Complete Property Market Updates of Singapore

May 12, 2008

Ascott buys London property for US$85.13 million

Filed under: General,UK — Propertymarketupdates @ 3:36 am

The Ascott Group (Ascott) said it has bought a serviced residence within London’s ‘Midtown’ region at High Holborn for 43.5 million pounds (US$85.13 million).

Ascott currently leases the property from Land Securities plc and operates it as Citadines London Holborn-Covent Garden.

Land Securities plc is the United Kingdom’s largest real estate investment trust.

Ascott said the 192-unit serviced residence enjoys a great location. Holborn is rapidly becoming a major shopping and office district. The property is a short walk from Covent Garden, one of the liveliest areas in London with many boutiques, theatres, restaurants and clubs. It is also near the city’s business area, across the Holborn Tube Station with easy access to both the Central and Piccadilly underground lines.

Ms Jennie Chua, Ascott’s president & CEO said Europe is an important region for Ascott’s global expansion.

‘We have a global portfolio of 21,000 serviced residence units, 5,600 are in Europe. In the recent year, Ascott has been ramping up its expansion in Europe’s gateway cities and emerging markets,’ she said. — BT newsroom

Source : Business Times – 8 May 2008

InterContinental Q1 profit falls 34% to £31m

Filed under: General,Hotel,UK — Propertymarketupdates @ 3:29 am

InterContinental Hotels Group plc, the owner of the Holiday Inn chain, said first-quarter profit fell 34 per cent following the sale of hotels to focus on managing and franchising sites.

Net income declined to £31 million (S$82.8 million), or 10.5 pence a share, from £47 million, or 12.9 pence, a year earlier, InterContinental said yesterday in a statement.

That beat the £25 million average estimate of three analysts surveyed by Bloomberg.

InterContinental, whose chains include Crowne Plaza and Indigo, increased the number of rooms in its network by 5,267 in the first quarter.

The Windsor, south England-based company added management and franchise contracts after selling property worth £3 billion in 2003 to 2006.

‘Our broad market coverage, record pipeline, strong brands and resilient fee-based business model position us well for continued growth,’ chief executive Andrew Cosslett said in the statement.

InterContinental’s stock has declined 6.7 per cent this year.

Revenue from continuing operations increased 15 per cent to £226 million during the first quarter.

Mr Cosslett said in February that the company had added more than 47,000 net hotel rooms since 2005, and was on course to beat its goal of raising that number to between 50,000 and 60,000 by the end of 2008.

The hotelier is also spending US$1 billion to renovate the Holiday Inn chain.

InterContinental, founded as a unit of Pan American World Airways to accommodate aircrew, said yesterday that it added more than twice the number of rooms in the first quarter compared with the same period a year earlier.

Revenue per available room, an industry gauge of profitability, gained 3.5 per cent at constant exchange rates in the first quarter, held back by the earlier timing of Easter this year, InterContinental said.

Pretax profit declined 25 per cent to £42 million, beating the £34.5 million average estimate.

Mr Cosslett, a former Cadbury Schweppes plc executive, said in February that London and southern England were experiencing ‘a bit of downward pressure’ on visits from the United States as the US dollar’s drop made trips more expensive.

He added, however, that that was offset by growth in the number of visitors from the Middle East and China.

The company owns, manages or franchises almost 4,000 hotels in about 100 countries.

InterContinental still owns 18 properties and said last year that it would sell the rest in ‘years’ rather than months. — Bloomberg

Source : Business Times – 8 May 2008

February 28, 2008

London luxury-home prices jump again

Filed under: Property Trends,UK — Propertymarketupdates @ 5:47 pm

1.1% rise in average price of units costing £2.5m or more; overall market unchanged

Luxury-home prices in London, the world’s most expensive city for prime real estate, rose at the fastest rate in four months as the overall UK market stagnated, industry reports showed.

The average price of houses and apartments costing at least £2.5 million (S$6.96 million) climbed 1.1 per cent in January from December, Knight Frank LLC said in a statement on Tuesday. There was no change in the average cost of homes across the country, HBOS plc said in a separate report.

‘It is being totally led by the purchase of properties of £10 million or more,’ Liam Bailey, head of residential research at Knight Frank, said in an interview. ‘The number of deals done at that level in the past three months was double a year ago.’

The wealthiest property buyers don’t need to borrow money to make purchases, so they’re not dependent on lenders that have made it more difficult and costly to obtain mortgages, Mr Bailey said.

Britons are now buying between 40 and 50 per cent of all London homes priced at more than £10 million, up from 30 per cent a year ago, according to Knight Frank, a real estate broker based in the city.

London’s most expensive new- built home was sold for £50 million last month to Hourieh Peramaa, a 75-year-old real estate entrepreneur from Kazakhstan, Sunday Times reported on Jan 27.

The house on Bishops Avenue in Hampstead, northwest London, has nine main bedrooms, 16 bathrooms and five reception rooms, and was acquired from Turkish businessman Halis Toprak.

Ms Peramaa plans to spend another £30 million extending and redecorating the property, the newspaper said.

Earlier in January, Lev Leviev, an Israeli diamond billionaire, paid £35 million for a house in the same district as Ms Peramaa, according to Daily Telegraph.

Indian steel entrepreneur Lakshmi Mittal owns the UK’s most expensive home. He paid £57 million in 2004 for a home close to Kensington Palace in central London. Both Kensington Palace Gardens and Bishops Avenue have been dubbed ‘Billionaires Row’.

January’s increase in luxury-home prices was the biggest since September, when prices advanced 1.2 per cent.

For the year ended Jan 31, the gain was 26 per cent, the smallest since October 2006.

Across Britain, prices in January were 4.5 per cent higher than a year earlier, according to HBOS, the country’s largest mortgage provider. Lenders are selling fewer mortgages as they contend with losses stemming from the collapse of the US sub-prime mortgage market.

Properties at the lower end of Knight Frank’s prime index are now moving more in line with the UK market, said Mr Bailey.

Bonus-earners in the UK’s financial industry will invest £2 billion in homes this year, compared with £5.5 billion in 2007, as they look for higher returns, Savills plc said in November. Savills and Knight Frank are the biggest brokers for prime London properties.

This year, top-quality dwellings in the UK capital will appreciate about 3 per cent, Knight Frank said on Tuesday, reiterating an October forecast. The Bank of England’s ability to cut interest rates to ward off an economic slowdown may be hindered by inflationary pressures, said Knight Frank.

‘It is fair to say that the issues of confidence and affordability that have so far dogged the main market may now promote a more cautious purchasing environment in the prime sector too,’ Mr Bailey said.

Britain is home to about 68 billionaires, according to the Sunday Times 2007 Rich List. Many are investors from China, India and Russia who have bought homes in London for its schools, stores, theatres and restaurants.

The most expensive houses can fetch as much as £4,000 a square foot, CB Richard Ellis Hamptons International estimates. That compares with about £2,075 a square foot in New York, the broker said.

Purchasing at such prices so far isn’t being inhibited by the prospect that the UK may impose an annual tax of £30,000 on wealthy individuals who live in the UK and keep their residence elsewhere for tax purposes, said Mr Bailey.

‘There is a lot of interest in deals being done by super-rich foreign buyers,’ he said. — Bloomberg

Source : Business Times – 7 Feb 2008

December 20, 2007

New Star turns down 3 bids for Parakou Building

Filed under: Property Deal,UK — Propertymarketupdates @ 11:36 am

UK-BASED New Star International Property Fund has received three offers to buy the Parakou Building in Robinson Road for 20 per cent more than the $128 million it paid in May.

But it has decided that the rental returns are just fine – for now.

‘We are in Singapore for the long term,’ said New Star Property Asset Management’s head of global property Stuart Webster.

The potential buyers of the Parakou Building included two international funds and a private investor, he said.

Mr Webster was in Singapore yesterday to look at more acquisitions here. He did not give details but said one building in particular is worth about $120 million and he expects to close the deal early next year.

New Star was launched six months ago and has since raised $1US.1 billion, about half of which has been invested in property.

New Star has 13 properties – seven are in Japan, two in Australia, two in Germany, one in the Netherlands and one in Singapore.

While its seven properties in Japan account for 22.2 per cent of asset allocation, its single Singapore property accounts for 11.6 per cent.

Its portfolio may double by next year, with a longer-term target of around $5US billion.

About 70 per cent of assets will be in Asia. But the fund is not looking at property in China or India because these markets do not fit its risk profile.

It is not looking for trophy assets either, he said. ‘I would rather have 10 small buildings rather than one large one,’ said Mr Webster. ‘We are not looking for prestige but for quality investment.’

New Star is yielding about 4 per cent and is unique insofar as it is a non-leveraged fund with daily liquidity.

Up to 80 per cent of its assets will be invested directly in property and with the other 20 per cent in property securities and cash.

Although one could argue that real estate investment trusts (Reits) offer investors exposure to real estate too, Mr Webster reckons Reits pick up the volatility of equities.

There is volatility in the property sector, but he believes the outlook for the office sector here is good.

Rents have hit $8 per sq ft per month at Parakou Building which is enjoying spillover demand for Grade A space in Raffles Place.

Mr Webster does not expect demand to weaken either, even after new supply comes on stream after 2010.

Based on his reading of the Singapore economy, he said: ‘Singapore will need that supply.’

Source : Business Times – 14 Dec 2007

November 30, 2007

World’s most expensive office rentals in London, Mumbai

Filed under: India,UK — Propertymarketupdates @ 9:02 pm

London and Mumbai tenants paid the most for high-quality offices this year, while Singapore rents grew the fastest as economic growth lured international banks to Asia, said CB Richard Ellis Group Inc, the world’s largest commercial real estate broker.

London’s West End led with average annual rents of US$328.91 per square foot (psf) this month, compared with US$180.80 for the UK capital’s main financial district.

Mumbai had the second-most expensive leases at US$189.51, CB Richard Ellis said in its semi-annual Global Market Rents survey.

Asia’s booming economies drove up demand for financial and computing services in the region, catapulting Mumbai to second spot and fuelling Singapore’s 83 per cent growth in rents.

The US currency’s decline also drove up costs in dollar terms, while a dearth of new space bolstered London rents, CB Richard Ellis said.

‘Markets that moved up that quickly had the highest growth rates based on the economy’ as well as a scarcity of space, said Ray Wong, director of research operations for the Americas for Los Angeles-based CB Richard Ellis.

‘In the most expensive markets, if they’re close to their peak, the expectation for increase is marginal, but other markets, especially resource sectors, are enjoying an increase in demand so they’re going to move up a lot quicker.’

Mumbai’s rents rose 55 per cent, driven by computer related tenants, according to CB Richard Ellis.

Midtown Manhattan was the most expensive North American market, with rents averaging US$100.79 psf, 12th- highest worldwide. Downtown New York ranked 46th globally at US$53.47.

Moscow rents jumped 65 per cent after crude oil prices tripled in the past five years, bolstering the economy of the world’s second-biggest exporter of the fuel.

Rents in the oil hub of Edmonton, Canada, rose 43 per cent, the ninth- fastest worldwide, as energy companies leased more space to house expanding workforces, the survey showed. Edmonton did not rank in the top 50 markets by rental prices.

Eighty-five per cent of the 171 cities included in the survey saw rental increases in the year ended Sept 30, according to CB Richard Ellis. This bodes well for investment returns, Mr Wong said.

The survey measures the most expensive rents based on US dollars. Rental growth rates were measured in local currency terms. — Bloomberg

Source : Business Times – 22 Nov 2007

July 17, 2007

UK, S’pore property buyers show mutual interest

Filed under: Property Investment,UK — Propertymarketupdates @ 4:21 pm

More super-wealthy South-east Asian individuals, including Singaporeans, are looking to invest in UK properties, especially in London. But the flows are not just going one way; more British investors too have become interested in Singapore real estate, say two senior private bankers with SG Private Banking, part of the Societe Generale Group.

‘Over the past one year we have seen – if you consider only the more serious expressions of interest from our clients in South-east Asia in this market (UK) – a jump of at least 20 per cent,’ said Don Percival, director of private banking with SG Hambros, which is SG Private Banking’s UK arm.

The property boom in this part of the world has heightened the interest that wealthy Asians have traditionally had in acquiring real estate as an asset class, and the UK is one of the most popular destinations for that purpose, Mr Percival told BT.

The UK property market holds several attractions for foreign investors. Not only does it offer investors non-domicile tax status, it also offers a stable economic and political environment. Furthermore, the market has been booming as growing demand exceeds limited supply, with property values in central London growing some 33 per cent last year.

There’s also a historical connection for investors from South-east Asia, as a result of British colonialism.

Said Nikita Rossinsky, managing director (Southeast Asia) of SG Private Banking: ‘There is an amazing amount of interest right now (in UK property). And part of it is historically motivated. There’s an affinity with the UK especially in this part of the world. Investors from Singapore, Malaysia, Brunei – when they look overseas, they look at the UK.’

Typically, these high-net-worth clients are looking to diversify their portfolio by investing in the UK. Many of them, in fact, may already have an exposure to the UK property market, but are looking to rebalance their portfolio.

Said Mr Percival: ‘We’ve seen more Singapore clients who already have portfolios in London.’

Added Mr Rossinsky: ‘And it’s not just money going from Singapore to London. We have also seen clients who have multiple properties there, who then leverage these properties to help them invest in their business here. So the money goes out and then comes back here.’

The Singapore real estate market itself has also become a draw for foreign investors, such as those from the UK, who are drawn by recent developments here and the stable regulatory and social environment. ‘People feel comfortable investing here; it’s a centre of global excellence,’ said Mr Rossinsky.

‘And we have seen the interest in London as well…Singapore is marketing itself as ‘the Switzerland of Asia’ and I have made introductions to our teams here for accounts and trusts to be set up,’ said Mr Percival.

The two senior bankers were speaking to BT after a private seminar held by SG Private Banking for about 50 of its South-east Asian clients last week. The seminar was held in response to more queries from clients on investing in UK property. It drew double the number of participants it had planned for. About 60-70 per cent of the guests were flown in from Malaysia, Brunei, Indonesia and the Philippines.

A lot of times, a client’s property investment decisions are also influenced by lifestyle factors, as the investor may also be looking to stay in the property he buys, said Mr Percival.

What his bank then does for these clients – upon introduction by their local SG Private Banking relationship managers in Asia – is to adopt a holistic approach in helping them make the best property investment decisions.

Other than offering lending services, the bank also provides advice in efficient tax planning, and estate and success planning. It also introduces them to independent specialists in property acquisition, education and immigration, said Mr Percival.

Source: The Business Times, 16 July 2007

June 8, 2007

UK valuation body woos Indian varsities

Filed under: UK — Propertymarketupdates @ 3:33 pm

Sensing enormous job opportunities in the property valuation market and allied fields in India, the London-based Royal Institution of Chartered Surveyors (RICS) is exploring partnerships with Indian universities and B-schools to offer RICS-accredited courses in India, according to a report in Business Standard. Chartered surveyors, members of RICS, are professionals in valuation and cost estimates of land, property, construction and development. Initially, RICS is planning to introduce courses in valuation, quantity surveying and construction.

‘This is because major international firms in valuation and construction have told us there is a severe shortage in these booming sectors. We will add more courses in other areas as demand is identified through our on-going contact with the major firms in real estate sectors,’ says Jas S Kalsi, manager, membership development, India.

The additional courses could include building surveying, facilities management, geomatics, commercial property practice and planning and development, adds Mr Kalsi. In addition to these, candidates need to demonstrate achievement of technical competencies in the selected subject. After the academic course, the students have to undertake APC (Assessment of Professional Competence) training provided by the employers after recruitment. For a new graduate, this will take two years.

Having completed the APC training, the graduates go through an assessment by practising experts. Once they pass the assessment successfully, they qualify as RICS members.

Source: The Business Times, 05 June 2007

May 30, 2007

UK May house price growth eased slightly

Filed under: UK — Propertymarketupdates @ 9:00 pm

British house price inflation eased slightly in May, according to property researchers Hometrack, suggesting higher interest rates may be starting to cool demand in the housing market. Hometrack said yesterday that house prices rose 6.7 per cent on the year this month, cooling a touch from 6.8 per cent in April.

‘The steady ratcheting up of interest rates was bound to take its toll eventually,’ said Richard Donnell, director of research at Hometrack.

‘We expect the headline rate of growth to slow relatively quickly over the rest of the year towards 4 per cent as affordability pressures put a continued squeeze on purchasing power and more supply comes to the market.’ he added.

The housing market has remained robust in spite of four interest rate hikes since August, but some economists forecast that rates could rise as high as 6 per cent and significantly cool house price growth. ‘The expected slowdown will be exacerbated by any further increases in interest rates above the (current) 5.5 per cent,’ Mr Donnell said.

Source: The Business Times, 29 May 2007

33% gains for prime London property

Filed under: UK — Propertymarketupdates @ 8:08 pm

Prime central London property prices are growing at their fastest in almost 30 years – and at three times the rate of the wider British market, figures show.

The value of the best properties in central London has risen by more than 33 per cent in the 12 months to end-April, according to estate agent Knight Frank’s prime property index.

That is the fastest rate of growth since mid-1979 and means prices in central London are rising at three times the UK average.

A property worth just 100,000 pounds in 1976 would now be worth more than 4.1 million pounds, the index shows.

Knight Frank said demand had been supported by growing numbers of overseas buyers and money spent on property by City bankers.

Over the past year, Belgravia and Knightsbridge have seen the strongest market, with prices surging by more than 40 per cent.

Head of residential research Liam Bailey said: ‘London’s traditional spring market rush starts earlier and earlier every year. For the past two years, the season has opened in December rather than March, and has run on well into May.

‘The early part of 2007 saw an incredibly active market, with price growth totalling nearly 11.9 per cent in the first quarter.’

He said, even after 18 months of strong price appreciation, the pace of growth was yet to slow and, if anything, had quickened.

In the six months to end-April, monthly price growth averaged 2.8 per cent, against 1.7 per cent in the same period last year.

‘The strong performance of the top end of the market can be attributed, at least in part, to the continuing health of the City economy and the bonus season,’ said Mr Bailey.

‘However, it is our experience that, whilst there have been growing numbers of deals completed by City workers, it is the influx of overseas buyers – European, Russian, Indian and increasingly Middle Eastern – which is the key to the substantial price growth seen in many areas of central London,’ Mr Bailey said.

Knight Frank data shows that the supply of available property fell by more than 50 per cent in the first quarter of 2007, compared to a 17 per cent rise last year.

Looking forward, Mr Bailey believed stock shortages would continue to buoy the market.

Higher transaction costs – stamp duty, in particular – mean people are moving less often, while the introduction of home information packs (HIPs) this summer is also likely to cause a drop in supply, he said.

The controversial packs – designed to make the home-buying process more efficient, cut the number of transactions that fall through and encourage homeowners to reduce energy consumption – are due to come into force in England and Wales on June 1, but have met fierce opposition.

HIPs are expected to cost sellers around 500 (S$1,520) and estate agents have been reporting a rush to complete deals ahead of their introduction.

The Knight Frank prime central London residential index charts the value of property at the top end of the market: flats and penthouses with an average value of 2.5 million and houses valued at close to 5 million.

Source: The Business Times, 24 May 2007

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