Business Times: ING Real Estate plans second China fund November 29, 2007
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November 29, 2007
ING Real Estate plans second China fund
It is also looking to buy and privatise battered Reits in mature
markets
(HONG KONG) The world’s biggest property fund manager ING Real
Estate plans a second China fund next year, worth about US$700
million, in response to growing enthusiasm for Asian property at a
time when Western markets are suffering.
With a global credit crunch depressing activity in European and US
commercial property markets, ING Real Estate is pushing further into
Asia. But the unit of Dutch financial services firm ING Groep NV is
also looking to snap up and privatise battered real estate
investment trusts (Reits) in mature markets.
‘On the one hand you see part of the world slowing down, triggered
by the credit crunch,’ ING Real Estate chairman and chief executive
George Jautze told Reuters in an interview. ‘And then you see
another part of the world – China, Japan, and even Australia – where
there are lots of opportunities.’
ING Real Estate, which has a global portfolio worth more than 100
billion euros (S$214.4 billion), set up two pan-Asian funds this
year worth a combined US$1.6 billion in equity.
A new fund for Japan is in the works for next year, and after
spending most of the US$350 million raised at the end of 2006 for
residential development in China, the firm plans a follow- up fund
about twice that size.
The fund will be marketed in the first half of next year, according
to ING Real Estate’s Asia head, Robert Lie, and could invest in some
commercial property as well as housing.
But tougher competition among developers, which has led to higher
land prices, could mean that investors will have to lower their
expectations slightly from the 20 per cent internal rates of return
notched up by ING Real Estate’s first China fund.
Mr Jautze said that he expected global property yields to edge up in
the next year, as investors find borrowing harder to obtain and more
expensive.
Highly leveraged investors have faded away, and without the prospect
of huge private equity deals, the US commercial property market has
come to a standstill.
Even in Japan’s arena of rock-bottom interest rates, the number of
bids for any building has halved to four or five as leverage for
deals has fallen to around 60 per cent from 80-90 per cent since the
US sub-prime crisis unfolded early this year.
Business Times: Cheung Kong wins HK$7b MTR property project November 29, 2007
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November 29, 2007
Cheung Kong wins HK$7b MTR property project
(HONG KONG) Cheung Kong (Holdings), the property flagship of tycoon
Li Ka-shing, has won a tender from Hong Kong subway operator MTR
Corp Ltd to develop a residential project with an investment cost of
HK$7 billion (S$1.29 billion).
MTR said in a statement that it would sign a formal agreement with
Cheung Kong for the third phase of the Lohas Park project in Hong
Kong’s Tseung Kwan O district within the next few weeks.
Property prices in Hong Kong have jumped more than 70 per cent since
a trough in 2003, when the Sars respiratory disease ravaged the
city’s economy.
Some analysts expect prices to rise another 50 per cent in the next
two years because supply of apartments is falling short of demand at
a time when Hong Kong is mimicking US interest rate cuts.
But if prices fail to meet those expectations, developers could see
their margins squeezed because of soaring land prices at recent
auctions.
Cheung Kong could cut costs in its new project as it is also
developing the first two phases of Lohas Park, said Charles Chan,
the managing director of Savills Valuation and Professional
Services.
‘They can duplicate the design and lower labour costs,’ he said.
The first phase of the Lohas Park is selling at HK$5,000-6,000 per
square foot, but Cheung Kong could lift prices by as much as 40 per
cent for the third phase, Mr Chan said.
‘The third phase could ask for HK$7,000-8,000 a square foot when it
is ready for sale three years later,’ he said.
Business Times: Wharf posts HK$3.12b Q3 profit November 29, 2007
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November 29, 2007
Wharf posts HK$3.12b Q3 profit
Earnings more than double on higher rental income from office and
retail properties
(HONG KONG) Wharf Holdings Ltd, the Hong Kong landlord and port
operator that owns a pay-television company, more than doubled its
third-quarter profit as rental income from office and retail
properties rose.
Net income for the three months ended Sept 30 rose to HK$3.12
billion (S$578 million) from HK$1.21 billion a year earlier. Profit
in the first nine months of the year was HK$7.55 billion, or HK$3.08
a share, compared with HK$7.47 billion, or HK$3.05, in the same
period in 2006, Wharf said yesterday in a statement to Hong Kong’s
stock exchange.
Wharf is investing in Chinese property to tap wealth in the world’s
fastest-growing major economy as it seeks to diversify from Hong
Kong. Rental profit from the group’s Hong Kong commercial
properties, which accounts for 70 per cent of total assets, surged
20 per cent in the first nine months compared with a year earlier.
‘Wharf is a relative latecomer in the China market compared with its
peers,’ said Kenny Tang, a research director at Hong Kong-based Tung
Tai Securities Ltd. ‘Key for them will be whether they can at least
catch up with the big boys in the second-tier cities, where they
have been very aggressive in acquiring land.’ The quarterly figures
were derived by Bloomberg News by subtracting first-half profit from
the nine-month profit released by the company yesterday.
Wharf plans to increase its land bank in China to 100 million square
feet, from 70 million square feet now, according to the statement.
The company is competing against other Hong Kong developers
including Henderson Land Development Co and Cheung Kong Holdings Ltd
in acquiring property in the country.
The company, a unit of Hong Kong-listed developer Wheelock & Co,
said it will boost investment in China, seeking a 50-50 weighting in
assets between the mainland and Hong Kong in the next five years.
The company has bought 14 sites in China since the middle of 2005,
it said.
Wharf and its subsidiaries have acquired at least 10 development
sites in Chinese cities including Chengdu, Hangzhou and Chongqing
between August and November, it said in yesterday’s statement.
Earlier this month the company bought land in the southwestern
Chinese city of Chongqing for 7.5 billion yuan (S$1.46 billion)
through a public tender held by the city’s municipal government. The
project will be jointly developed with China Overseas Land &
Investment Ltd.
In October, Harbour Center Development Ltd, a Hong Kong- listed
subsidiary, and its partner bought land in Suzhou, a city west of
Shanghai.
Wharf currently operates several commercial properties in the
country including the Beijing Capital Times Square, Shanghai Times
Square and the Chongqing Time Square.
Excluding property revaluation gains, nine-month net income rose 30
per cent to HK$4.02 billion, Wharf said.
Wharf jumped 5.1 per cent to HK$40.55 at the 4pm close in Hong Kong,
the biggest daily gain in almost a month. The stock earlier climbed
as much as 7.9 per cent.
Wheelock, the property developer controlled by the family of Hong
Kong billionaire Peter Woo, said profit in the six months ended
September rose 8 per cent to HK$4.03 billion, with sales gaining 67
per cent to HK$13.9 billion, according to a statement to Hong Kong’s
stock exchange today. Its shares surged 8 per cent to HK$24.30.
Business Times: Where high finance meets high living November 29, 2007
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November 29, 2007
Where high finance meets high living
The new downtown will boast a casino, a financial hub, condos and
retail areas, writes CLARISSA TAN
TIRED of Orchard Road? Jaded by Clarke Quay? Finding Robertson Walk
just a trifle same-old, same-old? For the Singapore consumer -
probably among the most avid in the world – Marina Bay may be the
next big thing.
The new downtown will be home to a casino, a financial centre and
several sparkling condominiums, so not surprisingly, shops and
restaurants are eager for a presence there.
‘The Marina Bay area presents many exciting opportunities for both
the business and leisure market,’ said Sulian Tan-Wijaya, general
manager of The Fullerton Heritage, which is developing a string of
commercial properties along the waterfront.
‘Our development is at the heart of the Central Business District,
the Marina Bay Sands casino, the Esplanade theatres, new high-end
residences like The Sail and The Clift, and the nearby Civic
District,’ she said.
Edgar Huang, manager of marketing services for Esplanade – Theatres
on the Bay, said the arts-performance centre expects to see ‘even
more buzz in the area, with more people coming to work and live and
play here’. The theatres, open since 2002 and famous for their domes
that have been likened to durians, are also adjacent to a shopping
mall.
David Martin, general manager of Marina Bay Financial Centre (MBFC),
which will consist of high-rise office towers as well as retail
space, estimates there will be 50,000 people living and working in
the ‘immediate vicinity’ of the financial hub from 2011.
Along with the visitors who are sure to flock to the adjacent
Sands, ‘we believe this creates a compelling offer to potential
retail tenants, and this is also the feedback we are getting from
the market’, he said.
Events being held in and around the public areas of Marina Bay will
also help draw in the crowds, said the Esplanade’s MrHuang.
‘Marina Bay is also currently host to many celebrations like
National Day, the Fireworks Festival and the New Year’s Day
celebrations,’ he said.
Upcoming events like the Chingay street parade and the Grand Prix
Formula One race, which Singapore will host in September next year,
will also attract visitors, he added.
To entice what promises to be a diverse range of consumers, each
developer is adopting a slightly different marketing tack.
The Fullerton development, for example, is aiming to be high-end and
historical.
‘In addition to the Fullerton Hotel and a new waterfront 100-room
luxury hotel, the Fullerton Heritage Precinct will offer a range of
chic, trendy and elegant retail and dining experiences,’ said Ms Tan-
Wijaya.
‘These include conservation buildings such as The Fullerton
Waterboat House, Clifford Pier and Customs House, as well as One
Fullerton,’ she said.
One Fullerton will revamp its second floor and offer even more food
and beverage outlets, which should attract tourists who visit the
nearby Merlion Park, she said.
The Esplanade is pitching itself as a kind of natural retail
extension for the arts lover. ‘It’s a lifestyle experience pegged to
the arts,’ said Mr Huang.
‘Besides coming here for a show, you can start or end your evening
with drinks and food,’ he added. ‘There are many shops closely
related to the arts for art lovers, and those unfamiliar with the
arts won’t feel out of place either.’
Mr Huang said that business at the Esplanade has been bustling since
its inception.
‘It’s been positive here at Esplanade Mall,’ he said. ‘The Esplanade
also presents over 70 per cent of our artistic programmes free,
which means visitors will always have something to look forward to
after a meal or a visit to the shops.’
He said that some of the main attractions of the mall are the food
centre Makansutra Gluttons Bay, award-winning restaurant My Humble
House and library@esplanade, Singapore’s first performing-arts
library.
Not forgetting the small but unusual Tatami Shop – ‘the world’s
first tatami furnishings retailer outside Japan’, said Mr Huang.
Suntec City Mall, which welcomed its first customers in 1997, says
its retail concept is ‘a little something for everyone’. The
shopping centre’s larger tenants include hypermarket Carrefour and
fashion retailers Mango, La Senza and Lacoste. It also boasts the
gigantic Fountain of Wealth, which attracts visitors from all over
the world.
‘Also, Suntec City Mall houses the embarkation point for the many
tourists going for the Duck Tours and Hippo tours,’ said Marilyn
Tan, investor relations manager at ARA Trust Management (Suntec).
As for the MBFC, Mr Martin said the financial hub aims to be ‘a
vibrant and prestigious, yet convenient, shopping and dining
precinct for the internationally-minded’.
Retail in the MBFC would address a ‘market gap’ in the central
business district for serving the needs of higher-income earners and
residents, he said. ‘This group of customers wants much more than
what a conventional mixed-use centre offers. MBFC is designed as a
place where residents, the office population and visitors can
satisfy their everyday needs without leaving the business and
financial district.’
Of the development’s 160,000 sq ft of underground retail space,
about half will be for shops and the other half for food and
beverage, he said. In addition, there will be a restaurant on the
33rd floor of the Tower One office block.
‘MBFC is in talks with a number of leading retail interests to be
located within the centre,’ he said. The development will offer
dining and entertainment options for ‘a spectrum of tastes’.
Then, of course, there is Marina Bay Sands, which will open in 2009.
Its developers, Las Vegas Sands, declined to comment at this stage
on the specifics of upcoming shops and restaurants.
Besides the casino, the entire integrated resort, as it is called,
will feature three 50-storey hotel towers, linked by a two-acre Sky
Garden. Not to mention an Arts and Sciences Museum shaped like a
welcoming gesture, and one-million square feet of ‘integrated
waterside promenade and shopping arcade’, according to its website.
Clearly, there will be loads of shopping and dining opportunities
there. So hang on to your hats, Singapore consumer – if not your
purses.
Business Times: Grim US housing outlook in 2008 November 29, 2007
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November 29, 2007
Grim US housing outlook in 2008
(CHICAGO) US homebuilders said the housing market probably will
weaken in 2008 as foreclosures rise and banks tighten lending
standards.
Demand has deteriorated in many markets, limiting the prospect of a
rebound in new home sales, chief executive officers for D R Horton
Inc and Beazer Homes USA Inc. said on Tuesday at a JPMorgan Chase &
Co conference in Las Vegas.
Next year ‘is going to be worse than ‘07 for us and for the industry
in general’, said Donald Tomnitz, CEO of Fort Worth, Texas-based D R
Horton, the fourth- largest US homebuilder.
The housing slump that began in 2005 has erased about US$36 billion
in stock market value for the largest 15 homebuilders this year.
New home sales dropped 23 per cent in the year through September and
home delinquencies have reached a five-year high.
The California and Florida housing markets continue to weaken and
the Las Vegas market is ’soft’, Mr Tomnitz said.
New home sales in Phoenix will probably get worse in 2008, he said.
Stephen Scarborough, Standard Pacific Corp’s CEO, said at the
conference that his company isn’t planning on filing for bankruptcy.
Shares of Standard Pacific have fallen 91 per cent this year on
concern the company can’t pay back its debt.
‘There’s no effort on our part and nothing is in process as far as
filing for bankruptcy protection,’ Mr Scarborough said. ‘That is not
our present intent. We have a multifaceted approach to conserve cash
and generate cash,’ he said.
Homebuilders are cutting jobs and trying to reduce their
construction costs to boost cash flow to pay off debt. They’re also
selling land and writing down property values.
Business Times: US commercial real estate set to take a hit November 29, 2007
Posted by catherinefong63 in BusinessTimes, London.add a comment
November 29, 2007
US commercial real estate set to take a hit
Traders see bond defaults rising to the highest level since Great
Depression
(LONDON) In the bond market, commercial property investors are about
as creditworthy as US homeowners with sub-prime mortgages.
‘Commercial real estate is a full-blown bubble that feels very much
at a bursting point,’ said Christian Stracke, an analyst in London
at CreditSights Inc, a fixed-income research firm. ‘There’s a fairly
toxic mix of factors at work.’
The cost of derivatives protecting investors from defaults on the
highest-rated bonds backed by properties more than doubled in the
past month, according to Markit Group Ltd.
Prices suggest traders anticipate defaults rising to the highest
level since the Great Depression, according to analysts at RBS
Greenwich Capital in Greenwich, Connecticut.
The seven-year rally in offices and retail properties ended in
September when prices fell an average of 1.2 per cent, according to
Moody’s Investors Service. More losses are likely because banks are
holding US$54 billion of commercial mortgages they can’t sell, data
compiled by New York-based Citigroup Inc showed.
Lenders are struggling to sell loans to investors after losses on
debt backed by sub-prime mortgages to people with poor credit caused
financial markets to seize up in July and August. Bonds with AAA
ratings secured by properties ranging from the Sears Tower in
Chicago to trailer parks in Delaware yield about 203 basis points
more than similar maturity Treasuries, up from 92 basis points on
Oct 12, according to Morgan Stanley indexes.
The benchmark CMBX-NA-AAA index of derivatives tied to the safest
commercial mortgage securities rose to 102 basis points from 44 a
month ago. It costs US$102,000 a year to protect US$10 million of
bonds backed by property loans against default, up from US$44,000 a
month ago.
Derivatives are contracts whose value is derived from assets
including stocks, bonds, currencies and commodities, or from events
such as the weather or changes in interest rates.
Sales of debt secured by commercial mortgages tumbled 80 per cent to
US$3.9 billion in October from a year earlier, data compiled by
Bloomberg show. New securities backed by loans on buildings will
fall 50 per cent in 2008 from US$220 billion this year, Moody’s said
on Nov 2.
Real estate deals are coming apart at the fastest pace since
September 2001, when the US economy was shrinking, because banks are
tightening standards for loans, said Robert White, president of Real
Capital Analytics, a New York-based research firm.
More than 75 deals have been withdrawn because banks aren’t lending,
and that estimate is ‘probably conservative because not all deals
that blew up were well-publicised’, said Mr White.
‘The commercial real estate market is imploding,’ said James Ortega,
who manages US$150 million at Saenz Hofmann Fund Advisory in Sao
Paulo. Mr Ortega has set trades to profit from a decline in property
companies’ shares. ‘We’re about to experience a very significant
correction.’
Mortgage brokers say traders are overreacting. Defaults are running
at 0.4 per cent in the US, below the average of about one per cent
over the past 10 years, according to Moody’s. That’s a fraction of
the 15.2 per cent of subprime home loans that are at least 60 days
in arrears, an index by the New York-based ratings company shows.
The decline in prices of the highest rated commercial mortgage-
backed securities mostly reflects a slump in credit markets, not
expectations of defaults on loans backing the securities, said
Michael Sun, an analyst at Wachovia Corp’s Tattersall Advisory Group
in Charlotte, North Carolina, which manages about US$5 billion of
commercial mortgage securities.
‘They are, credit-wise, a no-brainer,’ Mr Sun said. ‘Nobody
disagrees they are rock-solid credits.’
In Manhattan, the world’s largest office market, the vacancy rate
rose to 7.6 per cent in October, the highest in a year, property
brokerage Colliers ABR said. Rents rose 1.4 per cent on average to
US$64.08 a square foot from September, the second-smallest month-to-
month increase since June 2006.
The Bloomberg Real Estate Investment Trust Index measuring the
stocks of 126 publicly-traded property companies fell 29 per cent
from its peak in February.
Record-low interest rates in the past five years encouraged banks to
loosen underwriting standards and caused prices to rise as much as
35 per cent a year.
Banks provided loans that allowed borrowers to pay only interest,
not principal, and lenders offered financing that exceeded property
values, according to Moody’s. The average loan-to-value ratio
reached a record high of 117.5 in the third quarter for mortgages
that were turned into bonds, from 90 in 2003, Moody’s said.
Bondholders helped feed demand for loans by purchasing a record
US$273 billion of securities backed by commercial mortgages this
year, up from US$95 billion in 2004, based on data compiled by Trepp
LLC, a New York-based research firm.
Demand has dried up since July, when securities linked to sub-prime
home mortgages contaminated credit markets and caused financial
institutions to report losses or writedowns of more than US$66
billion.
Citigroup analysts said in a Nov 15 note to clients that derivatives
indexes on commercial properties are priced for a ‘meltdown’.
Business Times: Segro buys property worth £400m in H2 November 29, 2007
Posted by catherinefong63 in BusinessTimes, London, Overseas News.add a comment
November 29, 2007
Segro buys property worth £400m in H2
(LONDON) British property firm Segro plc cautioned about continued
weakness in Britain’s property markets, but it bought £400 million
(S$1.19 billion) of property in its second half as it took advantage
of good buying opportunities. In a trading update yesterday, the
firm said financial market turmoil was taking a toll on the UK
property market, increasing the likelihood of asset writedowns and
reducing the number of active participants in the market.
But it said its pro-forma cash and undrawn debt facilities of £875
million would enable it to take advantage of ‘good buying
opportunities’ forged by the market conditions. ‘The UK investment
market has seen very few transactions in the second half of the
year, with . . . the shortage of credit available to leveraged
buyers dramatically reducing the volume of transactions,’ chief
executive Ian Coull said.
‘Whilst this will inevitably result in professional valuers writing
down the book values of properties, we believe it will create a
number of opportunities for well-capitalised companies such as
Segro,’ Mr Coull added. Segro shares, which have fallen 45 per cent
in the year so far, rose 2.23 per cent to 424.75 pence at 0813 GMT.
The real estate investment trust achieved more than 83,000 square
metres of UK lettings in the second half of the year to end-October;
an increase of 65 per cent on last year’s levels. It said vacancy
levels in the UK and continental Europe were still broadly unchanged
from the half-year position at 11.5 per cent and 6 per cent
respectively and that 36 per cent of its 394,000 square metre
development pipeline had already secured tenants. The firm still saw
modest rental growth across its portfolio and its full-year dividend
expectations remained unchanged at around 23 pence per share.
Business Times: Trouble looms for a third of UK mortgages November 29, 2007
Posted by catherinefong63 in BusinessTimes, London, Overseas News.add a comment
November 29, 2007
Trouble looms for a third of UK mortgages
Self-employed and those who move house frequently open to risk
(LONDON) Up to one in three or 5.5 million mortgage holders in
Britain could face serious financial difficulties as a result of the
US sub-prime crisis and the tougher lending climate it has created,
a study showed.
According to a report published by consumer research group Mintel
yesterday, people with poor credit records were not the only ones at
risk.
Those who are self-employed or had moved house frequently were also
in the firing line. ‘The focus over the last few months has very
much been on sub-prime borrowers, but they are only the tip of the
iceberg,’ Toby Clark, a senior finance analyst at Mintel, said in a
statement.
Mintel said 9 per cent of British mortgage holders were classed as
sub-prime, while a further 24 per cent were ‘non-standard’ and
relatively high risk because they had irregular incomes.
‘In today’s more conservative lending climate, the unconventional
financial situation of these homeowners means that they will now
face higher repayments and increased lenders’ fees when remortgaging
or moving house,’ Mintel said.
The Council of Mortgage Lenders (CML), whose members accounted for
98 per cent of all UK residential mortgage lending, said Mintel’s
figures were too high.
In an e-mail, the CML said preliminary data showed around 5 to 6 per
cent of all outstanding mortgages were held by people with blemished
credit records, while around 16 per cent of mortgage loans in the
last year had been extended to the self-employed.
Mintel said demand for non-standard mortgages – a £125 billion
(S$373.1 billion) market – was set to grow as people’s financial
circumstances become more complicated due to rising divorce rates
and the growing popularity of self-employment, but supply was
unlikely to keep up.
Nearly two fifths of the UK adult population, or some 18 million
people, probably now qualified as non-standard consumers and that
figure was set to rise to 20 million by 2012, Mintel said.
‘But ironically as lenders become increasingly cautious, these non-
standard mortgages will become harder to come by, leaving more
adults without the finances needed to buy property,’ Mr Clark said.
Based on a survey of almost 2,000 adults, Mintel said one in five
who were interested in getting a mortgage in future already foresaw
some problems with their applications because of their income,
working status or personal circumstances.
That figure could grow in the years ahead if banks become more
cautious in their lending.
Business Times: Popular’s property ventures not a sure winner November 29, 2007
Posted by catherinefong63 in BusinessTimes, Property News.add a comment
November 29, 2007
Popular’s property ventures not a sure winner
By WONG WEI KONG
POPULAR Holdings is best known for its bookstores and schoolbooks,
but there is now more to it than meets the eye. For the household
name has been making big bets on real estate in Singapore, and its
fortunes going forward are likely to be driven more by property than
by publishing.
It’s a shift that started just last year but has since picked up
dramatically enough to alter the complexion of the group.
Last week alone, the group announced two new property investments.
It purchased all the strata units at View Point at Jalan Datoh for
$16.5 million and at Shiba Apartments at Jalan Raja Udang for $15.5
million.
Earlier in May this year, Popular bought 10 residential units at 18
Shelford Road for $27.2 million for redevelopment.
Its first major property foray was back in May last year, when the
group bought eight residential units with a total land area of
15,070 sq ft at Robin Road, at a cost of $12.5 million. The company
plans to sell the units once development is completed.
So in just over a year, the group has invested almost $72 million in
the property business.
In sharp contrast, Popular’s investments in publishing-related
businesses have been less eye-catching. It has made only two recent
publishing-related announcements. This month, the group, through its
subsidiaries in Hong Kong, raised the paid-up capital of eNet
Digital Pacific Ltd from HK$2.00 to HK$10,000. In September, Popular
acquired two ordinary shares of RM1 each in the capital of Seashore
Publishing (M) Sdn Bhd, which is in the business of publishing and
distributing books, articles and other printed materials.
Property, clearly, has become an area of major focus for Popular. In
its announcements, the group had tended to characterise its property
forays as opportunistic. ‘While retail, distribution and publishing
will remain the group’s main business focus, property development
will be a potential area of growth that the group is looking into,
to capitalise on the potential and promising returns of the current
property market,’ it said while making one of its property
investments.
But it is clearly more than that. In its latest annual report,
chairman Chou Cheng Ngok told shareholders that Popular is entering
into a new business segment, property, through a new unit, Popular
Land Pte Ltd. And its ambitions span beyond residential
property. ‘We are also looking into commercial property business
opportunities as well as for potential future self-use,’ Mr Chou
said. ‘We will give the same passion for property development as we
have shown for our book and publishing businesses.
This ‘diversification’ will enhance our shareholders’ value in the
long term.’
The question, of course, is whether this will really be the case.
While one-off projects could well give a short-term fillip to
earnings, going into property on the basis that Popular is thinking
of entails more risks. The lessons from the past show clearly that
it is very difficult for non-property players to play the real
estate game well. Many will recall how many non-property companies
all rushed into property during the property bull run in the mid-
1990s, and got their fingers burnt when the bubble was pricked in
1996/97. While the current state of the property market is still
bullish, several factors, such as overstretched valuations in some
segments, the threat of more government intervention to cool prices,
and concerns about the impact of a potential US recession on local
sentiment, will make it challenging for property players.
So it is by no means certain, despite the company’s optimism, that
Popular’s property ventures would achieve the results it is hoping
for. It is also debatable if going the property route is the best
way for Popular to increase shareholders’ value – it could have
invested its surplus cash in its core business, or return it to
shareholders if there are no suitable investments. What has clearly
changed is that Popular is no longer just the stable, if rather
staid, publisher and retailer of education staples. If the potential
returns from property development are high, so will be the risks.
Business Times: Stamford Land in A$220m Sydney project November 29, 2007
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November 29, 2007
Stamford Land in A$220m Sydney project
Site in The Rocks will have apartment tower, terrace homes, retail
units By CONRAD RAJ
SINGAPORE-LISTED Stamford Land, the hotel and property arm of
shipping tycoon Ow Chio Kiat, is planning to build some of
Australia’s most expensive homes on the site of two old demolished
warehouses and a heritage building.
Mr Ow bought the 99-year leasehold site on Sydney’s The Rocks area
fronting Gloucester Street and Cumberland Street for A$22 million in
June 2004 and is developing a 30-storey building with 122
apartments, five luxury terraces and commercial and retail space, at
a total cost of some A$220 million (S$279 million).
Even before the official launch, 55 per cent of the project is said
to have been sold, at an average price of just over A$1,000 per
square foot (psf).
The 427 square metre penthouse at The Stamford Residences and The
Reynell Terraces is expected to fetch A$14 million, which, according
to The Daily Telegraph, will beat the A$12 million paid for another
apartment at The Bennelong. This would be just short of the record
A$16.5 million paid for three adjoining apartments formerly owned by
one of Australia’s richest men, John Symond, who founded lending
giant Aussie Home Loans and who in 2004 had a fortune estimated at
A$365 million.
The cheapest apartment, a 62 sq m one-bedroom unit, is expected to
go for A$645,000, or about S$1,200 psf – high, but way below the
$4,000 psf apartments at Singapore’s Orchard Turn are fetching.
A brochure for the project says: ‘This unique development will
create history as the last grand residential tower permitted in The
Rocks – Sydney’s first neighbourhood.’
According to The Daily Telegraph, The Stamford Residences is the
final tower to be approved under the Sydney Cove Redevelopment
Authority Planning Scheme. The scheme allowed for a single tower to
be built in each of the six blocks south of the Cahill Expressway as
a way to provide funding to upgrade other heritage buildings in The
Rocks area.
In the past 25 years, the scheme has resulted in the Four Seasons
Hotel, Grosvenor Tower, Quay West Apartments, the Shangri-la Hotel
and the Cove Apartments.
The Telegraph quoted National Trust of Australia conservation
director Graham Quint as saying: ‘We warm to the idea that this is
the last large development of this scale and size. You wouldn’t want
this encroaching further into the heart of The Rocks . . . This sort
of thing is the trade-off to protect the rest of The Rocks . . . The
area is becoming glitzier and glitzier but people and tourists don’t
want to see something they can in their own country. You don’t want
to lose all that character.’
Stamford Land, with a market capitalisation of about $500 million,
owns seven of Australia’s best hotels and one in New Zealand. It has
also gone into the development of high-end property in the two
territories, having developed three luxury residential projects in
Sydney – Stamford on Kent, 187 Kent, and Stamford Marque.
Besides The Rocks, it has two other residential projects – The
Stamford Residences in Auckland and The Stamford Cosmopolitan in
Double Bay – and an office tower in Perth under development.
Mr Ow, Stamford Land’s executive chairman, told BT: ‘Stamford will
continue to make its residential developments synonymous with its
five-star luxury hotel brand. We are committed to focus on the
upmarket end of the housing market throughout the region.’
