Yanlord hopes to secure several large land parcels to do phased development on each site.
‘Hopefully we’ll be be able to do something nice for the first phase and showcase our capabilities. This will help build up value for the remaining phases,’ said Ho Bee executive director Ong Chong Hua.
Through their alliance, Ho Bee and Yanlord will leverage on each other’s expertise and track record. ‘Yanlord is a high-end and reputable developer in China. Ho Bee has also made a name for itself, especially on Sentosa Cove. And I think projects by Singapore developers still command a price premium in China,’ Mr Ong said.
‘In China, you can get a big chunk of land and develop it over, say, a 10-year period. So things are much easier to plan. In Singapore, getting land is quite ad hoc.’
Mr Chua said securing land here through collective sales has become more difficult because of the more rigorous rules governing such sales to protect minority owners.
‘Looking for our raw material is the big challenge in Singapore,’ he said. ‘Every site that comes up (at state tenders) now attracts 12-15 tenderers. The pricing is also very competitive.’
‘Hopefully, when the government restarts the confirmed list next year, it will stabilise the market.’
A more positive note for Ho Bee in Singapore is that it has not exhausted its local land bank. Even after this week’s preview of the 205-unit Trilight condo on Newton Road, Ho Bee has three other Singapore condos that can generate a total of over 600 units. These include the 248-unit Parvis at Holland Hill, which is a joint venture with MCL Land, and two condos at Sentosa Cove – the 151-unit Seascape and a project of about 300 units on the Pinnacle Collection site.
Parvis may be previewed later this month or next, while the two Sentosa projects – to be developed jointly with Malaysia’s IOI Group – are slated for release next year to leverage on the opening of Sentosa’s integrated resort.
Ho Bee has been the predominant residential developer at Sentosa Cove, an upscale waterfront housing district emerging on 117ha of mostly reclaimed land on the east coast of Sentosa island. It clinched eight plots there, five of which it has completed developing. The other three are the two joint-venture sites with IOI and another plot on which Ho Bee is building Turquoise condo, which is about half-sold.
‘Most of our projects are close to nature – whether it’s a hill, nature reserve, river or the sea,’ said Mr Chua, who started Ho Bee in 1987 as a small developer focusing on industrial property. ‘In the 1990s, we became a decent-sized developer when we developed the Southaven I and II condos in Upper Bukit Timah at the foot of Bukit Timah hill,’ the 61-year-old said.
Even before the Singapore property market peaked in 1996, Ho Bee had turned its attention to London. Initially it bought several floors of apartments off-plan from London builders and later bought apartment blocks which it subsequently sold as the market went up.
‘When we understood the market better, we developed this trophy building opposite the Houses of Parliament,’ said Mr Chua, referring to the Parliament View project.
Things panned out well for Ho Bee as it managed to ride the jump in London property prices as well as the appreciation of the pound – in stark contrast to the lean times for Singapore’s property market during the Asian crisis.
‘Then around 2001-2002, we thought it was time to come back to Singapore,’ Mr Chua said. The company developed several projects such as Rio Vista condo at Hougang beside the Serangoon River, jointly with MCL, and Amaninda in Thomson Road, before it turned its attention to clinching sites at Sentosa Cove when these went up for sale from late 2003.
The rest, as they say, is history.
Source: Business Times, 10 Oct 2009
Wednesday, September 23, 2009
SINGAPORE is now a relative bargain for office tenants. Thanks to a sharp fall in rents, it has fallen right off one key ranking of the world's 20 most expensive office locations.
sat in 26th spot as at June 30, having tumbled 20 places from No. 6 just six months earlier, according to a global office report yesterday by Colliers International.
Indeed, average office rents here are now below the 20-year historical average of $8.40 per sq ft (psf) a month, after diving nearly 55 per cent from their peak a year ago, said another report from Jones Lang LaSalle yesterday.
Its preliminary data showed that average gross effective rent of prime Grade A properties in the main central business district area fell by 12.6 per cent quarter-on-quarter to $8.30 psf a month in the current third quarter.
The Colliers ranking showed that Hong Kong remained in the No. 1 spot ahead of cities such as London, Moscow and Tokyo.
It said Singapore's office property market was one of the most severely hit by the global financial crisis in the first half of the year. It registered the second biggest drop of 42.3 per cent in Grade A office rents to US$55.53 (S$78) psf a year.
Latvian capital Riga posted a drop of 49.6 per cent, the largest in the first half of the year, while New Delhi came in third with a 38.6 per cent fall. Hong Kong saw a 22.4 per cent fall during this period.
Unlike Hong Kong, Singapore has a supply problem. The Colliers report showed that Singapore ranked No. 8 among the cities with the most office supply in the pipeline.
Singapore has 10 million sq ft of office space under construction - likely to keep rents in the doldrums for a while more, despite the improving economic outlook, said Colliers International's director of research and advisory, Ms Tay Huey Ying.
'Singapore will stay out of the Top 20 ranking for at least the next 12 months, which means it will remain a very competitive location.'
Jones Lang LaSalle said market activity has risen significantly in the third quarter but much of the demand is a 'flight to quality' rather than evidence of expansion.
This was the case at 78 Shenton Way Tower 2. Commerz Real said yesterday that it has secured an anchor tenant - its first - for the building, which was completed in June.
The Singapore branch of American Home Assurance Co, an operating unit of Chartis, will take up about 85 per cent of 64,000 sq ft of space for 10 years, with an option to extend for a further three years.
The firm will move there next January from its present offices in Martin Road.
So far, increased activity is not enough to absorb new supply, as core CBD office stock grew 600,000 sq ft in the third quarter with the completion of 71 Robinson Road, Mapletree Anson and 78 Shenton Way Tower 2, said Jones Lang LaSalle.
'Under pressure to secure occupancy, some landlords continue to be aggressive on rentals,' it said. 'There have also been instances of landlords offering cash subsidies to attract prospective tenants in order to keep effective rentals high.'
Rent-free periods while negotiated on a case-by-case basis, are also becoming more widespread as landlords seek to maintain headline rents, it added.
With firms still cautious, new leases are likely to be signed at competitive rates and that will continue to weigh on the market, said Ms Tay.
Source, Straits Times 23 Sep 2009
sat in 26th spot as at June 30, having tumbled 20 places from No. 6 just six months earlier, according to a global office report yesterday by Colliers International.
Indeed, average office rents here are now below the 20-year historical average of $8.40 per sq ft (psf) a month, after diving nearly 55 per cent from their peak a year ago, said another report from Jones Lang LaSalle yesterday.
Its preliminary data showed that average gross effective rent of prime Grade A properties in the main central business district area fell by 12.6 per cent quarter-on-quarter to $8.30 psf a month in the current third quarter.
The Colliers ranking showed that Hong Kong remained in the No. 1 spot ahead of cities such as London, Moscow and Tokyo.
It said Singapore's office property market was one of the most severely hit by the global financial crisis in the first half of the year. It registered the second biggest drop of 42.3 per cent in Grade A office rents to US$55.53 (S$78) psf a year.
Latvian capital Riga posted a drop of 49.6 per cent, the largest in the first half of the year, while New Delhi came in third with a 38.6 per cent fall. Hong Kong saw a 22.4 per cent fall during this period.
Unlike Hong Kong, Singapore has a supply problem. The Colliers report showed that Singapore ranked No. 8 among the cities with the most office supply in the pipeline.
Singapore has 10 million sq ft of office space under construction - likely to keep rents in the doldrums for a while more, despite the improving economic outlook, said Colliers International's director of research and advisory, Ms Tay Huey Ying.
'Singapore will stay out of the Top 20 ranking for at least the next 12 months, which means it will remain a very competitive location.'
Jones Lang LaSalle said market activity has risen significantly in the third quarter but much of the demand is a 'flight to quality' rather than evidence of expansion.
This was the case at 78 Shenton Way Tower 2. Commerz Real said yesterday that it has secured an anchor tenant - its first - for the building, which was completed in June.
The Singapore branch of American Home Assurance Co, an operating unit of Chartis, will take up about 85 per cent of 64,000 sq ft of space for 10 years, with an option to extend for a further three years.
The firm will move there next January from its present offices in Martin Road.
So far, increased activity is not enough to absorb new supply, as core CBD office stock grew 600,000 sq ft in the third quarter with the completion of 71 Robinson Road, Mapletree Anson and 78 Shenton Way Tower 2, said Jones Lang LaSalle.
'Under pressure to secure occupancy, some landlords continue to be aggressive on rentals,' it said. 'There have also been instances of landlords offering cash subsidies to attract prospective tenants in order to keep effective rentals high.'
Rent-free periods while negotiated on a case-by-case basis, are also becoming more widespread as landlords seek to maintain headline rents, it added.
With firms still cautious, new leases are likely to be signed at competitive rates and that will continue to weigh on the market, said Ms Tay.
Source, Straits Times 23 Sep 2009
Thursday, September 3, 2009
Aussie wealth funds loading up on property
Other big Australian investors likely to follow suit, say analysts
(SYDNEY) Australia's sovereign wealth fund is beefing up its property portfolio through acquisitions at home and overseas, sources and local media said yesterday, leading analysts to suggest that more big investors may follow suit.
The Future Fund, which holds A$58 billion (S$69.7 billion) in assets, is looking to buy a stake in the Bullring shopping centre in Birmingham, UK, and is also looking at the Lakeside Joondalup shopping centre in Perth, deals that could be worth more than A$800 million, according to The Australian newspaper and sources.
Signs of stabilisation are emerging in the global property market.
Westfield Group, the world's largest shopping mall landlord, said last month that it was cautiously optimistic about the outlook, echoing other Australian firms, while there are signs of improvement in the US and UK markets, according to analysts.
'This is a sign of things to come. There will be more purchases. There are prospective investors sitting there with cash ready to invest,' said Ken Atchison, managing director at Atchison Consultants.
'Like Future Fund, superannuation funds in Australia will start to have cash available in the near future,' he added.
Ian Fryer, head of research for Chant West which covers the pension fund market in Australia, agreed. 'It's fair to say that some have been quite cautious in their investments over the past a little while and have built up more cash than they usually would, and they are waiting for opportunities,' he said.
The timing looks right for picking up real estate assets.
Capital values for UK retail assets fell 27 per cent last year, while those for Australian retail assets dropped 10.6 per cent in the year to June, according to UK research firm IPD.
EL & C Baillieu Stockbroking head analyst Ivor Ries said it was a good time in the economic cycle for the Future Fund to be buying shopping mall assets.
'When you've just been through a period where consumers have been shutting their wallets and savings are high, that's when you should be buying shopping centres.'
He said the Future Fund would get better yields by buying assets directly rather than buying exposure through listed property trusts.
'There's about a 1.5 percentage point gap between the cash yield on the listed vehicle and the actual yield you get from buying them directly,' Mr Ries said.
The Future Fund said it did not comment on specific investments.
The fund had just A$529 million invested directly in property, or one per cent of its total portfolio, as at March 31, the most recent date for which figures are available. That is well short of its long-term plans to invest up to 30 per cent of its funds in assets such as property, infrastructure and utilities. The fund sees itself as a long-term holder of assets. -- Reuters
Source: Business Times, 3 Sep 2009
(SYDNEY) Australia's sovereign wealth fund is beefing up its property portfolio through acquisitions at home and overseas, sources and local media said yesterday, leading analysts to suggest that more big investors may follow suit.
The Future Fund, which holds A$58 billion (S$69.7 billion) in assets, is looking to buy a stake in the Bullring shopping centre in Birmingham, UK, and is also looking at the Lakeside Joondalup shopping centre in Perth, deals that could be worth more than A$800 million, according to The Australian newspaper and sources.
Signs of stabilisation are emerging in the global property market.
Westfield Group, the world's largest shopping mall landlord, said last month that it was cautiously optimistic about the outlook, echoing other Australian firms, while there are signs of improvement in the US and UK markets, according to analysts.
'This is a sign of things to come. There will be more purchases. There are prospective investors sitting there with cash ready to invest,' said Ken Atchison, managing director at Atchison Consultants.
'Like Future Fund, superannuation funds in Australia will start to have cash available in the near future,' he added.
Ian Fryer, head of research for Chant West which covers the pension fund market in Australia, agreed. 'It's fair to say that some have been quite cautious in their investments over the past a little while and have built up more cash than they usually would, and they are waiting for opportunities,' he said.
The timing looks right for picking up real estate assets.
Capital values for UK retail assets fell 27 per cent last year, while those for Australian retail assets dropped 10.6 per cent in the year to June, according to UK research firm IPD.
EL & C Baillieu Stockbroking head analyst Ivor Ries said it was a good time in the economic cycle for the Future Fund to be buying shopping mall assets.
'When you've just been through a period where consumers have been shutting their wallets and savings are high, that's when you should be buying shopping centres.'
He said the Future Fund would get better yields by buying assets directly rather than buying exposure through listed property trusts.
'There's about a 1.5 percentage point gap between the cash yield on the listed vehicle and the actual yield you get from buying them directly,' Mr Ries said.
The Future Fund said it did not comment on specific investments.
The fund had just A$529 million invested directly in property, or one per cent of its total portfolio, as at March 31, the most recent date for which figures are available. That is well short of its long-term plans to invest up to 30 per cent of its funds in assets such as property, infrastructure and utilities. The fund sees itself as a long-term holder of assets. -- Reuters
Source: Business Times, 3 Sep 2009
Tuesday, August 18, 2009
Rental scam targets potential tenants
(WASHINGTON) Michelle Jonasson-Jones, a Silver Spring, Maryland-based property agent, cautions potential tenants about a rental scheme making the rounds online that has caught the attention of the FBI.
Ms Jonasson-Jones said that she has had her listings for rental properties 'stolen' and relisted under a different name and a lower price, usually on Craigslist. The impostors send prospective tenants an 'application' and ask for their personal and financial information.
They tell prospective renters that the owner is working overseas and is unavailable to show the house.
'It used to be they were scamming the owner; now they're scamming the tenants,' she said.
Wendy Dufford, an intelligence analyst for the FBI in Columbia, South Carolina, wrote an article for the bureau's website after the South Carolina Association of Realtors called to report such a scam.
Tenants who had been scammed were showing up at people's houses, she said, believing they had rented from a missionary overseas.
A formal investigation won't be launched until a minimum threshold of losses is reported online, Ms Dufford said, but so far the FBI has discerned that the scam originated in Nigeria and is affecting cities nationwide.
'They're choosing victims because of the economy,' Ms Dufford said.
Many of the scam victims have been forced to rent, because they've lost their homes and are searching on Craigslist, she said.
'They try to rent these homes, and then they get their money stolen.' - WP
Source: Business Times, 18 Aug 2009
Ms Jonasson-Jones said that she has had her listings for rental properties 'stolen' and relisted under a different name and a lower price, usually on Craigslist. The impostors send prospective tenants an 'application' and ask for their personal and financial information.
They tell prospective renters that the owner is working overseas and is unavailable to show the house.
'It used to be they were scamming the owner; now they're scamming the tenants,' she said.
Wendy Dufford, an intelligence analyst for the FBI in Columbia, South Carolina, wrote an article for the bureau's website after the South Carolina Association of Realtors called to report such a scam.
Tenants who had been scammed were showing up at people's houses, she said, believing they had rented from a missionary overseas.
A formal investigation won't be launched until a minimum threshold of losses is reported online, Ms Dufford said, but so far the FBI has discerned that the scam originated in Nigeria and is affecting cities nationwide.
'They're choosing victims because of the economy,' Ms Dufford said.
Many of the scam victims have been forced to rent, because they've lost their homes and are searching on Craigslist, she said.
'They try to rent these homes, and then they get their money stolen.' - WP
Source: Business Times, 18 Aug 2009
Saturday, August 15, 2009
Europe’s commercial property transactions value fall
THE average value of European commercial property transactions fell 35 per cent in the first half as banks granted fewer loans, according to CB Richard Ellis Group Inc.
The average price was 18.4 million euros (S$37.9 million), down from 28.3 million euros a year earlier and 44.4 million euros at the peak of the market in 2007, said CBRE, the world’s largest property broker. The biggest deal was the sale of properties owned by failed company Dawnay Day Group in the UK for more than £600 million (S$1.43 billion), CBRE said.
Commercial property investors are struggling to finance large purchases in Europe after banks curbed lending in the credit crunch and stopped securing bonds against buildings. There were nine transactions valued at more than 200 million euros in the first half, compared with 40 a year earlier, according to the broker.
‘Appetite for lending on large transactions has been very limited since the second half of 2007,’ said Jonathan Hull, CBRE’s executive director of European capital markets. ‘In recent months, we have seen greater willingness to lend.’
Source: Business Times, 15 Aug 2009
The average price was 18.4 million euros (S$37.9 million), down from 28.3 million euros a year earlier and 44.4 million euros at the peak of the market in 2007, said CBRE, the world’s largest property broker. The biggest deal was the sale of properties owned by failed company Dawnay Day Group in the UK for more than £600 million (S$1.43 billion), CBRE said.
Commercial property investors are struggling to finance large purchases in Europe after banks curbed lending in the credit crunch and stopped securing bonds against buildings. There were nine transactions valued at more than 200 million euros in the first half, compared with 40 a year earlier, according to the broker.
‘Appetite for lending on large transactions has been very limited since the second half of 2007,’ said Jonathan Hull, CBRE’s executive director of European capital markets. ‘In recent months, we have seen greater willingness to lend.’
Source: Business Times, 15 Aug 2009
Sunday, July 12, 2009
Good bet on student housing
Student accommodation promises good investment returns even as UK property market remains dull
London - Property investors are turning to the student accommodation sector as a would-be phoenix rising from the ashes of the UK real estate market, promising growth in returns and size for at least the next few years.
Student housing is viewed as a rarity in the UK property market that still makes for an attractive investment, as more traditional commercial assets suffer falling capital values and rents, and rising tenant defaults.
'Ten per cent increase (in student housing rents) per year is not sustainable in the long term when you have new supply coming on,' said Mr Philip Hillman of property agency King Sturge.
'But with the chronic shortage of student housing, rents will still rise for some time.'
Property broker Savills said it now gets about two enquiries a week from pension funds new to student housing, as rents for other assets like offices, malls and factories are forecast to fall up to 15 per cent this year amid the recession.
'Pension funds had their fingers burnt in commercial assets where, if a big tenant drops out, the entire building is vacant; but if a student drops out, you still have a hundred more ready to take the room,' Savills associate director Natasha Ham said.
The student housing sector, valued at 26.5 billion euros (S$54 billion), two-thirds of which is owned by universities and the rest by private operators, is about 10 per cent the size of the total commercial property market. Risk-averse banks are still willing to lend to build new student flats, thanks to an expected double-digit growth in Britain's student numbers, student homes operators said.
University Partnerships Programme (UPP), the UK's second-biggest student homes operator and part of Barclays Private Equity, last year raised £300 million (S$711 million) from banks, and plans to further invest £1 billion and double its portfolio of 18,000 student beds by 2015.
New entrants to the student housing market have been attracted by the prospects of steady returns, where property yields have held steady at about 6 per cent over the past three years.
Sydney's Campus Living Villages, backed by four Australian pension funds, made its first UK deal last December, buying 755 student flats from the University of Salford in Manchester, and is in talks over deals with other British universities, its UK chief executive, Mr Gary Clarke, said.
Elsewhere in Europe, agents say Germany and France also offer investment opportunities because of their attraction to overseas students, and relatively undeveloped student housing where average rents are a third cheaper than in the UK.
Savills is working with a Germany-based institutional investor to set up a 210-million-euro fund later this year, with plans to build student homes offering 6,000 beds across 15 German cities, including Frankfurt and Munich, Ms Ham said.
'The fund manager has identified a UK-listed developer to provide sector expertise, to create the branded student accommodation model in Germany,' she said, declining to name the parties as an agreement has not yet been finalised.
Branded student housing can be pricey, with high-end versions offering en suites, flatscreen TVs and laundry services costing up to £300 a week in London.
Despite the recession, King Sturge's Mr Hillman said there are few signs that the target market - mainly affluent first-year and post-graduate international students - is trading down.
'First-year students usually can't find housemates to rent with, and there is no guarantee the flat will be near to school,' said UPP finance director Gabriel Behr.
Reuters
-------------------------------------------------------------------------
Promising market
Elsewhere in Europe, agents say Germany and France also offer investment opportunities because of their attraction to overseas students, and relatively undeveloped student housing where average rents are a third cheaper than in the UK.
Wednesday, June 24, 2009
Singapore real estate 'not hot' for investors
Institutions and fund managers prefer China, Japan, Australia: Survey SINGAPORE no longer appears on the radar screen of most non-listed institutional investors and fund managers, according to the latest survey by Asian Real Estate Association (Area).
This year's hottest picks are China, Australia and Japan, said its Investment Intentions Asia Survey 2009.
The online survey of 73 organisations active in the Asian non-listed real estate funds market found that less than 20 per cent of fund managers and just 10 per cent of investors chose Singapore as their preferred investment location.
China is the most appealing location in terms of Asian performance prospects - it is the choice of 90 per cent of investors and 81 per cent of fund managers.
Japan was the top fund choice for fund of funds managers, firms that hold a portfolio of various investment funds, with 88 per cent of them opting for the country.
Australia, a new entrant, was also a firm favourite.
'With the exception of China, investors generally appear to have a lower regard than fund of funds managers or fund managers on the prospect of other Asian markets delivering target
performances,' said the survey.
This year, Singapore did not figure at all in respondents' preferred locations and sectors in Asia.
In last year's survey, the Singapore office market was ranked seventh on the list of respondents' preferred locations and sectors in Asia - though fund of funds managers were already not keen.
The number of institutions interested in Singapore has certainly diminished due to the downturn, said Mr Craig Ward, director of regional capital markets at Savills Singapore.
'There are still some institutions keen on the Singapore office market, but pricing has not reached an equilibrium.'
According to the survey, investors this year are most keen on the residential sector in China, followed by its retail market.
Fund of funds managers, however, prefer the Australian and the Japanese office sectors.
About 60 per cent of the respondents believe Singapore to be most hit by the global downturn, while just 20 per cent of them thought Hong Kong and Australia to be worst hit by the slump.
'Singapore is one of the most open economies in the world, so it is more than averagely affected by the downturn,' said Mr Robert Lie, co-director of Area's executive committee.
But it is an attractive mature market over the medium term, he added.
'A lot of investors are cautious. Basically, indicated prices have to correct,' said Mr Lie, who is also managing director of Redevco Asia.
Asia is the second home market of Redevco, which owns one of the largest retail real estate portfolios in Europe.
Source: Straits Times, 24 June 2009
Wednesday, June 3, 2009
Global retail rents hit by economic crisis
Orchard Road still 28th costliest; most cities see double digit drop: Colliers PRIME street-front retail rents in most cities worldwide shrank by double digits - and in some cases, as much as half - over the past 12 months as consumers cut back on spending, according to a survey released yesterday.
Published annually by Colliers International, the survey tracks annual retail rents - in terms of US dollars per square foot - along the prime retail corridors of 127 cities in North America, Europe, the Middle East and Africa, the Asia-Pacific and Latin America.
Singapore's Orchard Road remained the 28th most expensive place in which to rent retail space. Annual retail rents there fell to US$324 psf in the latest survey, from US$367 psf a year earlier. But the worldwide slide in rents meant Orchard Road retained its ranking.
Fifth Avenue in New York topped the global chart again this year with annual retail rents of US$1,400 psf, followed by the Champs Elysees in Paris at US$1,203 psf and Causeway Bay in Hong Kong at US$1,192 psf.
'As in other cities, as the financial crisis deepened and Singapore's economy slipped into a recession in the final quarter of 2008, domestic consumers tightened their belts on fears of rising unemployment and wage cuts,' said Tay Huey Ying, Colliers' director of research and advisory. 'Declining visitor arrivals also affected retail sales.'
Amid the less favourable operating environment, tenants became more selective and rent-sensitive, Colliers said. Coupled with the supply of retail space in the pipeline, Singapore's prime retail rents started to buckle in Q4 2008.
But although rents in Singapore are falling, they are not falling as fast as those elsewhere. Due to their relative resilience, and the relative strength of the Singapore dollar against the US currency, Singapore's prime retail rents recorded a milder decline of 12 per cent in US dollar terms compared with rents in some other Asia-Pacific cities.
'What this means is our retail competitiveness against our more costly neighbours has been eroded,' Ms Tay said. 'For example, while Singapore's premier retail rents were 18 per cent cheaper than those in Sydney and Melbourne in 2008, the gap has now narrowed to just 3 per cent in the latest survey.'
By the same token, Singapore's competitiveness against cheaper neighbours - such as Auckland, Bangalore, Christchurch, Delhi, Perth and Wellington - has worsened because the gap in rents has widened.
Colliers expects prime retail rents in Singapore to fall between 10 and 15 per cent in 2009, hit by weak consumer sentiment and falling visitor arrivals.
Source: Business Times, 3 June 2009
Wednesday, May 20, 2009
Property sector outlook 'uncertain'
DESPITE the recent uptick in property interest in some countries, the outlook for the sector remains uncertain, an Asian real estate conference heard yesterday.
Speaking at Cityscape Asia 2009, Mr Stuart Labrooy, chief executive of Malaysia-based Axis Reit Management, said the full effects of the credit crisis 'have not yet reached Asia'.
Property valuations in Asia, he said, will probably bottom out in the second half of the year, but there was no telling when the recovery will come.
Also speaking during a panel discussion on the impact of the downturn on Asian real estate, Mr Blake Olafson, Arcapita's head of Asia real estate group, said the industry was now focusing on the basics.
He added: 'If you're a pension fund manager, that's what you'll do - not suddenly try to become a real estate developer in some Tier 3 city in China. There's a greater sense of realism in the market, and a return to looking at fundamental cash flows, not just internal rate of return deals.'
Invista Real Estate chief executive Duncan Owen said Singapore, Hong Kong and Tokyo are attractive over the medium to long term as they have 'quite large commercial markets', sustainable economies and increasing market transparency.
The fact that the Singapore market is now badly affected like other markets is an opportunity for them, he added.
Invista, Britain's largest-listed property fund manager, recently bought the Asian real estate business of Babcock & Brown, which gave it offices in Singapore and Hong Kong.
In his keynote address, Singapore's Urban Redevelopment Authority group director (strategic planning) Richard Hoo acknowledged that the economic climate was now more challenging than during last year's Cityscape Asia.
Today's focus, he said, was on 'enhancing our readiness' when the economy improves.
Yesterday's Cityscape Asia exhibition was quieter than previous events. Just 40 exhibitors have set up booths this year, and the organiser is expecting more than 3,000 people to visit over its three-day period ending tomorrow.
Last year, it attracted 5,520 real estate professionals and 70 exhibitors.
The 2007 event - inaugurated by National Development Minister Mah Bow Tan - drew 4,689 participants and 125 exhibitors.
Source: Straits Times, 20 May 2009Property investors going back to basics
There's more stress now on asset management
THE property investment landscape has changed significantly because of the global financial crisis, speakers at a panel discussion said yesterday.
For a start, investors are going 'back to basics', said Blake Olafson, director and head of the Asia real estate group at international investment bank Arcapita.
For example, pension funds that used to invest in riskier asset classes are now beginning to redirect their investments into less risky assets, he said.
Agreeing that the industry is going back to basics, John Evans, managing director of Tractus Asia, said: 'Looking at it from a global economic perspective, the Asian real estate market had become a market where everyone was trying to get in, everyone was becoming a property developer.'
Mr Olafson and Mr Evans were speaking at Cityscape Asia, an annual real estate exhibition and conference aimed at investors.
The 'back-to-basics' approach includes a focus on making existing assets work harder.
'There's a lot more emphasis around true asset management, a shift towards hiring third-party facilities managers, and much more effort is going into tenant retention strategies,' Mr Olafson said. 'Before the downturn the focus was on building development, now asset management has become a lot more important.'
Players in the industry are going back to their core competencies and this, combined with tighter credit conditions, is driving a 'flight to quality' and a focus on assets that generate cashflows from day one, he said. 'There is liquidity, but it is being driven towards good quality projects.'
Panellists agreed that liquidity is beginning to return to the Asian market, although banks are still very selective about which projects to back.
Speakers were also quizzed about when they expect real estate markets to emerge from the current slump. In response, the panellists said there was no way to put a timeline to recovery.
'Everyone is trying to tell where the bottom is,' said panellist Stuart Labrooy, chief executive of Malaysia's Axis Reit Management. 'I think the full effects of the recession have not reached Asia yet.'
Property valuations should start to bottom out in Asia in the second half of 2009, he said.
More than 3,000 real estate developers, investors and regulators are expected to attend Cityscape Asia, which focuses on all aspects of real estate development, on May 19, 20 and 21.
Source: Business Times, 20 May 2009
THE property investment landscape has changed significantly because of the global financial crisis, speakers at a panel discussion said yesterday.
For a start, investors are going 'back to basics', said Blake Olafson, director and head of the Asia real estate group at international investment bank Arcapita.
For example, pension funds that used to invest in riskier asset classes are now beginning to redirect their investments into less risky assets, he said.
Agreeing that the industry is going back to basics, John Evans, managing director of Tractus Asia, said: 'Looking at it from a global economic perspective, the Asian real estate market had become a market where everyone was trying to get in, everyone was becoming a property developer.'
Mr Olafson and Mr Evans were speaking at Cityscape Asia, an annual real estate exhibition and conference aimed at investors.
The 'back-to-basics' approach includes a focus on making existing assets work harder.
'There's a lot more emphasis around true asset management, a shift towards hiring third-party facilities managers, and much more effort is going into tenant retention strategies,' Mr Olafson said. 'Before the downturn the focus was on building development, now asset management has become a lot more important.'
Players in the industry are going back to their core competencies and this, combined with tighter credit conditions, is driving a 'flight to quality' and a focus on assets that generate cashflows from day one, he said. 'There is liquidity, but it is being driven towards good quality projects.'
Panellists agreed that liquidity is beginning to return to the Asian market, although banks are still very selective about which projects to back.
Speakers were also quizzed about when they expect real estate markets to emerge from the current slump. In response, the panellists said there was no way to put a timeline to recovery.
'Everyone is trying to tell where the bottom is,' said panellist Stuart Labrooy, chief executive of Malaysia's Axis Reit Management. 'I think the full effects of the recession have not reached Asia yet.'
Property valuations should start to bottom out in Asia in the second half of 2009, he said.
More than 3,000 real estate developers, investors and regulators are expected to attend Cityscape Asia, which focuses on all aspects of real estate development, on May 19, 20 and 21.
Source: Business Times, 20 May 2009
Tuesday, May 19, 2009
Asia-Pac market for factory space falls
Rents, demand for industrial property hit by financial crisis, says Colliers
(SINGAPORE) Industrial property markets in the Asia-Pacific region deteriorated from October 2008 to March 2009 as the global financial crisis rolled on, Colliers International said in a report yesterday.
And more declines are expected. 'The economies of most cities in the Asia-Pacific region are likely to be in recession in the next 12 months notwithstanding the interest rate cuts and large stimulus budget,' Colliers said. 'As such, demand for industrial property is likely to stay weak.'
Except for Jakarta and Shanghai - where rents, land and capital values are expected to hold - those in other cities surveyed are forecast to decline as much as 30 per cent over the next 12 months.
In Singapore, average rents and capital values of factory space dipped 12.8 per cent and 17.6 per cent respectively between October 2008 and March 2009, compared with growth of 6.4 and 6.9 per cent in previous April-September 2008 review period.
'The decline in exports as a result of the contraction in global demand led to excess capacity at manufacturing plants and prompted many firms to shelve expansion plans or downsize premises, leading to lower demand for industrial property,' Colliers said.
Weakening exports also resulted in softer demand for warehousing space. Average rents and capital values of this space dropped 13 and 13.3 per cent respectively in the six months under review.
The Singapore government has cut its 2009 economic growth forecast to between minus-10 and minus-13 per cent, from between minus-6 and minus-9 per cent. And this will weigh heavily on demand for industrial property in the next 12 months, Colliers said. It reckons land prices, capital values and industrial rents here could drop as much as 15 per cent in that time.
Rents for high-spec industrial building space will also be hit, according to Colliers. 'Moving forward, the influx of high-spec space completing in 2009, amounting to an estimated 2.5 million sq ft, coupled with sluggish demand, are likely to exert downward pressure of up to 30 per cent on rents in the next 12 months,' it said.
Source: Business Times, 19 May 2009
(SINGAPORE) Industrial property markets in the Asia-Pacific region deteriorated from October 2008 to March 2009 as the global financial crisis rolled on, Colliers International said in a report yesterday.
And more declines are expected. 'The economies of most cities in the Asia-Pacific region are likely to be in recession in the next 12 months notwithstanding the interest rate cuts and large stimulus budget,' Colliers said. 'As such, demand for industrial property is likely to stay weak.'
Except for Jakarta and Shanghai - where rents, land and capital values are expected to hold - those in other cities surveyed are forecast to decline as much as 30 per cent over the next 12 months.
In Singapore, average rents and capital values of factory space dipped 12.8 per cent and 17.6 per cent respectively between October 2008 and March 2009, compared with growth of 6.4 and 6.9 per cent in previous April-September 2008 review period.
'The decline in exports as a result of the contraction in global demand led to excess capacity at manufacturing plants and prompted many firms to shelve expansion plans or downsize premises, leading to lower demand for industrial property,' Colliers said.
Weakening exports also resulted in softer demand for warehousing space. Average rents and capital values of this space dropped 13 and 13.3 per cent respectively in the six months under review.
The Singapore government has cut its 2009 economic growth forecast to between minus-10 and minus-13 per cent, from between minus-6 and minus-9 per cent. And this will weigh heavily on demand for industrial property in the next 12 months, Colliers said. It reckons land prices, capital values and industrial rents here could drop as much as 15 per cent in that time.
Rents for high-spec industrial building space will also be hit, according to Colliers. 'Moving forward, the influx of high-spec space completing in 2009, amounting to an estimated 2.5 million sq ft, coupled with sluggish demand, are likely to exert downward pressure of up to 30 per cent on rents in the next 12 months,' it said.
Source: Business Times, 19 May 2009
Opportunities for property investors
Cityscape Asia, the annual real estate exhibition and conference, opens amid talk of 'green shoots' of recovery for Asian economies
THESE are troubled times, and the global real estate sector has borne the brunt of the sub-prime fallout.
But now the property world is turning its attention to Asia as investors are hoping that 2009 will be the year to begin picking up undervalued assets ahead of economies in the region emerging from the global financial crisis, say the organisers of Cityscape Asia.
The annual real estate exhibition and conference - which is being held in Singapore from today until Thursday - comes amid talk of 'green shoots' of recovery for the Singapore and global economies.
Cityscape Asia focuses on all aspects of real estate development.
The real estate investment market in the Asia-Pacific region and the rest of the world saw a further contraction of market volume in the first quarter of 2009 against the backdrop of the global financial turmoil and the sustained problem of a credit crunch. However, analysts are beginning to see opportunities as the world and Asia rides out the crisis.
'Established firms, family enterprises and individuals with cash reserves, limited debt and an appetite for risk are expected to be among the first to begin searching the Asian market for bargains in the coming months,' said Graham Wood, group exhibition director of Cityscape.
This year's Cityscape Asia will examine topics relevant to the downturn such as surviving the global financial crisis, the future for real estate funds, and markets to invest in for long-term growth and returns.
But long-standing topics such as Asian real estate investment trusts (Reits), green investments and the retail scene in Asia will also be explored.
More than 4,000 top deal-makers from leading developers, banks, institutional investors and investment authorities, as well as senior officers from the foremost private equity funds and investment advisory firms will gather in Singapore over these three days to discuss key issues and investment opportunities.
This year, more networking functions and face-to-face interaction have been factored in to ensure that delegates have ample opportunity to conduct real business at Cityscape Asia. Participants could well walk away from the conference with signed deals.
Cityscape Asia is an extension of the successful Cityscape Dubai exhibition, which has grown to include Abu Dhabi, India, Saudi Arabia, Russia, the United States and Latin America.
The Singapore conference will focus on Asia. It will discuss and debate the recovery, opportunities, and the strategies adopted by leading real estate investment and development firms across Singapore, Malaysia, the Philippines, Thailand, Vietnam, Hong Kong, Indonesia, China and India.
In its recent inaugural Asia-Pacific investment market overview report, Colliers International said that opportunities remain in the region for investors. 'Although the regional real estate investment market in Q1 2009 was relatively quiet and despite the fact that the market will continue to be challenged by the economic environment for the rest of 2009, we believe there are still potential investment opportunities in the region in the coming quarters,' said Piers Brunner, Colliers' chief operating officer for Asia.
Real estate investment yields in the Asia- Pacific region have gone up further by 25-75 basis points in the first quarter of the year as investors held back from entering the real estate market, Colliers said. This should make investing more attractive now compared to a few quarters ago.
One market that will be much debated at this year's Cityscape Asia is China. 'In current times, the brightest light glows in China with the economy seeing a huge inventory adjustment,' said DTZ in April.
In the first quarter of 2009, mainland China's residential property sector staged a recovery of sorts, with transactions in some cities rebounding to levels not seen in years. However, the recovery did not spill over to the commercial sector as office markets in the major cities remained sluggish with fewer transactions amid declining rents and prices. A recovery in China could do much to help property markets in the rest of the region, analysts said.
Cityscape Asia also incorporates a host of 'mini events' designed to create business opportunities, such as developer project showcases, interactive discussion forums and investor roundtables.
Developers and other stakeholders from Europe and the US will be at Cityscape Asia looking for Asian investors. In its May bulletin, Citi Private Bank said that it expects to see a new global consumerism marked by a thrifty West and an affluent East, which should see investment flow from the East to the West.
Just one example - Philippe Chaix, director of La Defense, the prime office district of Paris, will be in Singapore during the conference to discuss the future of business property in the French capital, specifically, what it means for Asian investors.
London is also expected to get its share of attention. Asian interest in London properties is growing on the back of a devaluation in the pound, market watchers say. For example, the value of the British pound has fallen about 30 per cent against the Singapore dollar since December 2007. With London property prices down by about 15 per cent from their peak, Singaporean investors could reap savings of about 45 per cent off prices if they choose to invest in London.
Source: Business Times, 19 May 2009
THESE are troubled times, and the global real estate sector has borne the brunt of the sub-prime fallout.
But now the property world is turning its attention to Asia as investors are hoping that 2009 will be the year to begin picking up undervalued assets ahead of economies in the region emerging from the global financial crisis, say the organisers of Cityscape Asia.
The annual real estate exhibition and conference - which is being held in Singapore from today until Thursday - comes amid talk of 'green shoots' of recovery for the Singapore and global economies.
Cityscape Asia focuses on all aspects of real estate development.
The real estate investment market in the Asia-Pacific region and the rest of the world saw a further contraction of market volume in the first quarter of 2009 against the backdrop of the global financial turmoil and the sustained problem of a credit crunch. However, analysts are beginning to see opportunities as the world and Asia rides out the crisis.
'Established firms, family enterprises and individuals with cash reserves, limited debt and an appetite for risk are expected to be among the first to begin searching the Asian market for bargains in the coming months,' said Graham Wood, group exhibition director of Cityscape.
This year's Cityscape Asia will examine topics relevant to the downturn such as surviving the global financial crisis, the future for real estate funds, and markets to invest in for long-term growth and returns.
But long-standing topics such as Asian real estate investment trusts (Reits), green investments and the retail scene in Asia will also be explored.
More than 4,000 top deal-makers from leading developers, banks, institutional investors and investment authorities, as well as senior officers from the foremost private equity funds and investment advisory firms will gather in Singapore over these three days to discuss key issues and investment opportunities.
This year, more networking functions and face-to-face interaction have been factored in to ensure that delegates have ample opportunity to conduct real business at Cityscape Asia. Participants could well walk away from the conference with signed deals.
Cityscape Asia is an extension of the successful Cityscape Dubai exhibition, which has grown to include Abu Dhabi, India, Saudi Arabia, Russia, the United States and Latin America.
The Singapore conference will focus on Asia. It will discuss and debate the recovery, opportunities, and the strategies adopted by leading real estate investment and development firms across Singapore, Malaysia, the Philippines, Thailand, Vietnam, Hong Kong, Indonesia, China and India.
In its recent inaugural Asia-Pacific investment market overview report, Colliers International said that opportunities remain in the region for investors. 'Although the regional real estate investment market in Q1 2009 was relatively quiet and despite the fact that the market will continue to be challenged by the economic environment for the rest of 2009, we believe there are still potential investment opportunities in the region in the coming quarters,' said Piers Brunner, Colliers' chief operating officer for Asia.
Real estate investment yields in the Asia- Pacific region have gone up further by 25-75 basis points in the first quarter of the year as investors held back from entering the real estate market, Colliers said. This should make investing more attractive now compared to a few quarters ago.
One market that will be much debated at this year's Cityscape Asia is China. 'In current times, the brightest light glows in China with the economy seeing a huge inventory adjustment,' said DTZ in April.
In the first quarter of 2009, mainland China's residential property sector staged a recovery of sorts, with transactions in some cities rebounding to levels not seen in years. However, the recovery did not spill over to the commercial sector as office markets in the major cities remained sluggish with fewer transactions amid declining rents and prices. A recovery in China could do much to help property markets in the rest of the region, analysts said.
Cityscape Asia also incorporates a host of 'mini events' designed to create business opportunities, such as developer project showcases, interactive discussion forums and investor roundtables.
Developers and other stakeholders from Europe and the US will be at Cityscape Asia looking for Asian investors. In its May bulletin, Citi Private Bank said that it expects to see a new global consumerism marked by a thrifty West and an affluent East, which should see investment flow from the East to the West.
Just one example - Philippe Chaix, director of La Defense, the prime office district of Paris, will be in Singapore during the conference to discuss the future of business property in the French capital, specifically, what it means for Asian investors.
London is also expected to get its share of attention. Asian interest in London properties is growing on the back of a devaluation in the pound, market watchers say. For example, the value of the British pound has fallen about 30 per cent against the Singapore dollar since December 2007. With London property prices down by about 15 per cent from their peak, Singaporean investors could reap savings of about 45 per cent off prices if they choose to invest in London.
Source: Business Times, 19 May 2009
Tuesday, May 12, 2009
Asia Q1 property investor sales dive 83%
Weak risk appetite, expectation gap between buyer and seller deter activity
(SINGAPORE) Asian property investment sales slumped 83 per cent quarter-on-quarter in the first three months of 2009 as risk appetite remained weak and the gap between buyer and seller expectations continued to deter activity, according to a report by CB Richard Ellis (CBRE).
Preliminary data for Q1 2009 found that Japan, Singapore and Hong Kong suffered the biggest falls in transaction volume.
The industrial property sector suffered the largest drop by market segment, plummeting 95 per cent from the same quarter a year earlier. Office transactions sank 89 per cent, while retail transactions shrank a much smaller 40 per cent.
However, there was a noticeable improvement in sentiment in some key markets in March, as the rate of economic decline appeared to ease, CBRE notes.
'The overall property investment market in Asia was generally subdued and remained in a prolonged state of price discovery,' its report says. 'The period was characterised by isolated and small investment transactions across certain markets.'
The largest transaction in Q1 was the sale of the Sogo Department Shinsaibashi Store building in Osaka - which has retail space - for US$383.6 million.
Although cash rich investors continued to be interested in acquiring quality assets for the long term, the credit crunch, uncertainty over market direction and a significant gap between asking prices and what buyers are willing to pay put a dampener on activity.
Nevertheless, CBRE notes that a number of new funds were established in Q1 2009 to capitalise on opportunities arising from the current distressed market - a trend first noticed in Q3 and Q4 2008.
Market by market, CBRE's data shows Singapore experienced a further decline in investment sales in Q1 2009, seeing only isolated transactions.
Investment sales here during the quarter totalled $204.2 million, a decline of 51.8 per cent from Q4 2008 and a fall of 97.7 per cent from a year earlier. The last time quarterly investment sales were so poor was in Q1 1998, when they totalled $49.28 million, and Q3 1998, when they were $110.62 million.
In Hong Kong, institutional investment activity evaporated as investors in Q1 this year continued to find it difficult to raise debt and equity.
However, commercial banks gradually relaxed their requirements on property lending and lower
their mortgage rates during the quarter as interbank liquidity increased after several rounds of government intervention.
Driven by these two factors, the number of investment deals under HK$100 million (S$18.8 million) picked up considerably towards the end of the quarter, as did demand for new residential housing units.
Source: Business Times, 12 May 2009
(SINGAPORE) Asian property investment sales slumped 83 per cent quarter-on-quarter in the first three months of 2009 as risk appetite remained weak and the gap between buyer and seller expectations continued to deter activity, according to a report by CB Richard Ellis (CBRE).
Preliminary data for Q1 2009 found that Japan, Singapore and Hong Kong suffered the biggest falls in transaction volume.
The industrial property sector suffered the largest drop by market segment, plummeting 95 per cent from the same quarter a year earlier. Office transactions sank 89 per cent, while retail transactions shrank a much smaller 40 per cent.
However, there was a noticeable improvement in sentiment in some key markets in March, as the rate of economic decline appeared to ease, CBRE notes.
'The overall property investment market in Asia was generally subdued and remained in a prolonged state of price discovery,' its report says. 'The period was characterised by isolated and small investment transactions across certain markets.'
The largest transaction in Q1 was the sale of the Sogo Department Shinsaibashi Store building in Osaka - which has retail space - for US$383.6 million.
Although cash rich investors continued to be interested in acquiring quality assets for the long term, the credit crunch, uncertainty over market direction and a significant gap between asking prices and what buyers are willing to pay put a dampener on activity.
Nevertheless, CBRE notes that a number of new funds were established in Q1 2009 to capitalise on opportunities arising from the current distressed market - a trend first noticed in Q3 and Q4 2008.
Market by market, CBRE's data shows Singapore experienced a further decline in investment sales in Q1 2009, seeing only isolated transactions.
Investment sales here during the quarter totalled $204.2 million, a decline of 51.8 per cent from Q4 2008 and a fall of 97.7 per cent from a year earlier. The last time quarterly investment sales were so poor was in Q1 1998, when they totalled $49.28 million, and Q3 1998, when they were $110.62 million.
In Hong Kong, institutional investment activity evaporated as investors in Q1 this year continued to find it difficult to raise debt and equity.
However, commercial banks gradually relaxed their requirements on property lending and lower
their mortgage rates during the quarter as interbank liquidity increased after several rounds of government intervention.
Driven by these two factors, the number of investment deals under HK$100 million (S$18.8 million) picked up considerably towards the end of the quarter, as did demand for new residential housing units.
Source: Business Times, 12 May 2009
Tuesday, May 5, 2009
Office rents in Asia slump 7.9% in Q1: CBRE
Singapore, Hong Kong see steepest fall; leasing activity remains subdued (SINGAPORE) Office rents across Asia sank in the first quarter of this year - with Singapore and Hong Kong suffering the sharpest declines - a report by CB Richard Ellis (CBRE) shows.
Overall office rents in Asia fell 7.9 per cent quarter-on-quarter in Q1, after a 7.3 per cent decline in Q4 2008, according to the CBRE Asia Office Rental Index. Rents have now declined 18.5 per cent from their peak in Q2 2008.
Asia's major financial centres - Singapore and Hong Kong - continued to see the biggest falls. Rents in Singapore dropped 18.6 per cent, while those in Hong Kong declined 14 per cent. On an annualised basis, corrections in Singapore and Hong Kong have now exceeded 34 per cent, CBRE said.
'The Asian office property market deteriorated further during the first quarter of 2009 as companies continued to down-size and cut back on costs,' it said.
Leasing activity remained subdued across the region, with transactions dominated by renewals, although a few deals involving companies relocating to cheaper premises were concluded.
Across many markets, landlords were forced to offer more concessions to retain and attract tenants, CBRE noted: 'In some major Asian office markets, they are displaying a new willingness to negotiate lease restructuring with tenants they desire to retain.'
In Singapore and Hong Kong, the rise in vacancies was 'less than what might have been expected and availability remains tight', CBRE said. But the amount of shadow space due to sub-letting activity continued to rise.
A number of hedge funds in Hong Kong were considering sub-leasing and surrender options during the quarter, while landlords remained under significant pressure to reduce rents still further.
Likewise, Knight Frank said yesterday in a report on Singapore that there are signs that tenants are seeking to cut their occupation costs and, in some cases, are trying to sub-let space.
'Landlords have needed to offer reduced rents and incentives to retain existing tenants,' Knight Frank said. 'There is substantial new supply expected in 2009, which may further dampen rental prospects.'
Leasing activity in the Hong Kong office market has likewise slowed, with corporate occupiers continuing to down-size amid the financial crisis.
'A number of occupiers appear to be attempting to surrender office space by seeking replacement tenants, while some companies have moved from Central Hong Kong to Kowloon East to save occupation costs,' Knight Frank said in its report.
Source: Business Times, 5 May 2009
Aussie fund sees growth in Asian projects
(SYDNEY) A US$5 billion Australian pension fund is looking at property development projects in Asia that it believes will allow it to capture future growth when an economic recovery kicks in, its chief executive said yesterday.
Hostplus, a pension fund for hospitality industry employees, has made investments in projects in Singapore and is considering others elsewhere in Asia, betting that developments rather than fully-leased properties will give it an advantage when demand for offices and retail space picks up.
'In Malaysia, we are looking at a retail opportunity with one of our investment partners. We have a number of opportunities that are presenting themselves in Japan in the commercial sense, in the industrial area,' Hostplus CEO David Elia told Reuters in an interview.
Hostplus seeks an internal rate of return (IRR) of 12-15 per cent for property development projects, Mr Elia said.
In his opinion, the worst may be over for Singapore's economy.
'It's probably the first country that's probably been hardest hit in terms of the Asian region. We suspect that it's probably the first country to come out of it as well,' he said.
'We would like to think that once the economy recovers . . . we will be well positioned to take advantage of all that.'
Mr Elia noted that the supply of new buildings worldwide was limited due to tight lending, and construction costs have come down substantially, pointing to good opportunities for investing.
Australian pension funds have been hit hard by write-downs on unlisted property holdings as property value continues to fall, and Mr Elia said Hostplus had had to write down some of its assets.
It allocates 18 per cent of its funds to property, 4 per cent of which is in overseas markets.
'Because we have strong liquidity coming in, it does put us in a privileged position to negotiate tremendous outcomes.
'There are fantastic opportunities for our members going forward,' Mr Elia said. -- Reuters
Source: Business Times, 5 May 2009
Sunday, May 3, 2009
Global sales of real estate plunge 73% in first quarter
New York - Global sales of investment-grade real estate plunged 73 per cent to US$47 billion (S$69.3 billion) in the first quarter from a year ago, or just one-sixth of the level two years ago, according to real estate research firm Real Capital Analytics last Friday.
A total of 1,014 properties, each worth more than US$10 million, were sold worldwide from January through March, the firm said in a monthly report, noting that the slump affected all property types and just about every market.
Making things worse, the number of properties that need refinancing or capital infusions is soaring.
New reports of defaulted mortgages and failed commercial property companies added up in value that surpassed US$55 billion in the first quarter, bringing the total known distressed commercial properties to US$153 billion.
Moreover, capital which flowed across borders during the boom of 2004 to 2007 has retreated to home countries, as investors with local knowledge seek out opportunities there amid the crisis.
Distress among US property is accelerating, according to a separate report by Trepp, which tracks commercial mortgage-backed securities (CMBS). The securities, backed by commercial loans, are often used as a gauge for the rest of the commercial loan market.
The percentage of CMBS loans 30 or more days delinquent jumped 0.48 percentage point to 2.45 per cent last month, up 25 per cent from the previous month and five times what it was a year ago, Trepp said.
In addition, over the last few months, loan delinquencies for all property types have climbed, with the largest jump in multifamily properties. Delinquencies accelerated during the first quarter, rising 0.19 percentage point from January to February and 0.3 percentage point from February to March.
Reuters
Source: Straits Times, 3 May 2009
A total of 1,014 properties, each worth more than US$10 million, were sold worldwide from January through March, the firm said in a monthly report, noting that the slump affected all property types and just about every market.
Making things worse, the number of properties that need refinancing or capital infusions is soaring.
New reports of defaulted mortgages and failed commercial property companies added up in value that surpassed US$55 billion in the first quarter, bringing the total known distressed commercial properties to US$153 billion.
Moreover, capital which flowed across borders during the boom of 2004 to 2007 has retreated to home countries, as investors with local knowledge seek out opportunities there amid the crisis.
Distress among US property is accelerating, according to a separate report by Trepp, which tracks commercial mortgage-backed securities (CMBS). The securities, backed by commercial loans, are often used as a gauge for the rest of the commercial loan market.
The percentage of CMBS loans 30 or more days delinquent jumped 0.48 percentage point to 2.45 per cent last month, up 25 per cent from the previous month and five times what it was a year ago, Trepp said.
In addition, over the last few months, loan delinquencies for all property types have climbed, with the largest jump in multifamily properties. Delinquencies accelerated during the first quarter, rising 0.19 percentage point from January to February and 0.3 percentage point from February to March.
Reuters
Source: Straits Times, 3 May 2009
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