Britain falling into US-style slowdown

Britain falling into US-style slowdown


PARIS – A HOUSING market in shambles, inflation at the highest level in years and signs that the economy is headed for, or already in, a recession. Sounds familiar? No, it’s not the United States but Britain.

Indeed, it was the run in September last year on a British mortgage lender, Northern Rock, that helped to embed the terms ‘credit crisis’ firmly into the global consciousness.


‘A recession will more likely than not arrive by the end of the year,’ Mr Peter Newland, who covers the British economy for Lehman Brothers in London, said on Thursday, summarising a string of dismal economic data that had led economists to revise their growth forecasts downwards.


The FTSE 100, the benchmark London stock index, has fallen 19 per cent from a high of 6,732.4 that it hit in June last year – just short of the 20 per cent decline commonly said to define a bear market.


Consumer confidence is at the lowest since 1990, as oil prices drive towards US$150 a barrel and unemployment has risen for the past four months.


Like in the US, the main force dragging down the British economy is the collapse of the once red-hot housing market, which enriched many Britons as long as credit flowed nearly as cheaply as in the US.


According to the Nationwide Building Society, a leading British mortgage lender, housing prices have fallen for eight straight months.


Last month, they fell 6.3 per cent from a year earlier, the biggest drop since 1992, taking the price of a ‘typical’ British home down to £172,415 (S$466,141), a decline of more than £13,500 from the top of the market.


The British central bank said on Monday that mortgage approvals in May were at the weakest level on record – only 42,000 for all of Britain, down from 58,000 in April.


As the housing market sputters, consumers have retrenched. Shares in Marks & Spencer, the iconic British retailer regarded as a bellwether of the domestic economy, plunged more than 25 per cent in two days, after it reported a sharp decline in sales.


Unions are agitating for higher wages, even as inflation rose at a 3.3 per cent annual rate in May, above the 3 per cent upper limit of the Bank of England’s comfort zone.


And despite the growing distress of British workers and businesses, economists hold out little hope of monetary policy relief. Economists surveyed this week by Reuters were unanimous in predicting that Bank of England governor Mervyn King and his colleagues on the Monetary Policy Committee would hold rates unchanged at their meeting on Thursday.


Economists said the economy was lagging slightly behind the US business cycle.





Source: Straits Times

Frasers’ serviced apartments goal: Grow to 8,500 by 2010

Frasers’ serviced apartments goal: Grow to 8,500 by 2010


DRIVEN by rising corporate demand, Frasers Hospitality (Frasers) expects to grow its brand of serviced apartments to 8,500 by 2010. This will involve adding 5,000 apartments under the Frasers brand in the next two years.



China, India and Vietnam are three key areas of expansion for the hospitality arm of Frasers Centrepoint, a wholly owned subsidiary of Fraser & Neave. At least 80 per cent of the 5,000 serviced apartments will come under fee-based management, said its CEO Choe Peng Sum. Frasers will acquire the remainder with balance sheet funding.


‘We have been very careful about over-leveraging and over-borrowing,’ said Mr Choe. Frasers currently has a 50:50 debt-equity structure, but hopes to reduce the debt component to reach 40:60 or lower going forward.


Frasers is also looking at more collaborations with private equity funds to acquire serviced apartments.


‘For serviced residences, we’ve seen a lot of pent-up demand,’ said Mr Choe. According to him, multinational corporations have been sending teams overseas to set up new operations, and serviced apartments are aptly positioned to meet expatriates’ extended-accommodation needs.


Yet, the number of serviced residences in major cities such as London and Tokyo add up to barely 10 per cent of total hotel inventory, he noted. On room rates, Mr Choe said: ‘Singapore itself, we have seen year-on-year growth rates of about 26 per cent.’


Occupancy rates are also crossing 90 per cent.


With the large growth potential, Mr Choe shared that Frasers is looking at creating a separate brand of serviced residences to cater to a more dynamic group of corporate guests, or ‘road warriors’.


Hiccups in some economies may create more chances for expansion.


The property market in North America has softened, said Mr Choe, and Frasers is sourcing for deals in New York. In Vietnam, falling property prices also generate investment opportunities. As to whether Frasers will set up a Reit for its properties, Mr Choe said that ‘we are waiting for the right time’.


The US$135 million Fraser Suites CBD in Beijing has opened for operations.


Source: Straits Times


Frasers looking to expand in China, India and Vietnam

Frasers looking to expand in China, India and Vietnam 

Hospitality arm of F&N aims to add 5,000 serviced units over next two years


FRASERS Hospitality, undaunted by the uncertain global economic outlook, is pursuing an aggressive expansion strategy in China, India, Vietnam and other markets.

The hospitality arm of Singapore-listed conglomerate Fraser & Neave is a ‘contrarian’ that aims to add about 5,000 serviced apartments over the next two years, despite fears of a global economic slowdown, said its chief executive Choe Peng Sum.


He sees ‘a lot of pent-up demand’ in cities such as Singapore, London and Sydney – where its residences have enjoyed occupancy rates of more than 90 per cent.


It is also the ‘right time now to get into China’ while growth opportunities are still bright in Vietnam and India, Mr Choe told a media conference yesterday to mark Frasers’ 10th anniversary, as well as to share its expansion plans.


In Singapore, where Frasers already operates two high-end serviced residences, it is planning a third property, but details will be released later, he said.


He added that Frasers has seen a robust 26 per cent rise in average room rates to about $400 per night for certain units in Singapore.


Farther afield, Frasers is also planning to plant its brand in places such as Edinburgh, Bahrain and Perth.


Noting that ‘growth in Asia and Europe (for extended-stay accommodation) is just starting to take off’, Mr Choe said Frasers expects to expand its portfolio to 8,478 units by 2010.


It will focus on China, India and Vietnam, which have strong long-term growth momentum.


Frasers is targeting new property launches in cities where demand for serviced apartments has been driven up by expatriates working for multinational companies that set up shop in these countries.


In China, where Frasers already has 12 properties in key cities such as Beijing and Shanghai under its brand, the company is looking to grow in other cities such as Chengdu, Nanjing and Tianjin.


As for Vietnam, while skyrocketing inflation poses challenges for the hospitality industry, land prices are now becoming ‘more reasonable’ as land owners are more realistic in pricing. This offers opportunities for Frasers to expand there, Mr Choe added.


India is another key growth market for Frasers, which has seven properties scheduled to be launched there over the next three years.


Frasers is also in talks to set up private equity funds to invest in China, India and South-east Asia.


Mr Choe added that plans to inject some of Frasers’ properties into a real estate investment trust are still in the pipeline, but it depends on the ‘right timing’.



Frasers Hospitality chief executive Choe Peng Sum says the company expects to expand its portfolio to 8,478 units by 2010. Besides China, India and Vietnam, it is also planning to plant its brand in places such as Edinburgh, Bahrain and Perth.




Mr Choe says plans to inject some of Frasers’ properties into a real estate investment trust are still in the pipeline, but it depends on the ‘right timing’.


Source: Straits Times

Frasers Hospitality to its grow presence in China, India and Vietnam

Frasers Hospitality to its grow presence in China, India and Vietnam


SINGAPORE : Frasers Hospitality – the property arm of mainboard-listed Fraser & Neave – is planning to grow its presence in the emerging markets of China, India and Vietnam.


Revealing this at a news briefing on Thursday, Frasers said it plans to add about 5,000 serviced apartment units to its portfolio over the next two years. It is scheduled to open 10 new properties this year, and another 25 over 2009 and 2010.


Frasers believes there is room for growth in the serviced apartments sector in China, India and Vietnam, and is pumping in US$135 million for a prime property in the Beijing’s central business district.


That will be part of the 5,000 units that Frasers is planning to add to its portfolio. About 80 per cent will be held under fee-based management contracts.


Frasers has already opened two developments in Tokyo and Hanoi. Eight more will be launched within the next eight months, mainly in China, including a soft opening for its first apartment units in Hong Kong. The target is to open 25 properties within the next two years.


Serviced residences in most Asian countries account for about 10 per cent of the hotel inventory. Frasers said it sees more upside potential in this, especially with increased demand from multi-national corporations.


Choe Peng Sum, CEO of Frasers Hospitality, said: “I think the outlook for serviced apartments is (great). A lot of companies, instead of sending long-term expatriates there for 3-4 years, they are actually bringing project groups over for maybe 1-8 months, where they’ll start up the project and then fly back. That’s exactly where our market is, and a lot of our properties are seeing 80-90 per cent occupancy.”


Frasers is also looking at other opportunities in the Middle East, particularly in Abu Dhabi, Qatar, Oman and Kuwait, on top of recently announced Dubai and Bahrain.


Frasers currently has about 3,500 apartments worldwide, and it expects to have 8,478 apartments by 2010. – CNA /ls


Source: Channel NewsAsia

Frasers Hospitality planning global expansion

Frasers Hospitality planning global expansion


Frasers Hospitality is planning an aggressive expansion globally, with 5,000 serviced apartment units slated for China, India and Vietnam by 2010.


The property arm of mainboard-listed Fraser & Neave then plans to expand its presence in the Middle East, Australia and Europe, and maybe even enter the US.


Among the service apartments that will be launched by 2010, one is a 23-storey prime properrt in Beijing, in which Frasers has invested 135 million US dollars.


But most of the company’s other upcoming serviced apartments will be owned by other parties, and Fraser will only operate them on fee-based management contracts.


In fact Frasers will own only 20 percent of the upcoming 5,000 rooms to be launched in the next 3 years.


Chief Executive Choe Peng Sum said the expansion will help to meet the pent up demand for serviced residences around the world, and especially in cities such as China and India, which are seeing tremendous economic growth.


He said the demand is being created by the fact that many firms are now cutting back on long-term expatriate contracts, and instead sending project teams to stay overseas for just a year or less.


“If you stay for 3, 4, 5, 6, 8 months, to stay in a hotel would be a bit claustrophobic after a while. Yet if you’re not signing 1, 2 or 3-year leases, then you’re not in the apartment or condo market. So we fall right in the middle, where we meet the needs of the mid- to long-term segment.”


After 2010, Frasers plans to expand its presence in the Middle East, with developments slated for Abu Dhabi, Kuwait, Doha and Oman.


Mr Choe added that the company also plans to expand in Australia and Europe, including entry into cities such as Prague, Budapest, Madrid and Barcelona.


He said Frasers is even looking for possible acquisitions in New York, as the US market is now softer in the wake of the subprime and financial crisis.


Source: 938Live

Mapletree full-year earnings dip 3%

Mapletree full-year earnings dip 3%

But operating profit rises 35%; revenue jumps 69% to $365.6m


MAPLETREE Investments posted a 3 per cent dip in net earnings for the year ended March 31, 2008 to $1.04 billion because of lower net revaluation gain and higher net finance cost.


Operating profit, however, rose 35 per cent to $146.9 million on the back of first full-year contributions from VivoCity and St James Power Station (SJPS) and maiden contribution from The Beacon, a residential project at Cantonment Road.


The fully owned subsidiary of Temasek Holdings also achieved much higher occupancy and rental rates from all its investment properties across the board.


Revenue jumped 69 per cent to $365.6 million with VivoCity and SJPS contributing a total $99.5 million and The Beacon contributing $47.5 million.


The Temasek unit booked a net revaluation gain of $879 million (after deferred tax provision) for the latest financial year, lower than the $971.2 million in the preceding year.


Mapletree chairman Edmund Cheng said the group is exploring several mixed-use commercial projects in Vietnam (in Ho Chi Minh City, Hanoi and the provinces abutting them). ‘In line with our business model, we will seed these projects with our own balance sheet, and will consider the possibility of starting a Vietnam-focused fund once we have achieved a significant asset size,’ he said in his message in Mapletree’s latest annual report.


Elsewhere in the report, the group revealed it is ‘in the advanced stage of evaluating several projects comprising a wide spectrum of property types, from office, retail, residential, to industrial and service residential properties, with a view to seed a new Vietnam fund with these assets over the next few months’.


When asked, Mapletree’s spokeswoman said the Vietnam fund will be started within the next 12 months but this will depend on market conditions in Vietnam. The fund size will be at least US$500 million.


Mapletree’s real estate assets, both owned and managed, stood at $8.9 billion as at March 31, 2008, up 59 per cent from $5.6 billion a year earlier. Of these, its third-party assets under management (AUM) amounted to $3.1 billion, an increase of 94 per cent, while the group’s owned assets grew nearly 45 per cent from $4 billion to $5.7 billion.


Fee income, excluding fee income from associates, grew 40 per cent last year. The group’s AUM and fee income will be boosted significantly in the current financial year from the Mapletree India-China Fund launched in April this year and a new Mapletree-Arcapita Bank fund formed to hold the $1.7 billion portfolio of properties acquired from JTC Corp.


In an interview with BT in April this year, Mapletree CEO Hiew Yoon Khong projected the group’s total assets could hit $15 billion to $20 billion in a year.


The India-China fund has secured a US$600 million commitment at the initial closing and is currently marketing its second closing with a target to secure a total commitment of US$1.5 billion.


In Singapore, the group is developing Mapletree Business City, an office and business park with 1.7 million sq ft of total net lettable area and slated for completion in second-half 2010.


It is also developing a 19-storey Grade A office building at Anson Road called Mapletree Anson, which is expected to be ready in mid-2009. These two assets could be potentially sold at some point to the proposed Mapletree Commercial Trust.


This trust was to have been listed here earlier this year holding about $3 billion of the group’s assets in the HarbourFront and Alexandra Precincts with VivoCity as the anchor asset. However, the launch has been deferred due to unfavourable stock market conditions.


Source: Business Times

Mapletree planning $682m fund in Vietnam

Mapletree planning $682m fund in Vietnam


REAL estate firm Mapletree Investments is setting up a US$500 million (S$682 million) fund to invest in properties in fast-growing Vietnam, to be launched within 12 months.

The Temasek Holdings unit said it is setting up the fund to ‘harness Vietnam’s rising development cycle, and to tap into the growing affluence of the middle-class segment of its population’.


Mapletree unveiled its plans for the fund in its recently published annual report.


It is ‘currently in the advanced stages of evaluating several projects comprising a wide spectrum of property types, from office, retail and residential to industrial and service residential properties, with a view to seed a new Vietnam fund with these assets over the next few months’.


Mapletree spokesman Shae Hung Yee said the company plans to launch the fund, which will be at least US$500 million in size, within the next 12 months.


This timeline, however, may be altered depending on ‘market conditions’, she said. ‘We will make sure the time is right before starting any fund,’ she added.


Mapletree’s fund will include its own seed money, said Ms Shae, who added that the firm is considering ‘syndicating the fund’ out to like-minded investors with aligned interests.


The move is part of Mapletree’s efforts to tap into the high growth potential of emerging markets such as China, India and Vietnam, said chairman Edmund Cheng in the company’s annual report.


Mapletree posted a net profit of $1.04 billion for the financial year ended March 31, down 3 per cent from the year before.


On Tuesday, it announced that it had completed a $1.71 billion acquisition of industrial landlord JTC Corporation’s assets in Singapore.


The JTC properties, comprising 39 multi-storey factories and 23 offices and warehouses, had originally been slated for a real estate investment trust. Plans to list the trust were subsequently scrapped due to poor market conditions.


Mapletree owns and manages $5.7 billion worth of real estate assets in Singapore, including the VivoCity mall and St James Power Station. It manages about $4.8 billion worth of assets in the region. The latter figure includes the recent JTC acquisition.


Source: Straits Times

Potential lies in building townships

Potential lies in building townships

KepLand’s projects across the region will yield 54,500 housing units


TOWNSHIP developments in the region can offer large business potential. Tapping into this is Keppel Land, which currently has about 1,300 hectares of such projects across China, Vietnam, Indonesia and Malaysia. These developments are slated to yield 54,500 residential units on completion, and have been launched or planned for launch.


Phase one of a 34-hectare township development in Shenyang, China could be next in line for release in 2009.


According to Keppel Land International’s executive director and chief executive officer Ang Wee Gee, the property developer continues to actively pursue deals in Shenyang. ‘We might be able to announce some interesting deals in the near future,’ he said.


Mr Ang observed that residential prices in Shenyang have increased by an average of 10 to 15 per cent per annum over the last several years and the trend is likely to continue. This is a healthy growth rate because it is driven less by speculation, and more by demand for homes for occupation, he pointed out.


What of the outlook for property developments in Vietnam? Some analysts have been bearish over falling sale prices and expect developers to delay launches. Keppel Land currently has 431 hectares of township developments which have been launched or planned for launch in Vietnam.


Mr Ang said Keppel Land’s deals are ‘above water’ – it acquired seven sites in Vietnam last year on projections of lower selling prices before the property market peaked. ‘If these projects are presented to us today, we will still proceed to acquire them,’ he said.


Mr Ang also said that Keppel Land’s property launches in Vietnam will proceed according to plan.


He believes fundamentals remain strong in growing economies such as Vietnam and China, and factors such as rapid economic growth and urbanisation will continue to boost demand for housing.


There may be short-term market fluctuations but ‘we want to build our presence and that entails a longer term strategy,’ said Mr Ang.


Keppel Land shares closed at $4.96 yesterday, down 7 cents or 1.4 per cent.


Source: Business Times

UK mortgage loans fall to 9-year low in May

UK mortgage loans fall to 9-year low in May


(LONDON) UK mortgage approvals fell to the lowest in at least nine years in May, a sign that the housing slump is deepening.


Banks granted 42,000 loans for house purchase, compared with 58,000 in April, the Bank of England said in London yesterday. The result was the lowest since the bank’s series began in 1999. Economists predicted a reading of 51,000, according to the median of 26 estimates in a Bloomberg News survey. House prices fell the most in seven years last month, Hometrack Inc said yesterday.


The UK’s worst property downturn since the early 1990s is threatening to tip the economy into a recession. While Bank of England governor Mervyn King says there will be ‘extremely weak activity’ in the housing market, the fastest inflation in a decade is standing in the way of lower interest rates.


‘For approvals to fall by so much in one month having already collapsed over the last year underlines the ferocity of the housing market slowdown,’ said Alan Clarke, an economist at BNP Paribas SA in London. The report ‘suggests the pace of house price declines will continue or even accelerate and the risks to economic growth have also risen’.


The dearth of credit and slowing economic growth pushed property values down one percent last month from May, the most since records by market researcher Hometrack began.


Trevor Williams, an economist at Lloyds TSB Bank plc, said yesterday’s ‘huge drop’ in mortgage approvals shows first-time buyers have ‘been abandoning the market almost completely’. Home loans in May were about one third of last year’s peak.


UK banks are reining in lending following the collapse of the US sub-prime mortgage market, which so far has cost financial institutions worldwide US$400 billion in losses and writedowns.


Shares of property-related companies such as Taylor Wimpey plc and Bradford & Bingley plc have lost more than two thirds of their value this year. Taylor Wimpey, the UK’s largest homebuilder, said yesterday it is in talks with investors to raise money as it writes down the value of land amid a ‘sustained weak’ housing market.


HBOS plc, the country’s largest mortgage lender, and Bradford & Bingley are also turning to investors to replenish their balance sheets.


‘There’s no end in sight,’ said David Tinsley, an economist at the National Australia Bank in London, who formerly worked for the UK central bank. ‘With inflation remaining elevated, we’re unlikely to see rate cuts. But even if we did, it probably wouldn’t help much.’


Mr King said on May 14 that the country may experience the ‘odd quarter or two’ of contraction. The bank predicted that the annual rate of economic expansion will drop to around one per cent early next year, the lowest since 1992.


Consumer confidence fell 5 points to minus-34 last month, the least since 1990, GfK NOP Ltd said in a separate report. UK services output growth held at the weakest pace since 2002 in the three months through April as business services and finance contracted, the statistics office said yesterday.


At the same time, households are still adding to a record £pounds;1.4 trillion (S$3.79 trillion) in debt. Net consumer credit rose £pounds;1.4 billion in May, the most in three months, and credit card lending increased £pounds;0.6 billion, the Bank of England said yesterday.


In April, the Bank of England lowered the benchmark interest rate for a third time since last December to 5 per cent.


Commercial banks aren’t passing that on to homeowners. The cost of a home loan fixed for two years with a 25 per cent deposit rose to 6.27 per cent in May, the highest since 2000, central bank data shows.


Faster inflation may make the central bank reluctant to lower rates further. Consumer prices jumped 3.3 per cent in May from a year earlier, the most in more than a decade, and Mr King said last week that the rate may exceed 4 per cent later this year.


The bank aims to keep the inflation rate at 2 per cent.


‘The bank’s clearly concerned about inflation in the near term,’ said George Buckley, an economist at Deutsche Bank AG in London. ‘But those concerns should give way to growth worries and next year people will talk about when the bank starts cutting rates.’ – Bloomberg


Source: Business Times

Low Keng Huat unit to develop Viet project

Low Keng Huat unit to develop Viet project


A UNIT of Low Keng Huat (Singapore) has agreed to invest in and develop about 267,000 square feet of seafront land in Vung Tau City, Vietnam. LKH (Saigon) Pte Ltd will form a joint venture with the National Oil Services Company of Vietnam to build apartments, office building and a five star hotel with retail outlets.


Source: Business Times