Source : TODAY, Thursday, January 8, 2009
LAS Vegas Sands has said it has enough money available to finish its casino project here.
The integrated resort should open by the first quarter of 2010, president William Weidner said last night. The project was originally scheduled to be completed this year.
In November last year, the company Las Vegas Sands announced that it might default on outstanding bonds, signalling its possible bankruptcy.
It added that it would be halting all construction on all properties worldwide due to financial constraints and turned its attention to raising operating capital.
However, it stated then that the Singapore IR was on course for completion on time.
Later in November, the company announced that is had secured US$2 billion ($2.94 billion) in capital-funding commitments. Its total market capitalisation has fallen to US$2.5 billion from a historical high of US$43.7 billion in 2007. AGENCIES
Thursday, January 8, 2009
Prime Office Rents Could Plunge By Up To 40%: Report
Source : The Straits Times, Jan 8, 2009
OFFICE rents in prime districts could dive as much as 40 per cent by next year, says consultancy Cushman and Wakefield in a new report.
The industry has been expecting falls, but the magnitude of the projected slump is surprising. The consultancy blames a huge stock of office space that is rising amid tough times and rising job losses.
'The fact that Singapore is an international financial centre also means it will be badly hit during the downturn as a lot of investment activities are dependent on foreign participation,' it said.
Prime office rents, it said, will fall from a high of $14.20 per sq ft a month last year to $12 psf a month this year. It expects this to drop to about $8 psf next year, and to about $7.50 psf by 2011, when prime office vacancy rates are set to rise to 11 to 15 per cent.
But rents remain above the $7 psf witnessed in previous peaks of 1995 to 1997 and 2005 to 2006.
Three factors, said Cushman, are contributing to the fall in rents. First, office stock is rising at a time when economic growth is stagnating or falling.
Second, a huge pipeline of office inventory is building up because of the overwhelming optimism shown by developers during the boom years of 2006 and 2007.
And third, employment is likely to flatline or even shrink by 1 per cent, as seen in downturns in 1998 and 2001-2002.
'The rate at which new supply is added to existing stock in 2009 and 2010 will be one of the highest since 1992,' said the report.
Pre-commitments by tenants for office buildings due for completion this year and next are estimated to be only 30 per cent so far. The rate is not expected to improve in the near term, said Cushman.
A total of 10.7 million sq ft of office space will be available by 2013 - of which 2.7 million sq ft will be ready by 2010 - representing about 15 per cent of total stock, it said.
Office stock in the Central Business District will rise by up to 7 per cent by 2010 to 2011 - the second highest rate after 8.7 per cent in 1995 when economic growth was higher.
But demand, which averaged about 2 million sq ft a year in the past two years, is expected to fall by more than half, and possibly to just 500,000 sq ft a year.
OFFICE rents in prime districts could dive as much as 40 per cent by next year, says consultancy Cushman and Wakefield in a new report.
The industry has been expecting falls, but the magnitude of the projected slump is surprising. The consultancy blames a huge stock of office space that is rising amid tough times and rising job losses.
'The fact that Singapore is an international financial centre also means it will be badly hit during the downturn as a lot of investment activities are dependent on foreign participation,' it said.
Prime office rents, it said, will fall from a high of $14.20 per sq ft a month last year to $12 psf a month this year. It expects this to drop to about $8 psf next year, and to about $7.50 psf by 2011, when prime office vacancy rates are set to rise to 11 to 15 per cent.
But rents remain above the $7 psf witnessed in previous peaks of 1995 to 1997 and 2005 to 2006.
Three factors, said Cushman, are contributing to the fall in rents. First, office stock is rising at a time when economic growth is stagnating or falling.
Second, a huge pipeline of office inventory is building up because of the overwhelming optimism shown by developers during the boom years of 2006 and 2007.
And third, employment is likely to flatline or even shrink by 1 per cent, as seen in downturns in 1998 and 2001-2002.
'The rate at which new supply is added to existing stock in 2009 and 2010 will be one of the highest since 1992,' said the report.
Pre-commitments by tenants for office buildings due for completion this year and next are estimated to be only 30 per cent so far. The rate is not expected to improve in the near term, said Cushman.
A total of 10.7 million sq ft of office space will be available by 2013 - of which 2.7 million sq ft will be ready by 2010 - representing about 15 per cent of total stock, it said.
Office stock in the Central Business District will rise by up to 7 per cent by 2010 to 2011 - the second highest rate after 8.7 per cent in 1995 when economic growth was higher.
But demand, which averaged about 2 million sq ft a year in the past two years, is expected to fall by more than half, and possibly to just 500,000 sq ft a year.
Recovery?
Source : TODAY, Thursday, January 8, 2009
BNP predicts V-shaped recovery for economy, but others are sceptical
SINGAPORE'S faltering economy may spring back to life next year in a strong rebound, if a startling new prediction by BNP Paribas comes true.
The French bank has become the first major institution to forecast a 'V-shaped' recovery in Asia next year, as aggressive government spending and interest rate cuts kick in region-wide.
In a V-shaped recovery, the economy bottoms out and rebounds quickly. This is often compared to a U-shaped recovery, where the economy sees a slow and tepid rebound over a number of years.
So far, most economic watchers - the Singapore Government included - have warned of the latter. Export demand from developed countries has collapsed in recent months, worsened by a record contraction in US consumer spending.
Prime Minister Lee Hsien Loong said last week it is 'quite likely the global recession will be followed not by a quick rebound but by several more years of slow growth'.
But BNP Paribas is predicting that while Singapore's economy will shrink 2.8 per cent this year, it will bounce back to grow a healthy 4.4 per cent next year.
'The scale of the global policy response - monetary and fiscal - should ensure the recovery is more V- than U-shaped,' said BNP Paribas economist Richard Iley, in a report titled Asia: Apo-
calypse Now. 'In many instances, economies will experience a six- to seven-percentage point swing in growth rates.'
The report, dated Tuesday, slashed growth forecasts for countries around the world this year, in the light of the 'cardiac arrest' suffered by the global economy. It pointed out that things would get a lot worse for Asia before getting better.
But it added that the global manufacturing cycle is likely to improve even before the United States economy stabilises at year-end, which would bring about a 'reasonably vibrant rebound' across Asia. This will be helped by the 'substantial fiscal boosts' and increasingly loose monetary policy stances in the region.
Yesterday, Indonesia and Taiwan both cut rates by 50 basis points, a day after South Korea unveiled a 43 trillion won (S$49 billion) job creation programme.
Singapore is expected to announce an expansionary Budget in two weeks' time.
Economists yesterday said they were less bullish about recovery, as export-dependent Singapore will more likely suffer from continued sub-par growth in developed economies than benefit from a possible sharp rebound in developing nations.
Said OCBC economist Selena Ling: 'Companies' estimates for losses keep being revised upwards, while government moves such as additional liquidity, rate cuts and fiscal stimulus haven't filtered through the system yet because of the confidence crisis.'
She expects a return to economic growth next year but at a slower 1 to 3 per cent rate. She said a real equity markets recovery is too early to call and that it will take a few more quarters before the corporate sector stops feeling the pain.
Citigroup economist Kit Wei Zheng said he has yet to see any 'convincing forward-looking data' that signals a quick and sharp recovery.
'The key assumption here is that the US is not going to be in good shape for some time, and if we assume a U-shaped recovery for the US, there's no reason to assume otherwise for Singapore.'
But at least one economist agrees with BNP. HSBC's Robert Prior-Wandesforde even went one step further: He expects a resounding 5.5 per cent growth rate for the Singapore economy next year.
'History suggests that Singapore and Asia as a whole typically show V-shaped recoveries, particularly when they've had such a big downturn,' he said.
'Monetary policy is likely to be more effective in Asia than in the developed world because we don't see the same scale of financial sector problems. So if we get some growth in the developed world, there's every reason to expect a surprisingly strong improvement towards the end of the year and into 2010.'
In an uncanny coincidence, all three banks - OCBC, HSBC and Citigroup - have the same growth forecast for Singapore this year as BNP Paribas, expecting the economy to shrink by 2.8 per cent.
BNP predicts V-shaped recovery for economy, but others are sceptical
SINGAPORE'S faltering economy may spring back to life next year in a strong rebound, if a startling new prediction by BNP Paribas comes true.
The French bank has become the first major institution to forecast a 'V-shaped' recovery in Asia next year, as aggressive government spending and interest rate cuts kick in region-wide.
In a V-shaped recovery, the economy bottoms out and rebounds quickly. This is often compared to a U-shaped recovery, where the economy sees a slow and tepid rebound over a number of years.
So far, most economic watchers - the Singapore Government included - have warned of the latter. Export demand from developed countries has collapsed in recent months, worsened by a record contraction in US consumer spending.
Prime Minister Lee Hsien Loong said last week it is 'quite likely the global recession will be followed not by a quick rebound but by several more years of slow growth'.
But BNP Paribas is predicting that while Singapore's economy will shrink 2.8 per cent this year, it will bounce back to grow a healthy 4.4 per cent next year.
'The scale of the global policy response - monetary and fiscal - should ensure the recovery is more V- than U-shaped,' said BNP Paribas economist Richard Iley, in a report titled Asia: Apo-
calypse Now. 'In many instances, economies will experience a six- to seven-percentage point swing in growth rates.'
The report, dated Tuesday, slashed growth forecasts for countries around the world this year, in the light of the 'cardiac arrest' suffered by the global economy. It pointed out that things would get a lot worse for Asia before getting better.
But it added that the global manufacturing cycle is likely to improve even before the United States economy stabilises at year-end, which would bring about a 'reasonably vibrant rebound' across Asia. This will be helped by the 'substantial fiscal boosts' and increasingly loose monetary policy stances in the region.
Yesterday, Indonesia and Taiwan both cut rates by 50 basis points, a day after South Korea unveiled a 43 trillion won (S$49 billion) job creation programme.
Singapore is expected to announce an expansionary Budget in two weeks' time.
Economists yesterday said they were less bullish about recovery, as export-dependent Singapore will more likely suffer from continued sub-par growth in developed economies than benefit from a possible sharp rebound in developing nations.
Said OCBC economist Selena Ling: 'Companies' estimates for losses keep being revised upwards, while government moves such as additional liquidity, rate cuts and fiscal stimulus haven't filtered through the system yet because of the confidence crisis.'
She expects a return to economic growth next year but at a slower 1 to 3 per cent rate. She said a real equity markets recovery is too early to call and that it will take a few more quarters before the corporate sector stops feeling the pain.
Citigroup economist Kit Wei Zheng said he has yet to see any 'convincing forward-looking data' that signals a quick and sharp recovery.
'The key assumption here is that the US is not going to be in good shape for some time, and if we assume a U-shaped recovery for the US, there's no reason to assume otherwise for Singapore.'
But at least one economist agrees with BNP. HSBC's Robert Prior-Wandesforde even went one step further: He expects a resounding 5.5 per cent growth rate for the Singapore economy next year.
'History suggests that Singapore and Asia as a whole typically show V-shaped recoveries, particularly when they've had such a big downturn,' he said.
'Monetary policy is likely to be more effective in Asia than in the developed world because we don't see the same scale of financial sector problems. So if we get some growth in the developed world, there's every reason to expect a surprisingly strong improvement towards the end of the year and into 2010.'
In an uncanny coincidence, all three banks - OCBC, HSBC and Citigroup - have the same growth forecast for Singapore this year as BNP Paribas, expecting the economy to shrink by 2.8 per cent.
Nearly Half Of Recent Launches Still Unsold
Source : TODAY, Thursday, January 8, 2009
En bloc projects being leased out instead of getting rebuilt
MANY new homes recently built for the well-heeled in Singapore are sitting empty.
Only 45 per cent of the luxury projects launched since June 2006 have been sold as of November last year, according to property consultancy CBRE.
This period saw the roll-out of 20 projects in this segment, which has a total of 2,209 units, some of which have yet to be launched.
Faring worse are high-end projects launched since the second half of 2007, during the period of peak property prices. Only 33 per cent of the 1,233 units have been sold.
“Several projects remain on the market, especially those that were launched in the second half of 2007 and thereafter. By then, news of the sub-prime crisis had caused the market to put on the brakes,” CBRE said in a report released yesterday.
Some developers have seen poor sales, while others held back on the number of units rolled out.
Some projects launched over the past two years — such as: Belle Vue Residences, The Orange Grove, The Ritz Carlton Residences and The Hamilton Scotts — have over 90 per cent of their total units unsold.
This year, luxury apartment prices may drop by 10 to 15 per cent, predicted CBRE, while prices of Good Class Bungalows could decline by 10 per cent.
Already, the segment’s average launch price has dropped from $2,000 to $4,000 per square foot (psf) in 2007 to a range of $2,000 to $2,600 psf last year, CBRE estimated. It added that developments like Ardmore Park, Four Seasons Park and Grange Residences saw prices drop to $2,400 psf last year from as high as $3,300 psf in 2007.
In light of the weak market, several developers have delayed the redevelopment of their en bloc projects, by renting out units. These include collectively-sold developments like Grangeford Apartment in Leonie Hill Road, Lucky Tower at Grange Road, and Leedon Heights, said CBRE.
“Most developers will start to launch when the market begins to recover, “ CBRE said of en bloc redevelopments. “Developers who are laden with unsold units in projects that were already launched would prefer to focus on clearing them rather than launching new projects and add to supply.”
There were only seven residential collective sales last year, compared to 150 in 2007, DTZ Research said. “With high construction costs, financing difficulties and weak market sentiments, developers are shunning residential collective sales.”
En bloc projects being leased out instead of getting rebuilt
MANY new homes recently built for the well-heeled in Singapore are sitting empty.
Only 45 per cent of the luxury projects launched since June 2006 have been sold as of November last year, according to property consultancy CBRE.
This period saw the roll-out of 20 projects in this segment, which has a total of 2,209 units, some of which have yet to be launched.
Faring worse are high-end projects launched since the second half of 2007, during the period of peak property prices. Only 33 per cent of the 1,233 units have been sold.
“Several projects remain on the market, especially those that were launched in the second half of 2007 and thereafter. By then, news of the sub-prime crisis had caused the market to put on the brakes,” CBRE said in a report released yesterday.
Some developers have seen poor sales, while others held back on the number of units rolled out.
Some projects launched over the past two years — such as: Belle Vue Residences, The Orange Grove, The Ritz Carlton Residences and The Hamilton Scotts — have over 90 per cent of their total units unsold.
This year, luxury apartment prices may drop by 10 to 15 per cent, predicted CBRE, while prices of Good Class Bungalows could decline by 10 per cent.
Already, the segment’s average launch price has dropped from $2,000 to $4,000 per square foot (psf) in 2007 to a range of $2,000 to $2,600 psf last year, CBRE estimated. It added that developments like Ardmore Park, Four Seasons Park and Grange Residences saw prices drop to $2,400 psf last year from as high as $3,300 psf in 2007.
In light of the weak market, several developers have delayed the redevelopment of their en bloc projects, by renting out units. These include collectively-sold developments like Grangeford Apartment in Leonie Hill Road, Lucky Tower at Grange Road, and Leedon Heights, said CBRE.
“Most developers will start to launch when the market begins to recover, “ CBRE said of en bloc redevelopments. “Developers who are laden with unsold units in projects that were already launched would prefer to focus on clearing them rather than launching new projects and add to supply.”
There were only seven residential collective sales last year, compared to 150 in 2007, DTZ Research said. “With high construction costs, financing difficulties and weak market sentiments, developers are shunning residential collective sales.”
1,200 Luxury Homes Yet To Find Takers
Source : The Straits Times, January 8, 2009
CBRE says growing supply overhang may see prices drop by up to 15%
A STOCKPILE of up to 1,200 luxury homes in prime districts remains unsold, adding to a growing supply overhang that is likely to drag prices lower this year.
That grim assessment of the very top end of Singapore's property market has been made by leading property consultancy CB Richard Ellis (CBRE).
However, it has also concluded that despite the challenging market conditions, some developers may be able to hold on to projects until the market recovers.
'Developers who are laden with unsold units in projects that were already launched would prefer to focus on clearing them rather than launch new projects,' it said.
'This would inevitably lead to price cuts,' the consultancy added.
CBRE is projecting a decline this year of about 10per cent in the prices of good-class bungalows (GCBs) - the most prestigious bungalow type here - and 10 to 15per cent price falls for luxury apartments.
Last year, 49 GCBs worth about $785million were sold, down from 87 GCBs worth $1.15billion in 2007 and 119 GCBs worth $1.23billion in 2006.
Average prices of GCBs hit $822 per sqft (psf) last year, up from $681 psf in 2007 and $501 psf in 2006.
The top-priced GCB deal last year was a 52,528 sqft Leedon Park property sold for $43.2million in May. On a psf basis, the most expensive deal was at $1,303 psf for a Leedon Road property, also in May.
CBRE said GCB prices hinge on the location and land characteristics.
Given the current downturn, buyers will be looking to pay competitive prices for GCBs, but fire sales will be hard to come by as most GCB owners have the capacity to hold, said director of luxury homes Douglas Wong.
The luxury apartment market also saw a drastic fall in sales last year, with just 1,096 caveats lodged. Government data showed this worked out to just 19per cent and 32per cent of sales in 2007 and 2006 respectively, said CBRE.
Caveats lodged for high-end apartments worth $1million to $3million stood at 777, which is about 22per cent of the 3,566 caveats lodged in 2007 and 29per cent of caveats lodged in 2006.
But a considerable number of more expensive homes were sold last year, with 82 caveats lodged for apartments worth $10million and above, though 63 were units in Nassim Park Residences. This compares with 143 in 2007, 22 in 2006 and none in 2004-2005.
Price-wise, new luxury projects saw average launch prices drop to $2,000 psf to $2,600 psf by the end of last year, from $2,000 psf to $4,000 psf in 2007.
Prices of existing luxury developments, such as Ardmore Park and Grange Residences, hit $2,000 psf to $2,400 psf, from $2,000 psf to $3,300 psf in 2007 and $1,600 psf to $2,000 psf in 2006.
Most of the luxury projects launched in early 2007 have been fully sold. But several projects remain on the market, especially those launched in the second half of last year when the sub-prime crisis hit.
As of last November, only 41per cent of units offered at these launches had been sold.
This year, luxury sales activity is expected to be lukewarm, similar to the second half of last year, said CBRE.
CBRE says growing supply overhang may see prices drop by up to 15%
A STOCKPILE of up to 1,200 luxury homes in prime districts remains unsold, adding to a growing supply overhang that is likely to drag prices lower this year.
That grim assessment of the very top end of Singapore's property market has been made by leading property consultancy CB Richard Ellis (CBRE).
However, it has also concluded that despite the challenging market conditions, some developers may be able to hold on to projects until the market recovers.
'Developers who are laden with unsold units in projects that were already launched would prefer to focus on clearing them rather than launch new projects,' it said.
'This would inevitably lead to price cuts,' the consultancy added.
CBRE is projecting a decline this year of about 10per cent in the prices of good-class bungalows (GCBs) - the most prestigious bungalow type here - and 10 to 15per cent price falls for luxury apartments.
Last year, 49 GCBs worth about $785million were sold, down from 87 GCBs worth $1.15billion in 2007 and 119 GCBs worth $1.23billion in 2006.
Average prices of GCBs hit $822 per sqft (psf) last year, up from $681 psf in 2007 and $501 psf in 2006.
The top-priced GCB deal last year was a 52,528 sqft Leedon Park property sold for $43.2million in May. On a psf basis, the most expensive deal was at $1,303 psf for a Leedon Road property, also in May.
CBRE said GCB prices hinge on the location and land characteristics.
Given the current downturn, buyers will be looking to pay competitive prices for GCBs, but fire sales will be hard to come by as most GCB owners have the capacity to hold, said director of luxury homes Douglas Wong.
The luxury apartment market also saw a drastic fall in sales last year, with just 1,096 caveats lodged. Government data showed this worked out to just 19per cent and 32per cent of sales in 2007 and 2006 respectively, said CBRE.
Caveats lodged for high-end apartments worth $1million to $3million stood at 777, which is about 22per cent of the 3,566 caveats lodged in 2007 and 29per cent of caveats lodged in 2006.
But a considerable number of more expensive homes were sold last year, with 82 caveats lodged for apartments worth $10million and above, though 63 were units in Nassim Park Residences. This compares with 143 in 2007, 22 in 2006 and none in 2004-2005.
Price-wise, new luxury projects saw average launch prices drop to $2,000 psf to $2,600 psf by the end of last year, from $2,000 psf to $4,000 psf in 2007.
Prices of existing luxury developments, such as Ardmore Park and Grange Residences, hit $2,000 psf to $2,400 psf, from $2,000 psf to $3,300 psf in 2007 and $1,600 psf to $2,000 psf in 2006.
Most of the luxury projects launched in early 2007 have been fully sold. But several projects remain on the market, especially those launched in the second half of last year when the sub-prime crisis hit.
As of last November, only 41per cent of units offered at these launches had been sold.
This year, luxury sales activity is expected to be lukewarm, similar to the second half of last year, said CBRE.
Fewer Good Class Bungalows Sold Last Year
Source : The Business Times, January 7, 2009
A total 49 Good Class Bungalows changed hands in Singapore for a total $785 million (US$532 million) last year, down from the 87 transactions worth $1.15 billion in 2007 and 119 deals at $1.23 billion in 2006, according to latest figures from property consultancy CB Richard Ellis.
On a dollar per square foot (psf) value based on land area, the average price of GCBs rose to $822 psf last year, from $681 psf in 2007 and $501 psf in 2006.
These figures reflect a 64 per cent increase in GCB prices in the two years.
A total 49 Good Class Bungalows changed hands in Singapore for a total $785 million (US$532 million) last year, down from the 87 transactions worth $1.15 billion in 2007 and 119 deals at $1.23 billion in 2006, according to latest figures from property consultancy CB Richard Ellis.
On a dollar per square foot (psf) value based on land area, the average price of GCBs rose to $822 psf last year, from $681 psf in 2007 and $501 psf in 2006.
These figures reflect a 64 per cent increase in GCB prices in the two years.
Developers May Want To Take That Haircut Right Away
Source : The Business Times, January 8, 2009
PROPERTY consultancy groups have issued reports over the past couple of weeks reporting declines in Singapore residential property values, especially for the high-end segment, in 2008 - with pretty grim prognoses for 2009 too. This will mount pressure on listed property groups to make provisions for Singapore residential sites.
Storm warning: For companies that acquired sites at prices which are above current values, booking provisions in Q4 2008 will avoid putting further strain on bottomlines in the tough year ahead
When listed property groups did not announce such provisions in their Q3 results last year, the thinking among analysts was that these companies would take haircuts in their books on their pricier residential sites only in second-half 2009, or even later.
DTZ recently published a report estimating a 21.6 per cent decline in average prime non-landed freehold private home prices in 2008 and predicted a further 15 to 20 per cent drop this year.
CB Richard Ellis last week also said that in 2008, average prices of new luxury homes under construction had slipped 30-35 per cent in prime districts 9 and 10 and by 10-13 per cent in Marina Bay and Sentosa Cove.
Developers could argue that while property consulting groups may talk about declines in property values, there has been a scarcity of transactions to confirm the declines.
Nonetheless, for companies that acquired sites at high prices which are above current values, there's a case for booking the provisions in Q4 2008 - and moving on.
For one, most developers reported strong earnings in first-half 2008 that can help cushion against provisions on their Singapore residential landbank - if they choose to book them in their Q4 and full-year 2008 financial statements.
However, if they postpone the decision till 2009, the haircut could add further strain to bottomlines going ahead, which are already expected to weaken on the back of poor home sales, an all-round weaker economic showing and lower valuations for investment properties (these refer to assets like office buildings and shopping centres held for rental income). Right now the mood is so weak, that if developers were to announce provisions for their Q4 results, it would not dent sentiment much further. It may be better to flush out all the bad newsflow now.
Making provisions sooner also clears the decks for developers to price projects more attractively to tap any windows of opportunity to launch projects - and begin a new cycle of profit booking. As a big property group said over seven years ago when announcing massive residential provisions, the exercise provided it 'pricing flexibility to generate cashflow'.
Beyond writing down sites to current values, at least one big developer in the past went a step further and provided more than it perhaps needed to.
This is what many analysts say CapitaLand did in August 2001, when it marked down the value of its residential assets, mostly landbank, by $508 million, in its half-year result statement.
Analysts said the group wrote down the value to below then market prices. In short, it overprovided. The group's management refuted this point, but the strategy may be revisited by some property groups today spring cleaning their books.
Ask most property agents today and they'll tell you potential buyers are asking at least 20-25 per cent off current property values before they will make a commitment. This is to cushion against future price falls. Indeed, expectations are running high among analysts for a further drop in home prices this year.
Given this scenario, some developers may find it sensible to mark down values of high-cost residential sites in one fell swoop (not just to current valuations but also to factor in likely future price movements), instead of making a series of piecemeal adjustments over a period of time.
Of course, such a strategy may be frowned upon as an exercise in earnings management in some quarters.
This time round, CapitaLand may not be the market leader in making provisions for its residential landbank.
Still, some analysts point out that breakeven costs for two sites it bought in 2007 - Farrer Court and Char Yong Gardens - are higher than what new projects on these sites would command today. Other listed property groups too acquired sites at steep prices during the property fever.
Examples include two 99-year leasehold condo plots on Sentosa Cove - the Beachfront Collection site that SC Global bought at $1,800 psf per plot ratio in 2007, and The Pinnacle Collection plot purchased by a Ho Bee and IOI Properties joint venture in early-2008 for $1,822 psf ppr.
The latter was the highest price paid for a condo site in the waterfront housing precinct. Then there was the 99-year leasehold Grangeford site, bought at $1,810 psf ppr by Overseas Union Enterprise in 2007.
In fact, a seasoned property agent says that pretty much most sites bought in 2007 would be below water today. There is indeed impetus for developers to make provisions.
However, there will be ramifications. Beyond issues of managing earnings, for some developers, there could be a real limit to how much they can write down their sites as provisions may trigger breaches in loan covenants. They may be asked by their banks to top up more equity.
That would stretch smaller developers, many of whom are already highly leveraged and cash strapped.
PROPERTY consultancy groups have issued reports over the past couple of weeks reporting declines in Singapore residential property values, especially for the high-end segment, in 2008 - with pretty grim prognoses for 2009 too. This will mount pressure on listed property groups to make provisions for Singapore residential sites.
Storm warning: For companies that acquired sites at prices which are above current values, booking provisions in Q4 2008 will avoid putting further strain on bottomlines in the tough year aheadWhen listed property groups did not announce such provisions in their Q3 results last year, the thinking among analysts was that these companies would take haircuts in their books on their pricier residential sites only in second-half 2009, or even later.
DTZ recently published a report estimating a 21.6 per cent decline in average prime non-landed freehold private home prices in 2008 and predicted a further 15 to 20 per cent drop this year.
CB Richard Ellis last week also said that in 2008, average prices of new luxury homes under construction had slipped 30-35 per cent in prime districts 9 and 10 and by 10-13 per cent in Marina Bay and Sentosa Cove.
Developers could argue that while property consulting groups may talk about declines in property values, there has been a scarcity of transactions to confirm the declines.
Nonetheless, for companies that acquired sites at high prices which are above current values, there's a case for booking the provisions in Q4 2008 - and moving on.
For one, most developers reported strong earnings in first-half 2008 that can help cushion against provisions on their Singapore residential landbank - if they choose to book them in their Q4 and full-year 2008 financial statements.
However, if they postpone the decision till 2009, the haircut could add further strain to bottomlines going ahead, which are already expected to weaken on the back of poor home sales, an all-round weaker economic showing and lower valuations for investment properties (these refer to assets like office buildings and shopping centres held for rental income). Right now the mood is so weak, that if developers were to announce provisions for their Q4 results, it would not dent sentiment much further. It may be better to flush out all the bad newsflow now.
Making provisions sooner also clears the decks for developers to price projects more attractively to tap any windows of opportunity to launch projects - and begin a new cycle of profit booking. As a big property group said over seven years ago when announcing massive residential provisions, the exercise provided it 'pricing flexibility to generate cashflow'.
Beyond writing down sites to current values, at least one big developer in the past went a step further and provided more than it perhaps needed to.
This is what many analysts say CapitaLand did in August 2001, when it marked down the value of its residential assets, mostly landbank, by $508 million, in its half-year result statement.
Analysts said the group wrote down the value to below then market prices. In short, it overprovided. The group's management refuted this point, but the strategy may be revisited by some property groups today spring cleaning their books.
Ask most property agents today and they'll tell you potential buyers are asking at least 20-25 per cent off current property values before they will make a commitment. This is to cushion against future price falls. Indeed, expectations are running high among analysts for a further drop in home prices this year.
Given this scenario, some developers may find it sensible to mark down values of high-cost residential sites in one fell swoop (not just to current valuations but also to factor in likely future price movements), instead of making a series of piecemeal adjustments over a period of time.
Of course, such a strategy may be frowned upon as an exercise in earnings management in some quarters.
This time round, CapitaLand may not be the market leader in making provisions for its residential landbank.
Still, some analysts point out that breakeven costs for two sites it bought in 2007 - Farrer Court and Char Yong Gardens - are higher than what new projects on these sites would command today. Other listed property groups too acquired sites at steep prices during the property fever.
Examples include two 99-year leasehold condo plots on Sentosa Cove - the Beachfront Collection site that SC Global bought at $1,800 psf per plot ratio in 2007, and The Pinnacle Collection plot purchased by a Ho Bee and IOI Properties joint venture in early-2008 for $1,822 psf ppr.
The latter was the highest price paid for a condo site in the waterfront housing precinct. Then there was the 99-year leasehold Grangeford site, bought at $1,810 psf ppr by Overseas Union Enterprise in 2007.
In fact, a seasoned property agent says that pretty much most sites bought in 2007 would be below water today. There is indeed impetus for developers to make provisions.
However, there will be ramifications. Beyond issues of managing earnings, for some developers, there could be a real limit to how much they can write down their sites as provisions may trigger breaches in loan covenants. They may be asked by their banks to top up more equity.
That would stretch smaller developers, many of whom are already highly leveraged and cash strapped.
扭转前两年猛涨形势 豪宅销量价格去年齐跌
Source : 《联合早报》January 8, 2009
金融海啸席卷，房市情况不明朗，豪华私宅的销售量和价格也跟着滑坡，扭转前几年一路飞涨的局面。
根据世邦魏理仕最新的房地产报告，在2008年，豪宅（包括公寓在内）的交易量只有1096宗，只相等于2007年数量的19％和06年的32％。
豪宅一般指的是位于第9、10邮区黄金地段的豪华住宅。
这家房地产咨询公司认为，2006到2007年时，私宅价格猛涨，尤其是那些具有投资潜能的房地产更是倍受买家青睐，加上这两年发展商推出大量的新豪宅，更助长了豪宅的销售量。
然而，去年的成交量虽少，但价格介于100万至700万元的豪宅，只占所有出售豪宅的89.6％（往年都是占90％以上）。其中介于100万至300万元的豪宅交易有777宗，只相等于07年的22％、06年的29％。
较令人惊讶的是，去年，以超过1000万元价格成交的豪宅，超过06年的22宗，达到82宗。世邦魏理仕董事王德万认为，这可能是因为06年缺乏这类房地产项目的缘故。
同时，房屋转售禁令也显示，在82宗交易中，有63宗交易集中在华业集团的公寓Nassim Park Residences。截至去年11月，这个在去年5月推出市场、共有100个单位的永久地契豪华公寓项目，已卖出68个单位，平均尺价为2900元。
价格回到2006年水平
在价格方面，豪宅的价格已大致回落到2006年的水平。我国房地产市场在2006年开始复苏，豪华洋房的价格在06年和07年一路飞涨。在2006年，豪宅的平均推出价格介于每平方英尺1800元至2600元之间，在2007年则上涨到介于2000元至4000元。
然而，在2008年底，次贷问题肆虐进而演变成全世界多个主要城市的房地产泡沫破裂，豪宅价格也应声下跌。本地豪宅的价格在2008年也下滑到每平方英尺2000元至2600元。
王德万举例说，现有的一些豪宅项目，如阿摩园(Ardmore Park)、四季园（Four Seasons Park）和葛兰轩（Grange Residences），其售价也从2006年的每平方英尺1600元至2000元，攀升到2007年的2000元至3300元，但到了去年底，则回落到2000元至2400元。
在2007年下半年，美国次贷危机的消息传出后，不但影响了豪宅价格，也让房地产买家踩了“紧急刹车”，导致多数在2007年下半年推出的豪宅项目，无法像2006年和2007年上半年市场旺热时那样全数卖出。在2008年11月，出售的豪宅单位只占总数的45％。
市场不景气，一些在房市旺热时买下黄金地段集体出售项目的发展商，因此决定出租这些单位，以延迟重新发展计划。其中一些项目就包括景福苑(Grangeford)、礼敦岭(Leedon Heights)、幸运大厦(Lucky Tower)和杨忠礼(YTL)集团的良园(Westwood Apartments)地段。
优质洋房销量也锐减
杨忠礼集团是在2007年11月，当房地产市场开始放缓时，以容积率每平方英尺2525元的超高尺价（即4亿3500万元），买下位于乌节林荫道的良园地段，创下本地集体出售纪录。
不仅豪华公寓受创，供应量有限的优质洋房(GCB)去年的销售量也锐减，从2006年的119个单位(总值12.3亿元)和2007年的87个单位(总值11.5亿元)，下滑到仅有49个单位(总值7.85亿元)。
王德万指出，优质洋房销售量在2006年创高峰，主要是因为房地产正开始从低谷朝上走，价格非常吸引人。
在2006年，一栋位于第10、11邮区，地皮面积介于1万5070至2万平方英尺的优质洋房，平均价格介于600万至1200万元之间。但在08年，价格已上涨到1200万至1600万元。同样的，一栋超过3万平方英尺的优质洋房，在2006年的售价介于1500万至3000万元，在2008年就卖2000万至4000万元。
以每平方英尺来计算，在短短两年，优质洋房的尺价已上涨了64％，从2006年的每平方英尺501元、2007年的681元到2008年的822元。因此，优质洋房的价格走势似乎异军突起，走势强劲。
但王德万也指出，若单以优质洋房的售价来分析可能会具误导性，因为优质洋房的价格取决于许多不同因素，包括地点、地皮面积、形状、面向、屋龄等。
他说：“当市场好的时候，买家愿意为优质洋房支付溢价。但像现在经济走下坡时，买家只愿支付市价。但降价抛售的情况非常罕见，因为多数优质洋房的业主都有持守能力。”
尽管如此，王德万也估计，接下来，豪宅市场依旧会“微温”，相等于去年下半年的水平，成交量相信不高。他也预测，优质洋房今年可能跌价10％，豪华公寓价格也可能会下滑10至15％。因为发展商手头上还有已推出但未卖完的项目，因此价格将面对进一步下跌的压力。
但他也相信，有一些豪宅发展商或许会选择持守，等阴霾散尽，市场复苏再将项目推出市场。
金融海啸席卷，房市情况不明朗，豪华私宅的销售量和价格也跟着滑坡，扭转前几年一路飞涨的局面。
根据世邦魏理仕最新的房地产报告，在2008年，豪宅（包括公寓在内）的交易量只有1096宗，只相等于2007年数量的19％和06年的32％。
豪宅一般指的是位于第9、10邮区黄金地段的豪华住宅。这家房地产咨询公司认为，2006到2007年时，私宅价格猛涨，尤其是那些具有投资潜能的房地产更是倍受买家青睐，加上这两年发展商推出大量的新豪宅，更助长了豪宅的销售量。
然而，去年的成交量虽少，但价格介于100万至700万元的豪宅，只占所有出售豪宅的89.6％（往年都是占90％以上）。其中介于100万至300万元的豪宅交易有777宗，只相等于07年的22％、06年的29％。
较令人惊讶的是，去年，以超过1000万元价格成交的豪宅，超过06年的22宗，达到82宗。世邦魏理仕董事王德万认为，这可能是因为06年缺乏这类房地产项目的缘故。
同时，房屋转售禁令也显示，在82宗交易中，有63宗交易集中在华业集团的公寓Nassim Park Residences。截至去年11月，这个在去年5月推出市场、共有100个单位的永久地契豪华公寓项目，已卖出68个单位，平均尺价为2900元。
价格回到2006年水平
在价格方面，豪宅的价格已大致回落到2006年的水平。我国房地产市场在2006年开始复苏，豪华洋房的价格在06年和07年一路飞涨。在2006年，豪宅的平均推出价格介于每平方英尺1800元至2600元之间，在2007年则上涨到介于2000元至4000元。
然而，在2008年底，次贷问题肆虐进而演变成全世界多个主要城市的房地产泡沫破裂，豪宅价格也应声下跌。本地豪宅的价格在2008年也下滑到每平方英尺2000元至2600元。
王德万举例说，现有的一些豪宅项目，如阿摩园(Ardmore Park)、四季园（Four Seasons Park）和葛兰轩（Grange Residences），其售价也从2006年的每平方英尺1600元至2000元，攀升到2007年的2000元至3300元，但到了去年底，则回落到2000元至2400元。
在2007年下半年，美国次贷危机的消息传出后，不但影响了豪宅价格，也让房地产买家踩了“紧急刹车”，导致多数在2007年下半年推出的豪宅项目，无法像2006年和2007年上半年市场旺热时那样全数卖出。在2008年11月，出售的豪宅单位只占总数的45％。
市场不景气，一些在房市旺热时买下黄金地段集体出售项目的发展商，因此决定出租这些单位，以延迟重新发展计划。其中一些项目就包括景福苑(Grangeford)、礼敦岭(Leedon Heights)、幸运大厦(Lucky Tower)和杨忠礼(YTL)集团的良园(Westwood Apartments)地段。
优质洋房销量也锐减
杨忠礼集团是在2007年11月，当房地产市场开始放缓时，以容积率每平方英尺2525元的超高尺价（即4亿3500万元），买下位于乌节林荫道的良园地段，创下本地集体出售纪录。
不仅豪华公寓受创，供应量有限的优质洋房(GCB)去年的销售量也锐减，从2006年的119个单位(总值12.3亿元)和2007年的87个单位(总值11.5亿元)，下滑到仅有49个单位(总值7.85亿元)。
王德万指出，优质洋房销售量在2006年创高峰，主要是因为房地产正开始从低谷朝上走，价格非常吸引人。
在2006年，一栋位于第10、11邮区，地皮面积介于1万5070至2万平方英尺的优质洋房，平均价格介于600万至1200万元之间。但在08年，价格已上涨到1200万至1600万元。同样的，一栋超过3万平方英尺的优质洋房，在2006年的售价介于1500万至3000万元，在2008年就卖2000万至4000万元。
以每平方英尺来计算，在短短两年，优质洋房的尺价已上涨了64％，从2006年的每平方英尺501元、2007年的681元到2008年的822元。因此，优质洋房的价格走势似乎异军突起，走势强劲。
但王德万也指出，若单以优质洋房的售价来分析可能会具误导性，因为优质洋房的价格取决于许多不同因素，包括地点、地皮面积、形状、面向、屋龄等。
他说：“当市场好的时候，买家愿意为优质洋房支付溢价。但像现在经济走下坡时，买家只愿支付市价。但降价抛售的情况非常罕见，因为多数优质洋房的业主都有持守能力。”
尽管如此，王德万也估计，接下来，豪宅市场依旧会“微温”，相等于去年下半年的水平，成交量相信不高。他也预测，优质洋房今年可能跌价10％，豪华公寓价格也可能会下滑10至15％。因为发展商手头上还有已推出但未卖完的项目，因此价格将面对进一步下跌的压力。
但他也相信，有一些豪宅发展商或许会选择持守，等阴霾散尽，市场复苏再将项目推出市场。
UK Home Values May Drop Further 20%
Source : The Business Times, January 8, 2009
(LONDON) UK homeowners should brace for an additional 20 per cent drop in the average value of their homes in 2009 as a vicious recession threatens to slash tumbling prices even further, data from the property derivatives market shows.
According to the latest swap pricing, average UK house prices are expected to fall by almost 30 per cent between December 2008 and December 2010, indicating that the worst of Britain's housing slump is far from over.
The projected 2009 fall is almost double the forecasts for UK house price depreciation from the Royal Institution of Chartered Surveyors (RICS), and house price index (HPI) compilers Rightmove and Hometrack.
Average UK house prices, as measured by the non-seasonally adjusted Halifax house price index, have already sunk to £162,848 (S$351,360) in November from a peak of £201,081 in August 2007.
Halifax posted an 18.9 per cent fall in UK house prices in 2008, while rival Nationwide recorded a 15.9 per cent fall over the same period. Both groups originally predicted static house prices in 2008 and have declined to make a 2009 forecast.
Above are expected annualised percentage changes in UK house prices based on non-seasonally adjusted Halifax house price index derivatives.
The young and relatively illiquid over-the-counter market provides investors with an opportunity to increase or hedge exposure to the UK housing market synthetically - in a cheaper and more efficient way than buying or selling bricks and mortar.
The table is based on indicative HPI swaps mid-price data provided by interbank brokers Tradition Property, CB Richard Ellis-GFI and Tullett Prebon, and is made up of simple averages. -- Reuters
(LONDON) UK homeowners should brace for an additional 20 per cent drop in the average value of their homes in 2009 as a vicious recession threatens to slash tumbling prices even further, data from the property derivatives market shows.
According to the latest swap pricing, average UK house prices are expected to fall by almost 30 per cent between December 2008 and December 2010, indicating that the worst of Britain's housing slump is far from over. The projected 2009 fall is almost double the forecasts for UK house price depreciation from the Royal Institution of Chartered Surveyors (RICS), and house price index (HPI) compilers Rightmove and Hometrack.
Average UK house prices, as measured by the non-seasonally adjusted Halifax house price index, have already sunk to £162,848 (S$351,360) in November from a peak of £201,081 in August 2007.
Halifax posted an 18.9 per cent fall in UK house prices in 2008, while rival Nationwide recorded a 15.9 per cent fall over the same period. Both groups originally predicted static house prices in 2008 and have declined to make a 2009 forecast.
Above are expected annualised percentage changes in UK house prices based on non-seasonally adjusted Halifax house price index derivatives.
The young and relatively illiquid over-the-counter market provides investors with an opportunity to increase or hedge exposure to the UK housing market synthetically - in a cheaper and more efficient way than buying or selling bricks and mortar.
The table is based on indicative HPI swaps mid-price data provided by interbank brokers Tradition Property, CB Richard Ellis-GFI and Tullett Prebon, and is made up of simple averages. -- Reuters
Apartment Rents In America Down 0.4% In Q4
Source : The Business Times, January 8, 2009
(BOSTON) Average rents for US apartments fell in the fourth quarter, as a sharp economic downturn and rising unemployment left Americans unwilling to pay higher prices, according to data released yesterday.
Rents fell 0.4 per cent in the final quarter of 2008, the first decline since early 2003, the study by real estate research firm Reis Inc found. The vacancy rate rose to 6.6 per cent, a level last seen in the first quarter of 2005, and up from 5.7 per cent a year earlier.
While few Americans typically move in the fourth quarter, as they face the onset of the northern hemisphere winter and several national holidays, the decline in rents shows that landlords are moving quickly to try to keep vacancies down, said Victor Calanog, director of research at Reis.
'The quantity of rental apartments might not be suffering as much, but the price paid by households to occupy those rental units is buckling under the strain, with landlords lowering asking rents and raising the amount of concessions they are willing to provide,' Mr Calanog said.
The current global economic downturn can be traced back to the decline in US home prices that began in the middle of the decade. That led to a collapse in the sub-prime lending market, which last year snowballed into a global credit crunch.
The slump is not confined to residential properties. Reis data released on Tuesday showed that office rents across the United States fell 1.2 per cent in the fourth quarter, as a slumping economy drove vacancy rates higher.
Shares of major US owners of apartment complexes including Apartment Investment and Management Co , Equity Residential and AvalonBay Communities Inc have been pummelled in recent months. -- Reuters
(BOSTON) Average rents for US apartments fell in the fourth quarter, as a sharp economic downturn and rising unemployment left Americans unwilling to pay higher prices, according to data released yesterday.
Rents fell 0.4 per cent in the final quarter of 2008, the first decline since early 2003, the study by real estate research firm Reis Inc found. The vacancy rate rose to 6.6 per cent, a level last seen in the first quarter of 2005, and up from 5.7 per cent a year earlier.
While few Americans typically move in the fourth quarter, as they face the onset of the northern hemisphere winter and several national holidays, the decline in rents shows that landlords are moving quickly to try to keep vacancies down, said Victor Calanog, director of research at Reis.
'The quantity of rental apartments might not be suffering as much, but the price paid by households to occupy those rental units is buckling under the strain, with landlords lowering asking rents and raising the amount of concessions they are willing to provide,' Mr Calanog said.
The current global economic downturn can be traced back to the decline in US home prices that began in the middle of the decade. That led to a collapse in the sub-prime lending market, which last year snowballed into a global credit crunch.
The slump is not confined to residential properties. Reis data released on Tuesday showed that office rents across the United States fell 1.2 per cent in the fourth quarter, as a slumping economy drove vacancy rates higher.
Shares of major US owners of apartment complexes including Apartment Investment and Management Co , Equity Residential and AvalonBay Communities Inc have been pummelled in recent months. -- Reuters
More US Commercial Property Loans Stressed
Source : The Business Times, January 8, 2009
Credit market reluctant to renew financing of loans
(NEW YORK) The number of stressed commercial property loans increased at an accelerated pace in December, challenging a major segment of the US bond market that has shown recent signs of stability.
The percentage of commercial mortgages placed with companies that specialise in servicing troubled loans jumped 0.32 percentage point to 1.61 per cent, the highest in about four years, according to JPMorgan Chase & Co.
Erosion in fundamentals of commercial property has been long forecast as the slowing economy reduces demand for office space and cuts revenues from hotels and retail shops. Investors in 2008 fled commercial mortgage-backed securities (CMBS) as signs of recession led to increased aversion from risky assets, even as overall delinquencies fell far short of those in US residential real estate.
Many analysts claimed that the increase in CMBS risk premiums has been excessive, even under catastrophic loss estimates, having been fuelled by funds seeking cash or reducing borrowings as the financial crisis deepened. But a rally in the US$700 billion CMBS market in December is sputtering this week amid further erosion in market fundamentals and fresh signs of investor selling.
'Sellers may have sensed a good exit point after the December (price improvement), but the CMBS fundamentals remain weak and are unquestionably worsening,' said Chris Sullivan, chief investment officer at the United Nations Federal Credit Union in New York.
So-called special servicers are grappling with a credit market reluctant to renew financing on billions of dollars in loans, even those backed by relatively strong properties.
Borrowers with loans at or near maturity, including mall-owner General Growth Properties, are being forced to seek extensions from creditors or sell assets to avert bankruptcy.
Loans on retail and office properties appear to be leading those on servicer 'watch lists', or have been transferred to special servicers, said Erin Stafford, an analyst at bond rater DBRS in Chicago. Multifamily property delinquencies are high, but may reveal more 'borrower issues' than a fundamental problems with the properties, she said.
Possible solutions for a delinquent loan on The Mix at Southbridge - a 20,000 square foot Scottsdale, Arizona, retail centre - included modifying the mortgage, offering deed in lieu of foreclosure or an asset sale as the borrower tries to win leases, according to a DBRS report on the 2007 Bear Stearns-issued CMBS that contains the loan.
The special servicer on a delinquent loan for the 9,895 sq ft Natomas Crossing retail centre in Sacramento, California, was making progress on a forbearance agreement before the borrower decided to sell, DBRS reported.
But commercial property values are falling after being propped up in the 2005 to 2007 period by lax underwritings and investors eager to boost paltry yields with risky debt.
'I think you're going to see people giving back the keys and saying 'We don't think the asset is worth the debt',' Mark Weiss, president of McLean, Virginia- based JER Investors Trust, said in a December interview. 'I think you will see people say 'My cash flow is great, there's just no financing today, so work through it with me.' It's going to be all across the spectrum.'
The market for commercial property is not dead, however. Glimcher Realty Trust on Tuesday said that it sold its Olathe, Kansas- based Great Mall for US$20.5 million and repaid a US$30 million mortgage that was to mature on Jan 12. - Reuters
Credit market reluctant to renew financing of loans
(NEW YORK) The number of stressed commercial property loans increased at an accelerated pace in December, challenging a major segment of the US bond market that has shown recent signs of stability.
The percentage of commercial mortgages placed with companies that specialise in servicing troubled loans jumped 0.32 percentage point to 1.61 per cent, the highest in about four years, according to JPMorgan Chase & Co.
Erosion in fundamentals of commercial property has been long forecast as the slowing economy reduces demand for office space and cuts revenues from hotels and retail shops. Investors in 2008 fled commercial mortgage-backed securities (CMBS) as signs of recession led to increased aversion from risky assets, even as overall delinquencies fell far short of those in US residential real estate.
Many analysts claimed that the increase in CMBS risk premiums has been excessive, even under catastrophic loss estimates, having been fuelled by funds seeking cash or reducing borrowings as the financial crisis deepened. But a rally in the US$700 billion CMBS market in December is sputtering this week amid further erosion in market fundamentals and fresh signs of investor selling.
'Sellers may have sensed a good exit point after the December (price improvement), but the CMBS fundamentals remain weak and are unquestionably worsening,' said Chris Sullivan, chief investment officer at the United Nations Federal Credit Union in New York.
So-called special servicers are grappling with a credit market reluctant to renew financing on billions of dollars in loans, even those backed by relatively strong properties.
Borrowers with loans at or near maturity, including mall-owner General Growth Properties, are being forced to seek extensions from creditors or sell assets to avert bankruptcy.
Loans on retail and office properties appear to be leading those on servicer 'watch lists', or have been transferred to special servicers, said Erin Stafford, an analyst at bond rater DBRS in Chicago. Multifamily property delinquencies are high, but may reveal more 'borrower issues' than a fundamental problems with the properties, she said.
Possible solutions for a delinquent loan on The Mix at Southbridge - a 20,000 square foot Scottsdale, Arizona, retail centre - included modifying the mortgage, offering deed in lieu of foreclosure or an asset sale as the borrower tries to win leases, according to a DBRS report on the 2007 Bear Stearns-issued CMBS that contains the loan.
The special servicer on a delinquent loan for the 9,895 sq ft Natomas Crossing retail centre in Sacramento, California, was making progress on a forbearance agreement before the borrower decided to sell, DBRS reported.
But commercial property values are falling after being propped up in the 2005 to 2007 period by lax underwritings and investors eager to boost paltry yields with risky debt.
'I think you're going to see people giving back the keys and saying 'We don't think the asset is worth the debt',' Mark Weiss, president of McLean, Virginia- based JER Investors Trust, said in a December interview. 'I think you will see people say 'My cash flow is great, there's just no financing today, so work through it with me.' It's going to be all across the spectrum.'
The market for commercial property is not dead, however. Glimcher Realty Trust on Tuesday said that it sold its Olathe, Kansas- based Great Mall for US$20.5 million and repaid a US$30 million mortgage that was to mature on Jan 12. - Reuters
Prime Office Rents In Taipei May Dip 5-10% In '09: DTZ
Source : The Business Times, January 8, 2009
(TAIPEI) Prime office rentals in Taiwan's capital Taipei could fall 5-10 per cent this year and the value of real estate across the island will likely shrink further due to a sluggish economy, property services company DTZ said yesterday.
Cloudy outlook: The value of real estate across Taiwan is expected to shrink further due to a sluggish economy
Listed companies that purchased land in Taipei after the third quarter of 2008 could also suffer a loss of about 20 per cent in the value of the real estate after Taiwan adopted new accounting rules on Jan 1.
'Things are looking very cloudy for the real estate sector right now, and the industry will have to decide whether or not they want to push prices down further,' said Billy Yen, general manager of DTZ's Taiwan unit. Office rentals in prime Taipei areas fell 2.26 per cent in the fourth quarter from the previous three months, logging the first decline since late 2004, as the global financial crisis sapped demand for high-end real estate.
An expected increase in the supply of office space and weakened demand could push rents down even further this year, Mr Yen said.
DTZ figures showed that the value of foreign investors' real estate investments fell to NT$19.9 billion (S$889.5 million) last year from NT$44.5 billion in 2007, and the company was 'even more conservative' on the sector's outlook for this year. -- Reuters
(TAIPEI) Prime office rentals in Taiwan's capital Taipei could fall 5-10 per cent this year and the value of real estate across the island will likely shrink further due to a sluggish economy, property services company DTZ said yesterday.
Cloudy outlook: The value of real estate across Taiwan is expected to shrink further due to a sluggish economyListed companies that purchased land in Taipei after the third quarter of 2008 could also suffer a loss of about 20 per cent in the value of the real estate after Taiwan adopted new accounting rules on Jan 1.
'Things are looking very cloudy for the real estate sector right now, and the industry will have to decide whether or not they want to push prices down further,' said Billy Yen, general manager of DTZ's Taiwan unit. Office rentals in prime Taipei areas fell 2.26 per cent in the fourth quarter from the previous three months, logging the first decline since late 2004, as the global financial crisis sapped demand for high-end real estate.
An expected increase in the supply of office space and weakened demand could push rents down even further this year, Mr Yen said.
DTZ figures showed that the value of foreign investors' real estate investments fell to NT$19.9 billion (S$889.5 million) last year from NT$44.5 billion in 2007, and the company was 'even more conservative' on the sector's outlook for this year. -- Reuters
HK Property Prices May Fall By 20% In H1
Source : The Business Times, January 8, 2009
Prices will fall as jobless rate rises, Credit Suisse analysts say
(HONG KONG) Hong Kong residential property prices may fall by about a fifth in the first half of this year, taking the decline from their peak last year to 41 per cent, Credit Suisse analysts wrote in a report.
'Given that prices have already fallen by 23 per cent, we believe the remaining downside for the property market is about 20 per cent,' Cusson Leung and Joyce Kwock, based in Hong Kong, and other analysts wrote in a report dated Tuesday . Prices will fall as the jobless rate rises, they wrote.
The Hang Seng Property Index, tracking six of Hong Kong's biggest developers, has gained 12 per cent this year, amid signs of a rebound in real estate prices and transaction volumes. The gauge slumped 55 per cent in 2008, making it the worst performer among four industry groups within the benchmark Hang Seng Index.
Hong Kong's Land Registry reported this week that the number of residential units sold in December rose 44 per cent compared with November. Still, sales last month were 65 per cent lower than in December 2007.
'We believe it is not time to chase the entire sector now,' Credit Suisse said in the report.
Office rents in Hong Kong are expected to fall this year as vacancy rates climb, Credit Suisse said. Rents in shopping malls may drop as much as 20 per cent as private consumption shrinks, they said.
Cheung Kong (Holdings) Ltd and Sun Hung Kai Properties Ltd, Hong Kong's two biggest developers by market value, remain top picks at Credit Suisse with 'outperform' ratings, the report said. Sun Hung Kai has successfully marketed several projects recently and will start sales on another after the Chinese New Year holiday later this month, the analysts wrote.
Hong Kong landlords Wharf (Holdings) Ltd and Swire Pacific Ltd are also top picks because their offices in less-central locations and prime shopping malls will be relatively less affected than their rivals' will be, the analysts wrote. -- Bloomberg
Prices will fall as jobless rate rises, Credit Suisse analysts say
(HONG KONG) Hong Kong residential property prices may fall by about a fifth in the first half of this year, taking the decline from their peak last year to 41 per cent, Credit Suisse analysts wrote in a report.
'Given that prices have already fallen by 23 per cent, we believe the remaining downside for the property market is about 20 per cent,' Cusson Leung and Joyce Kwock, based in Hong Kong, and other analysts wrote in a report dated Tuesday . Prices will fall as the jobless rate rises, they wrote.
The Hang Seng Property Index, tracking six of Hong Kong's biggest developers, has gained 12 per cent this year, amid signs of a rebound in real estate prices and transaction volumes. The gauge slumped 55 per cent in 2008, making it the worst performer among four industry groups within the benchmark Hang Seng Index.
Hong Kong's Land Registry reported this week that the number of residential units sold in December rose 44 per cent compared with November. Still, sales last month were 65 per cent lower than in December 2007.
'We believe it is not time to chase the entire sector now,' Credit Suisse said in the report.
Office rents in Hong Kong are expected to fall this year as vacancy rates climb, Credit Suisse said. Rents in shopping malls may drop as much as 20 per cent as private consumption shrinks, they said.
Cheung Kong (Holdings) Ltd and Sun Hung Kai Properties Ltd, Hong Kong's two biggest developers by market value, remain top picks at Credit Suisse with 'outperform' ratings, the report said. Sun Hung Kai has successfully marketed several projects recently and will start sales on another after the Chinese New Year holiday later this month, the analysts wrote.
Hong Kong landlords Wharf (Holdings) Ltd and Swire Pacific Ltd are also top picks because their offices in less-central locations and prime shopping malls will be relatively less affected than their rivals' will be, the analysts wrote. -- Bloomberg
CBRE: More Than Half Of High-End Condos Unsold
Source : The Business Times, January 8, 2009
It also sees prices falling 10-15% from $2,000-$2,400 in Q4 last year
Fifty-five per cent of about 2,200 units in luxury projects launched by developers between 2006 and 2008 remained unsold in November 2008, according to CB Richard Ellis (CBRE).
And the property consultancy firm is tipping a 10-15 per cent fall this year in the price of luxury apartments/condos, which slid to about $2,000 to $2,400 psf of strata area in Q4 last year from $2,000-3,300 psf a year earlier.
The figures refer to existing luxury developments such as Ardmore Park, Four Seasons Park and Grange Residences.
As for new luxury condos/apartments, the average launch price fell to $2,000 to $2,600 psf in Q4 2008 from $2,000 to $4,000 psf in Q4 2007, says CBRE.
Caveats for only 1,096 luxury apartments/condos in prime districts 9 and 10 were lodged in 2008 based on filings by Jan 7, 2009 - a mere 19 per cent and 32 per cent of sales in 2007 and 2006 respectively.
The number of apartments sold for more than $10 million dropped to 82 last year from 143 in 2007. Still, the 2008 figure was above the 22 units sold in 2006.
Most luxury projects launched in 2006 and early 2007 are fully sold, such as Ardmore II and Tate Residences.
But several projects, particularly those released during or after second-half 2007, remain on the market. 'By then, news of the sub-prime crisis had caused the market to pull the brakes,' CBRE said.
In the landed housing segment, the firm predicts a drop of about 10 per cent this year in the price of Good Class Bungalows (GCBs).
Last year, the average price of GCBs rose 20.7 per cent to a record $822 per sq ft (psf) of land area.
'GCB prices recorded very strong growth in 2006-7,' said CBRE director (luxury homes) Douglas Wong. 'This upswing in prices spilled over into the first half of last year. Right up to July 2008, average GCB prices continued to raise the benchmark.
'Also, the capacity of owners to hold prices added to the resilience in this segment in the second half of 2008.'
The highest psf price in a GCB transaction last year was $1,303 for a property in Leedon Road with only 21,097 sq ft of land. In absolute price terms, it fetched $27.5 million.
The all-time record price for a GCB in Singapore is $1,899 psf, set in October 2007 when 32H Nassim Road was sold for $25.5 million.
While the average price of GCBs rose last year, the number and value of transactions fell.
Forty-nine GCBs changed hands for a total of $785 million in 2008, down from 87 worth $1.15 billion in 2007 and 119 worth $1.23 billion in 2006.
CBRE said: 'Going forward, we expect the activity in the luxury residential market to be lukewarm, similar to the pace in H2 2008. Hence, the number of GCBs and luxury apartments transacted will be small.'
It also sees prices falling 10-15% from $2,000-$2,400 in Q4 last year
Fifty-five per cent of about 2,200 units in luxury projects launched by developers between 2006 and 2008 remained unsold in November 2008, according to CB Richard Ellis (CBRE).
And the property consultancy firm is tipping a 10-15 per cent fall this year in the price of luxury apartments/condos, which slid to about $2,000 to $2,400 psf of strata area in Q4 last year from $2,000-3,300 psf a year earlier.The figures refer to existing luxury developments such as Ardmore Park, Four Seasons Park and Grange Residences.
As for new luxury condos/apartments, the average launch price fell to $2,000 to $2,600 psf in Q4 2008 from $2,000 to $4,000 psf in Q4 2007, says CBRE.
Caveats for only 1,096 luxury apartments/condos in prime districts 9 and 10 were lodged in 2008 based on filings by Jan 7, 2009 - a mere 19 per cent and 32 per cent of sales in 2007 and 2006 respectively.
The number of apartments sold for more than $10 million dropped to 82 last year from 143 in 2007. Still, the 2008 figure was above the 22 units sold in 2006.
Most luxury projects launched in 2006 and early 2007 are fully sold, such as Ardmore II and Tate Residences.
But several projects, particularly those released during or after second-half 2007, remain on the market. 'By then, news of the sub-prime crisis had caused the market to pull the brakes,' CBRE said.
In the landed housing segment, the firm predicts a drop of about 10 per cent this year in the price of Good Class Bungalows (GCBs).
Last year, the average price of GCBs rose 20.7 per cent to a record $822 per sq ft (psf) of land area.
'GCB prices recorded very strong growth in 2006-7,' said CBRE director (luxury homes) Douglas Wong. 'This upswing in prices spilled over into the first half of last year. Right up to July 2008, average GCB prices continued to raise the benchmark.
'Also, the capacity of owners to hold prices added to the resilience in this segment in the second half of 2008.'
The highest psf price in a GCB transaction last year was $1,303 for a property in Leedon Road with only 21,097 sq ft of land. In absolute price terms, it fetched $27.5 million.
The all-time record price for a GCB in Singapore is $1,899 psf, set in October 2007 when 32H Nassim Road was sold for $25.5 million.
While the average price of GCBs rose last year, the number and value of transactions fell.
Forty-nine GCBs changed hands for a total of $785 million in 2008, down from 87 worth $1.15 billion in 2007 and 119 worth $1.23 billion in 2006.
CBRE said: 'Going forward, we expect the activity in the luxury residential market to be lukewarm, similar to the pace in H2 2008. Hence, the number of GCBs and luxury apartments transacted will be small.'
Property Investment Sales Fall In Q4 '08
Source : The Business Times, January 8, 2009
It is the lowest level in five years, says a DTZ report
Property investment sales in the fourth quarter of 2008 fell to the lowest level since Q4 2003, with most players sidelined as prices weakened and credit tightened, a DTZ report shows.
Dormant market: The residential sector slowed tremendously in 2008 as interest in collective sales abated
Total transaction volume was just $352 million - a 74 per cent fall from Q3 2008. With sales falling rapidly towards the end of the year, total transaction value in 2008 plunged to $15.8 billion - a mere one-third of that in 2007 and two-thirds of that in 2006.
The investment market is expected to remain dormant in the first three to six months of 2009 as investors wait for prices to fall further and for tight credit conditions to ease, DTZ said.
Transactions will be confined to the private sector as government land sales through the confirmed list have been suspended and reserve sites are unlikely to be triggered.
'The second half of 2009 is likely to see more deals as the price gap between sellers and buyers closes,' said Shaun Poh, DTZ's senior director of investment advisory services.
'How much the investment market recovers will depend on the depth and length of the economic and property downturns.'
Although there was no major office deal in the second half of 2008, the office sector was still the main driver of investment sales during the year with $5.6 billion or 35 per cent of total sales - an increase from 24 per cent in 2007. All the major office transactions were in the first half of 2008. In the second half, all office deals were below $30 million.
The residential sector slowed tremendously in 2008 as interest in collective sales abated. Residential transaction value tumbled 82 per cent year-on-year to only $3.9 billion, accounting for 25 per cent of total sales, compared with 49 per cent in 2007.
There were only seven residential collective sales in 2008, compared with 150 in 2007. 'With high construction cost, financing difficulties and weak market sentiments, developers are shunning residential collective sales,' DTZ said.
Transactions in the industrial sector, by contrast, increased in 2008 as investors shied away from high office prices. Some $3.4 billion of industrial property was transacted, or double the amount in 2007.
About half of 2008's deals resulted from the divestment of JTC's industrial properties in Q2. And despite the restrained mood in Q4, several notable industrial transactions took place, including the purchase of Applied Materials Building by German fund manager Union Investment.
DTZ said that investment by real estate investment trusts (Reits) was subdued in the second half of 2008, as they shifted attention away from acquisitions and focused on refinancing and deleveraging.
There were only three purchases by Reits in Q3 2008 and just one in Q4, compared with 22 purchases in the first half of the year.
It is the lowest level in five years, says a DTZ report
Property investment sales in the fourth quarter of 2008 fell to the lowest level since Q4 2003, with most players sidelined as prices weakened and credit tightened, a DTZ report shows.
Dormant market: The residential sector slowed tremendously in 2008 as interest in collective sales abatedTotal transaction volume was just $352 million - a 74 per cent fall from Q3 2008. With sales falling rapidly towards the end of the year, total transaction value in 2008 plunged to $15.8 billion - a mere one-third of that in 2007 and two-thirds of that in 2006.
The investment market is expected to remain dormant in the first three to six months of 2009 as investors wait for prices to fall further and for tight credit conditions to ease, DTZ said.
Transactions will be confined to the private sector as government land sales through the confirmed list have been suspended and reserve sites are unlikely to be triggered.
'The second half of 2009 is likely to see more deals as the price gap between sellers and buyers closes,' said Shaun Poh, DTZ's senior director of investment advisory services.
'How much the investment market recovers will depend on the depth and length of the economic and property downturns.'
Although there was no major office deal in the second half of 2008, the office sector was still the main driver of investment sales during the year with $5.6 billion or 35 per cent of total sales - an increase from 24 per cent in 2007. All the major office transactions were in the first half of 2008. In the second half, all office deals were below $30 million.
The residential sector slowed tremendously in 2008 as interest in collective sales abated. Residential transaction value tumbled 82 per cent year-on-year to only $3.9 billion, accounting for 25 per cent of total sales, compared with 49 per cent in 2007.
There were only seven residential collective sales in 2008, compared with 150 in 2007. 'With high construction cost, financing difficulties and weak market sentiments, developers are shunning residential collective sales,' DTZ said.
Transactions in the industrial sector, by contrast, increased in 2008 as investors shied away from high office prices. Some $3.4 billion of industrial property was transacted, or double the amount in 2007.
About half of 2008's deals resulted from the divestment of JTC's industrial properties in Q2. And despite the restrained mood in Q4, several notable industrial transactions took place, including the purchase of Applied Materials Building by German fund manager Union Investment.
DTZ said that investment by real estate investment trusts (Reits) was subdued in the second half of 2008, as they shifted attention away from acquisitions and focused on refinancing and deleveraging.
There were only three purchases by Reits in Q3 2008 and just one in Q4, compared with 22 purchases in the first half of the year.
