Wednesday, October 30, 2013

Asia Life Co's

Asian Insurers to Invest $75 Billion in Global Real Estate as Regulations Ease 

According to global real estate consultant CBRE, the increasing liberalization of regulatory restrictions on Asian insurance funds could lead to an additional US$75 billion entering global real estate markets by 2018, with New York and London among the key targets.
Insurance companies in Asia are generally under-allocated to real estate because of stringent regulations, especially around overseas assets. Most of their overseas allocations are in liquid and transparent assets such as equities, cash, fixed income and government bonds. This situation is changing as several countries such as China, South Korea and Taiwan have started to allow overseas direct investments, higher allocation to real estate and a simplified approval process.
The asset size of the Asia insurance sector is also growing fast, having increased 13% between 2008 and 2013. CBRE predicts that the combined effect of an increase in Asian insurers' asset sizes and increasing liberalization will result in their investment assets growing from US$130 billion in 2013 to US$205 billion in 2018. This would translate into additional inflows of about US$75 billion into real estate - including direct and indirect real estate investment.
Compared to mature markets, there is a lack of investible assets in Asia. This, coupled with the recent rule relaxations, means more Asian insurers are investing in global markets. In 2013 alone, there were about US$2.4 billion of direct commercial real estate purchases by Asian insurers outside Asia Pacific. Typically, these insurers have a strong preference for trophy assets in gateway cities, particularly when they make their first overseas investments. The top cross-border destinations are London and New York, though it varies by country where their insurers are looking to invest.
Chinese and Taiwanese insurance companies are likely to be more active in overseas real estate markets given lack of opportunities and low yield levels for prime core assets in their domestic markets. Direct real estate investment will be their preferred channel given their preference for full ownership. Japanese insurance firms are expected to stay in domestic markets as they have been hurt by overly aggressive overseas investments in the 1990s. South Korean insurance companies have invested overseas over the past years and they have accumulated experience in overseas real estate markets. CBRE expects that Korean insurers will use more indirect channels to expand their global portfolios.
Marc Giuffrida, Executive Director, CBRE Global Capital Markets tells World Property Channel, "Given the low yield levels and the shortage of investable stock, particularly stabilized income producing assets in domestic markets, Asian insurance companies will have to explore opportunities in overseas markets. The lack of overseas real estate investment experience and the need for regulatory approvals is likely to mean activity will be limited initially to larger insurance companies with strong financial capability securing assets in major global cities, however as experience is built up we expect the tier two players to emerge in cross-border acquisitions and explore indirect strategies."
Ada Choi, Senior Director of CBRE Research also commented, "CBRE expects the increase in capital deployment to real estate by Asian insurers will grow largely in tandem with the total asset size of the sector in the next five years. Looking ahead to the longer term, liberalization for insurance companies will speed up the pace of international real estate investments by Asian insurance companies. We expect that further relaxation on overseas real estate investment will take place as regulators gain more confidence about overseeing such investments and insurance firms become savvier about investing globally."
According to the insurance regulators in 10 Asia jurisdictions, total insurance assets reached the level of US$6.7 trillion in Asia as at the end of 2013, higher than US$5.8 trillion in US and US$3 trillion in the UK. Japan is the largest insurance market by assets, controlling US$3.3 trillion of assets while the rest is largely held by insurers in China, South Korea and Taiwan. These four countries collectively control about 90% of the insurance assets in Asia.
Giuffrida further added, "Asian insurance companies have seen the positive results pension plans and sovereign funds have achieved from increasing their exposure to global real estate. Importantly there is now evidence and precedence in place which both regulators and investment committees can point to which may relieve concerns around the risk/return tradeoffs."
Industry statistics indicate that at the end of 2013, the real estate makes up on average just 2% of Asian insurers' portfolios - US$130 billion, which includes direct real estate and indirect real estate investments as well - which comprises 1.0% in China, 1.8% in Japan and 2.4% in South Korea. By comparison developed markets typically allocate 4-6% of their assets to real estate, while the figure stands at 6.7% for the US and 5.1% for the UK. For Asia, Taiwan stands out as the one market that has relatively high real estate allocation of 4.8%; however, this capital has been trapped within Taiwan itself, with overseas investments only allowed since 2013.
Asian insurers are also growing rapidly, particularly over the past five years, due to a low penetration relative to the west combined with fast economic growth. Insurance premiums in China alone have grown by over 10% per year on average for the past five years. Moreover, insurance business in Asia still has significant potential to grow.
Country by Country: How De-regulation is Happening
Countries around Asia are taking differing approaches to liberalization:

  • In ChinaSouth Korea and Taiwan, relaxation of real estate investment among insurance companies has accelerated over the past two years by increasing their maximum real estate allocation and permitting as well as streamlining the procedures in investing in property abroad.
  • China allowed insurance companies to invest abroad in 2012 and increase the maximum allocation in real estate (both domestic and foreign) from 20% to 30% of total assets in February 2014.
  • The Taiwanese regulator has allowed insurance companies to invest overseas since 2013 and is permitting insurance companies by using shareholder loan for their overseas acquisitions.

WPC News | Rise of Insurance Investment in Asian Real Estate - CBRE

Source: CBRE Research
-  World Property Channel
With over US$14 billion (S$17.84 billion) available for overseas property investment, Chinese insurance funds will likely target high transparency markets such as Singapore, Canada, US and the UK, revealed a CBRE report.

In fact, prime high-end office properties in core international cities are expected to be highly sought due to "scarcity of investable prime properties in first-tier Chinese cities and the short-term risk from the oversupply in second- and third-tier Chinese cities", the report said.   

While still new in cross-border real estate investment, Chinese institutional investors have ramped up investments in overseas property, on the back of local currency (RMB) appreciation, abundant liquidity, limited investment channels in China and the relatively lower valuation of overseas assets.

Notably, the total assets of China's national insurance institution amounted to US$1.2 trillion (S$1.53 trillion) in 2012. The new government policy allows these institutions to invest up to 15 percent of their total assets in "non-self-use" real estate. "

By this measure, there is in excess of US$180 billion (S$229.32 billion) currently available for real estate investment. Based on patterns of insurance fund allocations witnessed in developed countries in recent years (with most insurance funds typically allocating up to six percent of their assets to direct property investment) and assuming an 80:20 split between domestic and overseas market, it is estimated that Chinese insurers could invest up to US$14.4 billion (S$18.35 billion) in overseas real estate," noted the report.

Responding CBRE's Executive Director, Global Capital Markets, said: "Chinese insurance institutions are already well established in domestic markets, but following a series of government policy changes, they will look to target overseas commercial real estate markets."  "The insurance industry, in particular, is thriving; buoyed by ever-increasing funds they will target gateway cities around the world such as London, New York, Toronto, Singapore and Sydney in increasingly large amounts. 

The low liquidity, value-added potential and stable cash flow of prime office and retail assets offers a perfect match for these investors," he added.   --Yahoo! Finance Singapore

Sunday, October 27, 2013

Bugis Junction

Situated directly above a Mass Rapid Transit station, Bugis Junction connects 63 reconstructed and preserved shophouses along Victoria Street, Middle Road and North Bridge Road. 

Bugis Junction consists of four sections. They are Bugis Junction Tower, Parco Bugis Junction, BHG Bugis Junction and InterContinental Singapore.

Reconstruction permitted the glass arcade to be structurally embedded within the shophouse forms, freeing space within the internal corridors and unifying the old and new. The two- and three-storey structures reinforce a local identity, though historic memory is juxtaposed with large-scale, modern structures which bookend the site — a 16-storey, 400 room InterContinental Hotel, and a 15-storey office block. The result is an urban intervention that implants a 21st century network of public spaces within the city’s rooted fabric.
   >>   MORE

The project comprises 1,283,000 sq ft.

Bugis Junction has won a number of architectural awards:
International Council of Shopping Centers (ICSC) - Professional
Glasstech Asia Glass Architecture Design Competition: Winner
5th SIA Architectural Design Awards
International Council of Shopping Centres (ICSC) Innovative Design & Construction of a New Project: Merit
4th SIA Architectural Design Awards: Honourable Mention

Saturday, October 26, 2013


  • Almost 4,000 new hotel rooms coming on stream in 2016 including the 314-room Oasia Hotel Downtown in the city centre and the suburban 451-room Holiday Inn Express Singapore Katong   >> MORE


Parco to quit Millenia Walk after losing millions there

A change of scene: Pontiac Land Group, which owns and manages Millenia Walk, is in the midst of working out plans for the space that Parco will leave behind. 

[SINGAPORE] Japanese mall and department store operator Parco will be vacating its 83,000-square foot premises at Millenia Walk late next month, after racking up losses over the years which run to millions of dollars.
The Business Times understands that its lease ends in March and that it is looking to continue operations in another mall, though this is likely to be on a smaller scale, with about 10,000 sq ft of space to accommodate its food, cafe and restaurant operations. These are largely located on the third level of the department store currently, said to be the only part of Parco that is doing well.
Pontiac Land Group, which owns and manages Millenia Walk, is in the midst of working out plans for the space that Parco will leave behind. It revealed that no other tenant was leaving apart from Parco.
Said Michael Su, CEO of Pontiac Land: "We will be taking Parco's departure as an opportunity to reposition and focus on a renovation and enhancement exercise. In Q2, we will unveil exciting plans for the mall."
Talk in the market is that Pontiac is considering converting the retail space for hotel use, as those it owns in the area, such as Conrad Centennial Singapore and the Ritz Carlton Millenia Singapore, have been performing well. The site Millenia Walk sits on is the same parcel of land that houses the Ritz Carlton and Conrad Centennial Singapore. It has been zoned for hotel use under the Master Plan 2008.
But Mr Su dismissed such talk, saying: "We view retail as a viable business and with Parco's departure, we are taking this opportunity to reposition our mall."
Parco's departure from Millenia Walk comes after it chalked up millions of dollars in losses after tax from continuing operations each year since it moved to the mall in 2010. In 2011, it incurred as much as $8.7 million in losses, filings with the Accounting and Corporate Regulatory Authority (Acra) showed. In 2012, it made a loss of $3.4 million.
Its performance over the past few years contrasts sharply to the time when it first started here in 1995. At that time, it managed what was known as the Parco Bugis Junction shopping complex and a department store at the mall.
Some market observers had predicted that it would not do well, but Parco Bugis Junction managed to register sales of $110 million in its first full year and more than $22 million in rental revenue.
Parco sold its stake in Bugis Junction in 2005, and was the appointed retail manager for The Central mall at Clarke Quay between 2006 and 2009.
The Singapore department store is fully owned by Parco Co Ltd, which has 19 stores in Japan, where it has built a strong reputation for creating successful, bustling shopping complexes out of the most unlikely locations.
Its store at Millenia Walk covers three floors; it includes popular ramen joints such as Keisuke Tokyo and Nantsuttei and restaurants such as Saboten, Tomi Sushi and Ma Maison, which are located on the top floor.
Parco is also involved in a fashion design incubator project called Parco next NEXT, where local designers undergo a structured training and mentorship programme and set up shop on the second floor of the department store.
This is a joint initiative between Parco and the Textile & Fashion Federation (Singapore) (TaFf), with support from government agency Spring Singapore.
But designers who have set up shop there complain that sales have been poor.
Said one designer, who declined to be named: "We are doing very badly. There are very few customers. It's practically a ghost town."
In response to BT's query on the Parco next NEXT programme, Spring Singapore said it was launched in 2010 and will "run to its fruition" till March this year.
Yeo Meow Ling, deputy director of lifestyle at Spring Singapore, said: "This incubator programme has successfully groomed 55 designers to date and met its objectives."
Going forward, Spring Singapore will continue to help local designers by leveraging on alternative or existing avenues, added Ms Yeo.
"New-to-market designers who are interested to start their own business can tap the ACE start-up grant. Designers who are keen to gain working experience in the fashion industry can go through TaFf to be matched with suitable local fashion companies.
"Spring Singapore will work with existing designers who remain committed to grow in the fashion industry both locally and internationally. Furthermore, designers can seek Spring's support to upgrade their business capabilities using Spring's Capability Development Grant (CDG)."   --  2014 January  BUSINESS TIMES