City & Country: Foreign briefs

London’s West End is world’s most expensive office location
London’s West End has leapt four spots to take the title of the world’s most expensive office location for 2010, displacing Tokyo and overtaking Paris, Dubai and Hong Kong. DTZ, which released this survey, says West End’s performance was because of a rebound from a “short, sharp rental correction” that took place in 2008.

“Rising costs in London City will be driven by a sharp recovery in rental growth for prime property in 2010, as recovering demand combines with a rapidly declining supply of new space,” says DTZ. In contrast, Tokyo and Hong Kong rental declined throughout 2009.

“Overall, all of the top 10 global locations experienced either negative or neutral growth in occupancy costs during 2009,” states DTZ, which surveyed 116 business districts in 47 countries and territories.

The biggest decline in DTZ’s study was Singapore and Kiev, with occupancy costs dropping 51% y-o-y in local currency. “The sharpest falls within the global ranking were recorded in markets that have seen significant rental growth in recent years,” says DTZ. Demand for Singapore office space was hit by the economic downturn, at a time when “substantial” new supply came onstream.

For the 2010-to-2013 period, DTZ expects growth in occupancy costs in general to remain “relatively muted”. Singapore occupancy cost, for example, is expected to drop 1.8%.

“This reflects the global economic outlook that is having an impact on firms’ hiring decisions and consequent demand for office space, resulting in weak rental growth in the near term,” the firm adds.


Colliers International in US$1.9 billion merger with First Service Real Estate Advisors
Colliers International and First Service Real Estate Advisors (FirstService REA) will be merging their operations and real estate services businesses to form the world’s third-largest property services firm.

The combined entity, which retains the name Colliers International, will employ more than 15,000 people in 480 offices in 61 countries, with total revenue of more than US$1.9 billion (RM6.5 billion).

The merger will change the existing businesses from a network of affiliates to a more centrally owned and operated firm, providing a more consistent and high level of specialised services in all the markets, says Colliers International.


Dubai property firms to shift focus to asset management this year
The Dubai property market is expected to be more sober this year, even as the emirate opens the world’s tallest built structure, the Burj Khalifa. The key now is to work through the oversupply of properties of all kinds, following the earlier decade-long real estate binge, notes property firm Jones Lang LaSalle, in its January issue of Global Markets Perspective.

A debt default was narrowly avoided, as Dubai was rescued by neighbour Abu Dhabi, which signed a cheque for US$10 billion. The market is now expecting Dubai’s companies, including Nakheel, a government-linked developer, to pay closer attention to the huge debt levels estimated at US$80 billion to US$100 billion.

“We will see a shift this year from asset creation to asset management as the market moves into a period of more controlled and regulated growth. We also expect to see a greater emphasis on corporate governance and market transparency, with the increased recognition that improvements in these areas are no longer optional but essential in avoiding the uncertainties that surrounded the recent debt restructuring,” says the firm.


A-REIT’s DPU for 3Q2009 up 13.5% to 3.27 cents
Ascendas Funds Management Ltd, which manages the Ascendas Real Estate Investment Trust, has announced a 13.4% growth in distributable income to S$61.2 million (RM149.4 million) for the three months ended December 2009.

Shareholders can look forward to a distribution per unit of 3.27 cents a share, up 13.5% from the 2.88 cents paid in the year-earlier period.

As at Dec 31 last year, A-REIT had a portfolio of 91 properties with a total asset value of $4.8 billion, playing host to a combined tenant base of some 900 companies, both local and international.

For the current final quarter of FY2009/10, 97.9% of A-REIT’s portfolio has already been committed, expiring only 4.8 years later on average. A-REIT believes that its diversified portfolio will help provide a “high degree of predictability” for its earnings, and allowing it to deliver a return that is “in line” with market expectations.


CapitaCommercial Trust DPU for 4Q2009 up 38.2% to 1.88 cents
CapitaCommercial Trust (CCT), the office REIT under CapitaLand, has announced a 39.3% rise in distributable income to S$52.9 million for the three months ended December 2009. DPU rose 38.2% to 1.88 cents from 1.36 cents, after taking into account an earlier rights issue. The trust also wrote down the value of its properties by $327.6 million to S$5.7 billion, as at end-2009, reflecting a softer market.

CCT is also making adjustments to its portfolio. For example, it is selling one of its properties, Robinson Point, to a private fund managed by AEW Asia for S$203.3 million, booking a S$19.2 million gain from the sale. The 21-storey Robinson Point is located on Robinson Road, and has a net lettable area of 133,133 sq ft. As at last December, it had a “committed” occupancy rate of 94.1%.

CCT is also planning to redevelop StarHub Centre on Cuppage Road, just behind Orchard Road, from a purely commercial property into a mixed resi­dential and commercial development. The change is subject to approval from URA.




This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 791, Feb 1-7, 2010.