Opportunities for property investors

THESE are troubled times, and the global real estate sector has borne the brunt of the sub-prime fallout.

But now the property world is turning its attention to Asia as investors are hoping that 2009 will be the year to begin picking up undervalued assets ahead of economies in the region emerging from the global financial crisis, say the organisers of Cityscape Asia.

The annual real estate exhibition and conference – which is being held in Singapore from today until Thursday – comes amid talk of ‘green shoots’ of recovery for the Singapore and global economies.

Cityscape Asia focuses on all aspects of real estate development.

The real estate investment market in the Asia-Pacific region and the rest of the world saw a further contraction of market volume in the first quarter of 2009 against the backdrop of the global financial turmoil and the sustained problem of a credit crunch. However, analysts are beginning to see opportunities as the world and Asia rides out the crisis.

‘Established firms, family enterprises and individuals with cash reserves, limited debt and an appetite for risk are expected to be among the first to begin searching the Asian market for bargains in the coming months,’ said Graham Wood, group exhibition director of Cityscape.

This year’s Cityscape Asia will examine topics relevant to the downturn such as surviving the global financial crisis, the future for real estate funds, and markets to invest in for long-term growth and returns.

But long-standing topics such as Asian real estate investment trusts (Reits), green investments and the retail scene in Asia will also be explored.

More than 4,000 top deal-makers from leading developers, banks, institutional investors and investment authorities, as well as senior officers from the foremost private equity funds and investment advisory firms will gather in Singapore over these three days to discuss key issues and investment opportunities.

This year, more networking functions and face-to-face interaction have been factored in to ensure that delegates have ample opportunity to conduct real business at Cityscape Asia. Participants could well walk away from the conference with signed deals.

Cityscape Asia is an extension of the successful Cityscape Dubai exhibition, which has grown to include Abu Dhabi, India, Saudi Arabia, Russia, the United States and Latin America.

The Singapore conference will focus on Asia. It will discuss and debate the recovery, opportunities, and the strategies adopted by leading real estate investment and development firms across Singapore, Malaysia, the Philippines, Thailand, Vietnam, Hong Kong, Indonesia, China and India.

In its recent inaugural Asia-Pacific investment market overview report, Colliers International said that opportunities remain in the region for investors. ‘Although the regional real estate investment market in Q1 2009 was relatively quiet and despite the fact that the market will continue to be challenged by the economic environment for the rest of 2009, we believe there are still potential investment opportunities in the region in the coming quarters,’ said Piers Brunner, Colliers’ chief operating officer for Asia.

Real estate investment yields in the Asia- Pacific region have gone up further by 25-75 basis points in the first quarter of the year as investors held back from entering the real estate market, Colliers said. This should make investing more attractive now compared to a few quarters ago.

One market that will be much debated at this year’s Cityscape Asia is China. ‘In current times, the brightest light glows in China with the economy seeing a huge inventory adjustment,’ said DTZ in April.

In the first quarter of 2009, mainland China’s residential property sector staged a recovery of sorts, with transactions in some cities rebounding to levels not seen in years. However, the recovery did not spill over to the commercial sector as office markets in the major cities remained sluggish with fewer transactions amid declining rents and prices. A recovery in China could do much to help property markets in the rest of the region, analysts said.

Cityscape Asia also incorporates a host of ‘mini events’ designed to create business opportunities, such as developer project showcases, interactive discussion forums and investor roundtables.

Developers and other stakeholders from Europe and the US will be at Cityscape Asia looking for Asian investors. In its May bulletin, Citi Private Bank said that it expects to see a new global consumerism marked by a thrifty West and an affluent East, which should see investment flow from the East to the West.

Just one example – Philippe Chaix, director of La Defense, the prime office district of Paris, will be in Singapore during the conference to discuss the future of business property in the French capital, specifically, what it means for Asian investors.

London is also expected to get its share of attention. Asian interest in London properties is growing on the back of a devaluation in the pound, market watchers say. For example, the value of the British pound has fallen about 30 per cent against the Singapore dollar since December 2007. With London property prices down by about 15 per cent from their peak, Singaporean investors could reap savings of about 45 per cent off prices if they choose to invest in London.

Source : Business Times – May 2009

China property recovery not expected till H2

Prices need to fall further before buyers are attracted, says Goldman Sachs

China’s real estate developers do not expect the property market to recover until at least the second half of this year, as prices need to fall further before attracting more buyers, according to Goldman Sachs Group Inc.

‘A sustainable property market is out of sight,’ Goldman Sachs analysts Thomas Deng and Kinger Lau write in a report, which was based on observations from company visits in southern China and published yesterday.

Home prices in China fell 0.9 per cent in January, the second consecutive monthly decline and the longest losing streak since the government started issuing the data in August 2005. Property prices more than quadrupled in the five years through 2007 as urban incomes rose.

Goldman Sachs said that a recent increase in property transactions is not evidence of the market bottoming out. The analysts visited China Vanke Co, the nation’s largest publicly traded developer, Shenzhen Investment Ltd and Gemdale Corp.

Sale volumes in the southern city of Shenzhen, bordering Hong Kong, more than doubled to 787,800 square metres in December from 358,300 sq m in November and 338,000 sq m in October, according to a report by property agency DTZ earlier this month. House prices in the city dropped 16 per cent in January from a year earlier.

Source : Business Times -  Feb 2009

HK developer ups luxury home prices

 

After selling 150 units in 10 days, they plan a 5% raise

Sun Hung Kai Properties Ltd, Hong Kong’s biggest developer by market value, is raising prices for a new luxury residential project by 5 per cent after selling 150 units in 10 days.

‘The response has been so good, we are raising the prices gradually,’ Victor Lui, executive director of Sun Hung Kai Real Estate Agency, said in a phone interview yesterday.

The builder, which released 200 apartments at its Kowloon project in the first launch, sold the 150 units for HK$14,000 to HK$20,000 a square foot, generating HK$3.5 billion (S$689.2 million) revenue, Mr Lui said. It’s now selling three-bedroom units at the project, called The Cullinan, for HK$14,700 to HK$21,000 a square foot, based on Bloomberg calculations using his figures.

The sale may indicate investment in Hong Kong’s luxury homes is picking up, Centaline Property Agency Ltd, one of the city’s biggest real-estate agencies, said. Prices of luxury homes, defined as those worth at least HK$10 million, fell 19.2 per cent in the fourth quarter from a year earlier, CB Richard Ellis Group Inc said last week.

‘There’s a bunch of cash-rich people out there who prefer holding real assets such as property, gold as they become more wary of other financial investments,’ said Wong Leung-sing, an associate director at Centaline. ‘Under the current environment, The Cullinan sale has exceeded expectations and it’d be a harbinger of an increasingly active investment luxury market.’

Sun Hung Kai’s shares rose as much as 4.2 per cent on the news, the most since Feb 9. They traded 0.8 per cent higher at HK$60.65 at 3.05pm Hong Kong time, while the Hang Seng Property Index, which tracks the shares of six developers, advanced 2.7 per cent.

The number of units sold and the revenue generated were earlier reported by the South China Morning Post.

Prices fetched at The Cullinan may entice Hang Lung Properties Ltd, Hong Kong’s fourth-biggest developer by value, to sell units at its nearby Harbourside project, analyst Manfred Ho said. Shares of Hang Lung rose as much as 6.9 per cent yesterday, snapping a nine-day losing streak. They traded 4.7 per cent higher at HK$14.30.

Hang Lung has ‘quite a big number of unsold units at The Harbourside, so if The Cullinan is selling well, definitely they will be one of the direct beneficiaries’, said Mr Ho, a Hong Kong-based analyst at BOC International Group.

Hang Lung has about 2,000 homes unsold at its Harbourside and Long Beach developments in Hong Kong, as it held back apartment sales last year after prices fell as much as 25 per cent from last year’s peak.

Sun Hung Kai may start selling the second batch of units next week, Mr Lui said, adding that the developer will decide on the number after wrapping up the first launch. Buyers in the first launch included investors from China, he said.

Sun Hung Kai is also in the final stages of negotiating the sale of four penthouse units, Mr Lui said. One of them, a 4,000 square-foot duplex, is priced at HK$50,000 a square foot while the other three smaller ones at more than HK$30,000, he said.

Standing at 270 metres, The Cullinan will be Hong Kong’s tallest residential project and includes 825 units.

Still, some analysts said prices for The Cullinan are not enough to lift the entire Hong Kong property market, which is weighed down by a recession and rising unemployment.

‘Hong Kong’s economy is really dependent on the financial sector, which is volatile, and trade, where we don’t see any sign of improvement,’ Cusson Leung, an analyst at Credit Suisse Group AG, said yesterday.

Hong Kong’s economy slid into a recession in the third quarter, its first since 2003, as the global slowdown hurt domestic spending and demand for exports.

Unemployment rose to 4.6 per cent in the three months ended Jan 31, the highest rate since September 2006, the government said on Feb 17.

Home prices on the Peak, Hong Kong’s most-expensive residential area, slumped 30.5 per cent in the fourth quarter of 2008 from a year earlier, the steepest decline since the Asian financial crisis in 1998, CB Richard Ellis said last week. The average price was HK$16,678 a square foot, it said.

Hong Kong’s record price for a luxury home was for a house in Sun Hung Kai’s Severn 8 project on the Peak that sold in the first half of last year for almost HK$56,000 a square foot.

Source : Business Times – Feb 2009

China moves to help housing market

 

Beijing may scrap curbs on purchases of second homes, official media say

China is considering a package of measures to provide long-term support for its residential housing market, including the scrapping of curbs on purchases of second homes, official media reported yesterday.

The China Securities Journal quoted an unnamed, authoritative source as saying that the National Development and Reform Commission, the top economic planning agency, was now reviewing proposals submitted by the construction ministry.

The package would aim to increase demand for owners to improve their homes, cut tax costs for people buying and selling homes, and help low-income people buy homes, the source said.

There are also proposals for the government to buy a small amount of housing stock to help it prevent excessive price fluctuations, and for steps to ensure that home buyers and developers receive ample long-term financing, the newspaper added.

Developers would be allowed to create real estate investment trusts (Reits) as soon as possible to bolster their funding, while rules restricting the amount of institutions’ investment in property would be abolished or relaxed.

The newspaper did not say when the package might be introduced.

The Shanghai Securities News quoted Cheng Siwei, an influential former lawmaker, as saying that the government had placed residential housing on its list of 10 major industries, which would receive policy assistance.

But it remains unclear what specific policies will result from this, partly because the authorities are still debating whether a policy package should focus on the property market’s current slump or its long-term development, the newspaper added.

Two government sources told Reuters yesterday that the State Council, or cabinet, did not plan to include the property sector in its list of industries to receive formal assistance packages.

Since last year, the government has announced a range of steps to aid the real estate market. In December, it cut business and transaction taxes for real estate sales, and said it would let people buy second homes on the same preferential terms normally reserved for those buying first homes, if floor space per person were lower than the average for the city where the homeowner lived.

Source : Business Times – Feb 2009

Property buyers hit a bump on sliding valuations

Banks slash loan amounts before disbursing them

The rapid slide in property prices has resulted in some banks slashing the loan amount to borrowers just before it is disbursed. This has put property buyers in a quandary, forcing them to either top up the difference or pay a penalty for backing out of the loan offered.

And valuers have become the latest ‘villains’ as borrowers find it harder to get home loans to match their purchase prices. ‘I don’t tell people I’m a valuer,’ sighed Lydia Sng, Knight Frank executive director.

Bankers agree that the time lag between the loan offer and disbursement can result in a final smaller loan. The loan offer, while based on an indicative valuation, contains a clause that it is subject to a formal valuation.

But borrowers who want to cancel the loan are hit with a punitive 1-1.5 per cent cancellation fee. Also, by this time, it would be hard to back out because they would have already committed to the purchase of the property.

The wobbly market is not helping. A Citigroup report last month said that, in the high-end segment, properties have seen price corrections of about 35 per cent from a year ago and they could fall by another 30-40 per cent this year.

Ms Sng said the problem is with the valuation process. ‘They’ll give us a call with the address, we’ll give a range as we’ve not seen the property. It’s a bit like calling the doctor and telling him your symptoms and asking for a diagnosis,’ she said.

Gregory Chan, OCBC Bank head of secured lending, said: ‘It is possible to receive a lower formal valuation on a property compared to the initial indicative valuation. To mitigate this, as well as to ensure valuations are realistic, OCBC Bank does not rely solely on a single valuer for indicative valuations,’ said Mr Chan.

A DBS spokeswoman said the indicative value will be based on the information declared by the customer in the home loan application form.

‘In the event that the formal valuation is lower due to the wrong details provided on the property, the bank will have to take the lower of either the purchase price or valuation as per regulatory stipulations. As such, the buyers will be required to top up the difference between the purchase price and valuation in cash. If the borrowers decide to abort the purchase and cancel the loan at any point after loan acceptance, a cancellation fee will apply,’ said the DBS spokeswoman.

‘We monitor our panel of valuers regularly to ensure that valuations are always fair and based on current market values,’ said a United Overseas Bank (UOB) spokeswoman.

Jerry Tan, managing director of Jerrytan Residential Pte Ltd said his beef is that valuers sometimes look to non-comparable transactions to determine the price. But it could be comparing a five-star development to a three-star one, he said.

DTZ executive director Poh Kwee Eng said that if they were valuing a unit and there had not been a transaction in the same building for some time, they would look nearby, in similar developments. If the five-star unit was priced 20 per cent higher during last year’s red hot bull market compared to a three-star one, similar premiums would still hold.

‘Say, last year, your unit was sold at $1,000 per square foot and next door a unit went for 800 psf, there was a 20 per cent difference. So if the next-door unit is now selling at $500 psf, I would adjust your unit by 20 per cent upwards,’ explained Ms Poh.

Some banks are said to be staying clear of certain developments where there is a wide range of valuations such as The Sail with 1,111 units and Sentosa Cove.

UOB head of loans Kevin Lam declined to comment on specific projects but offered general observations about mortgages. ‘We have been conservative all along. With the recent further fall in prices, we have become even more careful,’ he said.

Knight Frank’s director of research and consultancy Nicholas Mak said valuations vary widely among the 1,111 units at the 63-storey The Sail. As for Sentosa Cove, ‘newer developments have better views or better designs. Some earlier projects didn’t have sea views,’ he said.

Some ground-floor condos sited between the landed homes with the sea front were not very different to condos on the mainland, said Mr Mak. ‘The value of a sea view alone is difficult to pin down,’ he said.

Credo Real Estate managing director Karamjit Singh said that The Sail and Sentosa Cove, as new markets which targeted foreigners, provided their own challenges. ‘The Sail was part of a new market that emerged as part of the development for the new downtown including the integrated resorts,’ said Mr Singh.

He said it takes time for prices to find their equilibrium, and they have not stabilised yet. ‘It’s a challenge everyone faces, including banks.’

Source : Business Times – Feb 2009

Price war in the works?

CDL offers Valentine’s Day discount for Pasir Ris project

AT A time when consumers think twice before forking out money for big-ticket items, a major property developer here is dangling outright discounts to lure buyers. And if customers do bite, the move may mark the start of a price war, say industry observers.

Yesterday, Mainboard-listed City Developments Limited (CDL) fired the first salvo by revealing a 5-per-cent discount for selected units at Livia, a mass-market condominium in Pasir Ris.

The announcement was decibels louder than usual: Up until now, developers have largely offered discounts to walk-in customers, rather than publicly trumpeting the promotions. CDL is expected to be taking out advertisements for its special offer over the next few days.

The occasion for the promotion? Valentine’s Day tomorrow, according to CDL’s press release obtained by Today.

Cupid, however, is not going to be the clincher for customers, said Colliers International’s research and consultancy director Tay Huey Ying. It’s the “pretty attractive pricing”, she said.

Livia’s special price is about $620 per square foot (psf), said CDL, versus the average of $650psf during the phase-one launch in July last year when 340 of the 360 units released were sold. This equates to a discount of 5 per cent.

CDL “senses a renewal of market interest and improvement in buyer sentiment”, said group general manager Chia Ngiang Hong.

Although CDL said it would apply the offer to just 30 units of the 99-year leasehold project, the reality is likely to see some 60 units let go at that price, a marketing agent said, on condition of anonymity.

That is a small number compared to the 384 units still unsold. But observers say the V-Day offer may be a starting point, to test if the price is “right”. Said an industry insider: “People have been coming to showflats and just nibbling. Singaporeans want to see prices move.”

A three-bedroom unit at Livia will now cost $752,000, CDL said, versus the phase-one price of $793,000.

How long will the special offer last?

“A limited period,” CDL said.

Could this spark a price war? CDL’s competitors declined comment yesterday.

Colliers’ Ms Tay said developers were likely to resort to cutting prices – and hence eroding their profit margins – “only for projects that they’re keen to move in order to ease cash flow”.

It’s more likely that developers will roll out “a combination of competitive pricing and innovative marketing strategies”, said Ms Tay.

Demand, however, is certainly there. Crowds yesterday thronged Alexis, a freehold condominium near Queenstown MRT station, during the first day of its launch. By evening, more than half of the 293-unit project was sold, developer EC Prime told Today.

Agents there dangled a big sweetener: Discounts of as high as 28 per cent, resulting in prices between $850 and $1,150psf.

While there were interested owner-occupiers, some people were overheard asking: “What are my chances of flipping this?”

Last week, Frasers Centrepoint sold 300 units of the 712-unit Caspian project in Jurong West within the first three days for an average of $580 psf. Most of the buyers were Singaporean HDB upgraders.

Source : Today – Feb 2009

New positive spin on S’pore’s real estate sector

Economist calls bottom in 2010, based on an 18-year cycle seen in US

With observers seemingly falling over one another to come up with the most bearish forecasts, Phil Anderson – who calls himself a renegade economist – stands out from the crowd and confidently calls a property market bottom next year.

‘There will be substantial real estate buying opportunities for people with cash next year, which will set them up comfortably for the next 18 years,’ the founder of Economic Indicator Services told The Business Times recently.

Investors, however, will need cash to buy because, by then, banks will have no money and will be very reluctant to lend, he said. So individuals, companies and even countries with no debt, such as Singapore, will be well-placed to take advantage of the next boom.

Mr Anderson bases his prediction on an 18-year cycle which he says has manifested itself in the United States since 1800. ‘The cycle is as regular as clockwork. It is quite bizarre,’ he said.

The US began selling real estate, officially and under a set legal structure, on May 10, 1800, he said. ‘Since then there were speculative peaks every 18 years.’

There were peaks in land sales or real estate speculation in 1818, 1836, 1854, 1888, 1908, 1926 and 1944. The peaks were followed by downturns or depressions, typically lasting four years. World War II disrupted the pattern. But the cycle resumed in 1955.

The real estate market in the US again peaked in 1989 and bottomed in 1991. And 18 years later, in 2006-07, it hit another high. We are now into the third year of downturn, so by next year the market should bottom, which will mark the beginning of the new 18-year cycle, according to Mr Anderson.

The next boom, peaking around 2024, will be huge because hundreds of millions of Chinese will enter the market for the first time, he said. ‘Singapore is well-positioned to take advantage of the next boom because of its proximity to China. I am very bullish on Singapore. It is uniquely placed. Although real estate is already expensive in Singapore, it is going to be more expensive.’

Mr Anderson is confident the cycle will repeat itself as long as land is tradeable and in private hands. ‘It will continue to happen because people will chase the capitalised rent of land,’ he said. ‘It will be gone only if the rent is collected by the government.’

China’s privatisation of its real estate market guarantees a real estate cycle, according to him.

Also, everything that has been done to tackle the current financial crisis is to preserve the system. ‘So the system will start again.’

There are smaller cycles within the big 18-year cycles. The first seven years are characterised by a gradual improvement in activity and confidence following the previous crash. The next seven years see steeper increases in activity and prices, with the sharpest gains taking place in the final two of the seven years.

‘That’s when most people take on more debt. That’s also the easiest time to buy real estate because loans are easy to get as banks have a lot of money. But that’s absolutely the wrong time to do so,’ said Mr Anderson.

The next four years, of course, are the downturn, during which the banks will clear their problem loans, the market will absorb the excess stock and the governments will get organised.

Mr Anderson has detailed his research in a book The Secret Life of Real Estate – How it moves and why, published last year. Based in London and Melbourne, his firm has ’several hundred’ online subscribers who pay £200 (S$442) a year each for his ‘big picture analysis and ways to take advantage of turning points in market cycles’.

Source : Business Times – Feb 2009

HK luxury homes sales climb a notch

Lack of supply, lower prices bolster deals. But analysts think it is too early to say market has stabilised

SALES of Hong Kong luxury homes rose to their highest level in six months in January, indicating that prices may have stabilised, according to a report by Centaline Property Agency Ltd, as buyers seek out bargains.

Completed transactions of existing properties increased 31 per cent from December, and the value of the deals rose 9 per cent to HK$2.7 billion (S$522.8 million), the highest since July, the property broker said on Thursday. Luxury homes are those valued at more than HK$10 million.

A lack of supply and lower prices bolstered sales of existing luxury homes amid a deteriorating outlook for Hong Kong’s property market as a recession hurts sentiment. Prices for luxury homes dropped 19 per cent in the fourth quarter from the preceding three months, Marcos Chan, an analyst from Jones Lang Lasalle, said yesterday.

‘Since the meltdown of the financial markets in the fourth quarter, it’s no surprise to see a rebound after a sharp drop’ in prices, said Mr Chan, head of research for the Pearl River Delta at Jones Lang Lasalle. ‘Most buyers are those with old money and who hardly need to get financing from banks.’

Billionaire Joseph Lau, chairman of developer Chinese Estates Holdings and the city’s fifth-richest man, spent HK$170 million buying a 5,657-square-foot duplex, local newspaper Ming Pao said on Thursday, citing unidentified people. The price is about 16 per cent less than what the seller had paid.

A total of 144 transactions were completed in January, the Centaline report said. The data excludes new properties released to the market last month. January was the second straight month that transactions for existing luxury homes rose, posting a cumulative increase of 82 per cent, Wong Leung-sing, an associate director at Centaline, said in the report. ‘With the lack of new luxury homes, buyers are turning to the second- hand market, rejuvenating activity there,’ he said.

Sun Hung Kai Properties Ltd, Hong Kong’s biggest developer by value, said it expects to fetch HK$50,000 per square foot for its three-storey penthouse units at a new property, the Hong Kong Economic Times reported yesterday, citing a company executive. Buyers from China, Australia, Europe and the US have expressed interest in the pre-launch sale of the property, called The Cullinan, the paper said, quoting Victor Lui, executive director of Sun Hung Kai Real Estate Agency.

Overall, January home sales gained 3.6 per cent from December, the Land Registry said this week.

Still, it’s ‘too early’ to say that the luxury property market has stabilised, Jones Lang’s Mr Chan said. ‘We will continue to see pressure this year, whether it’s luxury or mass market real estate, as there are still uncertainties in the economy and unemployment will shoot up.’

Source : Business Times – Feb 2009

Private housing supply shrinking as prices fall

Developers delay projects’ expected completion dates to beyond 2011

DEVELOPERS appear to be turning their backs on the property market, deferring more projects as property prices keep falling.

Private residential property prices fell 4.7 per cent last year. This, after rising over 30 per cent in 2007. On a quarterly basis, prices fell 6.1 per cent.

And according to statistics from the Urban Redevelopment Authority (URA), the number of private residential homes expected to be completed between 2009 and 2011 is now also expected to be lower.

URA said that as at Q4 2008, there were 64,982 private residential units in the pipeline. Of these, about 31,000 units were expected to be completed between 2009 and 2011, lower than the pipeline supply of about 34,600 private residential units as at Q3 2008.

URA said that the decline in the pipeline supply was mainly because a number of developers had in Q4 2008, made adjustments to the expected year of completion of their private housing projects to beyond 2011.

DTZ senior director for research Chua Chor Hoon said that while developers have already been delaying completions over the last few quarters, the momentum increased in Q4 2008. She also believes that with the recent Budget announcements giving developers more leeway to delay completion of their projects, ‘there would be further adjustments to improve the supply-demand balance’.

Still, she notes that 10,448 private housing units are expected to be completed this year, which is higher than the past 10-year average of 8,700 units. ‘These projects are at the advanced stage of construction and cannot be delayed. These would add pressure on prices and rentals.’

While the property tax deferment on approved development sites is expected to cost the government $290 million over the next two years, Knight Frank director of research and development Nicholas Mak said that this will not have much impact on the supply pipeline – but only because many developers have already decided to do this. He does, however, believe that it will help developers bear the holding costs.

Barclays economist Leong Wai Ho added: ‘I don’t think these (Budget) measures per se will reverse the slide in the property market. The dominant factors in the near term are the increase in white-collar unemployment and falling household income.’

Poorer economic prospects are more likely to persuade developers to defer projects.

Already, of the 64,982 uncompleted units in the pipeline, 43,414 units were still unsold. These comprised 3,880 units that had been launched for sale by developers and 14,386 units which had the pre-requisite conditions for sale and could be launched for sale immediately. The remaining 25,148 units with planning approvals did not have the pre-requisite conditions for sale.

Prices of non-landed properties fell by 6.3 per cent in Q4 2008 compared with the decline of 2.5 per cent in the previous quarter. For the full year, prices of non-landed properties fell by 5.3 per cent.

Prices of non-landed properties in Core Central Region1 (CCR) fell by 6.5 per cent in the quarter while prices of non-landed properties in Rest of Central Region (RCR) and Outside Central Region (OCR) fell by 6.2 per cent and 5.9 per cent respectively. For the whole 2008, prices of non-landed properties in CCR, RCR and OCR fell by 5.6, 4.7 and 2.9 per cent respectively.

Mr Mak said that despite the mass market sector experiencing the slightest decline in home prices, a drop in prices in OCR reflected that buying interest for mass-market private homes has waned. ‘Prices of mass-market homes were initially thought to be able to hold better than high-end private residential properties in 2008, as some buyers settle for mass-market private homes for lower-cost alternatives. However, the cautious homebuying sentiments have become so significant that some homeseekers chose to purchase HDB resale flats,’ he added.

Rental decline accelerated, easing by 5.3 per cent in Q4 2008 quarter-on-quarter. Mr Mak noted: ‘On a yearly basis, the 2 per cent growth rate in 2008, though still positive, is a far cry from the double-digit expansion observed in the last two years.’

Last year saw the total number of homes sold fall to 13,593 units, down from a record high of 40,654 units in 2007.

CBRE Research executive director Li Hiaw Ho notes that the fall in sales volume was seen in both the primary and secondary markets, with only 419 new homes, 965 resale homes and 203 sub-sales registered in the fourth quarter. ‘The decline in sales momentum was indeed significant as both home-buyers and developers retreated from the market,’ noted Mr Li.

For the whole year, the 4,264 new private homes sold was a record low, and made up only 29 per cent of the 14,811 new homes sold in 2007. Similarly, a total of 7,701 resale homes were transacted last year, compared with 20,980 sold in 2007. Sub-sales fell to 1,628 in 2008 from 4,097 in 2007.

Source : Business Times – Jan 2009

Long-term property investors should bet on S’pore: Analyst

SINGAPORE looks a pretty good bet for long-term property investors, given its strong savings rate, low corporate taxes and near-full employment, according to a key real estate player here yesterday.

And if prices fall further next year, it would be a good time to buy, said Mr Christopher Fossick, Jones Lang LaSalle’s managing director for Singapore and South-east Asia at a media briefing at the firm’s office. There is a consensus that the economy will go through a tough time next year, which means it will be tough for everybody, including those in property, he said.

‘If prices are lower, that provides opportunities,’ Mr Fossick added. He pointed out that Asia, particularly Singapore, given its status as a financial services hub, is better off economically than the United States and Europe. The level of household borrowings and corporate loans here is lower than in the US and Britain, he said.

He quoted a recent report commissioned by London Mayor Boris Johnson that said that the rising status of regional hubs such as Dubai and Singapore is threatening London’s position as the world’s financial capital.

He listed some of the key factors that should continue to attract investors here. Singapore’s corporate tax rate of 18 per cent, he said, is a tad above Hong Kong’s 17 per cent but below the 29 per cent rate in Britain and the 40 per cent levy in the US.

There is near full employment and a strong savings culture here. Singapore has a gross national savings rate of 45 per cent, compared with 11 per cent in the US, 14 per cent in Britain and 32 per cent in Hong Kong. Also, about 76.5 per cent of Singapore’s population are working, compared with 67.1 per cent in the US and Britain.

Property is always a medium- to long-term proposition, he added. Most investors treat it as such and have an investment horizon of more than 24 months. Jones Lang LaSalle’s regional director and head of markets, Mr Chris Archibold, said the office market will have a lower take-up rate over the next year but most of the expected new supply will not come to market until late next year anyway.

There are a lot of institutional investors on the sidelines waiting to enter the Singapore market, according to Mr Fossick.

‘They are saying, come 2009 and 2010, there will be opportunities to buy properties in Singapore,’ he said. ‘Obviously, it’s going to be at some discount from prices we saw in 2007.’

Source : Straits Times – Dec 2008