(SHANGHAI) The city’s Peace Hotel, which once accommodated Charlie Chaplin and other celebrities, opened to guests yesterday after three years of restoration, the managers said in a statement.

Fairmont Peace Hotel will be managed by Chinese hotelier Shanghai Jin Jiang International Hotels (Group) Co and Fairmont Hotels & Resorts Inc, which runs the Savoy hotel in London.

Jin Jiang, which operates more than 600 hotels in China, spent HK$500 million (S$88 million) to restore the building.

Some of the main features of the hotel have been kept, including the lobby with an Octagon ceiling, the hoteliers said.

Rates start from 2,300 yuan (S$464) and go as high as more than 7,000 yuan for a night, the hotel’s general manager, Kamal Naamani said at a press conference.

The hotel has 270 rooms including the so-called Nine Nations Suites.

The building, located on the Bund promenade overlooking the Huangpu River, has six restaurants and lounges, including the Jazz Bar patronised by former US Presidents Jimmy Carter and Ronald Reagan.

The Indian, English, Chinese and American suites have been preserved, while the French, Italian, Spanish, Japanese and German rooms were redesigned.

The hotel was previously called the Cathay Hotel and was built by British businessman Victor Sassoon, opening in 1929. The art deco property reopened as the Peace Hotel in 1956.

Jin Jiang also has an agreement with Swatch Group AG to develop the south wing of the old Peace Hotel, called Swatch Art Peace Hotel, part of which will serve as an arts centre. — Bloomberg

Source: Business Times, 29 Jul 2010

THE Housing and Development Board has cracked down on unauthorised sub-letting. Almost four times as many checks were carried out in the first five months of this year – 2,600, versus 690 between August and December 2009.

About 70 per cent of the 2,600 checks were routine inspections. The others were carried out after public feedback.

HDB said it has taken compulsory acquisition action against four flat owners this year and fined six others for unauthorised sub-letting.

Those whose flats were repossessed were not staying in them and had sub-let without HDB approval.

Owners are allowed to sub-let whole flats only after occupying them for at least five years if they are subsidised flats, or three years if they are non-subsidised.

Owners must also obtain written approval from HDB before sub-letting an entire flat. Different flat types have different limits on the number of sub-tenants allowed. One and two-room flats are allowed four sub-tenants, three-rooms are allowed six and larger flats are allowed up to nine sub-tenants.

Approval is not required for sub-letting of rooms, but flat owners must let HDB know within seven days of doing so.

Source: Business Times, 29 Jul 2010

But Q2 consensus as indicated by net balances weaker than in Q1 poll

MORE respondents polled for Real Estate Developers’ Association of Singapore’s (Redas’s) and NUS Department of Real Estate’s (DRE’s) Q2 2010 survey were still positive rather than negative on the overall performance of the prime and suburban residential markets over the next six months. However, the consensus as indicated by the net balances was weaker compared with the Q1 survey.

A net balance of +32 per cent of respondents in Q2 said that they expect better future market performance (over the next six months) in the prime residential sector, down from a +54 per cent net balance in Q1.

Likewise, the net balance of respondents who indicated better future market performance for the suburban private housing sector also slipped from +38 per cent to +27 per cent.

For an assessment of current market performance (now compared with six months ago), the net balance also declined from +79 per cent to +43 per cent for the prime residential sector. In the suburban housing segment, the net balance for current performance fell from +69 to +47 per cent.

Net balance is defined as the difference between the proportion of respondents who have selected positive options (such as ‘Better’) and the proportion of respondents who have selected the negative options (such as ‘Worse’).

The respondents who selected the neutral option (such as ‘Same’) are omitted from the calculation. A ‘+’ sign in the score denotes a net positive sentiment (optimism) and a ‘-’ sign indicates net negative sentiment (pessimism). The derived net balance scores are not weighted by the size of the respondents’ business.

Market watchers said the survey findings tallied with ground feedback. Generally, sentiment for the private housing market was less upbeat in Q2 as the sovereign debt problems in European economies unfolded. Some potential buyers also felt priced out of the market after rapid price increases and took a break during the World Cup and June school holiday season.

On the other hand, the outlook for the Singapore office sector improved in April-June as net office take-up continued to increase against the backdrop of the Republic’s economic recovery.

Reflecting this, the survey shows net balance of +63 per cent in Q2 for future performance of the office sector, an improvement from the Q1 figure of +43 per cent. A lower percentage of developers in Q2 expect stronger interest in land sales – both the Government Land Sales (GLS) Programme and private sector en-bloc sales market – over the coming half year compared with those polled in Q1.

About half of the developers in the latest survey said that the level of interest for both sources of land will remain unchanged in the next half year.

Only about 27 per cent of developers surveyed in Q2 expect more interest in the GLS Programme in the next half year, down from 71 per per cent in Q1.

Similarly, in Q2, 31 per cent of developers forecast a higher interest level in the en bloc sales market, down from 61 per cent in the preceding quarter. Of developers polled in April-June, about 24 per cent and 15 per cent foresee lower interest in GLS and en bloc sales respectively in the next half year.

Developers were also asked to identify the potential risks that may adversely impact market sentiment in the next six months.

In the second quarter, about 73 per cent and 63 per cent view a global economic slowdown or decline and an increase in supply of new development land respectively as the key threats – significantly higher than the 56 per cent and 44 per cent recorded in the previous quarter.

Other major risk factors listed by developers in the latest Q2 survey include rising interest rates (49 per cent of developer respondents) and excessive supply of new property launches (54 per cent).

Notably, about 49 per cent of the developer respondents were concerned with government intervention to cool the market over the next six months, significantly lower than the 81 per cent registered in Q1 this year.

Following government measures to cool the market in September last year and February and the record GLS programme for second half 2010 announced in May, the market probably read that the danger of further cooling measures has receded for now, say market watchers.

Among development cost concerns over the coming half year, developers said that their biggest worry is rising land prices, building materials cost and labour cost, with 90, 76 and 73 per cent respectively of developers polled expressing a moderate to high level of concern.

Interestingly, the percentage of developers who are ‘very concerned’ about escalating land cost fell from 83 per cent in Q1 to 35 per cent in Q2. ‘This could be due to the unexpected or suddenness of the spike in land bid prices seen at state tenders in Q1. In contrast, the ‘shock effect’ probably lessened as more tenders closed in the second quarter. However, I must emphasise that rising land cost is a very major issue for the development business,’ says Redas CEO Steven Choo.

Source: Business Times, 29 Jul 2010

(MADRID) Greek island homes, long coveted by millionaires and Hollywood stars such as Tom Hanks, are being marked down by as much as 45 per cent as the country’s debt crisis destroys demand for holiday getaways.

A half-built villa on Mykonos, an island in the Aegean Sea known for its all-night beach parties, is being offered by brokers at Athens-based Ploumis Sotiropoulos OE for 2 million euros (S$3.5 million) after the price was reduced by 500,000 euros. The same firm is seeking a buyer for a three-bedroom home on Corfu for 750,000 euros, down from an original asking price of 1.4 million euros. So far, no bidders have emerged.

‘It’s a scary place to invest right now,’ said Mike Braunholtz, a broker at Prestige Property Group, which markets properties on the Greek islands. ‘Things aren’t going to improve until the economic picture becomes clearer.’

Greece is counting on a 110 billion euro bailout from the European Union and the International Monetary Fund (IMF) to avert a default and end the nation’s first recession since 1993. Prime Minister George Papandreou, having raised taxes and cut civil service wages, is imposing luxury property taxes to convince voters that the wealthy also are helping foot the bill.

Mr Papandreou’s austerity package calls for an extra levy on properties valued at more than 5 million euros. Owners of homes worth more than 400,000 euros also will pay higher taxes.

The programme puts pressure on homeowners and debt-laden developers to lower prices, said Ioannis Kaligiannakis, an Athens-based property analyst at Colliers International Hellas.

Greece, which borders Albania, the Republic of Macedonia, Bulgaria and Turkey, has more than 1,000 islands and the 10th- longest coastline in the world. The country attracts about 15 million visitors a year, according to data compiled by the Hellenic Statistical Authority.

Property declines have been smaller in Spain, Portugal and Italy. Prices for luxury homes have dropped 8-10 per cent in Spain from the peak in 2008, according to Idealista.com, the country’s largest real estate website.

The market is holding steady in Portugal, where 832 kilometres of coastline and the archipelagos of Madeira and Azores attract about 13 million tourists each year, said Liselore Ligtermoet, a Lisbon-based marketing manager at International Realty Group. ‘We’re not seeing bargain hunters here,’ he said.

Discounts also have been hard to find in Italy since the country emerged from recession in the third quarter of 2009, said Angelo Savioli, a director at Sotheby’s International Realty in Rome. ‘Prices are actually rising in areas such as Rome, Venice, Milan and Florence,’ he said.

Greece plans to increase the so-called objective value it places on real estate for tax purposes next year. The system depends on an assessment of a property’s value based on the area and amenities, rather than on the actual market value, which is usually higher.

State revenue will increase next year with the new programme, Finance Minister George Papaconstantinou said on July 5.

‘The tax overhaul is certainly a concern for property investors in Greece,’ said Liam Bailey, head of residential research at Knight Frank LLC in London. ‘These measures specifically target the rich, higher-end buyer.’

Prestige is marketing a three-storey, eight-bedroom villa with a swimming pool on Mykonos for 4.1 million euros, down from 5.5 million euros. More than a third of the island’s 11,000 residents are foreigners, according to its official website.

Tom Hanks, Oscar-winning star of Forrest Gump, and his wife Rita Wilson, an actress whose father was born in Greece, have a property on Antiparos, according to a spokeswoman for the island’s Community Council.

House prices on the mainland also are falling. Ploumis Sotiropoulos is helping sell a 450 square metre villa in Ekali, a wealthy suburb of Athens where former premier Andreas Papandreou lived until his death in 1996, for 2 million euros. The asking price has dropped 48 per cent.

‘It’s tough this year,’ said Giannis Ploumis, CEO of Ploumis Sotiropoulos. ‘More properties are on the market and fewer buyers are willing to invest.’

The economy will contract by about 4 per cent this year and by 2.6 per cent in 2011, according to estimates from the Greek Finance Ministry.

Greece is losing its cache with potential buyers ‘simply looking at other places’, said Mr Bailey of Knight Frank.

France is gaining in popularity as it offers plenty of bargains and the country’s economic prospects make the market more attractive than Greece, Mr Braunholtz said. — Bloomberg

Source: Business Times, 29 Jul 2010

(DUBAI) Office rents in Dubai dropped by as much as 17 per cent in the second quarter as new supply put pressure on landlords, CB Richard Ellis Group Inc (CBRE) said.

About 240,000 square metres of commercial space became available in areas such as Al Barsha, Tecom C and Jumeirah Lakes Towers, Matthew Green, head of United Arab Emirates research at CBRE, said in a report yesterday.

Rates at the Dubai International Financial Centre (DIFC), a tax-free hub that’s home to hundreds of companies, dropped by 7.5 per cent to 3,982 dirhams (S$1,481) a square metre when offered by DIFC authority and 2,690 dirhams to 3,014 dirhams when offered by private developers, according to CBRE.

Companies in Dubai have shed thousands of jobs since the onset of the global credit crisis, increasing office vacancy rates.

Available commercial space is set to increase by almost 80 per cent by the end of 2011, Colliers CRE plc said in May.

Dubai’s economy shrank 2.5 per cent last year, according to preliminary government estimates.

Power delays are pushing back the completion of construction in the Business Bay development, reducing the amount of office space coming onto the market in the second half, according to CBRE.

Office supply is increasing by about 5 per cent per quarter in Dubai, mainly in areas including Port Saeed, Al Mamzar, Airport Road and Diyafa Street, according to CBRE.

The value of leases has dropped by 60 per cent since the mid-2008 peak, while prices slumped by 57 per cent and occupancy dropped to about 71 per cent from 90 per cent, according to property researcher Colliers International.

The total space available will rise to about 6.4 million square metres from about 3.6 million square metres at the end of 2009. — Bloomberg

Source: Business Times, 29 Jul 2010

Pick-up in building sales, leasing boost commercial services firms’ earnings

(NEW YORK) Two of the world’s largest commercial real estate services firms reported sharply improved earnings on Tuesday, fuelled chiefly by a pick-up in building sales and leasing, particularly in the United States.

US commercial real estate has been struggling since it began to weaken in late 2007, with activity falling precipitously last year. That hurt commercial real estate firms such as Jones Lang LaSalle Inc and CB Richard Ellis Group (CBRE), which rely heavily on sales and leasing commissions.

However, during the second quarter, sales of investment-grade US commercial real estate rose 32 per cent over the first quarter to US$20.6 billion, according to preliminary data by real estate research firm Real Capital Analytics, which measures sales greater than US$5 million.

‘In the US, we saw a very strong pick-up in property sales and leasing, reflecting recovering market conditions,’ Brett White, CB Richard Ellis chief executive, said in a statement.

His company posted a second-quarter profit of US$54.8 million, or 17 cents a share, compared with a loss of US$6.6 million, or two cents per share, a year ago.

Excluding one-time charges related to acquisitions, severance, space consolidations and impairments, the Los Angeles- based company earned US$58.8 million, or 18 cents a share, exceeding analysts’ average expectation of nine cents a share, according to Thomson Reuters I/B/E/S.

Revenue rose 23 per cent to US$1.2 billion in the second quarter. Revenue from the Americas region, which includes the United States, Canada and Latin America, rose 20 per cent to US$722.3 million. Jones Lang LaSalle reported a second-quarter profit of US$32 million, or 72 cents per share compared with a net loss of US$14 million, or 40 cents per share in the second quarter 2009.

Excluding restructuring and other charges, the company’s income was US$37 million, or 83 cents per share, versus analysts’ average forecast of 58 cents per share, according to according to Thomson Reuters I/B/E/S, and US$11 million, or 30 cents per share, a year earlier.

Chicago-based Jones Lang LaSalle said its revenue rose 18 per cent to US$680.3 million. In the Americas, second-quarter revenue rose 18 per cent to US$296 million.

‘Business prospects for the year remain good, and we are moving forward with confidence while watching market and economic dynamics,’ Colin Dyer, Jones Lang LaSalle chief executive, said in a statement. – Reuters

Source: Business Times, 29 Jul 2010

MAPLETREE Logistics Trust has signed a binding memorandum of understanding (MOU) with Kabushiki Kaisha A-Max to acquire three properties in Japan, its manager Mapletree Logistics Trust Management (MLTM) said yesterday.

The properties are the Iwatsuki Logistics Centre, a distribution centre and office in Iwatsuki, with a gross floor area (GFA) of 30,000 sq m; the Iruma Logistics Centre, a distribution centre and office in Iruma, with GFA of 26,000 sq m, and Noda Logistics Centre, a distribution centre and office in Noda, with GFA of 36,000 sq m. All the locations are in Saitama Prefecture, which is Toyko’s northern neighbour.

The properties will be acquired for a total of 13 billion yen, (about S$200 million). The vendor, A-Max, is a logistics facilities development and management company.

The acquisition is the sixth announced by Mapletree since December last year, totalling $430 million.

With the completion of all of these acquisitions, MapletreeLog will have a portfolio value of about $3.3 billion.

MLTM said the latest acquisition will have significant benefits arising from attractive net property income (NPI) yield and distribution per unit accretion. The properties are also 100 per cent leased for eight to 10 years, providing stable rental income, and are in good locations.

‘Given the low interest rates in Japan, it is likely that this acquisition will be funded predominantly by debt,’ said MLTM. ‘Any proceeds from equity issuance will likely be applied towards other acquisitions or refinancing of other more expensive debt in the portfolio to maintain a gearing below 45 per cent.’

MLTM chief executive Richard Lai said: ‘Japan’s logistics market remains attractive to us because it has breadth and depth that is currently unmatched elsewhere in Asia. We will continue to expand our portfolio in Japan by selectively acquiring yield-accretive logistics assets of good quality and location. We also seek to enhance the quality of our income stream through addition of good-quality customers to our diversified customer base. We will continue to focus on such accretive third-party acquisitions as a key strategy to grow our portfolio, and in turn, the returns to our unit-holders.’

Source: Business Times, 29 Jul 2010

It is setting its sights on growth markets of Singapore, China and Malaysia: CEO

CAPITAMALLS Asia (CMA) has a potential war chest of some $2.5-3 billion for developing and buying malls, and it will be targeting its firepower at Singapore, China and Malaysia.

The retail property group’s shares may have been hovering below the initial public offering price, but they should perform better in the longer term.

CMA chief executive Lim Beng Chee shared these views in an interview with the press yesterday. The group is sitting on around $1 billion of cash, which includes proceeds from the listing of CapitaMalls Malaysia Trust (CMMT) and the sale of Clarke Quay to CapitaMall Trust.

With that, the group can borrow another $1.5-2 billion for investments. This situation presents a ‘very good opportunity’ for acquisitions, he said.

In Singapore, the market has improved from a year ago, Mr Lim said. The economy has picked up, retail sales have grown, and tourist arrivals have increased.

CMA is eyeing state land for mall developments, and it is particularly keen on areas where it already has a presence. These would include the Jurong district, where IMM and the upcoming JCube are.

The group had bid for a mixed-use site in the Jurong Lake district in June, but lost out to Australian developer Lend Lease. ‘It’s ok, there are always sites two and three’ in that area, Mr Lim said.

Another plot of interest is the one at Stamford Road/North Bridge Road, where Capitol Theatre is. The tender for the site will close next month and the winning developer can build an underground link to City Hall MRT station. Raffles City Singapore, which CMA has a stake in, is right next to the station.

Asked if CMA will be bidding for that land parcel, Mr Lim said: ‘We’ll consider any site.’

There have been concerns about an oversupply of retail space in Singapore but Mr Lim believes in just the opposite. ‘My problem is, I’ve got no space.’

According to him, many global retail brands such as Abercrombie & Fitch are not here because they have a problem finding space for large flagship stores.

Besides Singapore, China remains a key growth market for CMA. The Chinese government is trying to boost domestic consumption for economic growth and CMA can benefit from that trend, Mr Lim said.

In Malaysia, CMA is also looking to acquire or develop malls. It is setting up a RM1 billion (S$428 million) fund for this.

Despite the many growth plans, investors appear unexcited. CMA’s shares have been trading below their listing price of $2.12 in the last one month. The counter closed unchanged at $2.05 yesterday.

‘I think a lot of shareholders don’t understand this business,’ Mr Lim said, explaining that CMA runs longer term operations of building and managing malls.

On the gap between the share price and the listing price he said: ‘My sense is, we can actually overcome this very easily.

‘It’s a question of us making a few acquisitions over time that could actually correct the share price… I have no doubt that over time it will correct.’

Source: Business Times, 29 Jul 2010

(SINGAPORE) Latest flash estimates from National University of Singapore (NUS) confirm what property industry players have already experienced on the ground – a rapid slowdown in the growth of non-landed private home prices in June compared with May.

NUS’s overall price index for non-landed homes for June rose 0.3 per cent month on month, compared with month-on-month gains of 2.4 per cent each for May and April.

It was the same story for the sub-index for the Central region, which covers a basket of properties in districts 1-4 and 9-11. It increased 0.7 per cent month on month in June, slower than gains of 2.1 per cent in May and 3.4 per cent in April.

The sub-index for Non-Central region was unchanged in June from the preceding month, after rises of 2.7 per cent in May and 1.7 per cent in April.

The Singapore Residential Price Index (SRPI), compiled by the NUS Institute of Real Estate Studies, covers only completed properties.

DTZ executive director (consulting) Ong Choon Fah said: ‘The latest indices confirm the slowdown in buying momentum felt on the ground in June – because of the school holidays, World Cup and continued uncertainty in the eurozone economies.

‘People found no reason to rush and buy a home. Developers have also been holding back launches and the projects they did launch were not priced at the top end of their own target range; so developers have also moderated their own price expectation.’

Since the end of last year, all three NUS indices have appreciated – to the tune of 8.7 per cent for the overall index, 8.2 per cent for Central region and 9.2 per cent for Non-Central region. Based on the latest June flash estimates, NUS’s overall SRPI is now 36.3 per cent above the post-financial crisis low in March 2009. Over the same period, the growth for the Central region has been 42.1 per cent and that for the Non-Central region, about 33.3 per cent.

The June flash estimate for Central region is still 3.5 per cent below the pre-crisis high in November 2007. However, for the Non-Central region, the latest index surpassed its respective pre-crisis peak in January 2008 by 11.2 per cent. As a result, the overall SRPI flash estimate for June is 5.7 above its November 2007 high.

Looking ahead, Mrs Ong reckoned the overall and Central region indices are likely to remain flat in July, but the index for the Non-Central region could either be flat or post a marginal increase, supported by high cash-over-valuations in the HDB resale market.

Meanwhile Hong Leong Holdings said yesterday it has sold over 75 per cent of the 468 units available at The Scala, a 99-year condo at Serangoon Avenue 3. The units are sized between 474 and 2,142 sq ft, and sold at an average of $1,150 per square foot. Buyers comprised a good mix of HDB upgraders and investors, with the majority made up of locals.

Source: Business Times, 29 Jul 2010

New industry-backed index to measure sentiment shows mood has sobered slightly

(SINGAPORE) In a historic move, the Real Estate Developers’ Association of Singapore has teamed up with the National University of Singapore’s Department of Real Estate (DRE) to develop a Real Estate Sentiment Index (RESI), and it shows a lower reading for the second quarter of this year than for the first quarter.

Developers and industry players continue to express positive sentiments but expect market conditions to be less robust, Redas and DRE said.

More respondents were still positive (rather than negative) on the overall performance of the prime and suburban private residential markets over the next six months but the consensus as indicated by net balances weakened in the second quarter compared with the first quarter.

On the other hand, the net balance for offices improved substantially, in tandem with improving sentiment in this segment in April-June.

The survey also found that 51 per cent of developers polled for Q2 expect price growth for new residential launches, down from 85 per cent in Q1.

About 68 per cent of developers surveyed in Q2 expect more units to be launched over the next six months, down from 83 per cent in the Jan-March period.

The findings of the survey will be officially released this morning at the Redas Property Prospects Update 2010 seminar at Orchard Hotel.

Some market watchers welcomed Redas efforts in coming up with an objective method of gauging the confidence level of senior executives of property developers – and making it public. ‘It’s good to hear from the horse’s mouth,’ said DTZ executive director Ong Choon Fah.

Redas CEO Steven Choo noted that ‘while business expectation surveys are available for the manufacturing and service industries, there is currently no indicator specifically tracking sentiment in the fast-paced real estate market of Singapore’.

Some industry watchers also pointed to the refreshing change at Redas. ‘Previously, something like this, showing a slowdown in sentiment, would have been considered extremely sensitive and developers may have tried to hide it. Now they’re more open about it,’ said an observer.

Mrs Ong said: ‘Releasing the RESI shows just how far Redas has come. It reflects the maturity of the property market and stakeholders. It’s important to give the true market signals to all stakeholders – including home buyers and government – if we’re going to have a sustainable property market based on sound fundamentals.’

Redas and DRE developed the quarterly structured-questionnaire survey, which is conducted among senior executives of Redas member firms – mostly developers but also property consultants, architects, quantity surveyors and other professionals.

Dr Choo, who assumed the post of Redas CEO nearly a year ago, says: ‘The partnership between NUS and Redas has ensured academic rigour and added credibility to the new index. We are confident that in time, RESI will become an authoritative index and a highly-valued forward indicator for the property market, as well as an invaluable tool to guide the market and industry players, including investors and policymakers.’

Redas received about 70 responses for each of the Q1 and Q2 surveys – from largely the same people.

The survey measures respondents’ perceptions of current market conditions/ performance (now, compared with six months ago) and future expectations (over the next six months).

The RESI comprises three indices. The Current Sentiment Index, where respondents are asked to rate overall Singapore real estate market conditions now compared with six months ago, fell from 7.2 in Q1 to 5.8 in Q2. The Future Sentiment Index, where respondents rate overall property market conditions over the next six months, also slipped from 6.4 to 5.9.

As a result, the Composite Sentiment Index, which is the average of the two indices, declined from 6.8 in Q1 to 5.9 in Q2.

The index ranges from 0 to 10, with a score below 5 indicating deteriorating market conditions. A score above 5 shows improving market conditions. The Q2 score shows that developers and industry players continue to express positive sentiments and expect market conditions to remain favourable, but less robust than before.

Source: Business Times, 29 Jul 2010