The improved performance was buoyed by better market and investor sentiments.

In its latest report, property consultancy Jones Lang LaSalle said the residential sector dominated investment sales, accounting for 52 per cent of total sales.

Investment sales in the residential sector for this quarter totalled S$958 million. These include the sale of 24 Good Class Bungalows and 47 landed properties worth above S$5 million each.

With affordability remaining a key factor, Jones Lang said most investment transaction deals were still concluded below the S$100-million mark.

The exceptions were the two largest transactions in this quarter that came from the commercial sector.

The Suntec Convention Centre was injected into the ARA Harmony Fund, in which Suntec REIT holds a 20 per cent stake, for S$235 million.

K-REIT also joined the acquisition spree by purchasing six floors of its partially-owned Prudential Towers for S$106 million from Asia Property Fund.

This transaction boosted K-REIT’s ownership of this building from 44 to 73 per cent.

Jones Lang said the encouraging performance of the investment sales market is testament to the liquidity still available in the market.

Along with improving economic sentiments, Jones Lang said this market is expected to improve with more transactions expected by the end of the year.

SOURCE: Channel NewsAsia

The slump in Thailand’s tourism industry has resulted in at least 22 hotels in Bangkok worth a combined 17 billion baht being offered for sale, according to Patima Jeerapaet, managing director of the property consultant Colliers International Thailand.

One of the properties on the block is valued at around 3 billion baht while the average price is 800 million. Sizes and locations vary but include some in the inner city and by the Chao Phraya River.

Mr Patima said the asking prices that used to be higher than market values were now climbing down closer to what buyers were offering, but few deals have been sealed.

“Actually, there are many buyers hunting for hotels to take over but most of them are trying to bargain the prices in light of the economic downturn,” he said.

Hotel owners are unable to reduce the prices as much as buyers have asked, as they have debts to repay and expect satisfactory returns.

Mr Patima said most property deals completed in the second quarter were office buildings, condominiums and serviced apartments.

Major transactions totalled five projects with a total sales value of 2.08 billion baht.

He said many hoteliers wanted to sell because occupancy had slipped below the levels they needed to stay liquid and service loans.

Some banks needed to get involved in dealing with new investors to buy the hotels the banks had financed, he added.

“Some hotel owners have not even paid the hotel licence and management fees and needed to withdraw their international hotel brands. Some have not only hotel businesses but other businesses to maintain instead.”

Mr Patima said Thai investors had strong potential to make acquisitions. Some of them, liquor tycoon Charoen Sirivadhanabhakdi in particular, continued investing in hotels overseas. Such investors looked for reasonable prices and were less concerned about the brand of the management group.

“Some well-known hotels that have collected know-how from international chains can set up their own brands and make them well-established and acknowledged. They plan to branch out to overseas destinations,” said Mr Patima, mentioning Anantara owned by SET-listed Minor International as an example.

“This will become a new trend in the Thai hotel industry.”

Meanwhile, Thai hoteliers who are building their own brands have potential to sell the brands internationally and have funds to invest overseas. They include Dusit Group which is now in many countries, Central Group’s Centara and the Charanachitta family’s Amari.

Many other Thai hotel brands have improved their reputation in recent years. They include Furama, owned by the Thai-Indian Chansrichavala family’s Unico group; Lub-d Bangkok Hostel owned by Narai Hotel; S15 Sukhumvit Hotel and S31 Sukhumvit Hotel, owned by Peep Inn Group, said Mr Patima.

Properties in neighbouring countries also have some appeal. Thai Nakorn Pattana Co, the producer of Tiffy brand paracetamol, has invested in developing a hotel and golf course, the Sofitel Phokeethra Royal Angkor Golf & Spa Resort in Siem Reap, Cambodia. It also plans to open the Sofitel Phnom Penh Phokeethra in May 2010.

Investors snapped up a rights offering from Starhill Global Real Estate Investment Trust yesterday, helping the company to raise S$337.3 million ($234 million).

The Singapore-listed company received valid acceptances and excess applications for a total of 1.24 billion rights units, representing 129.3% of the 963 million rights units available in the offering, which Starhill launched in late June. The units were offered on a one-for-one basis and sold at a subscription price of S$0.35 each.

Since the rights issue was launched, units in the Reit have not moved notably: on the first day of the deal, June 22, they were trading at S$0.50. At the close of yesterday’s trading, they were at S$0.51.

Included in the acceptances are the subsidiaries of YTL Corporation, which hold units in Starhill. The company took its full entitlement, 256 million units, representing 26.6% of the offering.

A balance of 10.8 million rights units were not validly accepted. These will be allotted to satisfy excess applications.

Starhill Reit owns property in Singapore, China and Japan. Its two properties in Singapore are on the city’s main street, Orchard Road. Its Japanese assets are properties in central Tokyo, in areas such as Roppongi, Shibuya and Minato. In the western Chinese city of Chengdu, it owns an upmarket retail space. The 10 properties that make up its portfolio have a total value of around S$2 billion.

With the money raised, the Reit will pay off up to S$236 million of its outstanding debt which is worth around S$617 million. With the rights issue, its gearing will be reduced to 20.7% from 33.4%.

“The rights issue will reduce refinancing concerns in a tight credit environment and enhance Starhill Global Reit’s financial flexibility to carry out asset enhancement and seize attractive acquisition opportunities near the trough of the property cycle,” said Francis Yeoh, YTL Pacific Star Reit Management’s executive chairman, at the time of the deal’s launch.

The Reit has been controlled by Malaysia’s YTL since December 31 last year, after it bought Macquarie’s 26% stake in the trust and a 50% stake in the Reit manager through a principal-to-principal transaction.

The completion of Starhill’s rights issue comes just days after another Singapore-listed Reit raised capital through a placement. On Tuesday night, Ascendas Reit took home $208 million to pay for a building for SingTel.

The joint bookrunners and underwriters for the Starhill deal were Credit Suisse, DBS and Merrill Lynch

By Daniel Inman | 14 August 2009

Raffles Place

The improved investment turnover was due partly to debt-funded investors compromising at current price levels and liquidating assets to service near-term debt obligations, according to CB Richard Ellis’ Asia Investment MarketView report for the first half of 2009.

However, transaction volumes remained thin in the first half compared to the corresponding period in 2008, falling by 58 per cent on-year to about US$12.4 billion.

Investor sentiment in the region generally turned more positive in the second quarter. Hong Kong experienced the largest quarterly rebound in transaction volume, up 302 per cent in the second quarter, followed by Singapore and Taiwan at 297 per cent and 151 per cent respectively.

In Singapore, total investment sales during the second quarter were boosted by the sale of three en-bloc office buildings. They represented 24.5 per cent of total investment sales and injected life into what was previously a quiet commercial investment market.

Meanwhile, the Asian office market showed signs of stabilising in the second quarter as clearer indications of economic recovery emerge.

However, CB Richard Ellis said companies remained focused on reducing costs and tightening their real estate expenditures. They continued to adopt a conservative approach towards real estate decisions, especially those that would lead to an increase in operating costs.

The top priority for office landlords in Asia was retaining existing tenants and attracting new ones. In many markets, they displayed a willingness to negotiate lease restructuring and offer more incentives to desirable tenants.

Overall, leasing markets were sluggish and office rents remained in a down cycle, the report said. Office rents in Asia fell 6.7 per cent in the second quarter, decelerating slightly from the 8.1 per cent drop in the previous quarter as most cities underwent a smaller rental decline.

Since the start of the sub-prime crisis, rents in leading cities – including Tokyo, Hong Kong and Singapore – and major commercial hubs like Delhi, Mumbai, Manila and Ho Chi Minh City have corrected by 30 to 47 per cent from their peaks.

In Singapore, prime rents have fallen 46.6 percent from the peak recorded in the third quarter of last year. Occupancy rates continue to face pressure from new supply, as some 7.98 million square feet of new office space comes into the pipeline between now and 2013.

However, CB Ellis expects the rate of rental decline to slow as the macro economic environment becomes somewhat calmer.

SOURCE: Channelnewsasia.com

(SINGAPORE) Domestic investors played a bigger role in Asian property investment sales in the first half of this year as global institutional investors and property funds stayed mostly on the sidelines, says CB Richard Ellis.

Domestic investors were involved in nine of the 10 largest real estate investment deals in the region in H1. The 10 biggest deals totalled US$5.1 billion – a 46 per cent drop from H1 2008.

Overall, inter-regional cross-border investment accounted for only 8 per cent of total Asian investment sales of US$12.4 billion during the first half, down from a 30 per cent share in H1 2008.

The total value of property investment deals in Asia in H1 this year was down 58 per cent from US$29.5 billion in H1 2008. In the second quarter of 2009, US$7.3 billion of deals were sealed, up 41 per cent from US$5.1 billion in Q1.

Looking ahead, CBRE Research Asia’s executive director Andrew Ness says: ‘Cash-rich local investors are most likely to be the main drivers of the investment market over the short to medium term, as many of them are interested in purchasing quality assets for long-term investment. However, it is possible that even domestic investors will find it difficult to find suitable investment opportunities due to the shortage of quality properties put up for sale during the current downturn.’

CBRE’s figures are preliminary and include land transactions.

The biggest transaction in H1 was the sale of AIG Otemachi Building in Tokyo for about US$1.2 billion. Prime office properties continued to attract the strongest interest from investors, accounting for six of the 10 largest deals in the region.

The improved market in Q2 was driven to some extent by debt-funded investors compromising at current price levels and liquidating assets to service near-term debt obligations, CBRE says. Investor sentiment generally turned more positive as the first half of the year progressed.

Hong Kong, Singapore and Taiwan experienced the largest quarterly rebound in transaction volume, up 302 per cent, 297 per cent and 151 per cent respectively in Q2. There was also an increase in land acquisitions in China during the quarter, as big local developers scrambled to snap up sites in anticipation of imminent appreciation in prices.

Foreign institutional investors remained inactive, discouraged by the lack of further discounting, while local investors were more active on account of their easier access to domestic credit. India and Taiwan ended the six-month period with positive year-on-year growth of 339 per cent and 12 per cent respectively.

‘The change in investor sentiment in Taiwan primarily resulted from the expected opening of the domestic market to mainland Chinese investment,’ says CBRE.

‘Meanwhile, the formation of a stable government in India coupled with the utilisation of Qualified Institutional Placement (QIP) by real estate companies to raise new funds provided a boost to the Indian property investment market.’

Tokyo emerged as the location with the largest number of distressed or potentially distressed real estate assets in the region in Q2. Owners came under pressure to refinance deals that have fallen to well below the original loan-to-valuation ratios prescribed by their loan covenants.

‘The period saw a number of major office transactions concluded at US$50 million and above, with Japanese investors and investment institutions accounting for virtually all transactions, proving that appetite still persists in Japan for acquiring quality assets,’ says CBRE.

(SINGAPORE) Some buyers who managed to lay their hands on units at projects sold out recently are trying to get lucky for the second time – by selling what they snapped up, for a profit.

This brings to mind the government’s warning last week – that some element of speculation is back in the property market. Industry watchers say, however, that subsales are common for fully sold projects and speculation still remains mild.

Advertisements for subsales at Optima@Tanah Merah have surfaced in the last few days – with owners seeking prices which are at least 5 per cent more than what they paid.

This comes less than a week after all 297 units at the 99-year-leasehold project were taken up in just three days.

Developer TID sold the units at an average price of about $810 per square foot (psf). It had to conduct two rounds of balloting as home seekers descended upon the showflat in droves.

There are also offers for subsales at 8@Woodleigh. Frasers Centrepoint sold all 330 units at the 99-year-leasehold project over a few weeks in June.

According to industry watchers, sellers in the subsale market need to charge a premium of at least 5 per cent to break even. This would cover stamp duty, legal fees and any agent’s commission. To earn more, some may set prices which are up to 10 per cent more than what they paid.

But given the market today, those flipping properties would be glad to come out of the deal with $50,000 to $80,000, said ERA Asia Pacific associate director Eugene Lim.

He pointed out, though, that speculation today is ‘not excessive’. Every new project will attract a small number of speculators but most buyers today are ready to keep and lease out the property, he explained.

It is when the project is sold out that these buyers may change their minds, he added. ‘While some people buy with a medium-term view, because the project is sold out, it presents an opportunity for them to make a quick gain.’

Savills Residential director Phylicia Ang also believes that most buyers do not plan to ‘flip’ their properties initially. But she noted that if there is profit to be made, some are willing to hear out the offer and may sell later.

She also suggested that not all advertisements may be placed by owners – some property agents may take the initiative to promote units, test market interest and ‘gather more leads’.

Both Mr Lim and Ms Ang highlighted that speculation is nowhere as feverish as it was some two years ago. According to Mr Lim, buyers in the subsale market today are more particular – probably looking out for specific units they could not get during the launch.

Rising optimism in the property market seems to be benefiting older projects as well. Casa Merah – which is near Optima and will receive Temporary Occupation Permit soon – has seen prices at its units rise in the last few months. While caveats lodged for units there in February reflected prices of $631-$665 psf, those in July showed prices of $699-$751 psf.

Meanwhile, new launches continue to do well. The 70-unit Airstream at St Michael’s Road, for instance, was fully sold through balloting on Wednesday. Previews for Keppel Land’s 56-unit Madison Residences have begun, while previews for Allgreen’s Viva in Novena will start this weekend.

YET another government land parcel has been triggered for sale after a developer committed to bid at least $40.5 million for the site at the corner of Yio Chu Kang and Seletar roads.

The site is the third government plot triggered for sale in as many weeks after developers tendered bids on land in Dakota Crescent and Chestnut Avenue.

‘Developers are looking at the market two years down the road,’ said Jones Lang LaSalle’s head of South-east Asia research Chua Yang Liang.

‘We are still in a contraction mode but the global credit crunch has eased somewhat in Singapore and there is more certainty that we’ve seen the worst.’

The recent run-up in demand also points to a more positive mood, he said.

The latest land parcel is a 2.1ha commercial and residential site located within the established residential area at Seletar Hills and near the future Seletar Aerospace Park.

With a gross plot ratio of 1.4, it can generate a maximum permissible gross floor area of about 29,400 sq m.

The Urban Redevelopment Authority (URA) estimates the site can accommodate 225 housing units.

Shops and food and beverage outlets can be built on 4,500 sq m of commercial space within the proposed development.

Interest in the site is likely to be strong, given the high demand for suburban condos, experts said.

‘Given the current pace of sales for suburban condominiums now, the interest for land sites is high and the response to this site should be strong, with likely six to eight bidders,’ said the executive director of CBRE Research, Mr Li Hiaw Ho.

Bids are expected to range from $250 to $300 per sq ft per plot ratio, he said.

At that level, they will be about 95 per cent to 134 per cent above the trigger price, which works out to $128 psf per plot ratio.

Mr Li said new apartments on the site should fetch prices of between $700 and $750 psf.

This is based on the expected bids and the resale prices of some of the newer condominium units in the Yio Chu Kang area, which are going at between $600 and $700 psf.

The site was made available for sale via the reserve list system.

Under this sale method, a site goes up for tender only if developers indicate interest by committing to a minimum bid.

There had been much uncertainty in the market earlier, with developers showing little interest in buying sites, but the pick-up in recent months has been fast and furious.

Chesterton Suntec International research and consultancy director Colin Tan said the triggering of the Seletar site is another sign of the strong demand out there.

‘Even the developers feel that there is enough demand out there. It’s the market talking,’ said Mr Tan.

‘If the demand from investors is so strong…, then the Government should announce immediately that it will be activating the confirmed list once again at the next review,’ he said.

This should cool the market by telling investors that, with more supply coming up, the potential for higher profits will not be there, he said.

Under the confirmed list, sites are put up for tender at scheduled dates, regardless of developers’ interest.

The URA said it will launch the tender for the Seletar Road site in about two weeks. The date will be announced later.

By Joyce Teo

BUILDER Wee Hur Holdings, which was listed on Jan 30 last year, recorded a net profit of $8.8 million for its first half year ended June 30, 2009, almost six times the $1.47 million it made for the previous corresponding six months.

The first half-year saw revenue more than doubling to $108.3 million from H1 2008’s $46.5 million. This surge was brought about by revenue recognition from a number of major projects now in their more mature stage of work in progress. In H1 2008, these projects were in their early stage of construction.

Wee Hur’s H1 gross profit soared from $4.34 million to $14 million, thanks to the revenue increase and a 3.6 percentage point increase in its profit margin to 12.9 per cent.

The group said it has maintained its strong financial position with negligible gearing as well as with cash and cash equivalents of $28.4 million. Net cash from operating activities recorded an inflow of $6.9 million in H1 – an improvement from the outflow of $2.0 million for the comparative year-ago period. Wee Hur said this reflected its prudent approach in managing working capital.

Earnings per share (based on post-invitation share capital on fully diluted basis) stood at 2.73 cents for the first half of this year, compared with 0.46 of a cent for H1 2008.

‘We were fortunate that despite the recession, we rode on the stronger wave of the construction sector and prevailed. Our good results have strengthened our foundation further with the build-up in our cash and bank balances,’ said Goh Yeow Lian, executive chairman.

The group proposed an interim dividend of one cent per share, unchanged from that for H1 2008.

Wee Hur said that it has a healthy balance of $248.9 million worth of contracts in its order book to keep it busy till FY2011.

Last month, the group made headway in its property development business by securing a land parcel at Woodland Industrial Park E5 for $22.9 million for the development of strata-titled units. It plans to launch the sales within the next 12 months. Revenue contribution from this project is expected to roll in over the next two years.

‘While we have outperformed FY2008 in just six months, we will not rest on our laurels but will continue to strive and bring greater value to our shareholders,’ added Mr Goh.

In Singapore, the current growth momentum in the construction and property sectors seems to be building up, registering a robust 24.4 per cent growth for Q1 2009, said Wee Hur.

Singapore

The renewed buzz in the investment market was supported mainly by returned interests following price corrections which eventually broke the logjam of differences in price expectations between buyers and vendors, and a turnaround in market sentiment on the back of improved economic outlook and the ensuing stock market rally.

Colliers notes that the total investments was an increase of almost four times the level tallied in the preceding quarter and the highest level achieved since the third quarter of 2008.

Coutresy of The Straits Times

Jul. 30–Investors in Sena Development made a modest 1 percent gain yesterday as the firm listed on the Stock Exchange of Thailand.

The developer’s shares closed up, even as the main index fell 1.14 percent and most Asian markets closed lower following an overnight sell-off on Wall Street.

Shares of Sena rose to as high as 2.08 baht per share before settling at 2 baht on trade worth 461.38 million baht, two satang higher than the company’s initial public offering price.

The property developer is the second new listing on the SET this year. Asset Pro Management was the financial adviser and Kim Eng Securities the underwriter for the listing. The company listed 675 million shares in total with a par value of 1 baht per share.

Sena director Kessara Thanyalakpark said the industry outlook for the second half remained positive as interest rates should remain at current low levels.

House presales were in line with expectations and Sena was continuing 4.5 billion baht worth of developments, she said. Funds from the IPO are for land acquisitions and project development. Sena aims to maintain revenues this year at 1.2 billion baht, equal to 2008.

Revenues are set to jump to between 1.5 billion and 1.6 billion baht in 2010 as the economy improves and the company’s current projects — including the Niche Taksin, the Niche Lat Phrao, the Niche Huai Khwang and Sena Grand Home Phase 4 — go to market.

Sena, with 30 years in the property industry, has strong growth potential, said Montree Sornpaisarn, chief executive officer of Kim Eng Securities.

The IPO was priced at a 20-30 percent discount from fair value.