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  • Malaysia real estate market outlook for 2017

    Malaysia real estate market outlook for 2017

    2016 overview

    Fundamentally, you could say that the property industry runs alongside the economy of the country. As reported in CBRE / WTW’s report, domestic consumption rose, driven by spending in areas that include F&B, transportation and communication. Government consumption also grew (according to year-on-year basis) – with expenditure owing to infrastructure.

    Net exports saw mixed results – slower demand from China and reduced exports from the US but the weakening ringgit enticing and increasing Malaysian exports even further. The weak ringgit also opened opportunities for foreign investment.

    Other than the global rout in oil prices that has led to a significant number of layoffs in the oil and gas sector, the weakening business sentiment and slowdown in the overall trading is also expected to be more apparent, but in the short term.
    Looking positive was the growth rate of retail sales which remained buoyant despite softer consumer spending and the rising costs of living. According to the report, strong support was seen from tourists in retail spending from shopping. The weakening ringgit is expected to encourage tourists’ spending.

    2017 outlook

    In the Year of the Rooster, the country’s economic growth is expected to be slower due to the challenging global economic and financial landscape. Domestic demand is said to be the key driver of growth, sustained primarily by economic activity from the private sector. Due to the well diversified nature of our country’s exports, positive growth is projected into the year. However, inflation is expected to remain flat although pressured by increase of several price-administered items and the weak ringgit exchange rate.

    The impact of these cost factors on inflation is expected to be mitigated by continued low global energy prices, generally subdued global inflation and more moderate domestic demand. Supportive fiscal and monetary policies are also expected to help steady the ship for economic growth. GST will strengthen the government’s revenue source to accommodate its fiscal measures.

    With the overall weakening ringgit, low crude oil prices coupled with worldwide geo-political issues will continue to plague the economy in 2017. No doubt, the year will be a challenging one, but Malaysia’s economy is anticipated to remain stable with GDP growth estimated at 4.2%.

    Real estate market outlook in Malaysia

    As uncertainties and concerns over the large market supply remains unabated, loan growth is expected to slow further as the weak credit cycle continues.

    Apart from the stringent loan requirements from financial institutions that are said to have caused the drop in the number of property transactions, the increasing cost of living and economic uncertainties have led to an upswing in worries about job security, resulting in more cautious consumer spending. These and more will have led the market to consist of more genuine purchasers with speculative sentiments not as strong as during the boom period.

    As such, supply has remained resilient with greater activity in larger cities. The proposal to boost public servants’ housing loan eligibility proposed by the government, may stimulate some residential sales, apart from other plans to increase the number of units of low and medium cost, affordable housing. No doubt residential development will continue to be active beyond the KL fringe, especially supported by the rapid infrastructure development.

    Conclusion

    Looking at the real estate outlook in the Klang Valley for 2017 (refer boons and banes), key drivers to a positive year are expected to come from infrastructure – HSR, MRT and LRT additional lines and stations, new highways and expressways. While Johor and Seremban are expected to gain from the “spillover” effected from new infrastructure, residential hotspots to take note of include – Selangor Vision City, Nilai/Pajam, Semenyih/Kajang, Putrajaya/Cyberjaya, Rawang/Ijok/Kuang, Sungai Buloh and Kuala Selangor.

    Key drivers that will push these areas are scarcity of land in the city centre, high land costs in the city as well as the improved connectivity in view of new infrastructure.

    In his message at the launch of the 2016/2017 report, CBRE / WTW managing director Foo Gee Jen shared that on-ground consensus among practitioners throughout all its branches across Malaysia is that market conditions have become much more challenging in 2016 and that 2017 will not get any better.

    Transaction activity is down in many urban centres, especially in the residential sector, which Foo said is a common barometer to gauge the overall property market. However, although figures in CBRE /WTW’s outlook report are discouraging, there is still a glimmer of hope for the year to correct itself once the mass rapid transportation system in Kuala Lumpur and other similar transport systems are up and running.

    Bottomline

    Foo’s view on the whole: “Another flattish period pulled down by mostly low commodity prices, continued slow economic growth in most major countries, especially with political uncertainties like Brexit, Trump’s presidency and other referendums in Europe.”

    His advice: “Reduce portfolios of non-strategic assets to reduce loan gearing and be aware of liquidity needs if and when credit tightens. Investors and developers should focus on taking calculated risks where markets are strong, pursue developments in strong, supply-constrained markets and bid on strategic long-hold assets that are most likely able to withstand a downturn.”

    Information and charts/graphs were retrieved from the CBRE / WTW 2017 Malaysia Real Estate Market Outlook. Follow our column next week on interior design, followed by office space in KL and market direction across various regions in Malaysia.

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  • Cambodia’s property market continues to trend upwards

    Cambodia’s property market continues to trend upwards

    Cambodia’s property market has developed at an increasingly fast pace over recent years which has provided foreign investors with a range of opportunities. Some insight from Simon Griffiths, the senior associate director for CBRE Cambodia, to see what lays ahead for property and foreign investment in 2017.

    2015 saw a spike in foreign direct investment (FDI), and the property sector was a big benefactor of these investments both in terms of headline investments in new development projects, and also from foreign individuals investing in one or numerous condos, SoHo units or strata office.

    2016 saw the physical manifestation of this wave of development investment in the form of large-scale buildings rising out of the ground across Phnom Penh. However, there was also a slowdown in foreign private individual sales and/or investments.
    This led to developers and individual investors to be more cautious in 2016 as everyone took stock of the market.

    Nevertheless, a palpable appetite for further development still existed with developers actively seeking out opportunities away from the ubiquitous condo template by innovating on residential design or looking at new sectors and geographies all together.

    There was evidence that private individual foreigners were still buying real estate in Cambodia late in 2016 and that private investors were particularly attracted to guaranteed yields, developers with strong reputations and new or innovate products/design.  Consequently, FDI in property/real estate remained strong in 2016 but not equal to 2015’s.

    Looking ahead for 2017, it is likely FDI will remain high but not in the same sectors or geographies as experienced in 2015 and 2016.

    If Phnom Penh is a cup, then that cup is brimming with development. That does not mean there will not be further foreign investment in Phnom Penh in 2017, but expect to see foreign investment move towards entertainment, hotels, condo-hotels and retail in 2017 rather than in 2015 and 2016 where the focus was largely on the residential sector.

    For 2017, as a foreign private investor, it is an interesting time. 

    With greater competition, developers shall increasingly offer better guaranteed yields and deals to foreign (and local) buyers.  Against the back-drop of stagnant low interest rates in developed economies, guaranteed yields of five percent and above represent ways to appreciate wealth rather than in real terms losing it as it sits in the bank – but crucially only if the private foreign investors trust the developer and the investment holds its value.

    That brings me to another sector and geography that shall +see significant FDI, and that is Sihanoukville.  Traditionally, only low-scale, low-rise tourism expect big announcements about mega resorts above 1,000 hectares and significant foreign FDI in this province.

    Whether or not all the FDI will be in 2017 is difficult to predict, but it is looking likely the next real estate boom may well be in Sihanoukville.  Expect more tourism, hospitality and entertainment investment but also residential investment, and, interestingly, that residential foreign investment may not just be in condos but also on the ground.

    The details are not known but there is a possibility Sihanoukville may gain a ‘Special Status’ and this special status may permit foreigners to buy land within specially licensed areas within the province.

    Whether this would apply to industrial units such as the Thai Special Economic Zone model or include holiday homes for foreigners is not yet clear, but either or both will lead to significant FDI in the province and be an engine for growth and investment should such a status come to fruition.

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  • Sunsuria optimistic about 2017 outlook

    Sunsuria optimistic about 2017 outlook

    Property developer Sunsuria, which will be launching projects with total gross development value (GDV) in excess of RM1.55bil next year, is cautiously optimistic about the outlook of the market in 2017 – in spite of what the naysayers say.

    Sales and marketing director Simon Kwan says the outlook for 2017 “should be good”, which is why the company is embarking on the launches.

    “We are optimistic. Even though the market is challenging, the piece of cake will still be there – just a little smaller,” he tells.

    Among the projects in the pipeline is the first residential development of Sunsuria City, The Olive condominium, Bell Suites serviced apartments that face the main entrance of Xiamen University Malaysia and an upcoming landed residential development known as Monet Residences.

    Apart from the township projects, Sunsuria will also focus on the second-phase expansion of its mixed commercial development, dubbed The Forum, in Setia Alam.

    The company is targeting to launch phase two by the final quarter of 2017.

    The mixed integrated development is situated in Sunsuria Seventh Avenue, within Setia Alam. Located on 6.6 acres of freehold land, the second phase will comprise retail units, an office tower (21 storeys), SoHo service suites (33 storeys) and service apartments (41 storeys).

    “There will be 150,000 sq ft of lettable retail space in phase two. We sold the retail units in the first phase, but we’re holding the new units and will rent them out in the second phase, says Kwan.

    The first phase of The Forum, which was launched in 2015, comprised 172 units of office space and 61 units of retail space.

    “All of the office units have been sold, while about 40 units of the retail units have been snapped up,” says Kwan.

    The retail portion of the first phase has been taken up by tenants such as Village Grocer, Secret Recipe, Baskin Robbins and Focus Point.

    Kwan feels that these household names will help to attract new retail tenants in phase two of The Forum.

    He says Village Grocer, which has taken up about 25,000 sq ft in the first phase, has taken 10,000 sq ft in the second phase.

    Kwan is naturally optimistic about the prospects for The Forum.

    “Setia Alam is a mature area already and we believe it is self-sustainable. The site is strategically located within the vicinity of Setia Alam commercial hub, Sunsuria Seventh Avenue, Setia Eco Park, Klang and Shah Alam.

    “There is convenient access to major highways such as Persiaran Setia Alam, the New Klang Valley Expressway, Shapadu Highway, Elite Highway and the Federal Highway. We have 90 acres in Setia Alam and the second phase will be the last piece. So we want to do our best,” he says.

    Kwan also feels that the Malaysian retail sector will still be steady in 2017.

    “Malaysians like to go to malls. Online shopping is a new trend and, yes, it’s growing. But many families like to go to shopping centres and we believe this trend will continue.

    “It’s a favourite pastime for Malaysians. A lot of us go to malls – we won’t necessarily shop but may spend the day at food and beverage or entertainment outlets.”

    The Olive

    Another highly-anticipated project for the Sunsuria group in 2017 is the company’s high-rise development, The Olive.

    Initially slated for a 2016 launch, a delay in obtaining the advertising permit and developer’s licence has forced the company to push the launch to next year.

    Located at Sunsuria City at Putrajaya South, Salak Tinggi, Kwan says the project, which comprises three blocks, is already open for booking and has been well received.

    “Block A has been fully taken up, while Block C has achieved a take-up rate of about 75%. We will launch Block B next year,” Kwan says, adding that The Olive will comprise 21-, 19- and 18-storey blocks, housing a total of 240, 216 and 207 units respectively.

    The units come with a built-up of 818 sq ft and each floor houses 12 units. The space within each unit has been carefully planned so as to construct living space that can be utilised effectively. Kwan says the non-bumiputra lots start from RM420,000.

    “The take-up rate has been quite fast. We initially targeted the units to be fully taken up by September next year. But looking at the rate of acceptance, we expect it to be fully sold by the first quarter of 2017,” he says.

    Kwan explains that the name “The Olive” was inspired by Ceferí Olivé, a Spanish watercolor painter.

    “The Olive is the first high-rise residential development in Sunsuria City,” he says, adding that the company is targeting students and residents from within the Putrajaya and Cyberjaya areas for the high-rise project.

    “We’d also like to target upgraders,” says Kwan.

    It’s no coincidence that Sunsuria City envelops the G2G-initiated Xiamen University Malaysia campus, the first Chinese university campus on foreign soil.

    Sunsuria posted a 137% growth in revenue of RM202.4mil and a 230% increase in net profit to RM43.8mil compared to the previous financial year.

    This was attributed to the company’s strong sales force, customer-centric practice and the ability to deliver quality projects and developments, namely the upcoming Suria Residence in Bukit Jelutong, commercial development The Forum in Setia Alam and several new commercial projects situated in Sunsuria City, such as Bell Avenue and Jasper Square.

    The roots of the Sunsuria group dates back to 1989, when its founder and owner, Datuk Ter Leong Yap, started to develop various residential, commercial and industrial property projects in the Klang Valley.

  • Hong Kong still tops Asian retail rent rankings

    Hong Kong still tops Asian retail rent rankings

    Tokyo’s Ginza has overtaken Sydney into second spot behind Causeway Bay in the latest DTZ/Cushman & Wakefield Asian retail rent rankings.

    The annual Main Streets Across the World report tracks 462 of the top retail streets around the globe, ranking them by their prime rental value.

    Globally just 36 per cent of the markets witnessed an increase in rent rates, a reflection of the growing power of eCommerce and economic challenges in many economies around the world.

    New York’s Upper 5th Avenue, which saw its first decrease in annual rents per square foot since the financial crisis, and Causeway Bay remain more than twice as expensive as the leading street in any other country. So while Causeway Bay rents fell year-on-year, it had no impact on its ranking.

    But DTZ/Cushman & Wakefield says the downward pressure on Hong Kong retail rents is creating an opportunity for some retailers looking to snap up units on prime pitches in good rental terms.

    In Asia, Beijing’s Wangfujing has lept two places into eighth at the expense of Guangzhou’s Ti Yu Zhong Xin District, and Kuala Lumpur’s Pavilion has fallen one spot to 12th. Ho Chi Minh City in Vietnam has jumped two spots to 14th and is now more expensive than Auckland, Nanjing and New Delhi.

    DTZ/Cushman & Wakefield commentators say advances in technology will shape the consumer experience of retail as well as drive the way how people shop and live in the future, placing more pressure on retail rents.

    “We have seen an increasing number of retailers in Hong Kong continually enhance shoppers experience through leisure offerings and differentiate their market positions to maintain competitiveness under the impact of eCommerce disruption,” said Kevin Lam, DTZ/Cushman & Wakefield’s head of business space, Hong Kong.

    Key fact APAC

    “Though we could see that some high street rents were close to the bottom in Q3, eCommerce disruption so far on rents is rather indirect in view of close proximity in Hong Kong.”

    Elsewhere, Chinese brick-and-mortar retailers are facing stiff competition from the growing eCommerce market and the emerging trend is to partner with online-to-offline platforms in an attempt to capture these changing trends in consumer behavior. In parallel, both retailers and landlords are raising the bar on the experience offered to consumers by expanding the food and beverage and leisure offerings.

    Theodore Knipfing, Cushman & Wakefield’s, head of retail, Asia Pacific, says retailers continue to be cautious in their store expansion across the region due to concerns including continued global economic instability, and this will continue well into 2017.

    “When expansion does happen, the focus is typically on quality over quantity. All in all, despite the cautious outlook across the region, major international and regional retailers will have to eye overseas growth, as their respective domestic markets reach saturation point and investors demand results.”

    Most expensive locations by city Pacific chart

    Global rankings

    In the global rankings, the Champs Elysees in Paris comes third followed by New Bond St, London, Tokyo’s Ginza and the Via Montenapoleone in Milan. Pitt St mall in Sydney is seventh followed by Seoul’s Myeongdong district, the Bahnhofstrasse in Zurich and Vienna’s Kohlmarkt.

    global

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  • Shinsegae to open all-in-one shopping complex

    Shinsegae to open all-in-one shopping complex

    Shinsegae Group is set to open South Korea’s largest shopping theme park in Hanam, southeast of Seoul, on Friday to offer a wide variety options for shopping, leisure and culinary experiences.

    “Starfield Hanam” is a three-story building with four underground floors, covering an area spanning 460,000 square meters located some 20 kilometers southeast of Seoul. It’s equivalent to 70 football fields, big enough for visitors to day trip to without leaving the shopping mall that houses 750 brand stores and a parking space for 6,200 vehicles.

    Shinsegae Group opens "Starfield Hanam," South Korea's largest shopping theme park on the southeastern outskirts of Seoul on Sept. 9, 2016. (Yonhap)

    Shinsegae Group opens “Starfield Hanam,” South Korea’s largest shopping theme park on the southeastern outskirts of Seoul on Sept. 9, 2016.

    The 1 trillion won (US$916.5 million) joint investment with Taubman, a U.S. shopping mall owner and operator, is the Korean retail giant’s ambitious project to revitalize its offline retail channel in the face of tougher competition with emerging online and mobile malls.

    “This is Korea’s largest suburban shopping mall that provides shopping, leisure and rejuvenating experiences in one place,” Lim Young-lock, vice president of Shinsegae Property, the group’s property development unit, said during a press meeting on Monday. “We hope that it will become the ultimate destination for a one-day shopping trip for customers in the Seoul metropolitan areas and potentially, across the nation.”

    Starfield Hanam targets to post 820 billion in sales in the first year, hoping to raise it to 5 trillion won within 4-5 years, Lim said.

    Women’s clothing stores as well as open cooking studios and ceramic workshops are located on the first floor, differentiating itself from traditional department stores that have cosmetic and luxury brands on the first floor.

    On the second floor, about 30 luxury brands, including Louis Vuitton, Gucci and Prada, are lined up along with contemporary fashion brands.

    Shinsegae placed its affiliate stores in the first basement floor, including E-Mart Traders, a warehouse-style supermarket similar to U.S. chain Costco, and Electro Mart, the group’s electronic retail shop.

    Apart from other malls that mostly focus on shopping experiences, Starfield offers various options for men to see, experience and buy.

    Hyundai Motor Co., South Korea’s largest automaker, has a showroom on the first floor to showcase its Ioniq green car and luxury sedan Genesis brands.

    The Ioniq showroom features the Ioniq line, which includes the firm’s first pure electric vehicle built on a dedicated platform. In addition to the electric version, the Ioniq also comes in plug-in hybrid and traditional hybrid models.

    Hyundai Motor displays plug-in Ioniq model at its showroom at Starfield during a pre-opening event on Sept. 5, 2016. (Yonhap)

     

    Foreign automakers and motorcycles are also heating up the competition to attract male customers.

    BMW MINI launches Asia’s first “City Lounge” where customers can see and test drive the German automaker’s MINI models, and American motorcycle Harley Davidson’s shop displays its latest models and sell related products.

    In November, American electric car maker Tesla Motors is set to launch its first dealership to prepare for its entry into the Korean market.

    “Traditional shopping malls usually have a lack of options for male customers, but Starfield offers things to do and see for men like me, who like cars and electronic gadgets,” Kim Min-seok, a 24-year-old from Seoul, said during a pre-open event. “I’m looking forward to seeing Tesla’s electric cars when it opens a new shop.”

    The shopping theme park has a lot to offer to family visitors as well.

    Aquafield, an indoor and outdoor waterpark, and Sports Monster, an electronic sports field, are located on the third and fourth floor.

    Aquafield at Starfield Hanam on the third floor. (Yonhap)

    Aquafield covers an area of 13,000 square meters, with an indoor swimming pool that has a panoramic view of the Han River and the surrounding mountain, a water park and an upscale spa.

    At Sports Monster, people can enjoy basketball, volleyball and badminton as well as rock climbing and bouncing on a trampoline.

    It also displays an “e-sports arena” that combines virtual reality (VR) gadgets and 4D technology for such sports as surfing, snowboarding, horse racing and rowing.

    “I felt almost like I was falling from a cliff while getting on a roller coaster in this virtual reality,” Shin Min-hee, a 20-year-old, said, taking off a pair of VR goggles.

    There are also various restaurants, cafes and desert places and a food market for fresh ingredients.

    PK Market, a food market that has “Live to Eat” slogan, sells international food ingredients, vegetables, fishery and meat.

    PK Market sells fresh vegetables, fishery and meat as well as international food ingredients. (Yonhap)

    “Eatopia” (a compound for eat and utopia), and “Gourmet Street” feature branches of famous local and international restaurants.

    “I was surprised to see many visitors even during the pre-opening events, which far exceeded my expectations,” said Lim, after touring the mall. “I hope Starfield can change customer expectations for an offline shopping mall through new experiences.”

     

  • Chinese retail real estate crushed

    Chinese retail real estate crushed

    One of the under discussed aspects of rising real estate prices is the attendant rising rents amid a brick-and-mortar retail slowdown. In 2015, the top 100 chain stores saw sales growth of only 4.3 percent.

    Locally, in Beijing the smaller mom-and-pop retail shops as well as national chains are being forced out by high rents, as rental agreements expire and the minimum increases are at least 100 percent. Mix in shifting consumer behavior, particularly the popularity of online shopping, and it is a brutal environment for the least efficient retailers.

    A reporter for the Beijing Evening News heads to Xinjiekou Beida Street to see the impact on the ground.

    Yesterday afternoon, just the beginning of autumn (Liqiu August 7-22) of Beijing is still hot. From Jishuitan subway station out along Xinjiekou North Main Street South a rough count shows about ten small stores at least half with the words “sale”, “clearance” and even more than one “contract expiration” two or three family has to pull the shutter doors, completely closed shop closed state. The old familiar clothes shop has been replaced by a shop selling steamed buns and meat patties. A clothing store retreated from higher rental shops along the street to the alley inside, to attract customers it has a “Grand Sale” promotion red sign hanging.

    Contact by telephone sublease front of the store, correspondent to turn to a store owner. He told reporters that although the lease is to expire in April next year, but because of the difficult business environment, ready to move up, “mainly rents are too high.” The owner said, Xinjiekou traffic here also, but his rented storefront upper and lower rent would more than 1.5 million yuan a year, an average of 129,000 yuan a month, plus the prior renovation costs, operation stress is too great. Now the shop is handbags sale, sell a single inexpensive earn more than twenty yuan, the most expensive also more than fifty yuan. Even under the most expensive 50 yuan terms, without considering other costs, the shop must to sell 2580 each month to pay the rent. The boss said, in order to share the rent pressure, a lot of shops in this street are sharing the rent two- and three-ways.

    Chain stores are feeling the pressure as well:

    In fact, more than street shops closed tide appears, district located in Daphne, Metersbonwe, Ning [ -0.73% ] , Jeanswest and other brand shoes and apparel shops are also rapidly reduced stores. According to Daphne released the first half of 2016, a profit warning report shows only the first half of this year, Daphne net off store 450, including 400 direct sales stores and 50 franchise stores. Once all the rage Metersbonwe business situation is not optimistic about 2013 sales stores and franchise also has nearly 5000, the end of 2015 has been remaining 3700, store sales decreased by about a quarter. Jeanswest in the past 4 years has closed 1012 stores, at the end of 2015 had only 2249 retail stores.

    In the micro-channel circle of friends spread a worldwide brick-and-mortar retail death list, it is revealing physical retail bleak. According to this list were killed in the first half 2016, a second-tier cities major retail companies closed shop more than eighty percent. China Chain hundred reports China Chain Store & Franchise Association released statistics also show that in 2015 the chain of hundred sales volume of 2.1 trillion yuan, an increase of only 4.3%, the lowest ever one. Department stores even have negative growth of -0.7%.

    China Chain Store & Franchise Association, the relevant responsible person said, “This year the store is really a life and death to the moment”, but specialty stores, convenience stores have achieved double-digit growth.

    Entity is not fully closed shop because of the impact of the electricity supplier, there are real weak economic growth, labor costs, rental costs, taxes, weak profits and other reasons. In the late 1990s, chains began a large expansion, rental contracts generally expired in 10 to 15 years, these contracts are now expiring and the rent is at least doubling, some low-margin supermarkets, department stores have been unable to renew the lease.

    Another issue is the failure to embrace changes in the market:

    Beijing Zhi future starting from Consulting Group founder Li pointed out that the impact of the electricity supplier, rent increases, etc. are one of the most direct reason. But more than the rent, labor, electricity providers more powerful impact, and is continuing under the influence of these factors, changes in consumer spending habits occurred. More important reason is consumer behavior, consciousness, the pursuit of consumer convenience, reliance on technology and the like. On the other hand, traditional commercial aspects of the transition moves more slowly. Department stores these years has been to break, suffer not found the right ways, not kept pace with changes in consumers.

    Li Zhi said that from the domestic and international experience, the current transformation of department stores there are two main directions. On the one hand is to break through the high-end direction, shrinking front, the focus is more on the line, service requirements are relatively high business forms; in the other direction is toward a more pluralistic, more inclusive development, to provide similar shopping mall such a large, integrated leisure experience scenes business forms.

     

  • Ayala launches Philippines’ most luxurious condo

    Ayala launches Philippines’ most luxurious condo

    Ayala Land Premier (ALP), the top-tier market segment unit of Ayala Land Inc. is launching the country’s most expensive residential development to date with a total value of P20.5 billion—including an ultra-luxurious unit sold at P477 million.

    “ALP competes in a valuable segment in the market. The players are very select, and it is by delivering these one-of-a-kind properties in choice locations that ALP handily distinguishes itself,” said ALP Managing Director Jose Juan Jugo in a press briefing.

    Park Central Towers will be an ultra-luxury, two-tower development at the corner of Paseo de Roxas and Makati Avenue. The 69-storey Park Central South Tower worth P20.5 billion will rise across Ayala Triangle and shall have 281 private residences with 12 different unit designs and layouts.

    Unit sizes range from a two-bedroom unit at approximately 138 sqm to a three-level penthouse unit called Anadem Villa One at approximately 1,635 sqm (inclusive of a limited common area, 281 sqm pool deck).

    “Park Central South Tower will sell for an average price of about P300,000 per sqm. Unit prices range from P32 million to an unprecedented P477 million with an average unit costing close to P80 million,” said ALP Sales Head Mike Jugo adding that the units are the size of houses in exclusive subdivisions.

    Jugo said they have so far sold 40 percent of the project, or 116 units, with a total value of P8.3 billion in a preview sale to their most valued clients. Units sold include the $10 million Anadem Villa.

    There will be 54 Aquaview Villas, which feature their own private elevators and a 5.7 meter high living room area that flows out to a private plunge pool and lounge deck.

    At the corners opposite the Aquaview Villas are 54 Skyview Villas. While the Skyview Villas do not have the private elevators and pool areas, they feature floor-to-ceiling and wall-to-wall windows that wrap around a 5.7-meter high living room space.

    The 54 Gallery Villas meanwhile provide a heightened level of exclusivity, with their private elevators opening up to a gallery where discerning homeowners can feature prized possessions or works of art.

    The 112 Glass Suites are aptly named because all of the rooms feature floor-to-ceiling and wall-to-wall windows maximizing views and bathing these luxury apartments with natural light.

    “There are typically only five units per floor. Since most units have their own dedicated private elevators, well-heeled residents will likely not see each other in the elevator lobbies or lifts,” said Jose Juan Jugo.

    Park Central Towers will rise on a vast 15,860-sqm. parcel adjacent to an equally opulent Ayala Land Premier project, Roxas Triangle Towers.

    The building’s unique architectural design includes special four-storey high common spaces called Sky Terraces that will house either a gym, swimming pools, residents’ lounge or spas.

    Anchoring the luxury appointments and central location is an upscale retail podium that will house highly-curated shops and restaurants.

    The renowned Leandro V. Locsin & Partners collaborated with a boutique luxury Singaporean architectural firm, Soo Chan Design Associates (SCDA), and noted Japanese design group, Studio Taku Shimizu to come up with an iconic design for the structure, befitting its exceptional Makati CBD address.

     

  • Indonesia plans emergency law to let foreigners buy apartments

    Indonesia plans emergency law to let foreigners buy apartments

    Property sector needs reform to attract investments, says minister. Indonesia plans to issue an emergency law – known as a perppu – to break an impasse of more than a decade in efforts to streamline unfriendly laws as the country aims to allow foreigners to purchase apartments in Indonesia.

    The government had in the past repeatedly tried to move forward and set regulations to allow foreigners to own apartments in South-east Asia’s biggest economy.

    But they were never able to get these implemented because the basic stipulation under Indonesia’s 1960 Agrarian Law is that foreigners just cannot own homes in the country, Coordinating Minister for Political, Legal and Security Affairs Luhut Pandjaitan said.

    “But the era has changed now. The property sector needs a reform so we could attract foreign investment. Foreigners should be allowed to buy apartments – but not landed houses – even if they don’t hold Kitas (Indonesia’s residence permit),” Luhut told The Straits Times.

    “It is similar to that in Singapore,” he added.

    Indonesia’s Constitution gives the President the right to issue a rule in lieu of law (perppu) when he determines that an emergency in the country requires it.

    A perppu is immediately effective after the President signs it, and Parliament can either let it remain effective or end it within a year after the perppu is issued.

    Luhut said the perppu that covers a new rule allowing foreign investors to buy apartments is one of between four and five perppu that Indonesia plans to issue by August, to resolve other obstacles hindering the government reform programme.

    “This is a revolutionary step to address such problems,” he said.

    A so-called debottlenecking working committee has been set up to identify problematic and protracted clauses in all laws.

    “We will comb all legislations that overlap with each other,” Purbaya Yudhi Sadewa, who heads the working committee, told The Straits Times.

    The perppu will supersede only the problematic clauses in each law and serve to bypass them, Luhut said.

    He added that one perppu could address problems in five to more than 10 existing laws, and about 80 per cent to 90 per cent of the existing laws can be harmonised.

    Issuing perppu is a normal practice that some foreign governments, such as the United States, also use, Luhut said, adding that the term used in the US is “presidential Act”.

    In May, President Joko Widodo signed a perppu that allows courts to increase penalties for sex crimes, which include for the first time chemical castration and death sentence, after the media highlighted a growing number of attacks against children.

    Previously, the maximum sentence for a child sex offence was 15 years’ jail. Indonesians have mostly welcomed the move.

    Amending existing laws through the normal process, by proposing Bills to Indonesian Parliament, can drag on for several years, and in some cases, proposed Bills were thrown out.

    Numerous government reform programs in Indonesia in the past decades have hit a snag due to conflicting laws that need amendment.

  • Clevo to sell properties in China

    Clevo to sell properties in China

    Clevo will sell office space and residential units of its IT and consumer electronics retail chain Buynow in China and is poised to float REIT (real estate investment trust) certificates in Taiwan for commercial real estate in China including Buynow stores, department stores and hotels, according to the company.

    Clevo has also approved its 2015 financial report and will issue dividends of NT$1.10 (US$0.03) in cash.

    With growing demand for gaming notebook products, Clevo’s notebook shipments grew strongly in China, boosting its May revenues by 23.1% on year to reach NT$1.63 billion.

  • South Korea Now Fourth Biggest Foreign Investor in US Real Estate

    South Korea Now Fourth Biggest Foreign Investor in US Real Estate

    Over the past few years South Korea has invested billions of dollars in the real estate market in the United States. The country has always been a major investor but just recently the diversity and stability of the US market has made it increasingly attractive.

    Last year South Korea became the fourth largest foreign investor in office space in the United States but its interest isn’t confined to one particular type of property. Although commercial buildings are of major interest, investors are also putting money into data centres, retail and logistics.

    According to Commercial Property Executive, Koreans have been actively investing in foreign real estate since around the turn-of-the-century. Even though South Korea isn’t a small market, there is still a lot of interest in investing globally with investors looking to diversify their portfolio in order to get a better yield. Over the past year South Korean funds have made high-profile investments in the US market, attracted by the fact that the market in this country is very developed, offering more opportunities and more deals.

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    Most of the interest from South Korean investors is from global brands such as Samsung SRA and from pension funds, and is mainly centered in gateway cities. These cities include Los Angeles, San Francisco, Washington DC and Chicago, but there is also increasing interest in secondary cities that include Seattle and Denver. While there is considerable interest in commercial properties, this isn’t to the exclusion of residential properties, provided they are of the right type. This doesn’t always mean they have to have a huge price tag, although this is often the case. For asset management companies, prices can go up to $400 million and may start at $150 million.

    In spite of the interest from South Korean investors, there are various challenges that have to be resolved during transactions. These are mainly due to the difference in cultures as transactions in Korea are conducted in the way that is very different from the US. Even with these differences, there is expected to be continued growth in the amount of South Korean funds being invested in the US as there just isn’t as much opportunity in Korea as in foreign countries. Although this growth may be set to continue there are signs the Koreans are becoming more selective in terms of asset types and yield requirements as they are becoming more cautious.

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  • UBS optimistic on Australia, Japan real estate markets

    UBS optimistic on Australia, Japan real estate markets

    UBS Asset Management is optimistic on the Australian and Japanese real estate markets, according to its latest Asia Pacific quarterly outlook report. Amid a challenging macro conditions, transaction volume for commercial real estate fell 12% y-o-y in 2015. However, Japan and Australia bucked the trend as domestic lenders eased their credit policies on account of improving fundamentals and collateral quality.

    Toh Shaowei, UBS Asset Management director of research and strategy for Asia Pacific, says: “Broadly speaking, the near-term condition in APAC region is still challenging and there is a ‘longer winter’, but the long-term fundamentals remain strong. We see a few macro themes and continue to monitor them.”

    In Japan, household spending is likely to be the main driver of economic growth on the back of ongoing wage rises, healthy job market and lower oil prices. Negative interest rates have also boosted capital expenditures. Notably, these expenditures have focused largely on new product development, R&D and efficiency saving measures to counter aging population and labour shortages.

    Occupancy rates and rents for Japan’s key office markets have also trended up due to limited new supply and steady demand from large corporates. These corporates have benefited from Bank of Japan’s asset purchases, lower borrowing costs and weaker currency which boosted earnings.

    The leasing market in the Japanese logistics sector remains robust on the back of increasing demand for same day deliveries from end users and growth of online shopping. However, rising supply from new developments are likely to restrict overall rental growth.

    In Australia, Sydney and Melbourne led the recovery in the office leasing market as the country shifts its growth model from the mining sector and resource-rich state. Finance and insurance, professional services and the technology, media and telecommunications sector are the key drivers of demand for office space. Meanwhile, net absorption level in resource-rich states of Queensland and Western Australia continue to lag but is gradually stabilising, says UBS.

    Separately, robust demand from international retailers looking to gain exposure to the Australian market have strengthened the rents and occupancy rate of prime retail space. However, secondary retail space is expected to continue to underperform amid subdued wage growth and increasing penetration of online retailers. UBS anticipates near-term rental growth to remain below historical averages as households allocates a higher share of their incomes to healthcare and education.

    On the home front, the outlook for Singapore’s real estate market remains challenging in the near term. The clampdown in foreign labour supply and an elusive labour productivity gain have lifted business costs and dented corporate sentiments. Coupled with a supply onslaught, UBS expects the overall office sector performance to remain depressed over the next two years.

    UBS expects the weakness to be broad-based across all property segments. Singapore’s retail rents are likely to witness a flat to marginal declines over the next 12 months while sluggish manufacturing outlook is clouding the overall prospects for the industrial property sector.

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  • Bribery probe hammers shares of Indonesian property firm Agung Podomoro

    Bribery probe hammers shares of Indonesian property firm Agung Podomoro

    Shares in property developer PT Agung Podomoro Land Tbk plunged 10 percent on Monday, after Indonesia’s anti-graft agency launched an investigation that raised concerns that a multi-billion-dollar project could be delayed.

    Ariesman Widjaja, the firm’s chief executive officer, is suspected of bribing a member of the Jakarta provincial assembly to influence the regulation for a land reclamation, the Corruption Eradication Commission (KPK) said in a statement dated Friday.

    The anti-graft agency said it had caught the Jakarta official receiving 1.14 billion rupiah ($86,725) in cash from an Agung Podomoro employee at a shopping mall a day earlier.

    Agung Podomoro has plans for a project called Pluit City, which is estimated to be worth billion of dollars, on the northern coast of the Indonesian capital.

    The firm issued a statement late on Friday acknowledging that KPK had named Widjaja as a suspect, but gave no other details. The company’s directors and legal team are studying the case and are committed to obey the law, it added.

    Widjaja could not be reached for comment.

    Agung Podomoro Director Cesar M. Dela Cruz declined to comment.

    Agung Podomoro shares plunged as much as 10 percent after the market opened on Monday, hitting their lowest in more than four months. The broader Jakarta stock exchange was up 0.1 percent.

    With Agung Podomoro “on the hot seat”, the company’s mega project may be delayed indefinitely, broker Trimegah Securities said.

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  • Grim outlook for Singapore retailers

    Grim outlook for Singapore retailers

    Singapore retailers are facing “dark days”, including store closures, according to Singapore real estate company CBRE.

    With falling domestic demand and soaring costs, there will be more store consolidations and closures, it says in a new report.

    It predicts the retail market to undergo further restructuring following a muted performance last year, with weak brands being elbowed out, reports the Singapore Business Review.

    “This year will be marked by challenging conditions that could push weaker-performing brands to close or downsize.”

    There will also become harder to hire staff, with the report warning it is “highly unlikely” the government will lift restrictions on hiring foreigners. However, the costs and time associated with innovation and revamp are likely to keep a lid on expansion plans.

    CBRE says the fast-fashion segment will be particularly hit hard by manpower constraints and lack of suitable retail space. It says cheaper running costs in neighbouring countries have helped pull fast-fashion retailers’ attention away from Singapore.

  • Hong Kong retail sector to suffer most from yuan devaluation

    Hong Kong retail sector to suffer most from yuan devaluation

    The yuan devaluation could force Hong Kong’s retail landlords to cut rents as it threatens to erode shopping in the city by tourists from China, say analysts.

    A weaker yuan means these tourists will now be spending in a more expensive Hong Kong dollar, denting the city’s retail sales even further.

    “Shopping in Hong Kong will get more expensive for mainlanders,” said Nicole Wong, regional head of property research at CLSA, “Landlords need to be more realistic [in setting their rents].”

    Wong said retail rents would in any case have to correct in view of the slump in Chinese spending and that the yuan devaluation would only steepen the fall.

    Big spenders from China had already been skipping Hong Kong and flying directly to Europe, taking advantage of a cheaper currency, she said. The euro has lost nearly 18 per cent in the past year.

    The yuan has lost more than 3 per cent against the US dollar since the People’s Bank of China shocked the markets by devaluing the currency by 1.85 per cent on Tuesday, the most in one day in more than 20 years.

    “Any meaningful depreciation of the yuan could further dampen Hong Kong retail sales as mainland visitors’ spending represented 38 per cent of Hong Kong’s total sales in 2014, compared to below 20 per cent prior to 2008,” wrote Bank of America Merrill Lynch analyst Raymond Ngai in a note to clients.

    The devaluation would be another direct headwind for Hong Kong retail landlords, he said, citing the widespread market expectation of a 10 per cent depreciation of the yuan against the US dollar in the next 12 months.

    Shares in Causeway Bay’s largest retail landlord Hysan Development have fallen for three straight days since Tuesday. In all, it lost 1.7 per cent to close at HK$33 on Thursday. Hang Lung Development, which owns Fashion Walk in Causeway Bay, lost nearly 3 per cent to close at HK$19.80.

    Sogo department store operator Lifestyle International Holdings fell nearly 1 per cent on Thursday. Only Wharf (Holdings), which owns the city’s largest shopping mall Harbour City, but is diversified into areas other than retail, bucked the trend to edge up nearly 0.5 per cent on Thursday after falling 3.7 per cent the previous day.

    Jefferies downgraded Hysan to “hold” from “buy” for its concentration in retail operations.

    Even before the devaluation, global brands have been pushing landlords to cut rents as mainland footfalls have been dwindling amid an economic slowdown as well as the anti-corruption drive on the mainland that has crimped luxury spending. Swiss watchmaker TAG Heuer last week said it was closing a store in Causeway Bay’s prestigious Russell Street.

    Tom Gaffney, head of retail at property consultancy JLL, said some retail outlets in Central and Causeway Bay had asked for rent reductions of up to a fifth.

    But the yuan depreciation is likely to have a mild impact on Hong Kong’s physical property market.

    Sammy Po, chief executive of Midland Realty’s residential department said mainlanders accounted for 20 to 30 per cent of new luxury homes sales in 2011.

    “Today, mainland buyers have dropped to about 4 per cent due to stamp-duty curbs for non-locals,” he said.

    This article appeared in the South China Morning Post print edition as Devalued yuan to hit retail sector

  • M&G makes first retail acquisition in South Korea

    M&G makes first retail acquisition in South Korea

    M&G Real Estate has acquired three retail assets in South Korea at a combined value of US$230 million, representing an average yield of 6.5%. The acquisition was made on behalf of its core Asia real estate strategy, managed by Singapore-based Erle Spratt.

    Under the terms of the deal, M&G Real Estate has acquired two hypermarkets: the first in Daejeon, South Korea’s fifth largest city; the second in Jeju, the capital of the Jeju Province and the nation’s premier tourist destination. The third asset is an outlet mall in Incheon City, the country’s third largest city after Seoul and Busan. All three assets are highly sought after retail outlets in prime locations and are leased to South Korea’s largest retailer, Lotte Shopping.

    Hyesik Ryu, Managing Director, M&G Real Estate Korea, comments: “We were one of the first non-domestic institutional investors to invest in South Korea when we bought into the country’s commercial office sector in 2004. M&G Real Estate has developed a deep understanding of the market, enabling us to make this latest investment in the retail sector, which will strengthen the strategy’s long term income stream.”

    Erle Spratt adds: “We’re seeing strong capital flows, particularly from global pension funds and insurance companies in the UK and Europe. With responsibility for more than US$2 billion in assets, we are well positioned to pursue property investments across the region to further improve our risk adjusted returns and sustain the outperformance of our portfolio.”

    Stefan Cornelissen, M&G’s head of institutional business, Benelux, Nordics and Switzerland, says: “The Asia Pacific real estate market is now the second largest in the world and rivals the US and Europe in terms of its maturity, transparency and liquidity. European investors in search of diversification can now benefit from Asia’s strong economic growth and attractive long term returns without going higher up the risk curve.

    “We have recently had a significant commitment from Dutch investor, Blue Sky Group, which has invested on behalf of its recently launched Core Asia Pacific Fund. We expect further capital to follow from other UK and European investors. Asian real estate has come of age and is earning itself a strategic place in a diversified core real estate portfolio.”

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