Friday, March 6, 2009

Marina Bay Sands To Be 15% Bigger

Source : The Business Times, March 5, 2009

Size increase, due to redesign, partly accounts for higher budget of US$5.4b

Marina Bay Sands, which is targeted to open around the end of the year, will be 15 per cent bigger in terms of gross floor area (GFA).

The four level casino area will, however, only occupy about 3 per cent of the total GFA.

Bigger and better: About 2% of additional GFA is attributed to the $50m to be spent on art at the resort. This is through a URA art incentive scheme which allows developers more GFA if they integrate art permanently in the design of new buildings in the Central Area

The GFA for the integrated resort was initially expected to be 570,000 sq m (6.14 million sq ft). A 15 per cent increase could take it up to 655,500 sq m (7.06 million sq ft).

MBS general manager and vice-president George Tanasijevich said that since the design of MBS was first revealed, the design of the integrated resort (IR) had undergone 'refinement and redesign' to become both 'bigger and better'.

This increase in size also partially accounts for the current budget for the IR which stands at US$5.4 billion, up from previous estimates of US$3.6 billion and US$4.5 billion.

About 2 per cent of additional GFA can be attributed to the $50 million that will be spent on art at MBS. This is through an Urban Redevelopment Authority art incentive scheme which allows property developers of new projects to gain additional GFA, over and above the maximum allowed, if they integrate art permanently in the design of new commercial or residential buildings in the Central Area.

Mr Tanasijevich was speaking at a media briefing yesterday at the construction site of MBS where it was revealed that the IR will now also be 5-storeys higher.

Structural works are almost 75 per cent completed with the structure for the casino building already 'topped up' and the topping up for the three 55-storey hotel towers expected by July.

The hotel towers, which are currently at about the 28-storey level are simultaneously being fitted out.

All this with the aim of opening in time.

While Mr Tanasijevich said they hope to open by the end of 2009, 'or close to it', it is not clear yet which parts of the IR will open first.

He said what will likely open first will be the 'primary contributors of revenue'. He added that MBS was currently in discussions with the authorities on the phasing of the 'progressive opening' of the IR.

Separately, Las Vegas Sands (LVS) chairman and CEO Sheldon Adelson, who was speaking in the US, said that estimates made by analysts for earnings by MBS were 'somewhat low'.

According to a Reuters report, analysts had estimated that MBS could generate Ebitda of between US$500 million and US$900 million.

But citing Singapore's favourable tax regime, Mr Adelson said: 'We will save 25 per cent on average on taxes.'

Mr Adelson's comments come after LVS reported a loss of US$136.5 million in the fourth quarter of 2008, down from a profit of $39.9 million a year ago.

At the time of the filing on Feb 25, LVS also said that it had raised its annual cost savings target to US$250 million.

In addition to this, Mr Adelson said yesterday that it would try and 'squeeze out another US$200 million to US$250 million'. 'If we do that, we are home free,' he added.

According to its Q4'08 filings, LVS has unrestricted cash balances as of December 31 of US$3.04 billion while restricted cash balances were US$194.8 million.

Of the restricted cash balances, it said US$124.1 million is restricted for Macau-related construction and US$61.9 million is restricted for construction of MBS.

Total debt outstanding, including the current portion, was US$10.47 billion. Principal payments required to be repaid in 2009 and 2010 total US$114.6 million and US$197.6 million, respectively.

Property Transactions With Contract Dates Between Feb 9th - 20th, 2009

Guangdong Eases Rules For Developers, Home Buyers

Source : The Business Times, March 5, 2009

Late payment facility in land deals boosts developers' shares

(SHANGHAI) China's southern province of Guangdong will allow real estate developers to delay payments on land purchases for as long as two years as part of measures aimed at supporting the industry. Developers' shares gained.

Wooing foreigners: The Guangdong provincial government has granted equal treatment for home purchases by buyers from Hong Kong, Macau and Taiwan

The provincial government has also granted equal treatment for home purchases by buyers from Hong Kong, Macau and Taiwan, and will encourage local real estate developers listed abroad to sell domestic stock in China, according to a statement on its website.

Home sales in the province, the biggest contributor to China's economy, fell 21 per cent last year, the first decline since 2003, the Guangdong Real Estate Association said in a report last month. The stock of unsold homes rose 37 per cent last year, the association said.

Country Garden Holdings Co, a Foshan, Guangdong-based developer, rose 10 per cent, the most since Feb 6, to HK$1.60 in Hong Kong. Guangzhou R&F Properties Co jumped 11 per cent, the most in almost a month, to HK$6.65. China Overseas Land & Investment Ltd, a Hong Kong-based developer controlled by China's Construction Ministry, gained 4.6 per cent to HK$10.84.

The provincial government said it will allow home buyers to borrow more for 30-year loans. The relaxation on buyers from Hong Kong, Macau and Taiwan is effective until the end of the year.

China's government in July 2006 announced rules barring foreigners who haven't lived or studied in China for a year or more from buying apartments and forbidding the purchase of properties to rent to third parties. -- Bloomberg

Manhattan Prices Fall Most In 5 years

Source : The Business Times, March 5, 2009

Number of 2008 sales falls 23%; units put up for sale jump 41%

(NEW YORK) Manhattan apartment sellers cut prices by the most in five years last year and unsold inventory rose to the highest since 1999 as the economy retreated.

The average listing discount climbed to 4.1 per cent, the highest since 2003, as buyers negotiated for reductions off the asking price. The number of condominiums and co-ops for sale jumped 41 per cent last year to 9,081 even as the median price reached a record US$995,000, appraiser Miller Samuel Inc and broker Prudential Douglas Elliman Real Estate said on Tuesday.

Going cheap: Prices for luxury apartments in Manhattan, or units selling at US$3.5 million and above, are now selling at discounts of about 25 per cent off the asking price

New York City is bracing for a drop in property values after three of the five largest investment banks collapsed. In the Hamptons, on the eastern end of Long Island, prices are already falling. Banks and securities firms have cut more than 180,000 jobs in the past year, according to Bloomberg data, as the recession entered its second year and the global credit crisis forced writedowns and mortgage-related losses of US$1.18 trillion.

'There clearly was long-running irrational exuberance out here in real estate,' said Diane Saatchi, senior vice-president for broker Corcoran Group Inc, in East Hampton. 'It's gone full circle from people who would pay any price because they had to have the house, to people who pick a price and take any house at that price as long as they think it's discounted.'

The median price in the Hamptons, New York's summer playground for the rich and famous, fell almost 13 per cent last year to US$850,000, the first decline since 2000. Discounts on Hamptons homes rose to 11.1 per cent in 2008, according to Miller Samuel-Prudential data.

Wall Street firms are expected to lose US$47.2 billion in 2008 and further shortfalls are expected in 2009, Mayor Michael Bloomberg said last week.

Budget officials assume the city will lose 294,000 jobs from mid-2008 through 2010, including 46,000 in financial industries. The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP.

The firings mirror the national recession that has driven unemployment in January to the highest since 1992 and pushed home prices down the most since the Great Depression.

The securities industry accounted for 51 per cent of the growth in wages in Manhattan's private sector from 2003 to 2007, according to the US Bureau of Labor Statistics. 'Prices have to drop,' Dottie Herman, chief executive officer of Prudential Douglas Elliman, said in an interview. 'They have to, have to, have to - and they have.'

In Manhattan, the number of sales declined 23 per cent last year from 2007, Miller Samuel and Prudential said. Falling sales and rising inventory preceded lower home prices nationwide.

The increase in inventory in Manhattan was largely driven by a slowdown in transactions in the second half, said Jonathan Miller president of Miller Samuel.

The median sales price for the entire year rose 11 per cent to a record US$955,000, according to the report. The gain mostly reflects deals from the first half of the year, before the collapse of Lehman Brothers Holdings Inc, and closings from new condominium developments.

The Miller Samuel-Prudential report also shows the heights that Manhattan's real estate market achieved over the last decade, a period of easy credit.

In 1999, the median sales price of all Manhattan apartments was just US$310,000.

By 2004, it almost doubled to US$605,000. The average price per square foot rose from about US$400 in 1999 to US$1,251 last year, the report said.

The median price of two-bedroom apartments rose 178 per cent since 1999 to US$1.6 million last year. One bedrooms rose by 200 per cent over that time, to a median of US$750,000 last year. Three-bedrooms sold at a median price of US$3.79 million, a 161 per cent increase from 1999.

Prices have also skyrocketed for Manhattan townhouses. In the past decade, the median has risen 156 per cent to US$4.995 million.

They jumped even higher for the category known as 'luxury townhouses', which Mr Miller defines as the top 10 per cent of all sales. The median jumped last year to US$31.8 million, up from US$6.5 million a decade ago.

Now the market is making an about face. Prices for luxury apartments in Manhattan, defined by Ms Herman as units selling at US$3.5 million and above, are now selling at discounts of about 25 per cent off the asking price, she said.

A three-bedroom, three-bathroom condominium on Tribeca's Hudson Street is now selling for US$4.6 million after being lowered almost US$1.3 million since August, according to, a property data service. A condo in Trump Tower on Fifth Avenue in midtown was cut 16 per cent to US$4.95 million since it was first listed in November.

The Financial District, which saw the largest year over year price increase for co-ops in 2007, was the neighbourhood with the largest price per square foot decline in 2008, according the report.

The price per square foot for co-ops there declined by almost 19 per cent to US$857 in 2008, the result of lowered demand spurred by Wall Street layoffs, the report said.

'You're going to see stronger, less attractive numbers' in the first quarter, said Ms Herman.

The reported available inventory tally does not include new developments where units have yet to go on sale, Mr Miller said. 'That is definitely an undercount,' he said. 'There's a lot of shadow inventory in the background.'

The trend is likely to continue, said Damon Liss, an interior designer who is now trying to sell a three-bedroom cottage in East Hampton with a swimming pool for more than US$1 million.

'There's a big disconnect between buyers and sellers,' Mr Liss said. 'Buyers want 50 per cent discounts and sellers don't want to reduce the price at all. That's why transactions are down. Both buyers and sellers are being equally unrealistic.' - Bloomberg

US Pending Home Sales Slump Worse Than Forecast

Source : The Business Times, March 5, 2009

Housing crisis unlikely to bottom out in first half '09

(WASHINGTON) Fewer Americans than forecast signed contracts to buy previously owned homes in January as the housing slump deepened at the start of its fourth year.

The index of pending home resales fell 7.7 per cent after a 4.8 per cent gain in December, the National Association of Realtors (NAR) said on Tuesday.

Affordable: Falling prices and lower borrowing costs have brought more homes within reach of buyers, with the affordability index jumping to 166.8 in January

A lack of credit and record foreclosures that are pushing property values even lower may keep prospective buyers out of the market for much of 2009.

President Barack Obama has pledged to keep more Americans in their homes and create jobs, and Federal Reserve chairman Ben Bernanke on Tuesday said policy-makers may need to expand aid to the banking system.

'There are just too many headwinds for homebuyers - tight credit, mounting job losses and fears of further price declines,' said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. 'The housing market is showing no sign of a bottom. This could be the story for the first half of this year.'

Economists forecast a 3.5 per cent drop in pending sales after an originally reported gain of 6.3 per cent in December, according to the median forecast of 32 economists in a Bloomberg News survey. Estimates ranged from declines of 0.8 per cent to 5 per cent.

Policy-makers may need to boost aid to banks beyond the US$700 billion already approved and take other aggressive measures even at the cost of soaring fiscal deficits, Mr Bernanke said in the text of testimony before the Senate on Tuesday.

The Fed chairman last week warned the recession may last into 2010 unless policy-makers can stabilise the financial system.

Stocks dropped for a fifth day following Mr Bernanke's comments that the banking system still hadn't stabilised. The Standard & Poor's 500 index fell 0.6 per cent to 696.33, the lowest close since October 1996. The yield on the benchmark 10-year note rose to 2.88 per cent at 4.40 pm in New York from 2.86 per cent late on Monday.

Pending resales are considered a leading indicator because they track contract signings. The Realtors' existing-home sales report tallies closings, which typically occur a month or two later. The pending index was first published in March 2005 and included data going back to January 2001.

The group's index decreased to 80.4 in January, the lowest level since records began.

Three of four regions dropped, led by a 13 per cent slump in the Northeast and a 12 per cent slide in the South.

Pending sales increased 2.4 per cent in the West.

Compared with January 2008, pending sales decreased 6.4 per cent.

Sales of previously owned homes, which account for about 90 per cent of the market, fell in January to the lowest level since 1997, according to the Realtors group. New-home purchases, which make up the rest, plunged to the lowest level since records began in 1963, Commerce Department figures showed.

The median price for existing and new houses decreased in January from a year ago, the reports showed.

Falling prices and lower borrowing costs have brought more homes within reach of buyers. The NAR's affordability index jumped to 166.8 in January, the highest level since records began in 1970.

'Even with many serious potential home buyers on the sidelines waiting for passage of the stimulus bill, job losses and weak consumer confidence were a natural drag on home sales,' Lawrence Yun, the group's chief economist, said. 'We expect similarly soft home sales in the near term, but buyers are expected to respond to much improved affordability conditions.'

The S&P's 500 Supercomposite Homebuilding Index fell 20 per cent in the first two months of this year as sales plunged. The index dropped 76 per cent over the last three years. Pulte Homes Inc, the largest US homebuilder, last month reported its ninth consecutive quarterly loss.

Housing-related companies are also struggling. Home Depot Inc, the largest home-improvement retailer, had a fourth-quarter loss, closed its Expo design unit and is cutting about 7,000 jobs.

'The home improvement market in 2009 will remain just as challenging as 2008,' chief executive officer Frank Blake said on Feb 24.

The economy shrank at a 6.2 per cent annual rate in the fourth quarter, the most since 1982, revised government figures showed last week. Home construction contracted at a 22 per cent pace following a 16 per cent decline in the prior quarter.

Policy-makers are counting on a series of steps to stem the deterioration. Mr Obama last month introduced a plan to help as many as nine million people restructure mortgages to avoid foreclosures.

The Treasury Department is doubling the amount of stock purchases of Fannie Mae and Freddie Mac, the mortgage-finance companies now under government control. -- Bloomberg

Down Go Office Rents And Up Go Vacancy Rates

Source : The Business Times, March 5, 2009

(SEATTLE) Brookfield Properties Corp, owner of New York's World Financial Center, said that office rents are falling and vacancy rates rising in Manhattan in the wake of mounting losses tied to the collapse of credit markets.

'Clearly, rents are going down, both downtown and in midtown' Manhattan, Brookfield chief executive officer Richard 'Ric' Clark said on Tuesday at the Citigroup 2009 Global Property CEO Conference in Naples, Florida. The presentation was webcast.

'At the moment, vacancy rates have moved more meaningfully in midtown than in downtown. Midtown's been on the losing end of firms that have gone out of business.'

Mr Clark said that he expects vacancy rates in downtown New York to rise in the 'low teens' over the next two years.

Brookfield has interests in 108 properties with 74 million square feet in the US and Canada. It also has 4,339 residential development lots, mostly in Colorado and Alberta.

The company's portfolio is 96.3 per cent leased and only 3 per cent of leases will renew in 2009 and about 4.5 per cent in 2010, Mr Clark said. He said that next year's rollover rate could fall to less than 3 per cent by the beginning of 2010.

Brookfield has enough cash flow to meet maturing debt obligations and sees 'no need' to cut its dividend, Mr Clark said. The company may buy back debt, he said.

Brookfield said that it expects Bank of America Corp to make a decision by summer on whether to renew a lease at the World Financial Center now occupied by Merrill Lynch & Co, which the bank bought on Jan 1, Mr Clark said. -- Bloomberg