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GLOBAL COMMERCIAL REAL ESTATE ROUNDUP
- Singapore's biggest sovereign wealth fund plans $707 Million IPO.
- Egypt overtaking Dubai as hot commercial investment hub.
- Foreign-investor interest growing in Indonesia.
- Police raid offices of Hong Kong billionaire's real estate firm.
- Retail space in Toronto and Montreal averages $300 per sf.
Singapore's GIC Plans $707 Million Fourth-Quarter IPO
Singapore's biggest sovereign wealth fund GIC (GIC: Singapore SE) plans an initial public offering of its logistics business around the fourth quarter to raise at least S$1 billion ($707 million US), sources close to the deal told Reuters.
It is expected to be the biggest IPO in Singapore since CapitaMalls Asia (CMAL: Singapore SE) raised $2 billion late last year and will allow the world's fourth-biggest sovereign fund to raise cash for further investments.
JPMorgan (JPM: NYSE) and Citigroup (C: NYSE) are advising GIC, the Government of Singapore Investment Corp, on the deal.
The IPO will include assets in China and Japan that GIC's real estate unit bought from Colorado-based ProLogis (PLD: NYSE), one of the world's biggest warehouse owners and developers, and some third party assets, one of the sources said.
GIC, with $300 billion in assets, has been actively participating in deals in recent months after it reduced its exposure to equities at the start of the global credit crisis, according to Reuters.
Seek Ngee Huat
GIC RE, whose president Seek Ngee Huat was a former partner at Jones Lang LaSalle, manages a multi-billion dollar global portfolio of property assets, with over 200 investments in more than 30 countries. Real Estate is classified under alternatives and accounted for 12 percent of its assets as of March 2009.
Singapore, Asia's third largest REIT market after Japan and Australia, is home to several large industrial REITs including Mapletree Logistics (MAPL.SISE), (CALT.SISE) and Ascendas (AEMN.SISE).
The real estate assets span multiple property sectors, including office, retail, residential, industrial and hospitality, according to its web site.
Egypt Real Estate Market Forges Ahead in Middle East and North Africa
The Egyptian property market is on course to outperform all other Middle East and North African countries in 2010, according to Zawya.com, an online news service.
Citing a Credit Suisse report, Dubai-based analyst Ahmed Badr says growth in the Egyptian real estate market will be spurred by "strong domestic housing demand recovery that should filter through developers' sales figures this year, especially on the middle income segment," Bloomberg reported.
Khaled Khalil, a real estate analyst at Cairo-based investment bank Beltone Financial, told Daily News Egypt that stocks in the sector had been under-performing, partly due to financial turbulence in Europe.
Still, he added, "activity in the sector has been robust in spite of the global economic downturn and sales have even increased in 2010 so far over the previous financial year, which is not the case in Dubai, where prices have dropped sharply by around 60 percent."
"In Dubai, demand was centered on the expatriate community, and when these individuals' financial situations began to become unstable or unviable, they simply left Dubai. As a result, there was an excess of property due to a sharp drop in demand," he said.
Noting the strength of the Egyptian real estate market this year in contrast to the last, Khalil says, "If you take the real estate firm Talaat Moustafa Group's first quarter 2009 sales, for example, they were in the order of LE 440 million, while for the first quarter of 2010 they were able to attain LE 1.2 billion, which is quite a rise."
Indonesia Emerges as Alternate Investor Market in Asia and Europe
Interest from foreign investors to Indonesia has been strengthening since the first of this year, reports the Jakarta Post.
Citing Anton Sitorus, head of Research Jones Lang LaSalle Indonesia, as its source, the newspaper reports rising optimism and growing investor confidence helped support the tremendous growth in the domestic stock market over the past several months, leading the Indonesian Stock Exchange (ISX) to become the best performer in Asia.
Concerns over the European debt crisis and the recent policy tightening in China have pushed global and regional investors to look for alternative markets, and among emerging countries, Indonesia is considered one of the most promising economies today.
Not only in the stock market, interest from foreign investors in the Indonesian property sector has also begun to increase, according to Sitorus of Jones Lang LaSalle.
A number of fund managers and property developers, mainly from Asian countries like Japan, India and Singapore, are considering investing in the local real estate market.
"While many overseas markets are still struggling to recover from the recent and ongoing crisis in Europe, Indonesia is relatively unaffected by the turmoil due to the fact that the market is primarily driven by domestic demand with very minimum exposure to the overseas investment and foreign pool of buyers," according to the Jakarta Post.
Sitorus adds, "The condition has helped mitigate the negative impacts of unpleasant events in the outside world. This, combined with a long-term positive economic outlook and a relatively calm socio-political environment, has once again put Indonesia back on the radar of international investors, at least for now. "
However, despite growing interest from foreign investors, "we have not seen a significant increase in the number of projects involving foreign investors in the market place," he says. "Similarly, enquiries from foreign individuals to buy property in Indonesia have also not changed much."
Unlike investing through the stock market or through project financing schemes, investing directly in real development projects or by buying property in Indonesia is regarded as difficult and complex for investors and individuals from overseas.
Current laws and regulations and a lack of market transparency are the main concerns hampering foreign investment.
Police Raid Lee Shau-kee's Henderson Land Co. Offices
Lee Shau-kee
Lee Shau-ke, billionaire owner-developer of Henderson Land and Development Co., says the raid should not have been made because nothing illegal has occurred, The Wall Street Journal reports.
The raid follows an announcement by the Hong Kong government last month that its regulatory and law-enforcement agencies were investigating the cancellation of home sales at Henderson Land's 39 Conduit Road Tower development in the high-end Mid-Levels neighborhood.
The company said in June that 20 out of 24 apartment sales at the development had been cancelled by the buyers.
The government announcement followed public concern about the cancellations. Legislators questioned whether the original transactions were authentic.
The sales had drawn intense public and media interest because Henderson Land said in October it had sold a 6,158-square-foot duplex in the development at a record per-square-foot price of $9,200.
That unit was among the 20 canceled sales. Some analysts said the announcements of the sales helped push up prices in the broader property market. Mass-market apartment
prices in Hong Kong soared about 30% last year.
The company said earlier it would take a charge of 734 million Hong Kong dollars (US $94.5 million) against its first-half earnings because of the cancellations.
Following the controversy, the government began requiring property developers to make transaction information available to the public five days after the signing of an initial sales contract.
The government also introduced other guidelines and requirements on home sales that it believes will boost transparency and better protect consumer rights, according to the WSJ.
Please see related Real Estate Channel postings:
- $57 Million Penthouse Sale Flops as Hong Kong Commercial Market Cools, June 25, 2010.
- Frenzy for Hong Kong Luxury Property Continues, May 25, 2010.
- Trophy Home Site in Hong Kong Sells for $233 Million, May 19, 2010.
- Mainline Chinese Buyers Fueling Hong Kong Luxury Condo Sales Market, Feb. 24, 2010.
- Hong Kong Faces Property Bubble Explosion as Home Prices Rise 28% This Year, Oct. 30, 2009.
Toronto's Shopping District Rents Up 7% Over Last year
They are far from the most expensive shopping districts in the world but Toronto's Bloor Street and Montreal's St. Catherine Street retail real estate are averaging $300 per square foot rent annually, according to Colliers International.
In Colliers' latest survey of global retail space costs, Toronto and Montreal were tied for 32nd overall, both with average lease rates of $294.12. Vancouver ranked 51st with an average lease rate of $196.08.
Here are a few global retail rates:
- Champs Elysées in Paris was tops at $1,255.90,
- New York's Fifth Avenue averaged $1,250
- Hong Kong's Russell Street went for $1,205.46
- London's Bond Street leased at $1,174.24 per square foot
"Regardless of what is happening in suburban shopping malls and on secondary streets, there'll be strong demand for the No. 1 retail street in most markets," says Jim Smerdon, Collier's director of retail and strategic planning."
"When you look at who the retailers are on these streets in Canada, for the most part, they're many of the same stores we see in regional shopping centers, but with a higher volume of sales ... they are willing to pay significantly more rent to be (in prime locations)."
Colliers said its latest survey showed retail lease rates declining in most regions for the second year in a row.
But in Canada, the prime shopping district in Toronto was about 7 per cent more expensive than last year, Montreal's top rates were even, while Vancouver's highest prices were down about 17 per cent.
"Yorkville Condos for sale offer all the fine retail Toronto Real Estate one could ever want, along with world-class restaurants, bars and boutiques," according to TorontoCondo.com, an online real estate sales service.
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