Business Times - 12 Aug 2010
Yanlord posts 9% rise in Q2 profits to $99.9m
By LYNETTE KHOO
YANLORD Group posted a 9 per cent rise in net profit for the second quarter ended June 30 to $99.9 million, citing an increase in gross floor area (GFA) delivered.
Revenue grew one per cent from a year ago to $622.1 million during the quarter, while gross profit margin inched up 1.3 percentage points to 63.4 per cent, the China-based high-end residential developer said. Besides the continuing delivery of its existing project at Yanlord Riverside City (Phase 3) in Shanghai, the group also delivered two new projects namely Yunjie Riverside Gardens (Phase 2) in Shanghai and Yanlord Peninsula (Apartment-Phase 2) in Suzhou in the second quarter.
This raised its GFA delivered in the second quarter by 7.3 per cent to 132,638 sq m. Average selling price held steady at 23,156 yuan per sq m, compared to 23,152 yuan per sq m in the Q2 last year.
On a fully diluted basis, the group's Q2 earnings per share was 4.76 cents, compared to 4.69 cents for the same quarter last year.
Riding on improved GFA delivered, Yanlord's revenue grew in terms of Chinese yuan but the strengthening Sing dollar against the yuan resulted in its revenue dipping one per cent from a year ago to $795.2 million.
Yanlord chairman and CEO Zhong Sheng Jian noted that demand for high quality residential developments in China continues to drive the group's revenue performance.
He said the group will continue to focus on developing quality residential apartments in prime locations within high growth Chinese cities.
In the second half, Yanlord will launch a new batch of its existing projects, namely Yanlord G53 Apartment in Nanjing, Yanlord Townhouse in Shanghai and Yanlord New City Gardens (Phase 2) in Zhuhai. It will also commence the construction of Yanlord Sunland Gardens (Phase 1) in Shanghai and Yanlord Yangtze Riverbay Town (Phase 3) in Nanjing.
As at June 30, the group had total pre-contracted sales of about $1.13 billion which will be progressively recognised as revenue in subsequent financial periods. Its cash and cash balances grew to $1.43 billion as at June 30 from $1.27 billion a year ago, boosted by the issue of US$300 million senior notes in April.
Prior to the release of its Q2 results, Yanlord's shares slipped 1.64 per cent lower to $1.80 by market close.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Thursday, August 12, 2010
BT : Key property markets in Asia may face slower H2
Business Times - 12 Aug 2010
Key property markets in Asia may face slower H2
China govt cooling moves likely to dampen sector sentiment; 'policy risks' seen for S'pore, HK
(HONG KONG) Major property markets in Asia are likely to face a slower second half because of policy risks and an expected increase in housing and office supply, after some developers had a positive first six months.
China Overseas & Investment Ltd, the country's top listed developer by market value, Hong Kong tycoon Li Ka-shing's Cheung Kong (Holdings) Ltd and Singapore's CapitaLand Ltd, South-east Asia's biggest developer, all benefited from strong housing prices in their key markets earlier this year.
However, Chinese government moves to cool its red-hot property market by raising mortgage rates and downpayments for second and third homes, restricting lending and building affordable housing will likely dampen sentiment in the sector.
The Hong Kong and Singapore governments are also wary of asset bubbles, although moves so far have been muted compared with China. Hong Kong raised the stamp duty on purchases of luxury apartments, while Singapore slapped a new stamp duty on homes sold within a year of purchase and set a cap on loans.
'Every market is a little different in the coming six months,' said Nicole Wong, regional head of property research at CLSA. 'Some markets might have policy risks and that would be for Singapore and a little bit from Hong Kong. And there will be some markets where policy risks have peaked in our view, like China.'
In China, harsh policies announced in mid-April have caused transaction volume in some cities to plummet. The government also plans to roll out more affordable housing as, increasingly, more Chinese are complaining that they are priced out of the market.
'The main uncertainties are policy risks that are starting to unfold in China, and especially as inventory starts to build up, you should see price cuts emerge in September, October,' said UBS head of Asia real estate research Eric Wong.
A third of China's developers, such as China Vanke Co Ltd and Evergrande Real Estate Group Ltd, have reduced prices, and more are likely to do so in the second half, which is expected to affect their bottom lines, analysts said.
First-half operating profit at China Overseas rose 48 per cent to HK$7.98 billion (S$1.39 billion) in the first half, with analysts polled by Thomson Reuters IBES expecting HK$14.75 billion, up 20 per cent annually and indicating an easing second half.
In other markets, Japan's top developers Mitsui Fudosan Co Ltd and Mitsubishi Estate Co Ltd face an office space oversupply and lower rental revenue in the second half.
Japan was the world's second-biggest property market but was set to be overtaken by China in 2011, real estate services company DTZ said earlier this year.
In Australia and India, rising interest rates might dampen buying sentiment for the rest of the year.
The bright spots are likely to be some emerging markets, such as Thailand, where the government has been helping to support the markets as internal political strife impacted its economy.
The property sub-indexes in Thailand and the Philippines have been outperforming their broader stock markets. Ayala Land Inc, the Philippines' largest property company, said second-quarter net income was up by more than a third. Thai Land & Houses, Thailand's top home builder, said it expects revenue to grow by 15 per cent this year, better than analysts' forecasts, despite a weak second quarter.
CLSA had a preference for stocks of Thai developers and Singapore Reits (real estate investment trusts), Ms Wong said, but declined to identify any picks\. \-- Reuters
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Key property markets in Asia may face slower H2
China govt cooling moves likely to dampen sector sentiment; 'policy risks' seen for S'pore, HK
(HONG KONG) Major property markets in Asia are likely to face a slower second half because of policy risks and an expected increase in housing and office supply, after some developers had a positive first six months.
China Overseas & Investment Ltd, the country's top listed developer by market value, Hong Kong tycoon Li Ka-shing's Cheung Kong (Holdings) Ltd and Singapore's CapitaLand Ltd, South-east Asia's biggest developer, all benefited from strong housing prices in their key markets earlier this year.
However, Chinese government moves to cool its red-hot property market by raising mortgage rates and downpayments for second and third homes, restricting lending and building affordable housing will likely dampen sentiment in the sector.
The Hong Kong and Singapore governments are also wary of asset bubbles, although moves so far have been muted compared with China. Hong Kong raised the stamp duty on purchases of luxury apartments, while Singapore slapped a new stamp duty on homes sold within a year of purchase and set a cap on loans.
'Every market is a little different in the coming six months,' said Nicole Wong, regional head of property research at CLSA. 'Some markets might have policy risks and that would be for Singapore and a little bit from Hong Kong. And there will be some markets where policy risks have peaked in our view, like China.'
In China, harsh policies announced in mid-April have caused transaction volume in some cities to plummet. The government also plans to roll out more affordable housing as, increasingly, more Chinese are complaining that they are priced out of the market.
'The main uncertainties are policy risks that are starting to unfold in China, and especially as inventory starts to build up, you should see price cuts emerge in September, October,' said UBS head of Asia real estate research Eric Wong.
A third of China's developers, such as China Vanke Co Ltd and Evergrande Real Estate Group Ltd, have reduced prices, and more are likely to do so in the second half, which is expected to affect their bottom lines, analysts said.
First-half operating profit at China Overseas rose 48 per cent to HK$7.98 billion (S$1.39 billion) in the first half, with analysts polled by Thomson Reuters IBES expecting HK$14.75 billion, up 20 per cent annually and indicating an easing second half.
In other markets, Japan's top developers Mitsui Fudosan Co Ltd and Mitsubishi Estate Co Ltd face an office space oversupply and lower rental revenue in the second half.
Japan was the world's second-biggest property market but was set to be overtaken by China in 2011, real estate services company DTZ said earlier this year.
In Australia and India, rising interest rates might dampen buying sentiment for the rest of the year.
The bright spots are likely to be some emerging markets, such as Thailand, where the government has been helping to support the markets as internal political strife impacted its economy.
The property sub-indexes in Thailand and the Philippines have been outperforming their broader stock markets. Ayala Land Inc, the Philippines' largest property company, said second-quarter net income was up by more than a third. Thai Land & Houses, Thailand's top home builder, said it expects revenue to grow by 15 per cent this year, better than analysts' forecasts, despite a weak second quarter.
CLSA had a preference for stocks of Thai developers and Singapore Reits (real estate investment trusts), Ms Wong said, but declined to identify any picks\. \-- Reuters
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : Top bid for Ubi Rd industrial site springs a surprise
Business Times - 12 Aug 2010
Top bid for Ubi Rd industrial site springs a surprise
Oxley Rising offers $158.1m for 60-year leasehold site, double analyst estimates
By UMA SHANKARI
(SINGAPORE) Oxley Rising has emerged as the top bidder for a 3.5 hectare industrial site at Ubi Road 1.
The company, which offered $158.1 million or $169 per square foot per plot ratio (psf ppr) for the 60-year leasehold site, trumped 10 other bidders including Qingdao Construction (Singapore) and Sim Lian Holdings.
This is twice what analysts estimated the site could fetch when it was launched in June. Then, consultants reckoned that it could fetch $61-$75 million, or $65-80 psf ppr.
'The overwhelming interest in the land parcel could be due to (Singapore's) strong GDP growth of 18.8 per cent year-on-year in Q2 2010, driven by a 44.5 per cent year-on-year surge in manufacturing. This coupled with a robust take-up of 2.67 million sq ft of factory space in Q2 2010 could have created more interest in the land,' said Li Hiaw Ho, executive director of CBRE Research.
Oxley's top bid of $169 psf ppr was almost twice the amount of recent winning bids for industrial sites in Ubi that were awarded.
In fact, the last time that the $100 psf-level was breached for industrial land was in August 2009. Then, KNG Development paid $105 psf ppr for a 30-year leasehold site at Kaki Bukit Road 2.
And the only industrial land awarded under the government land sales programme for more than $169 psf ppr was a 30-year leasehold site that One Commonwealth now sits on. In November 2007, Chiu Teng Construction paid $170 psf ppr for it.
Oxley's top bid was 8 per cent higher than the second highest bid, which was from Qing Quan and Qingdao Construction (Singapore).
The two companies put in a joint bid of $146.6 million or $156 psf ppr. Oxley's bid was also 159 per cent higher than the lowest bid of $61.1 million or $65 psf ppr from Soilbuild Group.
The site has a land area of 375,150 sq ft and a 2.5 plot ratio, giving it a maximum gross floor area of 937,875 sq ft. It is zoned for 'Business 1' use, which means it can be developed for various uses such as clean and light industry - which includes computer software development, printing and publishing, assembly and repair of computer hardware and electronic equipment.
Mr Li said that the the breakeven cost for this development is estimated to be about $380 psf to $400 psf.
CBRE's data shows that in the first seven months of 2010, upper floor strata-titled units in the 60-year leasehold Vertex, located along Ubi Avenue 3, sold for between $309 psf and $409 psf while the ground floor units sold for $371 psf to $550 psf.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Top bid for Ubi Rd industrial site springs a surprise
Oxley Rising offers $158.1m for 60-year leasehold site, double analyst estimates
By UMA SHANKARI
(SINGAPORE) Oxley Rising has emerged as the top bidder for a 3.5 hectare industrial site at Ubi Road 1.
The company, which offered $158.1 million or $169 per square foot per plot ratio (psf ppr) for the 60-year leasehold site, trumped 10 other bidders including Qingdao Construction (Singapore) and Sim Lian Holdings.
This is twice what analysts estimated the site could fetch when it was launched in June. Then, consultants reckoned that it could fetch $61-$75 million, or $65-80 psf ppr.
'The overwhelming interest in the land parcel could be due to (Singapore's) strong GDP growth of 18.8 per cent year-on-year in Q2 2010, driven by a 44.5 per cent year-on-year surge in manufacturing. This coupled with a robust take-up of 2.67 million sq ft of factory space in Q2 2010 could have created more interest in the land,' said Li Hiaw Ho, executive director of CBRE Research.
Oxley's top bid of $169 psf ppr was almost twice the amount of recent winning bids for industrial sites in Ubi that were awarded.
In fact, the last time that the $100 psf-level was breached for industrial land was in August 2009. Then, KNG Development paid $105 psf ppr for a 30-year leasehold site at Kaki Bukit Road 2.
And the only industrial land awarded under the government land sales programme for more than $169 psf ppr was a 30-year leasehold site that One Commonwealth now sits on. In November 2007, Chiu Teng Construction paid $170 psf ppr for it.
Oxley's top bid was 8 per cent higher than the second highest bid, which was from Qing Quan and Qingdao Construction (Singapore).
The two companies put in a joint bid of $146.6 million or $156 psf ppr. Oxley's bid was also 159 per cent higher than the lowest bid of $61.1 million or $65 psf ppr from Soilbuild Group.
The site has a land area of 375,150 sq ft and a 2.5 plot ratio, giving it a maximum gross floor area of 937,875 sq ft. It is zoned for 'Business 1' use, which means it can be developed for various uses such as clean and light industry - which includes computer software development, printing and publishing, assembly and repair of computer hardware and electronic equipment.
Mr Li said that the the breakeven cost for this development is estimated to be about $380 psf to $400 psf.
CBRE's data shows that in the first seven months of 2010, upper floor strata-titled units in the 60-year leasehold Vertex, located along Ubi Avenue 3, sold for between $309 psf and $409 psf while the ground floor units sold for $371 psf to $550 psf.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
BT : OUE strikes a towering deal on Shenton Way
Business Times - 12 Aug 2010
OUE strikes a towering deal on Shenton Way
It snaps up DBS Towers One and Two for $870m as chairman Riady makes statement of intent
By EMILYN YAP
(SINGAPORE) Overseas Union Enterprise (OUE) has bought DBS Towers One and Two for $870.5 million or around $970 per sq ft of net lettable area, inking the largest commercial property deal in Singapore so far this year and perhaps since mid-2008.
The towers at 6 Shenton Way could turn into a mixed office-retail development, under one of several asset enhancement plans the property group is studying.
OUE announced its buy yesterday after the stock market closed. It is using both internal funds and debt to finance the purchase, which should be completed in September or October.
The seller is a Goldman Sachs real estate fund, which looks set to bag a nice profit - it had paid DBS $690 million or around $800 psf of net lettable area for the buildings in 2005.
The last time big office deals appeared in the market was in early 2008 before the global financial crisis erupted. These include the sale of the Singapore Power Building at Somerset Road for $1.01 billion or $1,836 psf of net lettable area.
Speaking to BT, OUE executive chairman Stephen Riady said that the purchase of DBS Towers One and Two is in line with his hopes to grow the company's asset size to around $10 billion in the next five to seven years. As at June 30, the company's assets stood at $2.93 billion.
The 99-year leasehold towers are valued at around $1 billion and they have a remaining lease of 56 years. Both are fully leased to tenants such as DBS Bank, Deloitte & Touche and Aviva.
OUE is considering various options for enhancing the buildings. 'We will not buy any asset and not do anything with it... We see a lot of value that we can create over the next few years,' Mr Riady said.
OUE could be creating more net lettable area at the towers. Even though they have a total gross floor area of around 1.24 million sq ft, the amount of income-generating space stands at just around 883,000 sq ft, he pointed out.
The first few storeys could be set aside for retail space, with offices taking up the rest of the towers, Mr Riady added. 'It's just one possibility. We have a few options which we are studying.'
Market watchers suggested that OUE could build a residential project on the site. The number of condominium developments at Tanjong Pagar has increased over the years, with recent launches such as 76 Shenton selling fast at prices that can exceed $2,000 psf.
Cushman & Wakefield managing director Donald Han said that OUE could consider redeveloping DBS Tower One - the older of the two blocks - into a residential-retail project. It could keep Tower Two as an office block but enhance it for more space.
He added that if OUE seeks approval from the authorities in time, it can even start launching the residential units for sale before 2012, when DBS starts vacating its space at the towers to move to Marina Bay Financial Centre.
Mr Riady said that asset enhancement works are likely to proceed in stages. In the meantime, OUE also stands to benefit from rising office rents at the towers as the leasing market continues to pick up.
According to CB Richard Ellis (CBRE) investment properties executive director Jeremy Lake, rents at DBS Tower One are around $5 psf while those at Tower Two are around $6-6.50 psf. They could go up by some 10 per cent by the end of the year given the recovery in the office market, he said. CBRE brokered the sale of the buildings to OUE.
On top of its property purchase, OUE had something else to cheer about yesterday. It posted a net profit of $16.7 million for the second quarter, reversing from a loss of $47.8 million a year ago.
Higher revenue from its hospitality business and contributions from the new Mandarin Gallery boosted earnings. The top line grew 81 per cent from last year to $51.7 million.
It also helped that OUE did not suffer any property impairment losses in Q2 - it was hit by such a loss of $52.2 million a year ago.
Earnings per share in Q2 was two cents, up from a loss per share of five cents last year. Net asset value per share was $2.28, increasing from $2.07 over the same period. OUE will be paying a dividend of two cents per share on Sept 15.
The counter lost three cents yesterday to close at $2.61.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
DBS Towers: The seller - a Goldman Sachs real estate fund - bought the property from DBS for $690m in 2005. OUE aims to triple its asset size to around $10b
OUE strikes a towering deal on Shenton Way
It snaps up DBS Towers One and Two for $870m as chairman Riady makes statement of intent
By EMILYN YAP
(SINGAPORE) Overseas Union Enterprise (OUE) has bought DBS Towers One and Two for $870.5 million or around $970 per sq ft of net lettable area, inking the largest commercial property deal in Singapore so far this year and perhaps since mid-2008.
The towers at 6 Shenton Way could turn into a mixed office-retail development, under one of several asset enhancement plans the property group is studying.
OUE announced its buy yesterday after the stock market closed. It is using both internal funds and debt to finance the purchase, which should be completed in September or October.
The seller is a Goldman Sachs real estate fund, which looks set to bag a nice profit - it had paid DBS $690 million or around $800 psf of net lettable area for the buildings in 2005.
The last time big office deals appeared in the market was in early 2008 before the global financial crisis erupted. These include the sale of the Singapore Power Building at Somerset Road for $1.01 billion or $1,836 psf of net lettable area.
Speaking to BT, OUE executive chairman Stephen Riady said that the purchase of DBS Towers One and Two is in line with his hopes to grow the company's asset size to around $10 billion in the next five to seven years. As at June 30, the company's assets stood at $2.93 billion.
The 99-year leasehold towers are valued at around $1 billion and they have a remaining lease of 56 years. Both are fully leased to tenants such as DBS Bank, Deloitte & Touche and Aviva.
OUE is considering various options for enhancing the buildings. 'We will not buy any asset and not do anything with it... We see a lot of value that we can create over the next few years,' Mr Riady said.
OUE could be creating more net lettable area at the towers. Even though they have a total gross floor area of around 1.24 million sq ft, the amount of income-generating space stands at just around 883,000 sq ft, he pointed out.
The first few storeys could be set aside for retail space, with offices taking up the rest of the towers, Mr Riady added. 'It's just one possibility. We have a few options which we are studying.'
Market watchers suggested that OUE could build a residential project on the site. The number of condominium developments at Tanjong Pagar has increased over the years, with recent launches such as 76 Shenton selling fast at prices that can exceed $2,000 psf.
Cushman & Wakefield managing director Donald Han said that OUE could consider redeveloping DBS Tower One - the older of the two blocks - into a residential-retail project. It could keep Tower Two as an office block but enhance it for more space.
He added that if OUE seeks approval from the authorities in time, it can even start launching the residential units for sale before 2012, when DBS starts vacating its space at the towers to move to Marina Bay Financial Centre.
Mr Riady said that asset enhancement works are likely to proceed in stages. In the meantime, OUE also stands to benefit from rising office rents at the towers as the leasing market continues to pick up.
According to CB Richard Ellis (CBRE) investment properties executive director Jeremy Lake, rents at DBS Tower One are around $5 psf while those at Tower Two are around $6-6.50 psf. They could go up by some 10 per cent by the end of the year given the recovery in the office market, he said. CBRE brokered the sale of the buildings to OUE.
On top of its property purchase, OUE had something else to cheer about yesterday. It posted a net profit of $16.7 million for the second quarter, reversing from a loss of $47.8 million a year ago.
Higher revenue from its hospitality business and contributions from the new Mandarin Gallery boosted earnings. The top line grew 81 per cent from last year to $51.7 million.
It also helped that OUE did not suffer any property impairment losses in Q2 - it was hit by such a loss of $52.2 million a year ago.
Earnings per share in Q2 was two cents, up from a loss per share of five cents last year. Net asset value per share was $2.28, increasing from $2.07 over the same period. OUE will be paying a dividend of two cents per share on Sept 15.
The counter lost three cents yesterday to close at $2.61.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
DBS Towers: The seller - a Goldman Sachs real estate fund - bought the property from DBS for $690m in 2005. OUE aims to triple its asset size to around $10b
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