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Archive for January 23rd, 2009

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Singapore private home prices dip 6.1% in Q4 amid downturn

Posted by luxuryasiahome on January 23, 2009

The economic downturn is hitting home, with private residential prices recording their steepest drop in a decade.

Private home prices fell by 6.1 per cent in the fourth quarter of 2008, worse than an early estimate of a 5.7 per cent drop.

The quarter-on-quarter decline in the October to December period follows a 2.4 per cent drop in the third quarter ended September.

Strong demand pushed up private home prices by about 31 per cent in 2007. But the picture changed very quickly in just one year.

In 2008, overall prices of private residential properties fell by 4.7 per cent, hurt by the global slowdown. Market watchers said they expect to see more downside.

Karamjit Singh, managing director of Credo Real Estate, said: “I expect the decline to accelerate, going forward, as the full effect of the meltdown that took place in the fourth quarter is being felt by the market. Q1 (2009) and Q2 would definitely be negative. In fact, I won’t be surprised if prices will reflect declines by more than 6.1 per cent.”

Donald Han, managing director of Cushman & Wakefield, said: “We think, probably, Q1 will be worse than Q4, mainly because we are at the epicentre of the economic downturn. We expect home buying mood to also descend from here… probably anything from 6 per cent to 7.5 per cent for Q1 and the same number for second quarter.”

Prices of homes in prime areas continued to slip faster than those in the mid-tier and mass market segments in the fourth quarter of 2008. They fell 6.5 per cent, compared with the 6.2 per cent drop for the mid-tier and the 5.9 per cent decline for the mass market segments.

It is unclear how long and how deep the recession will be, but some market players are already expecting the potential fall in private home prices to be comparable to levels seen during the Asian financial crisis when prices dropped by 42 per cent over two years.

Sales of private homes also declined in the fourth quarter. There were only 407 transactions, about 72 per cent lower than in the third quarter.

Despite the gloomy economic outlook, property analysts believe sales momentum will pick up towards the second half of the year. They expect 5,000 to 6,000 units to be sold in 2009, higher than the 4,264 transacted last year.

According to the Urban Redevelopment Authority, 706 uncompleted units were launched for sale by developers in the fourth quarter, down from 2,244 units in the previous three months.

Many developers have delayed projects as demand and prices head south. Analysts say that in total, about 10,000 units have to be deferred, easing concerns of an oversupply in the private residential market.

The frail market sentiment also impacted the private home rental market, which saw a 5.3 per cent drop in rentals in the fourth quarter.

Meanwhile, public housing prices remained more resilient. HDB resale flat prices in the fourth quarter rose by 1.4 per cent, albeit lower than the 4.2 per cent increase recorded in the third quarter.

But transactions fell by 24 per cent to about 6,190 units, while the median cash-over-valuation amount dropped by S$4,000 to S$15,000 in the fourth quarter. Property analysts expect the downtrend to continue.

Donald Han said: “You will have the (resale flat prices) beginning to taper off after a very strong 14 per cent last year. We probably expect the HDB prices to remain flat for the first half, before you see a slight dip towards the second half of 2009.”

Source : Channel NewsAsia – 23 Jan 2009

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Private home prices, rents fall in Q4

Posted by luxuryasiahome on January 23, 2009

Private home prices fell 6.1 per cent in the fourth quarter of 2008, bringing the full-year price drop to 4.7 per cent.

The decrease is the second quarterly decline in private residential property prices following the 2.4 per cent fall in Q3.

The latest decline, announced the Urban Redevelopment Authority (URA) on Friday, is worse than expected. Initial estimates earlier this month forecast a drop of a 5.7 per cent.

The URA also said that private home rents in the fourth quarter slipped 5.3 per cent. But for the whole of 2008, private residential rents still rose 2.0 per cent.

As with previous quarter, homes prices in Singapore’s prime districts were hit the hardest. Prices of non-landed properties in Singapore’s Core Central Region (CCR) fell by 6.5 per cent in Q4 – the largest fall among the three regions URA tracks. Prices of non-landed properties in Rest of Central Region (RCR) and Outside Central Region (OCR) fell by a slightly smaller 6.2 per cent and 5.9 per cent respectively.

For the year 2008 as a whole, prices of non-landed properties in CCR, RCR and OCR fell by 5.6 per cent, 4.7 per cent and 2.9 per cent respectively.

Source : Business Times – 23 Jan 2009

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HDB resale prices see slower growth in Q4

Posted by luxuryasiahome on January 23, 2009

HDB resale prices rose by 1.4 per cent in Q4 2008 over the previous quarter – lower than the 4.2 per cent increase seen in third quarter and the 4.5 per cent climb recorded in the second quarter.

Resale transactions decreased by about 24 per cent, from about 8,110 cases in third quarter of 2008 to about 6,190 cases in fourth quarter. The total number of resale transactions for 2008 was 28,419, about 3 per cent lower than in 2007.

The median cash-over-valuation (COV) amount among all resale transactions conducted in Q4 2008 was $15,000 – which was $4,000 lower than that in Q3.

Cases requiring COV constituted 85 per cent of all resale transactions in fourth Quarter 2008, 4 per cent lesser than that in the third quarter.

Source : Business Times – 23 Jan 2009

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Office rents dip 6.5% in Q4: URA

Posted by luxuryasiahome on January 23, 2009

Rentals of office space fell 6.5 per cent in Q4 2008, data released by the Urban Redevelopment Authority (URA) on Friday showed.

But for the whole of 2008, rents for office properties still rose by 5.8 per cent, lower than the 56.1 per cent increase in 2007.

The median rental for ‘Category 1′ office space, based on leases which had commenced, was S$13.00 per square foot per month (psf pm) in fourth quarter of 2008, lower than the median rental of S$13.57 psf pm in third quarter 2008.

Category 1 office space refers to office space in buildings located in core business areas in Downtown Core and Orchard Planning Area which are relatively modern or recently refurbished, command relatively high rentals and have large floor plate size and gross floor area.

URA’s data also showed that prices of office properties fell 4.9 per cent in Q4. For the whole of 2008, prices of office properties fell 7.0 per cent.

As at the end of Q4 2008, there was a total supply of about 1.39 million sq m gross floor area of office space in the pipeline, URA said.

Source : Business Times – 23 Jan 2009

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Property-related Budget measures are deemed developer-friendly

Posted by luxuryasiahome on January 23, 2009

Market-watchers have welcomed Budget measures, announced by Finance Minister Tharman Shanmugaratnam on Thursday, which are aimed at helping Singapore property developers through the current downturn.

While analysts had already expected the government to unveil help for the depressed property market, they noted on Friday that some of the moves are particularly creative.

These measures include allowing developers to rent out unsold units and deferring property tax for land approved for development. This deferment allows developers to hold back projects, easing near-term supply in the weak market.

Brandon Lee, investment analyst, DMG & Partners, said: “It’s a positive thing for the medium to long-term growth of Singapore’s property sector. If you look at these measures, a lot are pro-developer.

“It shows the government is giving a very definitive stance to help the developers tide through this tough period, while at the same time re-tweaking the demand-supply disequilibrium right now.”

On the flip side, some analysts said few measures actually benefit home buyers.

Nicholas Mak, director, Consultancy and Research, Knight Frank, said: “In the previous downturns, one of the measures announced was the deferment of stamp duty. That will lower the cost and demand for cash for home buyers.”

Demand-side concerns extend beyond the property market itself. For example, people are unlikely to buy a home when job security is an issue.

The government expects unemployment to increase this year due to the severe global economic downturn.

Source : Channel NewsAsia – 23 Jan 2009

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CapitaLand says no decision on fund raising

Posted by luxuryasiahome on January 23, 2009

CapitaLand, Southeast Asia’s largest developer, said on Friday it has not made any decision to raise funds via a rights issue.

‘CapitaLand wishes to state that it has received and is continuing to receive various proposals for fund raising. These proposals include rights issues. CapitaLand has not made any decisions,’ the firm said in a filing to the stock exchange.

The comment came as the firm enters into a tough period with Singapore property sales expected to slow significantly in 2009. CapitaLand’s third-quarter net profit fell 26 per cent.

CapitaLand, which is 40 per cent held by Singapore sovereign fund Temasek , said it had S$4.2 billion in cash at the end of the third-quarter.

CapitaLand fell as much as 5.2 per cent on Friday and was the most actively traded counter on the Singapore Exchange.

Source : Business Times – 23 Jan 2009

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S’pore private home prices fall 6.1% in Q4

Posted by luxuryasiahome on January 23, 2009

Singapore private home prices fell 6.1 per cent in the fourth quarter as the city-state plunged into its worst ever recession, government data showed on Friday.

The drop marked the second quarterly decline in residential property prices following a 2.4 per cent fall in July-September.

The decline in prices during the fourth quarter was also steeper than the initial estimate of a 5.7 per cent drop made earlier this month.

Rents during the October-December period fell by 5.3 per cent, the Urban Redevelopment Authority (URA) said.

Singapore releases advance estimates on property prices shortly after the end of each quarter based primarily on transactions during the first 10 weeks of the period.

The government subsequently provides detailed data for the period that includes price changes by region as well as rental trends.

Singapore’s gross domestic product shrank in the fourth quarter at a deeper-than-expected seasonally adjusted rate of 16.9 per cent, the biggest fall on record, and the government said the economy may contract as much as 5 per cent this year.

Source : Business Times – 23 Jan 2009

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Property slump to worsen Asia slowdown

Posted by luxuryasiahome on January 23, 2009

Activity in China, Korea cools fast as force of global financial crisis hits home

Slumping Asian property markets could intensify the region’s economic downturn this year, further undermining consumer and investor confidence and prompting homeowners to tighten spending.

Japan, Hong Kong, Singapore and New Zealand are already in recession, and data yesterday showed activity in regional powerhouses China and South Korea is rapidly cooling as the full force of the global financial crisis hits home.

Goldman Sachs sees economic growth in Asia excluding Japan falling to 4.4 per cent this year from an estimated 6.9 per cent in 2008, but says the risk is to the downside.

‘People are worried about losing their jobs and that the economy will get worse, so they are refraining from making very large investments,’ said Michael Spencer, Deutsche Bank’s Asia economist.

Half the wealth of Malaysia, Singapore, South Korea and India is tied to property, according to CLSA.

In Hong Kong and Singapore, double-digit declines in property prices last year and falling real interest rates have made apartments more affordable, and home prices are forecast to slide another 20-25 per cent this year as the global economy weakens.

Buyers, however, are thin on the ground as investors who lost heavily in Asian stock markets last year have less money to put down for property purchases. Worsening economic data across the region, meanwhile, is also discouraging people from committing to big investments like housing.

As homeowners see the value of their assets being eroded in tandem with the deteriorating economic climate, they become part of a vicious cycle, cutting back on consumption – which needs to grow significantly to offset declining Asian exports – and thereby accelerating the slowdown across the region.

Hong Kong homeowner Maggie Chan fears she will soon be strapped with negative equity on the HK$3 million (S$578,500) two-bedroom apartment she bought eight years ago, owing more on her mortgage than the property will be worth. ‘Property prices are going to go down and that’s making me think a lot more before I spend,’ she said.

As exports and domestic consumption weaken, HSBC forecasts a 0.6 per cent contraction in Asian GDP ex-China and Japan in the first quarter of 2009 from a year earlier, the region’s weakest performance since late 1998 during the Asian financial crisis.

Asia would typically lag a US economic downturn by two to three quarters, but is moving more in sync with the US cycle in this crisis, says Goldman Sachs. That’s partly because the credit crisis is making banks worldwide reluctant to lend, further depressing business activity and property sales.

‘Asian loan-to-deposit ratios are lower now than during the Asian financial crisis,’ said Michael Buchanan, Goldman Sachs’ Asian economist. In Hong Kong, banks are offering 70 per cent mortgages on just 85-90 per cent of the value of a property, says Colliers International.

Receding inflation is enabling Asian policymakers to slash interest rates aggressively but that may not be enough to stimulate demand.

South Korea has introduced measures to support its property market, including easing tax rates on luxury property, but Mr Spencer expects more action may be needed, such as cutting taxes on property transactions and capital gains.

In China, capital gains tax exemptions and reduced down-payment requirements, together with hefty discounts by developers, have boosted property sales though they are still well down on a year ago and supply overhang persists in cities like Beijing and Shenzhen, analysts say.

Source : Business Times – 23 Jan 2009

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MapletreeLog distributable income up 44% in Q4

Posted by luxuryasiahome on January 23, 2009

MAPLETREE Logistics Trust (MapletreeLog) yesterday reported total distributable income of $28.3 million for the fourth quarter ended Dec 31, 2008, up 43.7 per cent from last year’s corresponding period.

But the distribution per unit (DPU) of 1.46 cents for the quarter was 18 per cent lower than Q4 2007’s DPU of 1.78 cents.

MapletreeLog attributed the drop to the full quarter impact from dilution following the rights issue completed in August last year.

For the full year, DPU was 7.24 cents, 10.2 per cent higher than last year’s 6.57 cents.

Last year, Chua Tiow Chye, CEO of Mapletree Logistics Trust Management (MLTM), the Reit’s manager, had said that the rights issue would leave MapletreeLog with a ‘robust balance sheet’ which would help make it ‘well positioned to operate in the current more uncertain times’.

Net property income for Q4 2008 rose by $9.8 million to $45.1 million. This was helped by a $12.1 million rise in gross revenue to $52.4 million due mainly to contributions from 11 new properties acquired during the year.

There was also a $1.4 million fall in Q4 borrowing costs despite the enlarged portfolio.

As at Dec 31, 2008, the trust’s portfolio comprises 81 properties valued at $2.9 billion, including a $94.1 million revaluation gain.

No new acquisitions have been planned for the near term.

Singapore properties accounted for close to half of Q4 2008 net property income, with Hong Kong properties contributing about a quarter.

Portfolio occupancy rates remain high at 99.6 per cent. The trust attributed the resilience of its portfolio to a diversified tenant base and strong leasing covenants.

MapletreeLog’s leverage ratio of 38.5 per cent, as at Dec 31, 2008, is marginally higher than the 36.9 per cent as at Sept 30, 2008.

However, it has assured that it has sufficient committed lines to meet its debt obligations when they become due – hence avoiding any refinancing risk.

Source : Business Times – 23 Jan 2009

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First Reit’s Q4 distributable income up 11% to $5.3m

Posted by luxuryasiahome on January 23, 2009

BACKED by higher rentals from its eight properties in Singapore and Indonesia, First Real Estate Investment Trust (First Reit) achieved an 11 per cent rise in distributable income to $5.3 million for its fourth quarter ended Dec 31, 2008.

The year-on-year rise came as gross revenue rose 4.5 per cent to $7.6 million.

Distribution per unit (DPU) for the quarter grew 10.2 per cent to 1.94 cents, from 1.76 cents for the year-ago period.

Based on its FY2008 DPU of 7.62 cents (FY2007: 6.73 cents) and the closing price of 43.5 cents on Jan 20, the distribution yield is 17.5 per cent.

The quarter saw net property income grow 4.1 per cent to $7.51 million, helped by higher rentals from four Indonesia properties acquired in 2006 and four Singapore properties newly acquired in 2007.

For the full year 2008, First Reit – which is Singapore’s first healthcare Reit – reaped net property income of $29.96 million, 12.3 per cent higher than for 2007.

But it recorded a revaluation loss on investment properties of $700,000 compared with revaluation gains of $16.83 million in 2007.

First Reit’s eight properties have a total value of $324.9 million based on a recent annual revaluation, little changed from its book value in 2007.

Bowsprit Capital Corporation, First Reit’s manager, said it is hopeful that First Reit will continue to perform relatively well in 2009.

‘First Reit is hopeful that the demand for quality healthcare, particularly in Asia, will remain relatively unaffected despite the current global recession,’ it said.

Source : Business Times – 23 Jan 2009

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