Theme park developers focus on Asia now

Theme park developers focus on Asia now
As US attendance falls, region’s middle class is a big draw

(SINGAPORE) The global downturn has put some US theme parks into bankruptcy and upended grand plans for new ones in the Middle East.

Varied concepts: The Universal Studios theme park at Singapore’s Resorts World at Sentosa (above) will open early next year, while Legoland Malaysia in Johor is slated to open in 2012
But in Asia, a development boomlet is under way as operators race to roll out parks and add attractions to draw in the region’s growing middle class.

Across the border in Malaysia, ground has just been broken on the first Legoland in Asia, to open in 2012.

In Hong Kong, the roughly US$750 million redevelopment of Ocean Park is to be completed in 2013, while Hong Kong Disneyland Resort recently began a US$465 million expansion to add three areas by 2014. Last month, Disney finally won approval from the Chinese government to build a theme park in Shanghai. It is expected to open in 5-6 years.

In Singapore, a Universal Studios is to open early next year at Resorts World at Sentosa (RWS), a vast integrated resort (IR) development that includes a casino.

‘Even with the economic hardship the world has been feeling, there is still stability in this part of the world, and people are still looking to do things that are out of the ordinary,’ said Tom Mehrmann, chief executive of Ocean Park in Hong Kong.

Overall attendance at the world’s top 25 theme parks has declined over the last couple of years, according to a report by Economic Research Associates, a consulting firm, and the Themed Entertainment Association, an international industry association.

But visits to the 10 most-visited Asia-Pacific parks have continued to increase, albeit at a slow pace. With this upward trend expected to accelerate, developers are focusing on the region.

The industry anticipates solid growth in Asia, even though over the last six years, the number of what Mr Mehrmann calls ‘world-class parks’ in the region has risen to more than 35 from about 15.

‘What it says is that the market is growing, the middle class is growing, discretionary time and money is growing,’ he said.

Ocean Park had a record 5.03 million visitors in the fiscal year that ended in June 2008 and registered a small drop to 4.8 million in its fiscal 2009. But Mr Mehrmann said attendance had started to rebound in August.

Recent signals from big industry players point to a bleak near-term picture worldwide. Revenue at Walt Disney’s parks and resorts dropped 7 per cent, to US$10.6 billion, in the fiscal year ended in September.

Universal Studios theme parks (which General Electric sold along with NBC Universal to Comcast) have also been struggling this year although, according to GE, the company has been able to partly offset attendance declines with cost-cutting.

Meanwhile, Six Flags, which owns 20 amusement parks, mainly in the United States, filed for bankruptcy protection in June, burdened by high debt and declining attendance. It is working on a restructuring plan with creditors. Dubailand - which was to include Paramount, Marvel and DreamWorks Animation theme parks among various attractions - is now only a distant dream.

But some investors see opportunities in the downturn. Apollo Global Management said last week it would acquire theme park operator Cedar Fair in a deal worth about US$2.4 billion, including assumed debt. Cedar Fair’s properties include Cedar Point in Ohio, Canada’s Wonderland near Toronto, Dorney Park in Pennsylvania, and Knott’s Berry Farm and Great America in Southern California. Cedar Fair said attendance had dropped by 1.2 million visitors during the first three quarters.

The deal follows an agreement in October by the Blackstone Group to buy Anheuser-Busch Inbev’s 10 theme parks in the US for US$2.7 billion, including the SeaWorld parks in Orlando and San Diego and Busch Gardens in Tampa, Florida, three of the most-visited theme parks in the world.

Blackstone already has a majority stake in the Merlin Entertainment Group - which owns Legoland, among various parks - and the Anheuser-Busch assets will make the private equity firm the second-largest company in the theme park business, after Disney.

John Ussher, general manager of Legoland development at Merlin, said his company wanted to roll out the brand across the globe.

‘We’ve had a good year, we’ve weathered the storm well throughout our parks in Europe and the US,’ he said, while declining to provide attendance numbers. ‘We feel very strongly about the potential of the new park in Malaysia. The region has terrific potential.’

The company is also working on a Dubai Legoland, although Mr Ussher said the project had been delayed and the new expected opening date was 2015. He said Legoland was also looking for sites in South Korea and Japan and would be interested in developing a park in China. — NYT

Source : Business Times - 28 December 2009

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Owners turning to auction sales

Owners turning to auction sales
Competitive bidding, convenience make auctions appealing for property sellers
By Joyce Teo

Next year, there will be even fewer mortgagee sales at auctions as the economy continues to improve. Yet more owners are expected to go the auction route when it comes to selling their properties.

Jones Lang LaSalle said it expects to see more owners choosing to do so in the year ahead.

It also believes the number of mortgagee sales - or forced sales of repossessed properties - will fall further as the economy continues to improve.

Colliers International noted that more owners have taken to using auctions as a mode of sale due to its convenience.

This method has a relatively structured marketing process, a fixed sale date as well as a pre-arranged viewing schedule, it said.

‘Additionally, owners would be able to achieve good prices as a result of competitive bidding at auctions, especially if the market is buoyant.’

The bet is on a stronger property market next year. This means that mortgagee sales may not be done at very low prices.

‘A mortgagee sale does not necessarily mean a cheap sale,’ said Knight Frank auctioneer Mary Sai.

‘Next year’s mortgagee sales will be done at the prevailing market rate then, and prices may have inched up a few more per cent from this year’s level,’ she said.

Colliers expects high-end prices to recover next year as Singapore steps out of the global recession and opens its two integrated resorts. The sale of more high-value properties will prop up the total sale value at auctions next year, it said.

Mass market prices have recovered, while high-end prices are still a distance from the boom levels of early last year.

Nevertheless, buyers may still be able to find what they want at an auction.

As apartments get smaller and smaller these days, Colliers International is predicting that large homes will increase in popularity at next year’s auctions.

Residential properties that are perceived to be ‘value for money’, such as landed homes with big land areas or large apartments, would continue to be favoured by buyers, said its deputy managing director (agency and business services) and auctioneer Grace Ng.

But these need to be at bargain prices as terrace houses or small bungalow plots are typically popular with owner-occupiers.

The commercial sector, experts said, may present some good buys.

Colliers said that given ample liquidity in the market, shops and shophouse units with attractive rental returns will remain highly sought after.

Said Ms Sai: ‘Strata shops and offices are something to look out for. If rentals have declined, prices will likely fall in tandem.’

In the past, buyers wanted a gross rental yield of 6per cent to 8 per cent for a commercial property, she said.

‘Now that the cost of borrowing has fallen, some short-term buyers may want to buy a commercial property that gives a smaller yield of 4per cent to 5 per cent,’ she added.

Indeed, said Ms Ng, tenanted shop and shophouse units with average yields of about 5 per cent have attracted investors at auctions this year, given that bank interest rates are at a low of less than 1per cent.

In comparison, the average residential yield is about 3per cent to 3.5 per cent.

Landed homes typically offer an even lower yield of 1.5per cent to 2 per cent, though the potential for capital appreciation may be greater, experts said.

Source : Straits Times - 27 December 2009

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Keeping a watch on property deals

Keeping a watch on property deals
Swiss watch veteran keeps very little in cash, and prefers to invest in real estate
By Lorna Tan, Senior Correspondent
WORST AND BEST BETS
Q: My worst investment to date…

In 1994, I created a watch firm which made watches for an external brand. I had to close the business in 2005 when the principal failed to renew its licence with us. I invested US$4 million in that firm and lost all of it.

I learnt that to succeed in investments, I need to be in control. In this case, I had no control over the licence. I could make the money again, so losing US$4 million was not so bad. What hurt me was letting go of the team in my firm which helped create the watches.

Q: My best investment to date…

It is my house in St Tropez. I bought it 20 years ago at US$800,000 and it is now worth between US$5 million and US$6 million. The house is divided into two units, on the land area of 6,000 sq m. The kids use one unit and my wife and I, the other. We use the house several times a year.

Mr Jean-Marc Jacot, global chief executive of watch maker Parmigiani, at the Asia launch of the Parmigiani Pershing watch collection in Singapore.

Just like many Singaporeans, Swiss watch veteran and Parmigiani chief executive Jean-Marc Jacot’s first investment experience was in stocks.

He was 21 and a university student at Ipag, a business school in Paris. He set up an investment club for students at Ipag and decided to use the US$20,000 monetary gift from his grandmother to buy his first shares. He was lucky in his first few transactions and his investment doubled soon after.

‘I thought the share market was a goldmine. It was only a few years later that I realised that to continue to do well in shares, you need to be a professional and spend time to monitor it daily,’ said Mr Jacot, 60.

Some 15 years ago, he liquidated his share portfolio and concentrated entirely on real estate. Now, he owns 11 properties in Switzerland and France, eight of which are rented out, providing him a total monthly rental income of about US$30,000 (S$42,260).

Mr Jacot graduated from Ipag in 1972 and joined a United States watch firm in Germany as an assistant to the marketing director. Two years later, he crossed over to fashion house Cartier in Paris. In 1978, he partnered the founder of shoe firm Charles Jourdan to set up an accessories division.

He moved back to Switzerland in 1980 and worked for Omega as an international director for a year till he joined watch firm Ebel where he stayed till 1993.

On the side, in 1982, and with US$17,000, he set up a firm managing sports events and sportsmen. He would sell the business for US$10 million two decades later.

In 1992, he set up his consulting firm JMJ & Partners with US$50,000. The firm now achieves an annual turnover of US$500,000.

He joined Gerald Genta in 1995, and in 2000, he moved to Sandoz Foundation, which owns Parmigiani.

Mr Jacot was in Singapore last month to launch the new Parmigiani Pershing watch collection at Yafriro, Paragon. He is married to Christine, 57, and they have two children: Geraldine, 31, and Alexis, 26.

Q: Are you a spender or saver?

I’m more of a spender. I enjoy buying things that I like, such as watches and paintings. It is difficult for me to resist. When I was in my 30s, I used to own cars like Bentley and Porsche. I save about 20 per cent of my income annually. I keep very little in cash, preferring to invest in properties.

Q: How much do you charge to your credit cards every month?

I don’t know how much I charge to my credit cards every month. Too much, I suspect. I have six credit cards and some cash which I carry in my pockets. I do not have a wallet.

Q: What financial planning have you done for yourself?

My wealth comes from my income and good stock options. The bulk of my investments are now in properties.

I was interested in stocks in my younger days but later realised that the value of stocks may not have anything to do with the value of the firms. It depends on market sentiment. To make money, it is better to have control over what you invest in.

When I liquidated my stock portfolio, I lost half of the S$500,000 I had invested in stocks.

Q: Moneywise, what were your growing-up years like?

My father worked as a chief executive in a machinery and tools business. My mother was a housewife. I have an older sister. We lived in a three-storey house in Neuchatel, Switzerland, and I had a wonderful childhood. My father was both a saver and a spender. He taught me that money is important but not the most important thing in life. I learnt from my parents not to judge people in terms of monetary value. Respect people for what they are and not what they have.

Q: How did you get interested in real estate investments?

My father advised me that the best long-term investments are in brick and mortar. The value of property goes up slowly but it always trends upwards due to limited space and increasing populations. In the short term, it may not be the best investment.

Q: What properties do you own?

I have two homes in France. Besides the family home in St Tropez, I have a three-storey house in a countryside village in the centre of France. The built-up area of the latter is 200 sq m and the land area is 2,000 sq m. I bought it 16 years ago for US$500,000 and it is now worth US$2 million. I use it twice a year.

In Geneva, Switzerland, I have eight properties that I rent out, besides the condominium that I live in. The largest rental property is a 400 sq m penthouse with a terrace. I bought it in 1997 for US$1.9 million, and it is valued at about US$3 million now. I’m renting it out for US$7,000 a month. The rest of the rental properties were bought in 1988, 2001 and 2002. They average about 150 sq m and they cost about US$7 million in all. My total rental income comes close to US$30,000.

Q: What’s the most extravagant thing you have bought?

I bought a Parmigiani watch for US$30,000 six years ago. I have 80 watches now.

Q: What’s your retirement plan?

I do not plan to retire. What I hope is to have good health and to be able to work in a different place every two to three months. I’m happy to do what I’m doing… developing brands and I don’t wish to stop. My wife and I spend about US$30,000 a month.

Q: Home is now…

A three-bedroom 300 sq m condo in Neuchatel, Switzerland which I bought for US$1.5 million five years ago. The value would have risen by about 10 per cent since.

Q: I drive…

A four-wheel drive, a black Volkswagen Touareg.

Best long-term investment

My father advised me that the best long-term investments are in brick and mortar. The value of property goes up slowly but it always trends upwards due to limited space and increasing populations. In the short term, it may not be the best investment.

Respect for others

My father was both a saver and a spender. He taught me that money is important but not the most important thing in life. I learnt not to judge people in terms of monetary value from my parents. Respect people for what they are and not what they have.

Source : Straits Times - 27 December 2009

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MINDY YONG

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mindy@mindyyong.com