Henderson Global Investors, an independent asset manager with US$93.8 billion of assets under management at end-2009, is introducing a suite of property equity funds in China.

The Henderson Horizon Global Property Equities Fund, Henderson Horizon Asia-Pacific Property Equities Fund and Henderson Horizon Pan European Property Equities Fund will be distributed exclusively by Citibank China.

Henderson said the funds will invest in real estate investment trusts (Reits) and commercial property stocks, with strong emphasis on cash flow growth, sustainable dividend yields from rental leases and quality management.

Alexander Henderson, managing director of Henderson in Asia, said there is a growing appetite for property investment among Asians.

Henderson had about US$16.7 billion of property assets under management on Dec 31, 2009. The asset manager has 200 people worldwide who focus on property, covering all aspects from asset management to market forecasting.

Frankie Lee, head of property equities, Asia, said: ‘For Asia, we expect property to continue its growth in 2010, and Asian developers and landlords should continue to outperform their Western counterparts.

‘Equity capital is also looking to migrate into the region in the form of direct real estate and private equity funds. It is this healthy capital base, combined with the strong GDP outlook of all countries in the region, that should continue to drive the outperformance of Asian real estate in 2010.’

Mr Lee, based in Singapore, manages the Henderson Horizon Asia-Pacific Property Equities Fund.

On the fund’s strategy, he said: ‘A theme we remain excited about is growth in office rents and capital values, especially in the mature financial centres of Hong Kong and Singapore. The leasing environment has been improving incrementally on the back of stronger job growth expectations, and supply of prime Grade A offices in core business districts remains moderate.’

He also identified Japan’s commercial market as one with plenty of potential for a strong recovery. ‘The market is still focused on current weakness in occupancies and hence valuations of office developers remain attractive,’ he said.

Source: Business Times, 11 Mar 2010

A PART-TIME property agent duped eight foreigners in a rental scam and collected nearly $22,000 for herself and her accomplices.

Razieya Mohamed Ali was jailed for 11 months by a district court yesterday.

From November 2008 to February last year, the 34-year-old divorcee would post flats-for-rent advertisements on the Internet and invite foreigners working here to view the premises.

To entice them to sign the tenancy agreement after they had seen the flats, she would offer very low rents. She knew that the flats were occupied and by the time her victims found out, she and her accomplices would be long gone.

However, the police tracked her down.

She initially denied the charges and on the first day of the trial on Nov 30, her friend turned up instead. She claimed that Razieya had been raped by her former husband and was in no condition to attend court proceedings.

No police report or medical certificate was offered.

Assistant Public Prosecutor Santhra Aiyyasamy said yesterday that Razieya did not attend any police interview to substantiate the accusation.

Yesterday, the prosecutor asked for a deterrent sentence as Razieya had targeted foreigners, who were vulnerable to such scams.

Two of her accomplices were dealt with last year. Axley Alexander Ryan Shah, 40, a serial offender, was sentenced to six years’ jail while Letchimi Kasinathan, 52, was sentenced to 2 1/2 years.

A third accomplice, Arul Rajoo Michael Rajoo, 39, remains at large.

The court heard that in January last year, he hatched a plan with Razieya and Ryan to offer his leased flat for rent to foreigners and to cheat them of the deposit and rental. Their victims included Chinese, Filipino, Indian and Myanmar nationals.

Razieya also conspired with Letchimi, whose son stayed in a rented flat in Lengkok Bahru, near Jalan Bukit Merah. Without his knowledge, they offered it to Mr Jun Ojima, 43, a Japanese working here as a golf coach, for $1,000 a month on Jan 1 last year.

He handed over a deposit of $1,000 but two days later, he complained that the rent was too high and the two women lowered it to $700 on the condition that he pay up six months in advance.

Payment was made but before he could move in, Razieya cancelled the agreement.

Source: Straits Times, 11 Mar 2010

I REFER to Sunday’s report, ‘City Harvest paying $310m to become Suntec co-owner’.

While it is City Harvest Church’s right to decide how it spends its money, there are related issues which the Government should address.

Religious organisations are registered charities. Therefore, contributions and income are non-taxable.

However, with more and more religious organisations venturing into business and owning commercial properties, is their tax-exempt status still relevant?

Should the Government continue to let religious organisations own commercial properties and earn income from rent? After all, the revenue these organisations use for the purchase is tax-exempt in the first place.

Suntec City was developed for commercial purposes. With the church’s purchase of the development and its proposal to convert a section of the exhibition space for church use, is it in breach of the Urban Redevelopment Authority’s land-use policy?

For years, New Creation Church has rented space in Suntec for church services on a commercial basis. However, now that City Harvest owns the space, and wants to convert some part of it into the church’s auditorium, is it legal?

Besides Suntec, this issue is also a concern with the new civic and cultural centre at one-north, which is co-owned by New Creation Church.

Land sales for religious purposes by the Government are on a 30-year lease. With some religious organisations acquiring land earmarked for other uses, with much longer leases, and using it for their religious purposes, is it fair to other religious organisations which must tender for 30-year lease land?

Religious organisations obtain their funding from their congregations. However, some religious organisations, such as New Creation, and now City Harvest, own commercial properties which generate income for them.

Lester Lam

Source: Straits Times, 11 Mar 2010

CONSTRUCTION of the much-postponed Sports Hub is still on track to begin in the middle of this year, Mr Teo Ser Luck, Senior Parliamentary Secretary at the Ministry of Community Development, Youth and Sports, said yesterday.

The entire complex should be up and running by the end of 2013 or early 2014, which is in line with the new target date set last November.

The Sports Hub, a $1.87 billion mega-project built through a public-private partnership, was originally slated to open this year. It would have been the venue of the 2013 SEA Games, had rising construction costs and last year’s financial downturn not scuppered attempts to get it off the ground.

As it became harder to raise funds for the project, the hub’s completion date was pushed back to next year, 2012 and now 2013. These delays forced Singapore to pull out of hosting the 2013 SEA Games last December.

Mr Michael Palmer (Pasir Ris-Punggol GRC) expressed frustration at the repeated postponements. ‘We have had many final matches at the National Stadium and frankly, it’s becoming a bit of a joke.’

The House was assured by Mr Teo that no further delays were expected. The consortium building the hub – Singapore Sports Hub Consortium – held a funding competition late last year and banks have shown considerable interest, he said.

Mr Teo defended the hub’s public-private partnership model, saying it was not to blame for the delays.

‘It harnesses the efficiencies, innovation, energy and financial rigour of private sector enterprise and banks to bring about a vibrant, compelling, viable and fully utilised public facility,’ he said.

Source: Straits Times, 11 Mar 2010

Investment buzz in shopping centre scene; Alpha takes stake in Katong Mall

THE shopping centre investment scene seems to be abuzz. At least one property is being put on the market officially.

Sun Plaza, located between Sembawang MRT station and bus interchange, will be marketed through an expression of interest exercise.

The asking price for the 11-year-old mall, owned by Heeton Holdings and Koh Brothers, is understood to be in excess of $300 million or $2,000 per square foot (psf) of net lettable area.

The mall has seven levels, two of which are basement floors, and offers scope for asset enhancement work and repositioning to boost yields.

Meanwhile, over in the Katong area, a fund managed by Alpha Investment Partners is said to have taken a majority stake, believed to be around 70 per cent, in the consortium that bought Katong Mall late last year for $247.6 million.

The consortium, originated by former CapitaMalls Trust chief executive Pua Seck Guan, also includes China-based retailer Beijing Hualian Group and BreadTalk Group.

Katong Mall, located at the corner of East Coast and Joo Chiat roads, will be revamped and its net lettable area boosted by about 20 per cent.

Alpha, Keppel Land’s fund management unit, has also been active in other segments of the property market. Another of its funds controls 90 per cent of a company that owns the newly spruced-up office block at Cecil Street known as The Spazio (formerly Dapenso Building).

In Shanghai, Alpha is expected to bag an upscale service apartment block from Morgan Stanley Real Estate in a transaction estimated at about 900 million yuan (S$184 million).

Over in Singapore’s Sembawang area, CB Richard Ellis is handling the expression of interest exercise for Sun Plaza.

The property has been built to its maximum plot ratio; hence, it is being pitched for its asset enhancement potential.

For instance, a community library on the third level could be moved to a higher level with the library space decanted to create higher-value retail / restaurant space, for example, in basement 1.

As well, a cineplex on the fourth and fifth levels that was formerly operated by Eng Wah has been left vacant, presenting an opportunity for a new investor to reconfigure the space into smaller lots for lease to higher-paying tenants.

Sun Plaza’s retail area is spread across six levels, including basement 1. Basement 2 is occupied by 260 carpark lots.

Currently, the average gross monthly rental for the mall is said to be about $8 per square foot but market watchers reckon that through asset enhancement works and improving tenant mix, it might be possible to raise this figure to $12-14 psf.

Sun Plaza is on a site with a remaining lease term of about 85 years. Tenants include NTUC FairPrice, Yamaha Music School, Taka Jewellery and Kopitiam.

Above Sun Plaza are 76 apartments which were sold by the developers years ago.

Source: Business Times, 11 Mar 2010

They posted returns of 85.6%; Asian Reits performed well as a region: study

REAL estate investment trusts (Reits) in Singapore have outperformed their counterparts in other major markets in terms of total returns in 2009, according to a report released yesterday.

Ernst & Young’s study showed that Reits Singapore and Hong Kong posted returns of 85.6 per cent and 64.5 per cent respectively in 2009.

Malaysia (38.6 per cent) and South Korea (28.4 per cent) also put up strong showings.

By contrast, total returns in the more mature Reit markets were much lower. Returns for Australian Reits were 10.4 per cent in 2009, while Japan’s Reits came in at 6.7 per cent. The largest single Reit market in the world, the United States, witnessed returns of 27.9 per cent.

‘Asian Reits performed well as a region because the Asian economies have generally been more resilient to the financial crisis, underpinned to some extent by China’s economic performance and favourable long-term growth outlook,’ said Liew Choon Wai, assurance partner and head of Singapore real estate for Ernst & Young.

The performance of each country’s Reit market appears to reflect the broader economic sentiment, he added: ‘For Singapore, the economy was seen as particularly vulnerable during the financial melt-down, and it was not surprising that we saw a plunge in Reit returns in 2008 to early 2009, which has subsequently rebounded strongly since March as financial markets stabilise.’

But only Singapore recorded a negative three-year rate of return – of minus 4.15 per cent – of the Asian countries outside of Japan. Rates of return for South Korea, Malaysia and Hong Kong are all in positive territory over the last three years. Japan, a mature economy, had a three-year rate of return of minus 19 per cent.

Ernst & Young also noted that since March 2009, many Reit markets around the world have seen significant increases in share prices and Reits have raised billions of dollars by going back to the stock market for secondary (or follow-on) equity offerings to reduce debt, recapitalise their balance sheets and prepare their businesses for the next wave of growth.

Source: Business Times, 11 Mar 2010

Home Inns & Hotels Management Inc, China’s second-biggest budget hotel operator, said this year’s World Expo here will boost room rates by as much as 20 per cent, and it’s adding up to 200 hotels nationwide.

‘We’re positive about demand during the Expo,’ David Sun, 46, chief executive officer of Home Inns, said in an interview at the company’s headquarters in the city. ‘We may see full occupancy at our hotels in Shanghai’ during the fair.

Nasdaq-listed Home Inns has 61 hotels in the eastern Chinese city, which plays host to the World Expo May 1 to Oct 31. A total of 192 countries, including the UK, France and Japan, and 50 international organisations will participate, and organisers are expecting 70 million visitors, according to the Expo’s website.

The company expects to add between 180 and 200 hotels this year, according to Mr Sun. That’s up from 145 new hotels last year, when the slowing economy forced the company to miss its forecast of more than 200 hotels, said Mr Sun, who joined Home Inns as CEO in December 2004 from B&Q (China) Ltd, a unit of London-based Kingfisher plc.

Home Inns’ shares have declined 8.7 per cent this year in US trading, compared with a 1.6 per cent gain in the USX China Index, which tracks US companies that derive a majority of their sales from China.

The company had 616 hotels in operation in 120 cities in China at the end of last year. The price for a standard room ranged between 169 yuan and 299 yuan (S$34-$61) in different cities, he said.

At the depths of the economic crisis, China’s expansion slowed to 6.1 per cent in the first quarter of 2009 compared with the year earlier, its lowest level in a decade. Growth rebounded to 10.7 per cent in the fourth quarter, the fastest pace since 2007, on government stimulus measures and record bank lending.

Home Inns’ 2009 profit rose to 256 million yuan from 101.2 million yuan from the previous year. Fourth-quarter profit dropped 40 per cent to 68.4 million yuan from a year earlier.

The company is the second-largest China-based hotel operator by sales after Shanghai Jin Jiang International Hotels (Group) Co.

Mr Sun said he expects the development of high-speed rail services and rising incomes to boost travel demand.

High-speed railways will connect all of China’s provincial capitals and cities with more than 500,000 citizens by 2020, serving more than 90 percent of the population, the Ministry of Railways said.

‘High-speed rail will revolutionize domestic travel and we’re seeing bright opportunities,’ he said.

Source: Business Times, 11 Mar 2010

More pressure on govt to up stock of affordable housing, rein in speculation

China’s property prices rose at the fastest pace in 23 months in February, adding urgency to the government’s efforts to rein in speculation and increase the stock of affordable housing.

Residential and commercial real-estate prices in 70 cities climbed 10.7 per cent from a year earlier, the statistics bureau said on its website yesterday. That topped a 9.5 per cent gain in January.

Chinese officials are trying to reduce the risk of asset bubbles, resurgent inflation and bad loans for banks after flooding the world’s fastest-growing economy with cash to drive a recovery. Premier Wen Jiabao warned of ‘latent risk’ in China’s banks and pledged to crack down on real-estate speculation in a speech to the nation’s annual Parliamentary meeting in Beijing last week.

Today’s numbers ‘imply that there may be more upward pressure on inflation from the housing component,’ said Dariusz Kowalczyk, chief investment strategist at SJS Markets Ltd here.

‘Social consequences will be negative, making it more likely that policy makers will introduce further administrative curbs in the real-estate market and in lending overall.’ Bank of China Ltd, the nation’s third-largest lender by market value, said on Feb 3 that it had reduced discounts for some mortgages, citing concern about rising property-market risks.

The Chinese government earlier told banks to raise interest rates on third mortgages and demand bigger downpayments for such loans, a person with knowledge of the matter said on Feb 2.

Industrial & Commercial Bank of China Ltd, the world’s biggest bank by market value, said on Jan 27 it ’stabilised’ loan growth after lending rose ‘relatively fast’ in the first half of the month.

Lenders shouldn’t ‘over-grant’ the loans that companies use to finance goods and services and must reasonably calculate their ‘real demand,’ the China Banking Regulatory Commission said in a Feb 20 statement. Banks extended 19 per cent of this year’s 7.5 trillion yuan (S$1.54 trillion) lending target in January.

To cool speculation, the government in January re-imposed a tax on homes sold within five years of their purchase, after having cut the taxable period to two years in January 2009 to bolster a then flagging market.

The government has raised banks’ reserve requirements twice this year and also pledged to cut new loans by 22 per cent to 7.5 trillion yuan. Chinese banks in January extended 1.39 trillion yuan of loans, more than in the previous three months combined, the central bank said on Feb 11.

Su Ning, a deputy governor of the Chinese central bank, said on March 8 that government measures to cool the property market have had an effect, causing transactions to fall and some prices to halt gains. There’s no need yet for any further measures, Mr Su said at a briefing in Beijing.

Some developers have already reported slowing sales.

China Vanke Co, the country’s biggest developer by market value, said on March 4 that February property sales fell 35.4 per cent to 2.51 billion yuan from a year earlier. It was the Shenzhen-based company’s first sales decline since March 2008.

Prices in the so-called second and third-tier cities may continue to keep rising this year, Vanke chairman Wang Shi told reporters here on March 8.

‘Values in the first-tier cities are adjusting, and we need to observe further,’ he said. ‘There are too many uncertainties’ in the global market, he added, declining to be more specific about his comments on prices.

Guangzhou R&F Properties Co, the biggest developer in the southern Chinese city, said March 1 contracted sales fell 11 per cent in February from a year earlier because of slower activity during the month of the Lunar New Year holiday.

Still, other developers including Evergrande Real Estate Group Ltd, reported higher February sales. Shimao Property Holdings Ltd also said contracted sales revenue in the first two months more than tripled.

Shanghai, mainland China’s financial hub, plans to implement more measures to control property prices, such as introducing a policy for the leasing of public housing, the city’s Communist Party chief Yu Zhengshen said on March 7.

Source: Business Times, 11 Mar 2010

It is asking what would be – if achieved – record prices for the area at a preview for The Vision, on West Coast Crescent.

The preview, starting tomorrow, involves the release of up to 100 units mostly priced at $1,000 to $1,200 per sq ft (psf). This puts the starting price for an 818 sq ft two-bedder at nearly $900,000.
Cheung Kong’s vision is to develop a high-end project to be the area’s most luxurious building, said sales manager Cannas Ho at a media briefing yesterday: ‘We’re not building a mass product, we’re building a high-quality product.’

That may explain the relatively high pricing for a project in something of a backwater. A property expert noted there is no particular MRT advantage there.

Experts said if the units sell at the asking prices, it would be a record for the West Coast area.
Next door, Blue Horizon registered seven deals this year at $764 to $841 psf.

Last year, Far East Organization made the news when it launched the 329-unit Centro Residences in Ang Mo Kio at over $1,100 psf – a suburban record.

Ms Ho said it is targeting upgraders, families and expatriates, and has fielded more than 1,000 inquiries in the past fortnight.

A second phase will be offered by year-end. Pricing depends on the market then, ‘but we must adjust it upwards’, she said.

She said The Vision, to boast 281 apartments and 14 strata terrace units, is near the science and lifestyle hub one-north, and educational institutions.

The apartments are mostly between 818 sq ft and 1,604 sq ft, with two four-bedroom penthouses at 2,702 sq ft each. The two-bedder is the smallest unit.

Cheung Kong is packing The Vision with stylish fittings and branded appliances designed to give the 99-year leasehold project a luxurious vibe.

For instance, the kitchen comes with a Smeg induction cooker and electric oven and the bathroom has a Hansa rainforest shower with body jet.

A clubhouse, Sky Paragon, is on the top floor of the 33-storey building, with a gym, spa, bar and function room.

At the preview, Cheung Kong will release up to half of the 14 strata terrace units, each with a built-up area of about 5,000 sq ft. Interested parties will have to submit offers, said Ms Ho.

Cheung Kong clinched the site in a state tender in March 2008 with a bid of $305 psf per plot ratio (ppr). Last year, the developer paid a much higher than expected sum of about $533 psf ppr for an Upper Thomson Road plot.

Meanwhile, Sing Holdings will hold a preview of its 229-unit The Laurels at Cairnhill Road this weekend, concurrently in Singapore and Jakarta, while Tiong Aik will preview Coralis near Marine Parade tomorrow.
About 100 The Laurels units will be released with typical units priced at $2,600 to $3,050 psf.

Over 80 units have been sold since the first special sale to ex-owners, staff and business associates was held late last month at $2,500 to $2,900 psf.

Source, Straits Times 11 March 2010