Saturday, March 17, 2007

Urban fixed asset investment up

Urban fixed asset investment up
Updated: 2007-03-17 13:42

Fixed asset investment in China's urban areas rose to 653.5 billion yuan (about 86 billion U.S. dollars) in the first two months, up 23.4 percent from the same period last year, a report of the National Bureau of Statistics (NBS) said Friday.

This growth rate was 0.6 percentage point slower that in 2006.

Investment in the real estate, a sector the central government has been desperately trying to rein in, grew 24.3 percent to 178.6 billion yuan, according to the report.

Investment in projects authorized by the central government increased by 21.7 percent and in local government-approved projects by 23.6 percent over the same period last year.
Among the industries, the railway sector saw a 97.2-percent increase year on year; investment in coal mining grew 2.3 percent; and petroleum and natural gas was up 3.3 percent.

Thursday, March 15, 2007

Jones Lang LaSalle opens its 1st Vietnam office in Ho Chi Minh City

Jones Lang LaSalle opens its 1st Vietnam office in Ho Chi Minh City
Ho Chi Minh City, March 13, 2007 – Vietnam’s consistent high economic growth and political stability in the last ten years offer unlimited opportunities to foreign investors despite the challenges that the market presents. With the increase in foreign investment in the country and the improvement of the legal system, it is forecasted that the real estate sector will progress from a state of immaturity to one of sustainable growth and development in the near future. This is according to a report titled “Destination Vietnam - The Final Frontier?”, released by Jones Lang LaSalle, one of the world’s leading real estate services firm, which officially opened its first Vietnam office in Ho Chi Minh City today.

“The influx of foreign investment into Vietnam and the improvement in the country’s legislative system make it a viable destination for both corporates and developers,” says Mr Andrew Brown, Managing Director, Jones Lang LaSalle Vietnam. “We at Jones Lang LaSalle are excited to be a part of Vietnam’s growth and our business in Vietnam is gaining strong momentum. We offer a full range of services including capital markets, transaction management services, tenant representation, leasing, consultancy, research, valuations, property management and integrated facility management services. Since we began operations in Vietnam, we have been providing real estate advice and services to a growing list of multinational companies in the property, technology, consumer products and financial services industries including investment funds, Microsoft, Procter & Gamble and IBM,” Mr Brown adds.

Jones Lang LaSalle’s report on Vietnam also highlighted that despite the current optimism, there are notable constraints and obstacles on moving forward. These relate to what the government needs to address as well as what domestic and foreign investors and occupiers are required to accept as part of the fabric of operating and doing business in Vietnam.

Mr Buu Le, Senior Manager, Consultancy and Research states, “Vietnam’s economic growth, increased living standards, emerging consumer trends, rapid urbanisation, emerging tourism industry and growing foreign investment offer attractive opportunities for foreign and domestic property investors alike. Ho Chi Minh City and Hanoi are Vietnam’s two main metropolitan centres for investments given their attractive population profile and strategic location.”

“Vietnam’s real estate market is viewed as promising and opportunistic. Despite this optimism, market challenges exist such as the country’s low administrative efficiency, low transparency, an underdeveloped legal system and its requirements for significant infrastructural improvements. However, Vietnam’s attractiveness to foreign investors remains but they require long-term commitment, deep pockets, flexibility, patience and persistence,” adds Mr Le.

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Positive Outlook for Vietnam’s Real Estate Sector as Foreign Investments Grow – Add One

Other key highlights of the report include:

1. Over the past five years, Vietnam’s GDP growth rate averaged 7.4% per annum, second only to China. The country’s population profile is positive with 70% under the age of 30. Currently, the manufacturing sector is growing at a rate close to 17% per annum and the services sector is moving up strongly, driven by retail and tourism industries growth.

2. The international ratings agency, Standard & Poor’s has upgraded Vietnam’s financial strength rating. This has contributed to Vietnam’s placing on the radar screen of many international real estate market players. Foreign investment into Vietnam reached USD 10.2 billion in 2006 (a record high) and is expected to reach USD 10-12 billion in 2007.

3. The overall real estate market has a positive and prospective outlook, driven by high economic growth, rising foreign investment and deregulation. Annual overseas remittances, which have been continuously increasing reached USD 4 billion in 2005 and USD 4.5 billion in 2006, have driven demand for better-quality housing. With the foreign investment inflows and tourism rising in anticipation of Vietnam’s accession as the 150th member of the WTO, the demand for offices, shopping centres, hotels and warehouses is growing accordingly. Furthermore, the ratified Real Estate Trading Law which came into effect on 1 January 2007 will free up opportunity to non-resident Vietnamese and foreign property investors.

The above opportunities and the forecast that Vietnam’s real estate sector will move in the direction of sustainable growth and development bode well for the country.

Mr Brown concludes, “We are optimistic about Vietnam’s future and confident that given our strong global and regional network as well as the growing number of our clients looking to make their foray into or expand in Vietnam, Jones Lang LaSalle will be able to capitalize on the opportunities in this emerging market.”

Tanjong Pagar hotel site up for tender soon

An unnamed developer has entered a bid of $79.4 million for a 0.24 hectare hotel site at the corner of Tanjong Pagar Road and Gopeng Street, triggering a public tender for the site. Market watchers, however, reckon that the plot could fetch around $100 million in the tender.

The site has a plot ratio of 8.4, giving it a maximum potential floor area of 19,900 square metres, which means that the trigger price works out to about $370 per square foot (psf) of gross floor area.

However, a price tag of around $500 psf is achievable, said Jones Lang LaSalle Hotels executive vice-president Chee Hok Yean.

‘Looking at past transactions, bids were all around $500 psf,’ Ms Chee said. ‘The winning bid will probably be about the same.’ At $500 psf, the price for the site works out to $107.3 million.

This site is the first hotel site to be triggered for sale from the reserve list in 2007. Under the government’s reserve list system, a site is only offered for public tender if it receives an application from a developer who commits to bid for the site at a price which is acceptable to the government.

URA has received an application from a developer who has committed to bid a price of at least $79.4 million for the site. The government body said that the identity of the applicant will not be released.

URA will launch the public tender for the site in about two weeks’ time. The launch date will be announced later and about nine weeks will be set aside for the tender.

‘The land parcel is conveniently situated in close proximity to the Tanjong Pagar MRT station, which will provide hotel guests the convenience of travelling to other parts of the city and the rest of the island,’ said URA. ‘Complementary retail, restaurant and entertainment uses within the development will also add to the diversity of amenities and vibrancy of the area.’

Source: The Business Times, 15 March 2007

Foreigners make up 30% of non-landed subsale buyers

The Business Times

(SINGAPORE) Foreigners including permanent residents bought 325 private apartments/condos on the subsale market last year, a sharp rise from the 131 units they bought in 2005.

The 325 subsale units foreigners bought last year gave them a 30 per cent share of the 1,075 non-landed homes purchased in the subsale market in 2006. This is higher than a 25 per cent share in the preceding year and the highest level since 1995, according to the latest analysis of caveats by property consultancy DTZ Debenham Tie Leung.

Property market watchers say the knowledge that there's a big enough pool of foreign buyers willing to pick up a home in the subsale market is a key factor fuelling the confidence of property speculators.

DTZ executive director Ong Choon Fah sees the rising prominence of foreign buyers in the subsale market as a reflection of Singapore's rise as a global city. 'Singapore has so much to offer as a package that foreigners still see good value from buying units in highly sought-after projects on the subsale market - even if prices are higher than developers' launch prices for the projects,' she said. 'And these foreigners seem to be buying for investment (rental income) or for their own use - not to flip.'

Knight Frank executive director Peter Ow said: 'If a foreigner wants a certain development and it's sold out, he may have no choice but to buy it in the subsale market. Most of these foreigners are probably looking to stay in the unit.'

Another seasoned agent reckons that speculators - that is, those who aim to sell units in the subsale market shortly after buying them - are predominantly Singaporeans, although there are some foreigners including PRs as well. 'You have to be based here, or have a very good network in Singapore, to make sure you don't miss out on the previews,' he said.

Subsales refer to secondary market deals (that is, properties not bought directly from developers) in projects that have yet to receive Certificate of Statutory Completion. The certificate is typically issued about a year after a project receives Temporary Occupation Permit. Sub-sales are often seen as an indication of the level of speculative activity in the property market.

DTZ's analysis was based on caveats data captured by Urban Redevelopment Authority's Realis system, which allows an analysis of nationalities of buyers in the subsale market, but not of the sellers, many of whom will be speculators. Foreigners' 30 per cent share last year among those who bought units in the subsale market is the highest since 1995. In that year, foreign buyers accounted for 32 per cent, or 961 of the total 3,033 condos/apartments purchased in the subsale market.

Although the number of subsale apartments/condos bought by Singaporeans also increased from 391 in 2005 to 686 last year, their percentage share has declined from 74 per cent to 64 per cent over the same period, reflecting the growing foreigner share.

Indonesians were the biggest group of foreigners who bought non-landed private homes in the subsale market in 2006, followed by Malaysians. Others included UK nationals, Indians, mainland Chinese, Koreans and US citizens.

The Sail @ Marina Bay drew the most foreign buyers in the subsale market last year (41 units). Others include The Coast and Oceanfront (both on Sentosa Cove), The Imperial and Botanic on Lloyd.

While there was a spike in the number of subsale private apartments/condos bought by foreigners last year, the 325 units they picked up in the subsale market formed only 7 per cent of the total 4,739 apartments/condos bought by foreigners last year.

This is an increase from a 4 per cent share in the previous year, but in line with the overall 6 per cent share of subsale deals for overall condo/apartment transactions covering all nationalities in Singapore last year. The number of subsales for condos/apartments in Singapore in Q4 last year was 533, an 85% jump from the preceding quarter and more than double the 208 subsale caveats for non-landed private homes lodged in Q4 2005.

» Who's buying from speculators?


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