China’s largest real estate agency E-House plans US IPO

China’s largest real estate agency E-House plans US IPO
It may raise as much as US$150m, it says in a filing with SEC
(HONG KONG) E-House (China) Holdings Ltd, China’s largest real estate agency, may raise US$150 million in a US initial public offering), according to a filing with the Securities and Exchange Commission (SEC).

The Shanghai-based company, which operates in 20 Chinese cities through more than 1,800 salespeople, is raising capital to open new stores, upgrade its information system, increase marketing and fund possible acquisitions.
The filing on Tuesday did not disclose the number of American depositary receipts to be sold or their pricing.
New property sales in China increased by an average of 38 per cent a year between 2001 and 2005 as the government encouraged home ownership.
The floor area of new properties sold in the country grew 25 per cent a year in the same period, according to E-House’s filing.
The seven-year-old company sold 54 million sq ft of new properties with a combined value of almost 42 billion yuan (S$8.4 billion) between 2001 and 2006, the document said.

E-House, China’s largest real estate agency and consulting company by the number of transactions, the value of deals, floor area sold and sales network, had US$56 million of sales last year, a 45 per cent increase from 2005, the document said. It derived 81.6per cent of that from primary agency services, 6.9 per cent from secondary brokerage services and 11.5 per cent from consulting and information services. Net income jumped 62per cent to US$18.1 million, or $0.27 per share, the share sale document said.
Credit Suisse and Merrill Lynch & Co are arranging the share sale. E-House plans to trade on the New York Stock Exchange, the document said.
China Renaissance Capital Investment LP, a Credit Suisse fund venture co-founded by Mark Qiu, former chief financial officer of CNOOC Ltd, invested in E-House before the IPO. — Bloomberg
Source : The Business Times, 12 July 2007

US high-end property still going strong

US high-end property still going strong
But ‘average-priced’ homes are facing a hard time in the housing market
GIVEN that the real estate market is supposed to be in free fall, some strange things have been happening recently in Mill Valley.

It is one of the expensive suburbs of San Francisco just over the Golden Gate Bridge, and much of the housing market there seems to be doing just fine. One three-bedroom house sold for US$1.4 million last month without ever being officially put on the market. The seller accepted a pre-
emptive bid - US$20,000 above the asking price - from somebody who had heard that the house was about to be listed for sale.
‘The homes that are having a hard time selling are the average-priced homes,’ said Vanessa Justice, a real estate agent with Pacific Union GMAC in the Bay Area, where the median house price is about US$750,000. For upper-end homes, she said, ‘it’s actually pretty crazy right now’.
It has been a while since real estate agents used the word ‘crazy’ in a positive way, but Ms Justice is onto something here: The high end of the market is surviving the slump much better than any other segment. Even as foreclosures keep rising and overall sales continue to plummet, more expensive homes have staged a bit of a comeback in recent months. They’re spending less time languishing on the market than others, and their prices appear to be holding up better.
This split in the market helps explain why the sales of Manhattan apartments, some of the priciest homes in the country, have remained fairly strong. The national trend has gone largely unnoticed, though, because neither the federal government nor the National Association of Realtors - the main sources of housing data - report statistics for different price segments.
But after just about every home sale, documents must be filed with a local government office. A research firm called DataQuick Information Systems gathers these records, and a New York Times analysis of them shows that the story of today’s real estate market is really two different stories.
In the Boston area, for instance, the number of homes selling for at least US$1 million plummeted to 619 in the first five months of 2006, from 773 in the period in 2005, according to DataQuick. But the number jumped to 711 in the first five months of this year.
In the New York region, sales at the top end - that is, homes in the most expensive 5 per cent of the market - have also been rising, while they have been falling in the middle and bottom of the market. The same is true in the San Jose, California; Seattle; Denver; and Houston areas. In San Francisco, Los Angeles, Phoenix and Miami, high-end sales are down but not by nearly as much as sales in other price segments.
Separate statistics from the California Association of Realtors also show million-dollar-plus homes to be selling better than others in that state. The high-end market is far from booming, to be sure. Many houses would still sell for less today than they would have a year ago. But the market has stayed strong enough to catch a lot of buyers and sellers off guard. They keep hearing about a real estate meltdown and then finding a different reality when they go to make a deal.
A three-bedroom apartment around the corner from the Guggenheim Museum, on 88th Street near Fifth Avenue in Manhattan, was recently put on the market for US$2.8 million, and the first bid came in slightly lower than that. Ten days - and nine bids - later, the seller accepted an offer about US$500,000 above the asking price.
In Brookline, Massachusetts, near Coolidge Corner, a big Victorian house went on the market for US$1.4 million this spring - just as it had in 2006, without selling. ‘I thought it was still overpriced,’ said Chobee Hoy, the seller’s real estate agent. Yet the house ended up selling for about US$30,000 more than the asking price.
There seem to be three main causes of the split in the market. The first is that affluent families continue to do better than others, thanks to healthy income gains and a rising stock market. ‘To some extent, it is the rich getting richer,’ Andrew LePage, an analyst at DataQuick, explained. ‘The folks who don’t rely solely on a weekly or monthly paycheque seem to be doing better.’
The upper-end of the market has also been helped by an influx of well-off foreign investors whose buying power has grown with the recent decline of the dollar. Hard as this may be for an American to imagine, New York, San Francisco or Miami can now seem like a bargain, compared with London, Moscow or Sydney. Jason Haber, an agent with Prudential Douglas Elliman in Manhattan, said he had recently taught himself how to convert square feet into square metres - you divide by 10.8 - because of all of the international buyers traipsing through New York apartments.
Finally, both the recent rise in interest rates and the problems in the mortgage market have had a much bigger effect on low-income and middle-class buyers than affluent ones. It has become harder to get a subprime mortgage, while the uptick in interest rates this year has added about US$100 to the monthly payment on an average fixed-rate 30-year mortgage.
As Mark Zandi, chief economist of Moody’s Economy.com, summed up the market: ‘The low end is getting creamed. The middle is struggling. The high end is running on its own dynamic.’ It’s tempting to conclude, then, that the top of the housing market has somehow become bubble-proof. And some real estate agents will doubtless make this pitch to buyers who are on the fence. But it is almost certainly wrong.
In fact, the very top of the housing market - the sprawling vacation homes and 10,000-square-foot mansions - seems to be doing considerably worse than merely expensive homes. Ines Hegedus-Garcia, an agent in Miami, recently looked at sales volumes there and found the market for homes that cost US$1.2 million to US$2.5 million to be holding up decently. The situation was much worse for those priced above US$2.5 million. There are also a couple of areas, like Washington and San Diego, where the high-end of the market, broadly defined, is already doing about as badly as everything else. So perhaps the recent comeback won’t last long in other cities.
Remember, it’s not as if the wealthy are immune to irrational exuberance. Just think back to the 1990s - or the 1920s. Any asset can end up becoming overvalued. Right now, though, there is a bit more of a rational explanation for home values at the high-end of the market. — AP
Source : The Business Times, 12 July 2007

Lifting of cement cap will raise costs: M’sian developers

Lifting of cement cap will raise costs: M’sian developers
(KUALA LUMPUR) Malaysia’s developers said a government move to remove a cap on cement prices will boost construction costs and compel them to increase property prices by about 10 per cent.

‘The price increase is an additional burden on the property industry at a time when the building and property industry is challenged by softening market demand,’ the Real Estate and Housing Developers Association said in a memorandum to the trade ministry.
Shares of cement suppliers, including Lafarge Malayan Cement Bhd, surged after Malaysia decided last month to lift the price cap on cement, a governmentcontrolled item.
The selling price of cement will be fixed every four months under an automatic pricing mechanism from Jan 1 instead of being set by the government, Deputy Prime Minister Najib Razak said then.
The price mechanism would affect ongoing projects, including 597,242 houses being built nationwide, the association said. ‘In extreme cases, contractors’ inability to absorb such financial burden may lead to project abandonment,’ it said.
The association represents more than 800 developers responsible for about 80per cent of the total real estate built in Malaysia.
They include SP Setia Bhd, Malaysia’s biggest developer, Sunrise Bhd and Mah Sing Group Bhd. - Bloomberg
Source : The Business Times, 12 July 2007

Mapletree fund buys 2 properties in M’sia

Mapletree fund buys 2 properties in M’sia
Deals worth RM171.5m are part of its strategy to expand overseas

By MICHELLE QUAH

(SINGAPORE) Mapletree Investments says its wholly owned subsidiary, Mapletree Industrial Fund Management Pte Ltd (MIFM), will buy two industrial properties in Malaysia for a total of RM171.5 million (S$75.7 million) - the first regional acquisitions for Mapletree Industrial Fund.

MIFM will buy the first property, in Johor Technology Park, for RM80 million and the second property, at Technology Park Malaysia in Kuala Lumpur, for RM91.5 million.
Both deals have been structured on a sale and leaseback arrangement, with the Malaysian vendors - Classic Advantage Sdn Bhd and Iris Technologies (M) Sdn Bhd respectively - taking long leases on the properties.
‘These acquisitions are an important part of our strategy to expand our investments beyond Singapore for Mapletree Investment Fund,’ said Mapletree chief executive officer, Hiew Yoon Khong. ‘These acquisitions will help us gain a foothold in Malaysia. We will continue to look for quality industrial properties here and across Asia to invest in and grow Mapletree Investment Fund into a truly pan-Asian industrial fund.’
MIFM CEO Phua Kok Kim said: ‘The property at the Johor Technology Park benefits from its proximity to the University Technology Malaysia campus and the Standards and Industrial Research Institute of Malaysia as synergies and innovations from these two institutions would complement the manufacturing industries located in the Johor Technology Park.’

‘The property at the Technology Park Malaysia is also a strategic acquisition for us as it is located within one of Malaysia’s most advanced and comprehensive centres for research and development of ICT and knowledge-based industries,’ Mr Phua added.
Source : The Business Times, 12 July 2007

Singapore Property - Buy , Sell , Rent , Invest
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Margate Mansion Singapore en bloc sale seeks $63.8m

Margate Mansion en bloc sale seeks $63.8m
At that price, the potential developer can break even at about $1,330 psf

By ARTHUR SIM

MARGATE Mansion, just off Meyer Road, is now available for collective sale at an indicative price of $63.8 million, or $929 per square foot per plot ratio (psf ppr).

The 34,804 sq ft site is the first to go on the market in this area since The Seafront on Meyer set new benchmark prices when it was launched earlier this year. Average prices for The Seafront were reported to be between $1,400 and $1,800 psf.
CB Richard Ellis director (investment properties) Charles Hoon, whose company is marketing the property, said: ‘Meyer Road is the best stretch in District15 in terms of locality and sea views. The area allows high-rise developments unlike others in the East Coast which allow only up to five storeys.’
Mr Hoon also estimated that at the asking price, the potential developer can expect to break even at about $1,330 psf. ‘Recent new launches in the vicinity are averaging above $1,600 psf,’ he added.
The asking price may be higher than any recent transaction in the area but the Meyer Road area is fast becoming the alternative address for those choosing to live outside the traditional prime districts.
As such, market sources revealed that several other older developments, including Hawaii Tower, will soon be put on the market at similar prices.

The last collective sale transaction in the Meyer Road area was Eastern Mansion in 2005. As an indication of how much prices have risen, Eastern Mansion was sold for $152.9million, or around $500 psf ppr.
Margate Mansion has a gross plot ratio of 2.1 and an allowable building height of 24 storeys.
Mr Hoon estimated that a 60-unit development of about 1,200 sq ft can be built on the site.
Meyer Road still commands a premium in the East Coast. Further down the road, Credo Real Estate is marketing Rich East Garden, a 40-unit development at Upper East Coast Road. The indicative price for the site is $92 million-$95million, which translates to a land rate of about $630-$650 psf ppr, including an estimated development charge of $330,000.
The East Coast is already undergoing significant transformation.
Recently launched projects which are all under construction include: Wheelock Properties’ 546-unit The Sea View; MCL Land’s 400-unit The Esta; the 562-unit One Amber by United Industrial Corp and United Overseas Land; and Ho Bee’s 42-unit Vertis. At least five more sites have been offered for collective sale this year.
Source : The Business Times, 12 July 2007

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Mindy Yong
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mindy@mindyyong.com

Two good class bungalows fetch $35.5m at auctions

Two good class bungalows fetch $35.5m at auctions
White House Rd site sold for $566psf, Swettenham Rd plot worth $640 psf

By KALPANA RASHIWALA

TWO good class bungalows were sold at auctions this week - 2A/2B/2C/2D White House Road at $19.03 million or $566 per sq ft of land area, and 3C Swettenham Road, which fetched $16.5 million or $640 psf of land area. Both properties are freehold.

3C Swettenham Road, with a land area of 25,802 sq ft, was sold at a DTZ Debenham Tie Leung auction on Tuesday. The buyer is believed to be a Mr Lim, an industrialist with a factory in Tuas. He is believed to have bought the bungalow to live in after renovations.
It was sold with vacant possession by mortgagee bank HSBC. The opening bid sought for the property at the auction was $17.8 million, but there were no takers at this price. Instead a bidder made a counter offer of $15.8 million. Bids increased gradually to $16.5 million, when it was sold.
3C Swettenham Road had been offered at an auction last year and fetched a top offer of $12 million, which was not high enough for HSBC, BT understands.
DTZ’s auction, conducted at Amara Hotel, also saw two other properties being sold. One was a three-bedroom freehold apartment at Wilkie Vale at Wilkie Road (near Sophia Road) which fetched $1.05 million or $912 psf based on the unit’s 1,151 sq ft strata area. Another was a 1,001-sq ft freehold apartment at Casa Sarina in District 14 which changed hands for $560,000 or $560 psf.

Colliers International successfully sold the White House Road bungalow, with a 33,610 sq ft land area, at an auction yesterday. Two old bungalows stand on the site but provisional permission has been granted for the site to be subdivided into two plots. The new owner, a Singaporean, is expected to build two new bungalows on the site.
Other properties sold at the auction included an office unit on the seventh floor of Peace Centre at Sophia Road, which fetched $2.5 million or $656 psf based on its floor area of 3,810 sq ft. Peace Centre, with a remaining lease of 62 years, has been put up for en bloc sale, together with the next-door Peace Mansions. The expression of interest for the en bloc sale of the two properties closed in May.
At the same auction, a three-bedroom apartment at the 999-year Cashew Heights off Upper Bukit Timah Road was sold for $1.22 million or $736 psf. Cashew Heights, with a land area of over 900,000 sq ft, is also said to have potential for a collective sale.
Source : The Business Times, 12 July 2007

Consultants leave amid property boom

Consultants leave amid property boom
Directors at JLL and DTZ among those who have quit

By KALPANA RASHIWALA

IN THE red-hot property market, some property consultancies are seeing departures from their investment sales departments.

Lim Song Hai and Quek Soh Hoon, national director and local director respectively at Jones Lang LaSalle’s (JLL) investments department, have quit the firm.
Over at DTZ Debenham Tie Leung, Anthony Seah, associate director (investment advisory services), is leaving. Mr Seah is heading for property fund manager Develica Asia-Pacific, where he will be investment director.
Develica last month bought 1 Finlayson Green for just under $231 million.
Mr Lim left JLL at the end of last month and is now said to be taking a break before deciding on his next career move.
Market watchers expect him to stay in the investment sales business but perhaps focus more on the regional business instead of the Singapore market.
Ms Quek is still serving her notice at JLL; her last day will be July 19.
JLL’s regional director and head of investments Lui Seng Fatt described the departures as ‘part of the attrition and the organic growth process’.
He said that following the two departures, the investments department will have a total of 12 staff, including associate director Stella Hoh and senior manager David Batchelor, and may see some internal promotions.
He said: ‘We are setting up a new team to focus on institutional transactions serving clients who are primarily property funds seeking office, commercial and retail property acquisitions in Singapore.
‘So far we have four members in this team and may recruit more. These are mostly people with investment banking-type experience and who can talk the financial lingo that funds speak in.’
The current 12-member investments team will focus more on collective sales, development sites and sales of completed residential projects.
Market watchers note that JLL has been garnering a bigger share of brokering office investment sales deals lately, such as SGX Centre, SIA Building, Parakou Building and 78 Shenton Way, following the arrival of its new managing director (South-east Asia) Chris Fossick, who was one of Singapore’s top office leasing dealmakers during his days at CB Richard Ellis here.
Last month, BT reported the departure of DTZ’s director (investment advisory services) Tang Wei Leng to join Wachovia group of United States.
DTZ’s auction director Shaun Poh has assumed Ms Tang’s former responsibilities as head of investment advisory services for both Singapore and South-east Asia.

Source : The Business Times, 12 July 2007

Private housing crunch on the cards: JP Morgan

Private housing crunch on the cards: JP Morgan
Much of expected supply to kick in only about 1-2 years from now

By UMA SHANKARI

SINGAPORE could face a private housing supply crunch in the short term even though as many as 57,900 units are under construction or planned, says JP Morgan in a report.

Supply should ‘normalise’ in the next 12-18 months, says the investment bank, pointing out that 4,400 units were added to housing stock in just the first quarter of 2007.
But much of the supply will only kick in about one or two years from now. ‘Most of the inventory will be brought on-line over the next year or two for completion post-2010, with 16,800 private residential properties due in 2009.’
At end-2006, about 14,200 available units were unoccupied and a further 4,100 were due to be completed by this year-end.
‘These in total will yield 18,400 ready-to-occupy units to meet the demand from those who need a completed unit to occupy in 2007,’ says JP Morgan.
Its analysts, Christopher Gee and Joy Wang, point out that their estimates for the private housing pipeline do not include the supply from the government land sales programme, which could yield another 3,500 units. Nor do their figures take into consideration an estimated 16,000 units that could come up on the sites of projects sold en bloc.
JP Morgan says the government, which has over the past month made a number of cautionary statements about the excessive property price movements, can be expected to continue to back up those statements with supply-side initiatives.
But no official action to dampen demand - such as real property gains taxes - should be expected, it adds.
The analysts also point out that luxury home prices in Singapore are fast approaching those in Hong Kong. ‘Singapore’s luxury market prices are no longer such an apparent relative bargain as they were two or three years ago, especially in contrast to Hong Kong and some major cities around the world.’
Official estimates show that prices of uncompleted projects in the core central region climbed 46.3 per cent from the first quarter of 2004 to the first quarter of 2007.
JP Morgan has an ‘underweight’ rating on Singapore property stocks, saying prices already reflect ‘an optimistic outlook on further housing price increases’. It is keeping its ‘overweight’ calls on CapitaLand and GuocoLand, but has downgraded City Developments to ‘underweight’. Allgreen Properties and Wheelock Properties are also rated ‘underweight’.
Source : The Business Times, 12 July 2007