The Impact of Singapore Real Estate

singapore real estate

There are 18 total real estate management and development firms in Singapore. The total market capitalisation of the group comes out to be $90 billion. Just how big is this overall? The combined $152 billion capitalisation of the Real Estate Sector compares to $97 billion for the three Singapore banks.

Over the past fifteen years the Real Estate Index generated nearly double the price gains of the Residential Urban

Redevelopment Authority Property Price Index.

Who are the leaders of the pack?

Hongkong Land Holdings Limited (SGX: H78), CapitaLand Limited (SGX: C31), Global Logistic Properties Ltd (SGX: MC0), and City Developments Limited (SGX: C09), are all heavily involved with the development of real estate in the city.

How strong is their influence? What should investors know?

The stocks that of the Real Estate subsectors comprise a mix of Singapore real estate and international real estate and combination of holders of local and international properties.

Income investors should know that the largest dividend among Singapore’s real estate management and development companies comes from Frasers Centrepoint Ltd (SGX: TQ5). Oxley Holdings are the top performing stock of the group. With a 66% total return over the past three years, this is a good stock to watch. On the other hand, blue chip companies such as City Developments and Global Logistic Properties recorded negative total returns of 36.2% and 33.4%, respectively, over the same timeframe.

With a market cap of $21 billion, Hong Kong Land Holdings leads the list. Founded in 1889, the Group owns and operates nearly 800,000 sq. m. of luxury retail property and office space in key Asian cities, primarily Hong Kong and Singapore. The group is incorporated in Bermuda with a standard listing on the London Stock Exchange as its primary listing.

CapitaLand is headquartered and listed in Singapore. It focuses Singapore and China, while identifying Malaysia, Indonesia, and Vietnam as new growth markets.

To learn more, read the Singapore Exchange Limited February 2016 report.

The Strength of Singapore’s Real Estate Market

Singapore is a global city.  In a world tense with harrowing geopolitical tension and economic insecurity, it’s a great place to live. It’s not just a great place to live for one or two years while doing business, but it’s an ideal country to make a permanent home. This is something the country has learned as more people come looking at high-end real estate.

Despite the levying of duties intended to cool Singapore’s market, demand for luxury homes remains high. 

CNBC recently reported on this predicted growth. They spoke with Ong Chih Ching, executive chairman of KOP, in a recent article. She stated, “We are talking about 8 to 10 million [Singapore] dollar ($5.59 to 6.99 million) properties, so that’s a lot of money.”

This revenue leaves more than enough profit more than enough for renovation, according to Ong Chih Ching.

She estimates it will take Singapore another two or three years for the city to fully get on track with world markets. 

One company invested in luxury projects is the ten year old Singapore-based real estate and hospitality company KOP. Their portfolio of high-profile projects such as the Ritz Carlton Residences, Singapore’s Prudential Tower, Franklyn Hotels & Resorts, and Hamilton Scotts, to name a few.

Dubai Holdings was the major shareholder in KOP. When Ong made a management buyout of the 51 percent stake that the group held in KOP, she launched her visibility as one of the most powerful entrepreneurs in Asia.  She was even named one of 50 Power Business Women in Asia by Forbes in 2014.

With big dreams and the spirit to realize visions in real estate, Ong is a powerful leader in Singaporean real estate. Her next project is a colossal indoor winter resort in anticipated to open 2019 in Shanghai. With an estimated building cost of 3 billion yuan ($455.89 million), KOP is working with Chinese developers and city developers toward its completion. 

With KOP and Ong at the helm, luxury real estate in Asia is alive and well.

Big Hotel to Sell for $203m

Big-Hotel

A Hong Kong-based private equity group, Gaw Capital Partners (GCH), is slated to purchase the Singapore Big Hotel for $203 million. In the past, GCH has restored iconic hotels like the Hollywood Roosevelt in Los Angeles and The Strand in Yangon.

CGH directors Kenneth Gaw, Alan Lee Kam Hung, and Lee Wei Hsiung have been in the midst of acquiring Big Hotel since mid September. The 16-story, 308-room hotel offers accommodations for a range of visitors categorized into “hipster,” “rainmaker,” “explorer,” and “lover.”

According to the Straight Times, hotel investment in the region remains steady with an emphasis on larger, more mature markets. Singapore’s market has slowly started to strengthen as the Singdollar appreciates in value. Moreover, the CGH group has a positive reputation when it comes to high growth results. Since 2005, Gaw Capital has raised equity of US $5.22 billion and currently controls US $10.61 billion in asset management.

Although quite a large project, GCH has also been reported to have purchased Seattle’s tallest tower, the Columbia Centre for approximately $700 million as well as Hong Kong’s flagship InterContinental Hotel for US $938 million. They are expected to close later this year.

Booming Business for Rooftops

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As available real estate space in Singapore rapidly declines, businesses and event organizers are looking for alternatives via rooftop rentals. From highly coveted Orchard Road and the Central Business District to Chinatown, wide open rooftop spaces are available for the taking. More office and commercial buildings are converting drab rooftop spaces into restaurants, event venues, and urban gardens. Since last year, People’s Park Complex, an open-air carpark, was deemed one of the best nightlife spots in the city. Lepark, the manager of the 63,000 sq ft venue has been dedicated to consistently organizing outdoor events at the unexpected location, hosting concerts, craft markets, film screenings, and a yoga festival. .

The Getai Group has been equally dedicated to co-organizing public activities and events and joined forces with Lepark and TAJ back in May to produce the Getai Ethnica music festival as part of the Singapore Heritage Festival. The event attracted approximately 3,000 people over two days. Getai Ethnica mixed the world jazz sounds of Qilin Group with the acoustic songwriting of the HubbaBubbas followed by a performance from TAJ. TAJ is a Singapore based instrumental jazz hip-hop band comprised of Timmy D, JR, and Audrey 10k.

Open-air rooftop venues were particularly popular throughout the summer. In July, a concert featuring YouTube sensation Us The Duo performed at “A Rooftop Affair.” It allowed people to experience Singapore city from a very different perspective. According to Edmund Chye, executive director of Chye Lee & Sons, “In space-starved Serangoon Garden and Singapore in general, it’s difficult to find a space where the community can come together to bond.”

In addition to entertainment, rooftops give consumers access to urban farms. Bjorn Low, co-founder of the urban farming company, Edible Garden, has been on a mission to provide the city with numerous rooftop urban farms. Since last October, he and his team have been able to turn a 3,300 sq m garden on top of Wheelock Place into a vegetable patch.

Although there are various rooftop spaces available, this isn’t a quick fix for the lack of space available in the city. Moreover, because space is limited, many rooftop bars are tiny and can feel claustrophobic. What’s most important is that Singapore real estate investors now have more options – and the people love it.

Relief for Singapore Real Estate Market?

Singapore Housing

Relief is possibly on the way for the Singapore private property market. This year, the industry struggled due to falling prices and a general lack of enthusiasm. Ever since the government stepped in and enforced limits on financing, the Singapore market has rapidly begun to fall behind. And although buyer disinterest continues, developers are hopeful that 2016 will be more prosperous.

In the first six months of the year, real estate services JLL estimates only 3,496 private residential unit sold, a 21 percent decrease compared to last year. The lack of sales has nose-dived prices. Property prices are projected to reach a total decline of 6 percent by year’s end. Developers typically shy away from giving discounts any more than 15 percent of the initial asking price even in such a difficult situation. Fortunately, the upcoming general election has generated buzz around the potential end of government cooling measures in the near future.

Since 2009, the Singapore Government has placed restrictions on the housing market aimed at foreign demand in an attempt to stabilize market prices. Singaporeans currently have to pay an Additional Buyers Stamp Duty of 7 percent on their second home, and 10 percent on the third. Management companies are in hopes that the September or October general election will work in the favor of Singaporeans, rolling back additional fees.

In the current state of affairs, sellers aren’t the only ones feeling pressure. Renters currently face a dilemma due to a strong demand-supply imbalance. While 26,000 housing units are expected to be completed by year’s end, last year’s peak demand only hit just above 15,000. This year isn’t projected to be much different. This makes it difficult for renters to raise their tenants rent, hoping to keep up with the competition. A slow decline in the expatriate population further skews the issue.

With the continuos decline in rent, sellers and renters can only hope for a turn-around in this fall’s general election.

Square Yards Acquires Singapore Luxe Real Estate

Square-YardsA couple of weeks ago, Singapore-based real estate firm, Luxe Real Estate was acquired by Square Yards. Square Yards is the top pan-India organized real estate advisory group, toting a strong presence in 20 cities and 5 countries around the world. With over 600 employees and counting, the acquisition of Luxe Real Estate firmly places Square Yards in the top 30 Singapore-based agencies by number of agents. With direct access to prime Singapore Real Estate, Square Yards intends to hold a dominant position in the International real state market. Data from the International Project Marketing division in Dubai suggests high demand from influential counties like the United Kingdom and Malaysia. Square Yards hopes to reach the same level of presence in Asia.

Prior to the acquisitions, Luxe Real Estate offered investment, marketing, sales and rental services for private luxury and properties on its own. It will now operate in conjunction with Square, providing expertise in Australia, Hong Kong, Malaysia, Thailand, Indonesia, and China. The joining between Luxe and Square Yards appears to be favorable and both teams are looking forward to the merge. Each company provides and unique outlook and niche market, forming the ultimate package.

Luxe Real Estate was recently founded in 2014 by Calvin Chao, an individual with a particularly strong background in domestic and international luxury real estate. Square Yards was establish only a year before in 2013. The company will bring it’s 500 A grade developers to the Luxe team.

Over the next two quarters, Square Yards intends to expand it’s global reach into 20 additional markets.

Top Residential Locations of the World’s UHNW Population

According to the 2015 Global Luxury Residential Real Estate Report by Sotheby’s International Realty, the top cities for ultra high net worth residents are:

  1. New York, USA
  2. London, UK
  3. Hong Kong
  4. Los Angeles, USA
  5. San Francisco, USA
  6. Washington D.C., USA
  7. Singapore
  8. Dallas, USA
  9. Mumbai, India
  10. Paris, France

Ultra high net worth (UHNW) is defined by those with a net worth of US$30 million or more. There are approximately 211, 000 individuals worldwide who meet this requirement and each person averages 2.7 properties. The report also states that “United States is the most popular country for foreign UHNW individuals looking to buy secondary residences.” As you can see from the list, the United States holds the majority of UHNW residents worldwide. Also important, the world’s UHNW population grew 6% between 2013 and 2014, increasing the demand for luxury properties. Luxury real estate is deemed as any property valued at US$1,000,000 or more. Amazingly UHNW individuals tend to own at least 2 properties, and many have 3 or 4. These estates are purchased primarily for practical and business reasons, but emotional satisfaction plays a vital role as well.

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New York City Luxury Apartment

The report graciously breaks down the typical profile of luxury property owners by city. For example, the average UHNW New York resident is 60 years old, occupied in banking, investment, or finance, and has a median net worth of US$120 million. Sotheby’s CEO Kathryn Korte reported that a new record was set in Manhattan for the most expensive co-operative apartment ever sold at $70 million in 2014. It later broke the record again at $71.3 million. Interestingly, the report also claims that the emerging UHNW class from China and Russia are primarily younger, self-made individuals. China’s UHNW population has an average net worth of US$141 million and often elects to live in neighboring countries like Hong Kong and Singapore.

Definitely take a moment to read through the report for some interesting information regarding the world’s elite, where they chose to live, and how it affects the global real estate market.

Luxury Real Estate in Toronto

Toronto has been the fastest growing luxury real estate market in the world. According to a new report, conducted by Christie’s International Real Estate, Toronto was ranked the world’s hottest luxury real estate market.

The demand for mega-mansions and penthouses has grown substantially as wealthy buyers search for alternative investments such as collectible real estate. Toronto ranked 10th on the report’s luxury index overall but ranked first on the luxury thermometer. The city saw a 37 percent increase in luxury home sales in 2014, an incredible number especially when compared to the 4 percent mark a year before.

A large influence in the recent trends within the Toronto real estate market has been the low supply of homes available. This has pushed relatively average homes into the $1 – $2 million range and homes in more desirable neighbourhoods into the $2 – $4 million range. Furthermore, the housing shortage has pushed many luxury condo prices above the $1 million threshold.

Anthony S Casey Singapore

Toronto has a vibrant luxury real estate market (photo: Getty Images)

The houses and condos on the market are moving quickly, with prime properties finding a buyer within 31 days after listing on average. The fact that houses are moving quickly can have an influence on these soaring prices as home buyers do not have as much room to bargain because if they don’t act quickly, someone else will.

The luxury real estate market is booming as affluent investors continue to look to purchase unique and incredible real estate as a collectors items. Demand is growing among affluent Americans and Europeans as well as billionaires from unstable economies such as Russia and Middle Eastern countries who are looking for property investments to showcase in their portfolios. In addition, an influx of buyers from China has resulted following the country lifting a ban on investing overseas.

“People want trophy homes,” according to Eyal Ofer, a Monaco-based shipping and real estate magnate. “They’re a scarce commodity. And they’re better than gold because you can boast about it.”

The average starting price for a luxury home, in the areas Christie’s study took place, was $2 million. They defined luxury homes as having a combination of location, such as a prominent street address, and amenities such as privacy, urban conveniences or collectible architectural quality.

African Real Estate Investment Eyes Long Term

What’s causing the sudden interest in African real-estate and motivating international investors to seek out new prospects on the continent? According to Knight Frank, the world’s leading real estate consultancy headquartered in England, investors are currently attracted to the growth potential within African markets which makes good real estate highly desirable by investors abroad as well as investors within the African continent.

Knight Frank’s Africa Report 2015 points to projections on population growth across the continent by the year 2100 as a leading factor in investor interest. By 2100, it is projected that Africa’s population will quadruple to 4 billion meaning that 40% of the world’s population will reside within Africa. In Nigeria, which happens to be Africa’s largest economy with a GDP of $593 billion, the population is set to top nearly 1 billion by 2100.

Anthony S Casey

View of Victoria Island, Lagos, at night. Nigeria has Africa’s highest GDP

Impressive, right? And the growth has already begun across the continent. One of the fastest growing economic regions in the world is Sub-Saharan Africa and within the next five years 13 of 20 fast-growing global economies are projected to be within Africa. Luanda, the capital city of Angola currently has one of the highest office rents in the world at $150 per square feet. This is driven by lack of availability in the face of high demand for office space from the oil and gas sector. Adding to this, the population of Luanda is expected to grow by 70% by the year 2025.

Population growth is often accompanied by a growing middle class, and urban regions across the entire continent are seeing such growth. Retailers in particular are rushing to snatch up excellent real estate deals. Chinese investors are already active within real estate development across Africa and the experts at Knight Frank are also paying attention to more investment activities come out of South Africa, with more capital flowing in from South Africa into the northern regions than ever before.

This century will prove to be exciting for the entire African continent and it is clear that investors of all types are playing the long game when it comes to investing within Africa. However, it is doubtful that we will need to wait until 2100 to see some amazing developments coming out of these economies with growth well underway.

Vietnam Real Estate on the Rise

The Vietnamese real estate market is experiencing new life. Following almost a half decade of stagnation, as a result of the property bubble burst in 2009, the Vietnamese economy is rebounding and the real estate market is improving as a result.

New government policies, renewed interest by foreign investors, positive regional trends and the improving economy have all contributed to the recent real estate trends.

Anthony S Casey

Foreign investment is surging in Vietnam

As a result of revised policies, foreigners are now allowed to own property in Vietnam. The strong signs of recovery have already attracted foreign investors to fund over 1,600 projects. Investors see promise in the Vietnamese market because of the its high demand, young population and stable economy.

In early 2013, the Vietnamese government introduced a $1.4 billion stimulus package to offer low interest loans for the purchase of social housing in an effort to revive the real estate market. While only 14.5% of the package was distributed, the program was successful at stabilizing the market and increasing the number or real estate transactions.

The Vietnamese economy grew beyond expectations last year — gross domestic product growth reached 5.98% — and the economy shows no signs of slowing down. A $2.34 billion stimulus is expected for this year to support the commercial housing segment.

International property agencies forecast investment value in Vietnam to increase 5% this year to $118 billion. The investment growth is supported by a number of factors which have created a prime market environment. This include new private equity real estate funds, increase in institutional investors’ allocations for Asia Pacific, growing activity by Asian institutional investors and adequate debt financing.

However, there are some policies still in place which could potentially limit the market from reaching its full potential. The real estate investment trust (REIT), which is a popular method to raise funds around the world, is not currently available in Vietnam. However, the Vietnam State Securities Commission has stated that they are going to work on making amendments to allow for REIT funding in Vietnam. This announcement is a positive sign for Vietnam, as the real estate sector will need continued funding to take advantage of this remarkable market situation.