Greener pastures for JLL & DTZ Directors
In the red-hot property market, some property consultancies are seeing departures from their investment sales departments. Lim Song Hai and Quek Soh Hoon, national director and local director respectively at Jones Lang LaSalle’s (JLL) investments department, have quit the firm. Over at DTZ Debenham Tie Leung, Anthony Seah, associate director (investment advisory services), is leaving. Mr Seah is heading for property fund manager Develica Asia-Pacific, where he will be investment director. Develica last month bought 1 Finlayson Green for just under $231 million. Mr Lim left JLL at the end of last month and is now said to be taking a break before deciding on his next career move.
Market watchers expect him to stay in the investment sales business but perhaps focus more on the regional business instead of the Singapore market. Ms Quek is still serving her notice at JLL; her last day will be July 19. JLL’s regional director and head of investments Lui Seng Fatt described the departures as ‘part of the attrition and the organic growth process’. He said that following the two departures, the investments department will have a total of 12 staff, including associate director Stella Hoh and senior manager David Batchelor, and may see some internal promotions.
He said: ‘We are setting up a new team to focus on institutional transactions serving clients who are primarily property funds seeking office, commercial and retail property acquisitions in Singapore.‘ So far we have four members in this team and may recruit more. These are mostly people with investment banking-type experience and who can talk the financial lingo that funds speak in.’ The current 12-member investments team will focus more on collective sales, development sites and sales of completed residential projects.
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Market watchers note that JLL has been garnering a bigger share of brokering office investment sales deals lately, such as SGX Centre, SIA Building, Parakou Building and 78 Shenton Way, following the arrival of its new managing director (South-east Asia) Chris Fossick, who was one of Singapore’s top office leasing dealmakers during his days at CB Richard Ellis here.
Last month, BT reported the departure of DTZ’s director (investment advisory services) Tang Wei Leng to join Wachovia group of United States. DTZ’s auction director Shaun Poh has assumed Ms Tang’s former responsibilities as head of investment advisory services for both Singapore and South-east Asia.
Source: The Business Times, 12 July 2007
Posted by Property Wizkid
Dubai World to expand US & Asia markets
Dubai World, the investment holding firm of the Dubai government, said its real estate arm is looking to expand in the United States and Asia and is set to make an acquisition soon.
‘We like the market in Singapore and we’re evaluating opportunities here. We are looking at China, Vietnam, Thailand,’ Dubai World Chairman Sultan Ahmed Bin Sulayem told Reuters on the sidelines of a press briefing on Thursday.
Dubai World’s real estate firm, Nakheel Group — the developer of three palm-frond shaped islands off Dubai’s coast — recently said it would launch an international arm to pursue projects outside of Dubai. In December last year, it sold the world’s largest Islamic bond, raising US$3.52 billion.Asked what the timeframe was for Nakheel’s next acquisition, Mr Sulayem said he hopes ‘that it can come within the next few months,’ adding these would be in Asia and the US.
Dubai World holds a multi-billion dollar portfolio that includes British ports operator P&O and has been taking on considerable debt to fund its acquisitions for its various businesses. The investment firm’s private equity arm, Istithmar, has also been buying up US property aggressively. Last year, it bought a 73 per cent stake in the Mandarin Oriental New York, acquired retailer Loehmann’s, the Knickerbocker Hotel in New York, and office block 280 Park Avenue in April.
Istithmar and Nakheel have also said that they plan to develop tourist resorts and real estate projects in African nations including Kenya and Mozambique to tap rising leisure demand. Istithmar recently made an US$825 million offer for New York luxury retailer Barneys in June, but its bid could be scuppered by Japan’s Fast Retailing , which later offered US$900 million. In November 2005, Dubai Ports World, the investment firm’s port operator and the world’s third-largest container port operator, said it was planning an initial public offering (IPO) within two years. Its holding company issued a US$3.5 billion Islamic bond, or sukuk, convertible into shares in any IPO.
Mr Sulayem was in Singapore to finalise the acquisition of Singapore shipyard firm Pan-United Marine by Dubai Drydocks World, the global maritime arm of Dubai World.
Dubai Drydocks said in a statement that it has received acceptances of approximately 84.8 per cent of shares in Pan-United Marine.
Source: The Business Times, 12 July 2007
Posted by Property Wizkid
Will Malaysia lift cement cap?
Malaysia’s developers said a government move to remove a cap on cement prices will boost construction costs and compel them to increase property prices by about 10 per cent. ‘The price increase is an additional burden on the property industry at a time when the building and property industry is challenged by softening market demand,’ the Real Estate and Housing Developers Association said in a memorandum to the trade ministry.
Shares of cement suppliers, including Lafarge Malayan Cement Bhd, surged after Malaysia decided last month to lift the price cap on cement, a governmentcontrolled item. The selling price of cement will be fixed every four months under an automatic pricing mechanism from Jan 1 instead of being set by the government, Deputy Prime Minister Najib Razak said then.
The price mechanism would affect ongoing projects, including 597,242 houses being built nationwide, the association said. ‘In extreme cases, contractors’ inability to absorb such financial burden may lead to project abandonment,’ it said. The association represents more than 800 developers responsible for about 80per cent of the total real estate built in Malaysia. They include SP Setia Bhd, Malaysia’s biggest developer, Sunrise Bhd and Mah Sing Group Bhd.
Source: The Business Times, 12 July 2007
Posted by Property Wizkid
Mapletree buys 2 industrial properties in Malaysia
Mapletree Investments says its wholly owned subsidiary, Mapletree Industrial Fund Management Pte Ltd (MIFM), will buy two industrial properties in Malaysia for a total of RM171.5 million (S$75.7 million) - the first regional acquisitions for Mapletree Industrial Fund. MIFM will buy the first property, in Johor Technology Park, for RM80 million and the second property, at Technology Park Malaysia in Kuala Lumpur, for RM91.5 million.
Both deals have been structured on a sale and leaseback arrangement, with the Malaysian vendors - Classic Advantage Sdn Bhd and Iris Technologies (M) Sdn Bhd respectively - taking long leases on the properties. ‘These acquisitions are an important part of our strategy to expand our investments beyond Singapore for Mapletree Investment Fund,’ said Mapletree chief executive officer, Hiew Yoon Khong. ‘These acquisitions will help us gain a foothold in Malaysia. We will continue to look for quality industrial properties here and across Asia to invest in and grow Mapletree Investment Fund into a truly pan-Asian industrial fund.’
MIFM CEO Phua Kok Kim said: ‘The property at the Johor Technology Park benefits from its proximity to the University Technology Malaysia campus and the Standards and Industrial Research Institute of Malaysia as synergies and innovations from these two institutions would complement the manufacturing industries located in the Johor Technology Park. The property at the Technology Park Malaysia is also a strategic acquisition for us as it is located within one of Malaysia’s most advanced and comprehensive centres for research and development of ICT and knowledge-based industries,’ Mr Phua added.
Source: The Business Times, 12 July 2007
Posted by Property Wizkid
China’s largest real estate agency E-House plans US IPO
E-House (China) Holdings Ltd, China’s largest real estate agency, may raise US$150 million in a US initial public offering), according to a filing with the Securities and Exchange Commission (SEC). The Shanghai-based company, which operates in 20 Chinese cities through more than 1,800 salespeople, is raising capital to open new stores, upgrade its information system, increase marketing and fund possible acquisitions. The filing on Tuesday did not disclose the number of American depositary receipts to be sold or their pricing.
New property sales in China increased by an average of 38 per cent a year between 2001 and 2005 as the government encouraged home ownership. The floor area of new properties sold in the country grew 25 per cent a year in the same period, according to E-House’s filing. The seven-year-old company sold 54 million sq ft of new properties with a combined value of almost 42 billion yuan (S$8.4 billion) between 2001 and 2006, the document said.
E-House, China’s largest real estate agency and consulting company by the number of transactions, the value of deals, floor area sold and sales network, had US$56 million of sales last year, a 45 per cent increase from 2005, the document said. It derived 81.6per cent of that from primary agency services, 6.9 per cent from secondary brokerage services and 11.5 per cent from consulting and information services. Net income jumped 62per cent to US$18.1 million, or $0.27 per share, the share sale document said.
Credit Suisse and Merrill Lynch & Co are arranging the share sale. E-House plans to trade on the New York Stock Exchange, the document said. China Renaissance Capital Investment LP, a Credit Suisse fund venture co-founded by Mark Qiu, former chief financial officer of CNOOC Ltd, invested in E-House before the IPO.
Source: The Business Times, 12 July 2007
Posted by Property Wizkid
Morgan Stanley pays $1.58b for S Korea's office
Morgan Stanley set a record for real estate purchases in South Korea with its agreement to buy Daewoo Engineering & Construction Co’s Seoul head office for 960 billion won (S$1.58 billion), brokers said. The Government of Singapore Investment Corp (GIC) set the previous record in December 2004 by paying about 880 billion won to buy Star Tower in Seoul from Dallas-based Lone Star Funds, said Steven Craig, from Jones Lang LaSalle Inc, the world’s second-largest commercial real estate broker.
The purchase extends a global acquisition spree in which Morgan Stanley has bought offices, hotels and residences. Morgan Stanley, the biggest real estate investor among Wall Street banks, is buying into a market where demand for office space is likely to outstrip supply for the next three years, driving up rents. ‘Rent escalation for office buildings in Seoul has been 3 per cent to 5 per cent per annum for more than five years, and we expect it to continue,’ said Sean Kim, associate director of Colliers International’s Korea office, in a telephone interview.
The price per square metre paid for the Daewoo building is about 75 per cent higher than that paid for the Star Tower, according to local real estate brokers. At 23 storeys and 132,560 square metres, the Daewoo building is roughly half the size of the 45-storey Star Tower, which has 212,500 square metres. Morgan Stanley is paying about 24 million won per pyung, compared with the 13.7 million won per pyung that GIC Real Estate paid for Star Tower, said Mr Craig at Jones Lang LaSalle. One pyung equals 3.3 square metres.
‘One wonders what Star Tower would go for if it came back onto the market today,’ Mr Craig, a Seoul-based member of Jones Lang LaSalle’s investment sales department, said via e-mail. ‘With market vacancy touching 1.3 per cent, it would definitely be a lot more than US$1 billion.’
Mr Craig said the price Morgan Stanley is paying excludes a reserve for capital expenditures to refurbish the Daewoo building. ‘It will be a very substantial number because a very large renovation programme is required,’ he said.
Morgan Stanley spokeswoman Alyson D’Ambrisi didn’t immediately respond to a request for comment placed after regular New York business hours. Lay Choon Mah, a spokeswoman for GIC Real Estate, declined to comment. JPMorgan Chase & Co arranged the transaction for seller Daewoo Engineering.
Source: The Business Times, 12 July 2007
Posted by Property Wizkid
US high-end properties still hot while the rest is not.
Given that the real estate market is supposed to be in free fall, some strange things have been happening recently in Mill Valley. It is one of the expensive suburbs of San Francisco just over the Golden Gate Bridge, and much of the housing market there seems to be doing just fine. One three-bedroom house sold for US$1.4 million last month without ever being officially put on the market. The seller accepted a pre-emptive bid - US$20,000 above the asking price - from somebody who had heard that the house was about to be listed for sale.
‘The homes that are having a hard time selling are the average-priced homes,’ said Vanessa Justice, a real estate agent with Pacific Union GMAC in the Bay Area, where the median house price is about US$750,000. For upper-end homes, she said, ‘it’s actually pretty crazy right now’.
It has been a while since real estate agents used the word ‘crazy’ in a positive way, but Ms Justice is onto something here: The high end of the market is surviving the slump much better than any other segment. Even as foreclosures keep rising and overall sales continue to plummet, more expensive homes have staged a bit of a comeback in recent months. They’re spending less time languishing on the market than others, and their prices appear to be holding up better.
This split in the market helps explain why the sales of Manhattan apartments, some of the priciest homes in the country, have remained fairly strong. The national trend has gone largely unnoticed, though, because neither the federal government nor the National Association of Realtors - the main sources of housing data - report statistics for different price segments.
But after just about every home sale, documents must be filed with a local government office. A research firm called DataQuick Information Systems gathers these records, and a New York Times analysis of them shows that the story of today’s real estate market is really two different stories.
In the Boston area, for instance, the number of homes selling for at least US$1 million plummeted to 619 in the first five months of 2006, from 773 in the period in 2005, according to DataQuick. But the number jumped to 711 in the first five months of this year.
In the New York region, sales at the top end - that is, homes in the most expensive 5 per cent of the market - have also been rising, while they have been falling in the middle and bottom of the market. The same is true in the San Jose, California; Seattle; Denver; and Houston areas. In San Francisco, Los Angeles, Phoenix and Miami, high-end sales are down but not by nearly as much as sales in other price segments.
Separate statistics from the California Association of Realtors also show million-dollar-plus homes to be selling better than others in that state. The high-end market is far from booming, to be sure. Many houses would still sell for less today than they would have a year ago. But the market has stayed strong enough to catch a lot of buyers and sellers off guard. They keep hearing about a real estate meltdown and then finding a different reality when they go to make a deal.
A three-bedroom apartment around the corner from the Guggenheim Museum, on 88th Street near Fifth Avenue in Manhattan, was recently put on the market for US$2.8 million, and the first bid came in slightly lower than that. Ten days - and nine bids - later, the seller accepted an offer about US$500,000 above the asking price.
In Brookline, Massachusetts, near Coolidge Corner, a big Victorian house went on the market for US$1.4 million this spring - just as it had in 2006, without selling. ‘I thought it was still overpriced,’ said Chobee Hoy, the seller’s real estate agent. Yet the house ended up selling for about US$30,000 more than the asking price.
There seem to be three main causes of the split in the market. The first is that affluent families continue to do better than others, thanks to healthy income gains and a rising stock market. ‘To some extent, it is the rich getting richer,’ Andrew LePage, an analyst at DataQuick, explained. ‘The folks who don’t rely solely on a weekly or monthly paycheque seem to be doing better.’
The upper-end of the market has also been helped by an influx of well-off foreign investors whose buying power has grown with the recent decline of the dollar. Hard as this may be for an American to imagine, New York, San Francisco or Miami can now seem like a bargain, compared with London, Moscow or Sydney. Jason Haber, an agent with Prudential Douglas Elliman in Manhattan, said he had recently taught himself how to convert square feet into square metres - you divide by 10.8 - because of all of the international buyers traipsing through New York apartments.
Finally, both the recent rise in interest rates and the problems in the mortgage market have had a much bigger effect on low-income and middle-class buyers than affluent ones. It has become harder to get a subprime mortgage, while the uptick in interest rates this year has added about US$100 to the monthly payment on an average fixed-rate 30-year mortgage.
As Mark Zandi, chief economist of Moody’s Economy.com, summed up the market: ‘The low end is getting creamed. The middle is struggling. The high end is running on its own dynamic.’ It’s tempting to conclude, then, that the top of the housing market has somehow become bubble-proof. And some real estate agents will doubtless make this pitch to buyers who are on the fence. But it is almost certainly wrong.
In fact, the very top of the housing market - the sprawling vacation homes and 10,000-square-foot mansions - seems to be doing considerably worse than merely expensive homes. Ines Hegedus-Garcia, an agent in Miami, recently looked at sales volumes there and found the market for homes that cost US$1.2 million to US$2.5 million to be holding up decently. The situation was much worse for those priced above US$2.5 million. There are also a couple of areas, like Washington and San Diego, where the high-end of the market, broadly defined, is already doing about as badly as everything else. So perhaps the recent comeback won’t last long in other cities.
Remember, it’s not as if the wealthy are immune to irrational exuberance. Just think back to the 1990s - or the 1920s. Any asset can end up becoming overvalued. Right now, though, there is a bit more of a rational explanation for home values at the high-end of the market.
Source: The Business Times, 12 July 2007
Posted by Property Wizkid
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