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Thursday, September 4, 2008

SunCity still bullish on India

PETALING JAYA: Sunway City Bhd (SunCity), which is launching the RM1.5bil Sunway Opus Grand Residency in Hyderabad in November, does not see the downturn in the Indian property market affecting its venture.

The 35-acre project is a joint venture with Opus Developers & Builders Pvt Ltd and will comprise 3,400 condominium units in five phases when completed.

HSBC Bank plc, in a report last month, said house prices could fall by 25% to 30% across most Indian cities due to high inflation and slower growth.

The Reserve Bank of India, in its quarterly monetary policy review, had hiked the repo rate, which is the rate it lends to banks, by 25 basis points to 9% on July 29 in an effort to curb inflation, which has risen over 12% in recent times.

SunCity chief financial officer Koong Wai Seng said the company had never been “aggressive” in the pricing of its project in India, which is targeted at professionals.

“We’re not building homes in Mumbai or New Delhi where the level of speculation is high.

“No doubt there will be some impact but in Hyderabad, property speculation is minimal. So we don’t envisage taking a hit on profits due to a slowdown,” he told StarBiz yesterday.

Koong said despite the prevailing market conditions, the two private launches done in March and May for Sunway Opus had seen a total take-up rate of 30%.

“While this is not an indicator because the show units are not up yet, we’re confident that the take-up rate will be higher when the show units are opened for viewing in November,” he said. Units are priced at an average RM280 per sq ft.

Meanwhile, Koong said the RM380mil joint venture with MAK Projects Pvt Ltd for the development of 14 acres into a condominium project in Hyderabad was still at the design stage.

The project would feature units with an average built-up of 1,500 sq ft and with an average selling price of RM208 per sq ft.

By The Star (by Fintan Ng)

China may set up real estate investment trusts

BEIJING: China may introduce property trusts this year, giving developers a much needed new source of funding, according to a top industry association official who believes Beijing is easing its tough stance as the property market cools.

The move could come as part of a government change of tack to ease tight monetary policies, many of which have been aimed at the property industry, according to Nie Meisheng, president of the China Real Estate Chamber of Commerce.

Beijing intensified a campaign late last year to clamp down on bank loans to the property sector, asking for higher down payments from homebuyers, as part of a wider effort to curb inflation and rein in runaway growth.

The steps hit home sales - down 50 per cent in Beijing, Shanghai and Shenzhen in July from a year earlier - and prices in some areas of Guangdong province have fallen 25 per cent.

Nie said the measures were aimed at cutting the industry's dependence on bank loans, which account for half of developers' funding, but added that Beijing was keen to ensure the property market did not collapse and hurt the broader economy.

"When one door closes, others will open," she said.

China has given the green light to big developers, such as China Vanke, Poly Real Estate and China Merchant to issue corporate bonds or new shares to replace loans coming due and to fund further expansion this year.

Setting up real estate investment trusts (REITs) - securities that pay rent from their property as dividends - will provide developers with a new avenue for funding, allowing them to effectively sell finished commercial buildings to investors.

"There will be some breakthrough by the end of this year," Nie said, referring to the introduction of REITs in China.

She said China's central bank was soliciting opinions from different government departments but declined to give a timeframe for any launch of REITs, or give any other details.

Many analysts believe property trusts will catch on in China because insurers are keen for stable investments to match their long-term liabilities, especially at a time when their stock investments have been hit hard by rocky markets.

By Reuters

JPMorgan eyes property financing in Japan

TOKYO: JPMorgan Chase & Co said it expects Japan's beleaguered property market to rebound and will use staff gained from its acquisition of Bear Stearns to develop its real estate financing business.

"There is a lot of interest in buying real estate right now both from domestic real estate investors and foreign investors," said Gregory Guyett, chief executive of JPMorgan Securities Japan in an interview.

"And those investors will look for financing. That's a business we think can be attractive."

JPMorgan gained some 80 employees in Tokyo when it took over troubled Bear Stearns in May, which has led it to expand its small real estate securitisation team to about 25 people.

The group, headed by a former Bear Sterns employee Rosario Antoci, may expand further depending on market developments.

In the wake of the credit crunch, a number of banks in Japan have tightened lending to small and mid-sized property firms, leading to a string of bankruptcies. But large firms have been relatively unaffected and some like Orix Corp have seen the downturn as an opportunity to go bargain hunting.

Guyett named Fortress Investment Group, Blackstone Group and Mitsubishi Estate Co Ltd as active investors in Japan.

JPMorgan has also been hiring aggressively to develop its commodities and other businesses, and anticipates overall headcount to increase by about five per cent over the next year.

"You will see us in the early part of next year with a number of senior hires," Guyett said.

Recent hires include Hiroki Kazekami from Goldman Sachs Group Inc as head of its global commodities division in Japan.

"Even though commodity prices will fluctuate up and down, it's a major business that our corporate customers and investor customers are interested in," he said.

It has hired former senior finance ministry official Yoshiaki Kaneko as a senior adviser to strengthen government and regulatory relationships, and Christopher J. LaFleur as head of government relations and corporate responsibility.

LaFleur once served as US Ambassador to Malaysia.

By Reuters

UK takes steps to boost property mart

LONDON: With the British economy forecast to slip into recession, Prime Minister Gordon Brown's government unveiled a raft of measures to perk up the sluggish housing market - and its own flagging fortunes on Tuesday.

The Treasury said homes worth up to STG175,000 (STG1 = RM6.13) would be exempted from property sales tax, or stamp duty, for a year.

The government also laid out steps to help first-time buyers and to help homeowners at risk of repossession.