Private home subsales rise 10.6% in Q2

THE number of private homes sold in the subsale market, which is often used as a proxy of speculative activity, rose 10.6 per cent quarter on quarter to 712 units in the second quarter of this year, but this pace of increase was slower than a nearly 27 per cent jump reflected in the 4,562 new private homes sold by developers, according to Savills’ analysis.

‘With speculators weeded out from the market after the higher seller’s stamp duty (SSD) rates introduced in January, more genuine home buyers now have direct access to choice units from developers in the primary market. So the supply chain has become more efficient with the ‘middlemen’ or speculators cut out’, said Savills Singapore research head Alan Cheong.

‘The full impact of the January 2011 anti-speculation measures will need time to work their way through the system since the SSD would affect only those who bought a private home from Jan 14 and sell it within four years of purchase,’ he added.

The SSD rates are 16, 12, 8 and 4 per cent respectively for those who sell their properties in the first, second, third and fourth year of purchase respectively.

Those who had, a few years earlier, picked up private homes which are now still under construction, would generally still find it worthwhile to divest them, given the recovery in property values since the global financial crisis, say property consultants. This is expected to continue to contribute to a steady stream of subsale activity.

‘This will especially be the case for projects which are close to or have just been completed since buying interest in such developments is typically higher among those who would like to purchase a property that they can move into or rent out immediately,’ says Ong Choon Fah, DTZ’s COO and head of consulting and research, SE Asia.

Resales, which are also secondary-market transactions but involve projects with CSC, rose 17.5 per cent quarter on quarter to 4,144 units in Q2 2011, shows Savills’ analysis of caveats captured by URA Realis.

The subsale and resale figures were based on caveats lodged (excluding en bloc sales) while new home sales by developers were based on developers’ submissions to Urban Redevelopment Authority’s surveys. The latest Q2 developer sales figure was compiled as the sum of monthly sales from April to June 2011; however, the final tally to be released by URA today may be lower as it will take into account units returned by buyers.

Savills’ analysis covered landed and non-landed properties, excluding executive condos, which are a hybrid of public and private housing.

Date: 22 July 2011 | For the full report, please visit www.businesstimes.com.sg

MapletreeLog Q2 net up 25%

MAPLETREE Logistics Trust has achieved net property income of $57 million for the second quarter ended June 30, up 24.6 per cent from a year ago. Distribution per unit (DPU) came in at 1.6 cents, against 1.5 cents a year earlier.

Gross revenue for the latest quarter rose 26.6 per cent to $65.8 million on the back of contributions from completed acquisitions in Singapore, Japan and South Korea. This was further boosted by positive rental reversion and higher occupancy of 98.9 per cent, said Mapletree Logistics Trust Management Ltd (MLTM), manager of the trust.

Said MLTM CEO Richard Lai: ‘Despite the continued uncertain economic environment experienced in Q2 2011, MapletreeLog’s portfolio has demonstrated its resilience and robustness, delivering a strong set of results. Organic growth was also achieved through proactive asset management initiative which saw the conversion of a property in Singapore from single-user asset to multi-tenanted building in Q1 2011. Overall, the portfolio experienced organic growth of 5.1 per cent in Q2 2011 against Q2 2010.’

As at June 30, MapletreeLog’s portfolio comprised 99 properties with a book value of approximately $3.6 billion.

MapletreeLog said it continues to pursue its growth strategy with inroads having been made into South Korea. Besides South Korea, it said it continues to see acquisition opportunities in Singapore, Japan, China and Malaysia. It will also broaden its investment horizon to new markets.

Date: 22 July 2011 | For the full report, please visit www.businesstimes.com.sg

Suntec Reit DPU for Q2 edges up

SUNTEC Real Estate Investment Trust’s income available for distribution rose 22.3 per cent to $56.2 million for the second quarter ended June 30.

However, distribution per unit (DPU) for Q2 2011 came in only marginally higher at 2.532 cents as compared with the 2.528 cents recorded during the same period a year ago. This gives an annualised yield of 6.6 per cent based on yesterday’s closing price of $1.535.

Coupled with distributions in the first quarter of 2011, Suntec Reit’s H1 2011 DPU now stands at 4.92 cents.

ARA Trust Management (Suntec) Ltd, the manager of Suntec Reit, said yesterday that the gross revenue for the second quarter of $61.3 million came in 1.8 per cent lower year on year due to weaker office and retail revenues.

Gross revenue for H1 2011 stands at $122.3 million, down about 2 per cent year on year.

Correspondingly, Q2 2011 and H1 2011 net property income for the Reit came in 1.1 per cent and 1.7 per cent lower year on year at $46.9 million and $93.6 million respectively.

But overall committed occupancy remains stellar as at end June. The committed occupancy of Suntec City Office Towers stood at a high of 99.5 per cent while the Park Mall office maintained full occupancy take-up.

Similarly, amongst the Reit’s retail properties, committed occupancy stayed stable at 97.1 per cent for Suntec City Mall and 100 per cent for both Park Mall and Chijmes.

Date: 22 July 2011 | For the full report, please visit www.businesstimes.com.sg

CMA Q2 profit surges; HK listing towards year-end

CAPITAMALLS Asia is looking at finalising its dual listing on the Hong Kong bourse towards year end.

The group is also improving its dividend payout to shareholders this year after record strong gains in its Q2 and first-half earnings on the back of higher revaluation gains on its properties.

This was achieved despite lower revenue following the divestment of three malls in Malaysia to CapitaMalls Malaysia Trust (CMMT) and Clarke Quay in Singapore to CapitaMall Trust (CMT).

CMA is rewarding shareholders with an interim dividend of 1.5 cents per share and expects to pay another dividend of at least the same quantum for the full year, taking total payout for 2011 to at least 3 cents per share. CMA had paid 2 cents for 2010 and one cent for 2009.

On the stockmarket yesterday, CMA ended 0.5 cent lower at $1.45. It was floated in November 2009 at $2.12.

For the second quarter ended June 30, 2011, net profit doubled to $164.9 million from $82.1 million (restated) in the same year-ago period.

First-half net profit increased 45.7 per cent from $146.9 million in H1 2010 (restated) to $214 million in H1 2011.
The group booked a higher revaluation gain of $143.3 million in H1 2011, compared with $19.5 mllion in H1 2010.

ION Orchard in Singapore was valued at $2.68 billion as at end-June 2011, an increase of 2.72 per cent from $2.609 billion at end-December 2010. ION’s latest valuation works out to $4,288 per square foot on its net lettable area of 624,937 sq ft. CMA has a 50 per cent share in ION; the other half is owned by Hong Kong’s Sun Hung Kai. All eyes in the market are on when CMA divests its stake in ION to its Singapore-listed sponsored real estate investment trust (Reit), CMT.

ION’s latest valuation was based on a capitalisation rate of 5.25 per cent and reflects a property yield of 5.4-5.5 per cent.

CMA’s CEO Lim Beng Chee indicated that when the group would divest ION or any of its other malls would depend on when acquisition opportunities arise for which the divestment proceeds can be reployed to generate at least the same if not higher returns than the divested assets.

Three quarters or $107.6 million of the $143.3 million net revaluation gain in H1 was from operating malls. The rest was from three malls in China which are under development.

CMA’s portfolio (including properties held by its sponsored Reits) comprises 70 operating malls in China, Singapore, Japan, Malaysia and India. In addition it has 25 malls under development. The total portfolio of 95 malls have a property value of about $25.6 billion and combined gross floor area of about 75 million sq ft.

Date: 22 July 2011 | For the full report, please visit www.businesstimes.com.sg

Slow going for en bloc sales, especially those above $100m

Home owners keen to sell their property through an en bloc sale were less likely to be successful in the first half of this year as compared with the whole of 2010, with estates going for $100 million and above the most difficult to sell.

Data published by property consultancy firm Credo Real Estate showed that plots put up for sale enjoyed a 51 per cent successful selling rate from January to June this year, as compared with 65 per cent for the whole of 2010.

Dragging down the overall selling rate were bigger sites, with more put up for sale this year to tepid interest.

According to Credo, 26 sites valued at $100 million and above were available for sale in the first half of this year, compared with 11 for the whole of last year.

Of the 26 sites, just six – valued from $100 million to less than $300 million – were sold, while none of those priced above $300 million were picked up. This translates to a success rate of 23.1 per cent.

Last year, three of the 11 sites valued at $100 million and above were sold, putting the success rate at 27.3 per cent.

In contrast, plots valued at below $50 million enjoyed an 87 per cent success rate for the first half this year, higher than the 76 per cent garnered by sites put up for sale from January to December last year.

The different reception that big and small collective sale sites saw stem from the uncertain property market environment, and the higher supply of land available under the Government Land Sales (GLS) programme, said Credo’s deputy managing director Tan Hong Boon.

With the Singapore government intent on keeping property prices in check, developers are keen to see quicker turnaround times, especially for mega sites, he said. And collective sales – unlike plots sold under the GLS programme which are also large in size – generally take a longer time to change hands.

‘For collective sales, you need to factor in the 3-4 months that it takes for the strata title board to give the sale order’, for instance, said Mr Tan. Then there is the six-month period where the developer has to allow residents to stay rent-free before it can begin to redevelop the land.

Date: 22 July 2011 | For the full report, please visit www.businesstimes.com.sg

HK billionaire helps fund UK social housing

Billionaire Cheng Yu-tung and two fellow Hong Kong investors, faced with soaring real-estate prices in their own country, are helping the UK plug a gap in funding for low-income housing after gaining control of a London-based property manager.

Mr Cheng’s Chow Tai Fook Enterprises Ltd, developer Sammy Lee and businessman Peter Fung last month paid £30 million (S$58.7 million) for 61 per cent of Pinnacle Regeneration Group Ltd, manager of 22,000 homes in the UK cuts in social housing are part of the British government’s plan to trim a record deficit with the biggest spending reductions since World War II.

‘There is a big opportunity for investors directly coming to the fore because of the cutback in funding,’ said James Coghill, a real-estate investment adviser at Savills Plc. ‘Social housing providers are seeking other funds and need to become more commercial.’

A change in UK law last year enabled investors to profit for the first time from social housing in Britain, where there’s a waiting list of 1.8 million households. With property prices at home skyrocketing, Hong Kong investors are putting money into UK real estate ranging from subsidised housing and office buildings to luxury properties and infrastructure.

Home prices in Hong Kong have risen more than 70 per cent since the beginning of 2009 on record-low mortgage rates and an influx of buyers from mainland China. The Hong Kong government imposed restrictions to curb rising values, such as increasing the required down-payments.

‘The Hong Kong market is very hot,’ said Mr Lee, 53, who also developed a 200-apartment complex in London’s affluent Knightsbridge neighbourhood that opened in 2005. ‘We’ve got to diversify and the first port is London.’

Social housing in the UK, typically provided by local governments and non-profit associations, is rented out at below-market levels with the state subsidising the rest. Pinnacle plans to spend as much as £500 million on UK housing projects over the next three to four years, chief executive officer Perry Lloyd said.

The closely held company is working with the London borough of Lambeth to create almost 1,000 homes in a jointly funded project with the council. Pinnacle will manage the properties, half of which are social housing. Mr Lloyd said that the Hong Kong group’s investment of £30 million may only be the start.

‘We’re a key into a door – this is the price of the key and gives the option for further investment,’ he said in an interview in London.

Date: 21 July 2011 | For the full report, please visit www.businesstimes.com.sg

Dubai still in housing glut, prices to drop another 10%: poll

Dubai’s housing market still has nearly a third too much supply and prices will plummet by another 10 per cent, deepening a three-year rout to nearly 60 per cent from its peak, a Reuters poll showed yesterday.

Rents and prices in Dubai’s once-booming property market have been in a free fall over the last few years, pummelled by the global financial crisis, ensuing global slowdown and the Gulf state’s own debt crisis.

Residential property prices in Dubai, which boasts of the world’s tallest building and man-made islands in the shape of palms, will fall 58 per cent from a peak in the third quarter of 2008 according to the median estimate of 11 banks, investment firms and research institutions.

‘Despite increasing transaction volumes and improvement in economic activities, property prices in Dubai are expected to be under pressure due to oversupply,’ said Sajeer Babu, an analyst at National Bank of Abu Dhabi.

The findings matched those of a Reuters poll in April which showed that existing supply and additional new units would push Dubai’s house prices down by 10 per cent.

Global markets were rattled in 2009 when Dubai announced a US$25 billion debt restructuring of conglomerate Dubai World. A real estate collapse followed, putting an end to a historic building spree in Dubai.

Confidence has not recovered yet. Respondents in the Reuters poll saw zero chance of Dubai’s residential property market recovering in 2011. They gave just a 25 per cent chance of recovery in 2012 and only 50 per cent in 2013.

Only one respondent said house prices in Dubai have already reached a bottom. Three said they expected prices to reach a trough in 2011, while others said 2012 or later.

In percentage terms, the Dubai housing market crash is set to be nearly double the size of the fall in the US, which is down by about a third from its peak.

Date: 21 July 2011 | For the full report, please visit www.businesstimes.com.sg