Ascott’s China service residences lauded

THREE service residences managed by The Ascott Group have been named ‘China’s Best Serviced Apartments’ by Forbes China magazine.

Ascott Beijing, Ascott Shanghai Pudong and Somerset Olympic Tower, Tianjin were among 15 winning projects chosen from 100 short-listed in Beijing, Dalian, Guangzhou, Shanghai, Shenzhen and Tianjin.

Ascott bagged the most awards in the service residence category, created this year to recognise excellence in service, stay experience, facilities and location.

The awards are part of Forbes magazine’s ‘China’s Best Business Hotels 2008′ awards.

Ascott’s CEO for China Ee Chee Hong said: ‘Winning three out of 15 awards is a validation of Ascott’s focus on delivering service and product excellence.’

Ascott is the largest international service residence owner-operator in China, with a total of about 4,000 units in Beijing, Dalian, Guangzhou, Shanghai, Shenzhen, Suzhou, Tianjin, Xi’an and Hong Kong.

The group plans to grow its China portfolio to 10,000 units by 2010. It has won numerous brand and property awards.

For the full report, please visit www.asia1.com.sg 

Source: The Business Times

HK property deals surge to 2-year high in August

A SURGE in property deals has fuelled hopes that Hong Kong’s mass market is poised to catch up with the city’s runaway luxury sector.

The number of deals surged last month to a two-year high of 13,664, an increase of 22.9 per cent from July and a rise of 58.3 per cent from August 2006. In the past six months, the figure has exceeded 10,000, signalling a consistent shift upwards.

The total amount paid for these sale and purchase agreements came to HK$44.2 billion (S$8.6 billion), an increase of 16.3 per cent over the previous month.

The figure represents a hefty 76.3 per cent increase compared to the amount paid in August 2006.

Hong Kong‘s mass residential market has been a notable laggard over the past two years as the luxury sector took off. Sales in up-market locations such as the Peak and the South Side of Hong Kong Island have well outstripped 1997 levels.

Luxury residential sales in Hong Kong are expected to post double-digit growth this year as limited supply and an influx of capital to the city pushes up prices. Property firm Savills expects the luxury sector to post growth of 16 per cent in the 12 months to April 2008.

This follows stellar growth in 2006, in both sales and leasing.

While luxury sales are at 1997 levels or above, the mass sector is still about 20 per cent short. Residential property on Hong Kong island is 20-25 per cent below 1997 prices, while prices out in Kowloon and the New Territories could be as much as 40 per cent below.

Market players are hoping the latest transaction figures signal healthy buying power and renewed interest in buying a home.

Many home buyers are still stinging from the Asian financial crisis, after which the value of their homes fell by up to 40 per cent, often to less than the level of the housing loans they took out to buy the homes.

Another factor potential buyers are taking into account is that developers have been reluctant to drop their prices, despite ample supply in the mass sector.

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Source: The Business Times

Jones Lang plans mall mgmt JV in China

(BEIJING) Global real estate services company Jones Lang LaSalle (JLL) is in talks with a shopping centre management firm to establish a 50-50 joint venture in China, a senior company executive said yesterday.

Managing director David Hand said the company ‘is looking at doing a merger – a joint venture with an overseas expert in shopping centre management’ to strengthen its hand in a market where the world’s top retail brands are swarming in.

If everything goes smoothly, ‘by the end of the year, we will be able to announce it’, he told reporters.

He said the deal would make JLL the largest shopping centre management company in China and in Asia as well.

JLL provides management and leasing services to many shopping malls in China, including new developments in downtown Beijing. Its rivals include DTZ Holdings and CB Richard Ellis.

Mr Hand added that JLL would move its regional headquarters to China from Singapore to capitalise on Bejing’s drive to spur consumption in order to wean the economy off investment and exports.

He did not say when the move would occur. ‘In the future, China will be our strongest growth engine,’ he said.

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Source: The Business Times

House prices in Chinese cities up 8.2% in August

(BEIJING) House prices in 70 large and medium-sized Chinese cities were up 8.2 per cent in August compared with last year, as the rising trend continues to show no sign of stopping, according to latest statistics released yesterday.

The rise actually hit a new high and was 0.7 percentage points higher than the July figure, according to a report by the National Bureau of Statistics (NBS) and the National Development and Reform Commission.

The prices of newly-built commercial housing units were up by 9 per cent in August, 0.9 percentage points higher than the rise in July.

The prices of low-cost housing rose 3.1 per cent and the prices of luxury housing went up 10 per cent.

The cities of Beijing, Shenzhen, Beihai and Urumqi saw price hikes of more than 10 per cent, with Beihai the highest at 18.2 per cent.

The housing prices in Beijing went up 13.5 per cent and the prices in Shenzhen were up 17.6 per cent. Prices of second- hand houses in those cities were up by 7.8 per cent.

The Chinese government has pledged to tame the wild property market but house prices have rocketed over the last few years despite round after round of government measures including restrictions on housing ownership by foreigners. Speculation by domestic and overseas investors has been blamed as one of the main reasons for the price hikes.

China‘s real estate investment soared 28.5 per cent from a year earlier to 988.7 billion yuan (S$200.3 billion) in the first half of 2007, according to the NBS.

Analysts attributed the rising investment to booming housing demand, excessive liquidity and robust housing price hikes.

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Source: The Business Times

Aussie prime mortgage arrears decline on jobs

(HONG KONG) Delinquencies on Australian prime mortgages fell in the second quarter as unemployment declined to a 33-year low, according to Fitch Ratings.

Non-conforming home loans that were at least 30 days in arrears declined to 1.48 per cent of mortgages used to secure bonds, from 1.54 per cent in the first quarter, the credit assessor said yesterday.

‘Despite the disruption to international capital markets, increasing interest rates and contrary to press reports of local mortgage stress, Australian residential mortgage-backed securities continue to perform well,’ Sydney-based Ben McCarthy, head of Fitch’s Australian structured finance team, said in a statement.

Fitch expects higher interest rates to affect arrears in the third quarter. The Reserve Bank of Australia raised the overnight cash rate target by 25 basis points on Aug 8 to an 11-year high of 6.5 per cent.

The ‘buoyant Australian property market has ensured that even those under stress have been able to avoid mortgage default through refinancing or sale’, Mr McCarthy said.

Delinquencies for so called ‘low-doc’ low-home loans which require less documents and income proof than standard mortgages increased to 4.54 per cent from 4.45 per cent. Borrowers in the loans, ‘being primarily self-employed borrowers, are more affected by shifts in the economy such as interest rate movements’, said Jason Hughes, a senior analyst at Fitch.

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Source: The Business Times

Ascott in serviced residence tie-up

(DUBAI) Ascott Group Ltd, the biggest serviced-residence operator in Asia and Europe, and a group of Middle Eastern investors have started a venture to buy and manage properties in Persian Gulf Arab states.

Bahrain-based Nuzul Holding BSC has US$100 million of start-up capital from founding shareholders including Qatar’s pension fund, Barwa Real Estate Co, and Saudi Economic & Development Co, the new company said in a statement posted on Dubai-based business website Ame Info yesterday.

‘Partnering with the reputed Ascott International has enabled us to introduce high-quality serviced residences to the Gulf states for the first time,’ Nuzul’s chairman Ali al-Obaidli said in the statement.

CapitaLand Ltd, Ascott’s parent company, in May said it agreed to invest US$130 million in a fund to develop residential and retail projects in Bahrain.

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Source: The Business Times

15% price fall seen in US commercial property

(SAN FRANCISCO) US commercial real estate prices may fall as much as 15 per cent over the next year in the broadest decline since the 2001 recession as rising borrowing costs force property owners to accept less or postpone sales.

‘People aren’t willing to do deals right now,’ said Howard Michaels, the New York-based chairman of Carlton Advisory Services Inc, which has arranged financing for real estate purchases including the Lipstick Building in midtown Manhattan. ‘The expectation is that prices will come down.’

Investors in July bought the fewest commercial properties since August 2006 and apartment building acquisitions were down 50 per cent from June, data compiled by industry consultants at New York-based Real Capital Analytics Inc show. Archstone-Smith Trust in August postponed its US$13.5 billion sale to a group led by Tishman Speyer Properties LP until October. Mission West Properties Inc, the owner of commercial buildings in Silicon Valley, said on Aug 13 that the company’s US$1.8 billion sale may fail after a bank withdrew funding.

‘There are so many deals falling apart,’ said David Lichtenstein, chief executive officer of Lakewood, New Jersey-based Lightstone Group, an owner of more than 20,000 apartments and 30 million square feet of office and retail space. ‘People who can get out are getting out.’

About 930 commercial real estate transactions valued at US$5 million or more closed in July, preliminary data from Real Capital show. That count could climb as much as 15 per cent when all of the month’s deals are tallied, which would still be the lowest this year, said Dan Fasulo, director of market analysis for Real Capital.

Average prices for commercial properties might drop 5-15 per cent in the next two years depending on the type of property and its quality and location, said Matthew Ostrower, an industry analyst at New York-based Morgan Stanley, the second largest US securities firm by market value.

The increase has halted a rally that lifted prices for office buildings, apartments and hotels to records this year. The average price paid for high-quality office properties in city centres reached US$291 psf, up from US$188 in 2005 and almost double the average US$152 in 2001, Real Capital reported.

Real estate investors typically purchase properties with the expectation that the yield will outstrip conventional investments and make their financing affordable.

‘You’ve got a lot of fear in the system from the capital markets,’ Mr Stein said. ‘As far as the pricing of credit, it was greed six months ago and it’s fear today.’ Tighter credit standards at banks have given an advantage to investors with ample cash, said Joaquin de Monet, CEO of General Electric Co’s Arden Realty Inc. All-cash buyers might include insurance companies, pension funds and Reits.

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Source: The Business Times

US home sales dip; layoffs worsen

(NEW YORK) Pending sales of previously owned US homes plunged 12.2 per cent in July and planned layoffs by US companies surged 85 per cent in August due to turmoil in the sub-prime mortgage market, independent reports showed yesterday.

Also, employers added jobs at the slowest pace in four years in August, according to a separate private report.

Together, the data raised expectations of a weak employment from the government tomorrow and added to the view that the Federal Reserve could lower its overnight benchmark interest rate at its Sept 18 monetary policy meeting.

The National Association of Realtors’ Pending Home Sales Index, based on contracts signed in July, fell to a reading of 89.9, the lowest since September 2001 when the index stood at 89.8.

The fall was much bigger than the 2 per cent decline in the index economists were expecting for July and helped paint a bleaker picture of the housing market moving forward.

‘The decline in the pending sales index in the past three months has been by far the fastest at any time since the housing market began to slow,’ said Ian Shepherdson, chief US economist at High Frequency Economics in Valhalla, New York. ‘This is disastrous.’

Mortgage market troubles also played a big role in announced layoffs in August, which rocketed to 79,459 from 42,897 in July, according to Challenger, Gray & Christmas Inc, an employment consulting firm. August’s job cuts were the highest since February, when they totalled 84,014.

‘Nearly half of the August cuts came from the financial sector, as dozens of mortgage and sub-prime lenders caved under the pressure of a sinking housing market,’ Challenger, Gray & Christmas said in a statement.

Financial job cuts totalled 35,752 in August, the highest monthly total for the industry since Challenger, Gray & Christmas began tracking in 1993, the firm said.

Economists reckoned the Fed will not cut interest rates until signs of stress emerge in the labour market, which has remained relatively tight despite the slowdown in the housing market.

For the full report, please visit www.asia1.com.sg 

Source: The Business Times

Indian developers eye mass market as prices fall

(MUMBAI/HONG KONG) After a two-year surge, home prices in India have dropped as much as 20 per cent because even the most upwardly mobile tech graduates can no longer afford to buy, forcing developers to consider building for the poorer masses.

‘We’re at a point where growth in salaries has not kept pace with property price increases,’ said Hari Krishna, of Kotak Realty Funds, a unit of Kotak Mahindra Bank that has been raising US$350 million for property joint ventures in India.

‘Many developers are rationalising prices across the country, and certain sets of people are saying there’s a need to focus more on either the luxury or the mass market.’

Since India eased rules on inward property investment in early 2005, the country has swept into a dusty frenzy of construction, causing land prices to double in major cities.

Drawn by a thriving, 1.1 billion-person economy, where a new batch of graduates swarm out of technology parks eager to shop and go home to modern apartments, global property investors such as Citigroup and Morgan Stanley have rushed in.

Annual property investment is projected to double to US$90 billion by 2010.

But a drop of around 20 per cent in residential transactions since January – as rising interest rates and soaring prices put India’s new rich off buying – has persuaded many developers to take a second look at their business models.

Prices have fallen 15-20 per cent in the New Delhi area and Punjab state, and have paused in Mumbai after sharp rises.

Most developers have been targeting the roughly one million families bringing in US$25,000-50,000 a year – for example, middle level accountants or software programmers.

Another million families are expected to join their ranks over the next three years, according to an economic think-tank, while the number of ‘super-rich’ families with an annual income of more than US$250,000 is set to nearly triple to 141,000.

But with fierce competition to build high-margin apartments for the rich, some investors are starting to target the 53 million families earning US$2,500-5,000 a year – where the much-vaunted figure of a 20 million home shortfall originates.

An estimated 22 million families should be lifted out of poverty and into this segment of society by 2010.

‘Our view is that building residential units for the lower middle class in that part of the world is pretty recession proof,’ said Alastair King, chief executive of Eredene Capital, which is listed on London’s Alternative Investment Market (AIM).

Bank exposure to housing loans tripled in three years to around US$60 billion in 2006, but that was only about 6 per cent of gross domestic product (GDP) – so industry players are unconcerned about any US-style mortgage default crisis.

Mortgage debt in the US and Britain is equal to about 50 per cent of annual GDP.

Some investors are steering clear of residential homes altogether. ‘The residential market has taken a bit of a beating, but commercial prices are super buoyant and will continue to rise,’ said Vikram Mehta, associate director at Coldwell Banker, a unit of US real estate brokerage Realogy Corp.

For the full report, please visit www.asia1.com.sg 

Source: The Business Times

Aussie home-building approvals rise sharply

(SYDNEY) Australia’s home-building approvals unexpectedly increased to a five-month high in July as rising employment, wages and immigration encouraged investment in property.

The number of approvals to build or renovate houses and apartments advanced 0.4 per cent from June to 12,980, the Bureau of Statistics said yesterday in Sydney.

Australia‘s lowest jobless rate in 33 years and near-record consumer confidence is boosting an economy in its 16th year of expansion.

Property investors are returning to the market as rents increase after a construction slowdown last year cut the supply of housing just as rising immigration boosted demand

‘The signs are there for a lift in construction activity in the next 12 months,’ said Michael Blythe, chief economist at Commonwealth Bank of Australia, the nation’s largest mortgage lender.

‘We will see that at some point, with vacancy rates low and rents high,’ he added.

The Australian dollar advanced to 82.26 US cents at 4.46pm in Sydney from 82.07 cents immediately before the report was released.

Building approvals surged a revised 6.9 per cent in June. Approvals were 7.5 per cent lower in July than a year earlier, yesterday’s report said.

Australia‘s jobless rate has fallen to 4.3 per cent, the lowest since 1974, after employers hired 250,000 extra workers in the 12 months ended July 31.

The wage-price index gained 1.1 per cent in the second quarter, equalling the strongest increase since the series began in 1997.

‘There are several good reasons to expect residential construction will increase over the coming year,’ said John Edwards, chief economist at HSBC Bank Australia Ltd in Sydney.

‘Immigration is high; there have been substantial gains in employment and incomes,’ he added.

More than 3,450 people arrived in Australia every week in the year ended June 30, 2006, the Immigration Department reported last year.

In the subsequent six months to Dec 31, more than half the immigrants who arrived were either professionals or tradespeople, the department said in April.

Also encouraging property construction, rental vacancy rates have fallen to decade lows, and are less than 2 per cent in Australia’s six largest cities, according to the Real Estate Institute.

That has driven up rents by an average 10 per cent for a two-bedroom apartment, the institute said.

‘We’re really at the bottom of the Australian housing cycle,’ Rod Pearse, chief executive officer of Boral Ltd, said on Aug 15. ‘We’re in good position for when this market comes back.’

Demand plunged in New South Wales, Australia’s most populous state.

‘New South Wales has been at the bottom of the league table,’ Mr Pearse said. ‘There will be a strong recovery in the next five years.’

Still, higher borrowing costs may stifle housing demand.

The Reserve Bank of Australia raised the overnight cash rate target a quarter percentage point to 6.5 per cent, the highest in almost 11 years, on Aug 8.

That followed increases in February, August and November 2006.

The four rate adjustments have added about A$160 (S$200) a month to repayments on the average home mortgage of A$250,000, according to the Housing Industry Association.

About 23 per cent of homeowners have had to cut spending to pay their mortgages, according to a survey of 2,500 consumers conducted in March by JPMorgan Chase & Co.

For the full report, please visit www.asia1.com.sg 

Source: The Business Times