Dec 3, 2012

Asia - Asian Real Estate Report, Indonesia, Singapore, Hong Kong, Philippines, Thailand

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Asia-Pacific REITs, will come under some pressure due to subdued business and consumer confidence around the world arising from the expected slowdown in the developed economies in the next few.

“When buying any Real Estate, or REITS in Asia you must have a good handle on local demand, because local demand is the driving force behind value in the region.” Shayne Heffernan said in a note to clients on the weekend.

While there is talk of asset bubbles in Asian real estate it does not seem to be the case, on the ground here in the ASEAN region we are expecting a mini boom as the ASEAN states step up financial integration over the next few years.

Standard & Poor’s credit analyst Craig Parker said “We expect the major real estate markets of Australia, Hong Kong, Japan, Singapore and Taiwan to generally see economic pressures suppressing rental growth in the short term,”

“Nevertheless, we expect rated Asia-Pacific REITs to maintain their credit quality due to the sound foundations they have built over the years. We observe that they have maintained a well-spread leasing maturity profile and diverse tenant base that reduces the impact of cyclical volatility. And their superior quality property portfolios continue to attract tenants compared with the whole market.”

Standard & Poor’s rates 42 REITs covering the region’s major real estate markets. The majority of rated REITs have investment-grade ratings with a stable outlook.


Daiwa House Industry, a Japanese property company, agreed to buy a 10 percent stake of Bekasi Fajar Industrial Estate from Argo Manunggal Land Development, in a move that will allow Daiwa to help develop the estate and boost infrastructure.

Krishna Daswara, corporate secretary of Bekasi Fajar, said the deal was completed on Friday.

He would not disclose the value of the agreement.

A 10 percent stake of Bekasi Fajar is valued at around Rp 639 billion ($66.5 million), using the company’s total market capitalization of Rp 6.37 trillion on Friday. Krishna would not confirm the Jakarta Globe calculation.

The company’s stock jumped on Friday as a result of the news. It closed 9.1 percent higher at Rp 720 on the local market.

After the transaction, shares of Argo Manunggal Land will be reduced to 69.7 percent from the existing standing at 79.7 percent.

Argo Manunggal Land is unit a Argo Manunggal Group, which also controls property company Alam Sutera Realty, a house property developer. Alam Sutera has projects in Serpong, Banten and in Sentul, near Bogor.

Bekasi Fajar manages and operates an industrial estate in Bekasi, to the east of Jakarta.

The industrial estates of Bekasi Fajar are home to manufacturing plants belonging to Astra International, the country’s largest automotive distributor, and its subsidiaries Toyota Astra Motor and Astra Daihatsu Motor.

Hitachi Construction Machinery Indonesia and Nutrifood Indonesia also operate plants at the estate.

Net income of Bekasi Fajar rose more than 250 percent to Rp 301 billion in the first nine months this year from the same period last year, while its revenue jumped to Rp 662 billion in the period from Rp 351 billion last year.

Bakasi Fajar made a stellar debut in April this year, raising Rp 300 billion from the sale of its 20 percent stake during its initial public offering.

Shares of the company have more than quadrupled from its IPO price at Rp 170 apiece.


Real estate developer Yoma Strategic Holdings yesterday announced plans for a mixed-use project in downtown Yangon that would be developed at a cost of up to US$350 million (S$429 million).

The Singapore-listed company has agreed to acquire an 80 per cent equity stake in Meeyahta International Hotel from Serge Pun and Associates Myanmar for US$81.28 million to acquire the rights to participate in the development of the residential, office, hotel and retail complex on the 10-acre site in the heart of Yangon with a total gross floor area (GFA) of 2 million square feet.

Yoma plans to sell shares in a 1-for-4 rights issue in the first quarter of next year to fund the transaction. It will sell up to 241 million new shares in the rights issue at a discount of 25 to 35 per cent from the closing price at a date to be determined. The plan has the backing of Mr Serge Pun, the company’s Chairman and controlling shareholder, who will subscribe to his full entitlement as well as any rights shares not taken up by shareholders, it added.

Under the current master plan, the Victorian-era Railway Headquarters will be restored to its original grandeur and converted into a landmark 5-star hotel to rival the great historic hotels of the region, such as the Raffles Hotel in Singapore.

There are also proposals to build a 5-star luxurious condominium building next to the hotel, as well as a 4-star hotel and serviced apartment complex.

Hong Kong

Major property developers in Hong Kong raised objections to the government’s recently announced measures to curb skyrocketing home prices, and sought exemptions to a tax which targets overseas and corporate buyers, after home sales fell significantly following the measures’ introduction.

“We are gravely concerned over the recent measures introduced by the government to manage the demand side of the property market, especially the proposed buyer stamp duty (BSD),” Stewart Leung, chairman of the executive committee of the Real Estate Developers Association of Hong Kong (REDA), wrote in a statement addressed to the government.

The trade association, whose members include Sun Hung Kai Properties, Cheung Kong (Holdings), Henderson Land Development and other major developers in the city, specifically asked the government to exempt apartments worth more than HK$30 million and purchases by companies whose directors or shareholders are permanent residents, from the BSD.

To prevent a property bubble from bursting, the government imposed its toughest property curbs on October 26.

Aside from slapping a 15 percent buyer stamp duty (BSD) upon purchase of a residential property by non-local and corporate buyers, the government also raised a resale tax on residential property by 5 percentage points to make the tax as high as 20 percent, depending on the length of the holding period, and extended the period during which the resale tax will apply to three years from two previously.

Home sales in the city have slumped over the past several weeks as both buyers and sellers are playing a wait-and-see game, but prices have yet to fall significantly. During the weekend immediately following the announcement of the latest property curbs, only 16 units were sold in the primary market, down 80 percent from the previous weekend, while the secondary market saw only 10 deals in the 10 major housing estates, a record low in the past nine months, according to data from Centaline Property Agency, one of the two major real estate brokers in the city.

The slump in transactions has prompted some of the developers to put their plans to launch new projects on hold.


The real estate industry saw a revenue growth rate of 18.8% in the third quarter of the year, making it the fastest growing among all industries, said officials.

“Real estate posted strong expansion as major players including Ayala Land, SM Prime Holdings and Megaworld posted double-digit revenues in terms of real estate and rent of commercial spaces,” said Socioeconomic Planning Secretary, Arseio Balisacan, at a press conference on the Philippines’ third-quarter gross domestic product (GDP) growth on Wednesday, November 28.

According to Jose Ramon Albert, Secretary-General of the National Statistical Coordination Board, the country’s better-than-expected 7.1% growth in the third quarter was driven largely by services sector growth, which was, in turn, partly fueled by real estate, renting and business activity.


Hyatt Hotels Corporation announced recently that a Hyatt affiliate has entered into a management agreement with Grande Asset Hotels and Property Public Company Limited, a Bangkok-based real estate development company, for Hyatt Regency Bangkok, Sukhumvit. Expected to open in 2017, the hotel will be the first Hyatt Regency-branded hotel in Bangkok, and will join the already open Grand Hyatt Erawan Bangkok.

The plans for Hyatt Regency Bangkok, Sukhumvit represents an integral step towards the brand’s distribution in one of Asia’s key markets. Located in the heart of the rapidly expanding commercial city center, the hotel will be part of a mixed-use development that includes a boutique shopping experience and an upscale residential tower.

“Bangkok is a key gateway city in Asia and we are delighted at the opportunity to have a Hyatt Regency in this market. The hotel perfectly complements the currently operating Grand Hyatt Erawan Bangkok and the under-construction Park Hyatt Bangkok and will offer Hyatt guests a choice of high quality hotels,” said Ratnesh Verma, senior vice president real estate and development for Asia Pacific, Hyatt Hotels and Resorts. “The addition of the hotel reflects Hyatt’s commitment to the region and to expanding its distribution in markets where guests are increasingly traveling,” added Verma.

Hyatt Regency Bangkok, Sukhumvit will feature 300 guestrooms, including 26 suites. Designed by renowned Thai architecture firm Bangkok Architects, the hotel will feature a three meal multi-cuisine restaurant, a specialty restaurant and a bar. Designed to offer a full range of services and facilities tailored to serve the needs of meeting planners, the hotel will have more than 1,000 sq m of contemporary meeting space, including a ballroom. Additional hotel amenities will include a six treatment- room spa, a fitness center, a swimming pool, and a club lounge.

“We are thrilled by plans for Hyatt Regency Bangkok, Sukhumvit,” said Watcharakiti Watcharothai, Grande Asset Hotels and Property Public Company Limited. “Bangkok continues to experience strong growth in visitor numbers and this solidifies its position as a major leisure and business destination in the South East Asia region. We believe the hotel’s locations, amenities and overall urban sophistication will be well suited to upscale corporate, leisure and business travelers’ needs.”

Centrally situated at Sukhumvit Road Soi 13 in close proximity to the Asoke station of the Bangkok Transit System, the hotel will offer efficient access and visibility, connecting guests with ease to key points of interest in the city and the airport. Given its central business district location, Hyatt Regency Bangkok, Sukhumvit will be surrounded by premium residences, the offices of major international companies and high-end retail stores.

Last February, Hyatt also announced an agreement with Thailand’s real estate Central Pattana for a Park Hyatt on top of the new Central Embassy shopping centre. Park Hyatt Bangkok will be an iconic hotel featuring 222 rooms, including 49 suites. The hotel will include all-day dining and specialty restaurants, a lobby lounge and specialty lounge, as well as a sky bar and restaurant with magnificent views of downtown Bangkok.

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