Capital moves
CAPITAL is ever watchful for a route to higher returns, and lately, Singapore-based real estate players have trained their sights on Japan. Low borrowing costs and a weak yen have widened the market’s yield spread in marked contrast to other regions, sending investors piling in.
Almost US$3 billion worth of real estate assets in Japan were acquired in the first eight months of this year, according to Knight Frank, up resoundingly from US$977 million in the same period last year. The Japanese commercial market is bustling. Big buyers include Singapore’s sovereign wealth fund GIC, Mapletree Logistics Trust, the CapitaLand group, and City Developments Ltd. Samuel Oh finds out what’s spurred their interest, and how prospects look.
In Japan and other Asian markets, prime residential property is also offering net yields that outpace Singapore. Ry-Anne Lim looks at how regional prime markets stack up, but be wary of what a high yield offers.
For those invested in Reits, higher rents at properties held by a Reit count as good news. For tenants at those properties, not so much. As higher interest rates weigh heavily on a Reit’s performance and make acquisitions difficult, managers face pressure to deliver growth by squeezing tenants for rents.
Positive rental reversions mean more income for a Reit, but could also put a struggling tenant out of business. The balance is a tricky one. Space users generally have to put up with a deal that says: put out, or get out. Yet, failing tenants do a Reit no good. In The Level Ground, Leslie Yee asks: Are Reits friends or foes of space users?
In other Reits news:
OUE Commercial Reit should consider turning hospitality-centric for better valuation
CapitaLand Ascott Trust proposes renewal of three French master leases
ESR-Logos Reit divests Tuas asset at 35.2% premium to valuation
Cromwell E-Reit’s Bari asset sold for 94 million euros
Tracking deals, and a dealmaker’s exit
State land sales and the Far East Shopping Centre mega-deal propped up the value of investment deals in the third quarter. Stripping out those sizable sales, sentiment remains muted.
Still, real estate assets continue to change hands in some corners. Kalpana Rashiwala reports on Crescendas’ Leow family buying freehold Jalan Besar shophouses for S$38.5 million as well as the Textile Centre car park for S$26 million. Serene Centre, a freehold building in Bukit Timah, is said to have been sold for S$105 million, while 999-year leasehold Bugis Point is now on the market for S$85 million.
People are also talking about Ashish Manchharam, founder of 8M Real Estate, who has sold his stake in the company and stepped down as chief executive officer. From an initial acquisition of five adjoining shophouses at 112-116 Amoy Street, the real estate investment company’s portfolio has grown to 70-plus assets comprising mainly conservation shophouses, worth about S$1.4 billion in Singapore. What could his exit mean for the shophouse market?
The Sim Lian group emerged as the winner of a Tampines executive condominium site, bagging it for S$543 million at a record EC land rate of S$721 per square foot per plot ratio. At that land price, the average selling price for the completed EC will likely exceed S$1,500 psf.
In Hong Kong, meanwhile, the government has hit a pause on sales of commercial sites in land tenders this quarter. The decision comes as the city’s offices continue to suffer from high vacancy rates, put at 10 per cent to 15 per cent, and land sales see low bids. As the territory’s property markets stay depressed, a rout in shares of Hong Kong’s developers has pushed valuations to extreme lows on poor earnings prospects and falling payouts.
Tackling money laundering
The massive probe into a Fujian money laundering syndicate is steadily widening, with assets seized or frozen now surpassing S$2.8 billion in value, Parliament heard last week. These include 152 properties issued with prohibition-of-disposal orders - 94 residential properties, of which 34 were uncompleted, 53 commercial assets and five industrial properties. (Also recovered were 62 vehicles; monies in bank accounts exceeding S$1.45 billion; cash of more than S$76 million; and cryptocurrencies of more than S$38 million.)
An inter-ministerial committee will focus on how institutions and other players involved in transactions of assets can improve controls and better guard against risky flows. Singapore “can do better” in regulating gatekeepers, which include lawyers, accountants and real estate agents, ministers said, and investigations are ongoing into the property agencies and agents who had facilitated dodgy deals.
Follow our coverage of the billion dollar bust here.
