Source : The Straits Times, Feb 10, 2009
PROPERTY investment firm IP Global has said Singapore's residential market is not worth a look until at least six months from now.
The Hong Kong-based company, which helps property investors buy in emerging and recovering markets, expects prices in Singapore to fall further and recommends waiting until these return to pre-rally levels.
Until then, it says, the market will remain unattractive to foreign investors.
Strong demand sent property prices surging through the roof in 2007. Intense speculation then created a lot of froth, resulting in a mini-crash, said IP Global managing director Tim Murphy.
The fall in Singapore's residential property market, hence, started a year before the onset of the recession. 'I don't think anything the Government will do will revive the market now,' said Mr Murphy.
Private home prices will only flatten out by the third or fourth quarter, he said.
Property players have been hoping the Government will do something to stimulate demand, such as deferring payment of the stamp duty.
Mr Murphy's advice to investors: 'Look at yields, look at supply, look at cost of funds and spend five times longer than you normally do finding something to buy. There will be lots of deals in the next six to 12 months,' he said.
If he were to enter the Singapore market later, his interest would not be in luxury homes - where prices have fallen furthest and are expected to continue falling faster than in the other sectors - but in reasonably-priced homes in prime districts.
IP Global, which also invests in commercial properties, believes that the short-term office oversupply in Singapore is worrying. Office rents plunged by nearly 20 per cent in the fourth quarter of last year, while supply continues to grow.
On the upside, Mr Murphy believes that the property market has a number of factors working in its favour, such as strong population growth and its strategic position as a commercial hub in the region.
Wednesday, February 11, 2009
Liang Court Shops Hit As Japan Expats Exit
Source : The Straits Times, Feb 10, 2009
STORES serving the Japanese market in Liang Court are bemoaning a big drop in sales, with several saying they will give up their leases if the poor business persists.
An exodus of Japanese expats has resulted in some stores in Liang Court, which serve the Japanese market, suffering a big drop in sales. One example is Liu Xiang Tea Craft, where most customers are wives of Japanese workers posted here. -- ST PHOTO: SAMUEL HE
The dip was bad enough for the mall's landlord, AsiaMalls, to stage a $40 million revamp last year to move away from its roots as a shopping centre catering mainly to Japanese expatriates and appeal to a wider group.
It included reorganising the mall's layout and increasing visibility for shop fronts. Tenants such as Taiwanese restaurant Shin Yeh and furniture shop Living Works were introduced.
It was a necessary move.
According to the Japanese Association, many of its members have left recently, and more are set to go next month - the month Japanese firms traditionally end their contracts.
The association's secretary-general, Mr Kazuo Sugino, said he 'expects that many more expats will be asked to return home after March due to the economic downturn'.
There were 25,969 Japanese expats in Singapore in 2007, the latest year for which figures are available. This was a slight drop from the 26,370 in 2006.
Japanese housewife I. Hiroko, 42, knows of 10 Japanese families which will be leaving next month and wonders when it will be her turn to leave.
All this has left some Liang Court stores, which sell everything from Chinese tea to bookmarks, reeling.
In the past two months, Liu Xiang Tea Craft has lost 25 per cent of its regular clientele, mainly tea-appreciation students, along with half of its walk-in customers. Almost all the customers are wives of Japanese workers posted here.
It looks set to get even worse: 12 more students will be packing their teacups to leave next month.
'Companies usually give them two months' notice; then they are gone, and so is my customer base,' said Mr Lee Chee Keong, the 56-year-old owner of the store.
Some tenants are nearly at the end of their tether.
A Big John outlet on the first floor, which sells a popular Japanese brand of jeans, has been in the red since it opened in June last year. Its director, Mr Vincent Chua, 54, will not be renewing his lease, which has a year and three months to go.
'There are no customers, what can we do? My staff just sit around and look at walls. The Japanese just go to the supermarket and go home,' he said.
In contrast, shops selling goods that appeal to a wider market are not complaining.
A spokesman for Subway food outlet said business was 'better than anticipated' and he had no problems covering costs. A spokesman for electronics retailer Audiohouse said business had been 'quite swift' during the soft opening last August and grand opening in December.
The revamp resulted in shopper traffic hitting 700,000 in December, up 148 per cent from the previous year, said Ms Stephnie Ho, general manager of AsiaMall Management. Last month, shopper traffic was about 590,000.
The idea, she said, was to extend the mall's repertoire to 'broaden its appeal'.
She added that over the past seven months, the mall has purchased tenants' vouchers and products worth $92,000.
'This directly goes back to the tenants as sales chalked up. In our promotions for 2009, we will continue with this strategy to boost sales,' she said.
Liang Court started life in 1983, catering mainly to the Japanese market.
For a while, boosted by the anchor tenant Daimaru, a popular Japanese department store, it was a shining light in Singapore's retail industry, despite being quite a way off the Orchard Road shopping belt.
It is perhaps best remembered for its extravagant Christmas decorations, which electrified crowds and earned accolades from the then Singapore Tourist Promotion Board.
But Liang Court's history provides little comfort for Perpetua Fashion.
Two months ago, the women's store was selling about 10 dresses a week to Japanese customers. 'Now we would be lucky if we sell even a third of that,' said shop assistant Marienel Galano, 23. 'If there is increased traffic from the revamp, we are not seeing it.'
STORES serving the Japanese market in Liang Court are bemoaning a big drop in sales, with several saying they will give up their leases if the poor business persists.
An exodus of Japanese expats has resulted in some stores in Liang Court, which serve the Japanese market, suffering a big drop in sales. One example is Liu Xiang Tea Craft, where most customers are wives of Japanese workers posted here. -- ST PHOTO: SAMUEL HEThe dip was bad enough for the mall's landlord, AsiaMalls, to stage a $40 million revamp last year to move away from its roots as a shopping centre catering mainly to Japanese expatriates and appeal to a wider group.
It included reorganising the mall's layout and increasing visibility for shop fronts. Tenants such as Taiwanese restaurant Shin Yeh and furniture shop Living Works were introduced.
It was a necessary move.
According to the Japanese Association, many of its members have left recently, and more are set to go next month - the month Japanese firms traditionally end their contracts.
The association's secretary-general, Mr Kazuo Sugino, said he 'expects that many more expats will be asked to return home after March due to the economic downturn'.
There were 25,969 Japanese expats in Singapore in 2007, the latest year for which figures are available. This was a slight drop from the 26,370 in 2006.
Japanese housewife I. Hiroko, 42, knows of 10 Japanese families which will be leaving next month and wonders when it will be her turn to leave.
All this has left some Liang Court stores, which sell everything from Chinese tea to bookmarks, reeling.
In the past two months, Liu Xiang Tea Craft has lost 25 per cent of its regular clientele, mainly tea-appreciation students, along with half of its walk-in customers. Almost all the customers are wives of Japanese workers posted here.
It looks set to get even worse: 12 more students will be packing their teacups to leave next month.
'Companies usually give them two months' notice; then they are gone, and so is my customer base,' said Mr Lee Chee Keong, the 56-year-old owner of the store.
Some tenants are nearly at the end of their tether.
A Big John outlet on the first floor, which sells a popular Japanese brand of jeans, has been in the red since it opened in June last year. Its director, Mr Vincent Chua, 54, will not be renewing his lease, which has a year and three months to go.
'There are no customers, what can we do? My staff just sit around and look at walls. The Japanese just go to the supermarket and go home,' he said.
In contrast, shops selling goods that appeal to a wider market are not complaining.
A spokesman for Subway food outlet said business was 'better than anticipated' and he had no problems covering costs. A spokesman for electronics retailer Audiohouse said business had been 'quite swift' during the soft opening last August and grand opening in December.
The revamp resulted in shopper traffic hitting 700,000 in December, up 148 per cent from the previous year, said Ms Stephnie Ho, general manager of AsiaMall Management. Last month, shopper traffic was about 590,000.
The idea, she said, was to extend the mall's repertoire to 'broaden its appeal'.
She added that over the past seven months, the mall has purchased tenants' vouchers and products worth $92,000.
'This directly goes back to the tenants as sales chalked up. In our promotions for 2009, we will continue with this strategy to boost sales,' she said.
Liang Court started life in 1983, catering mainly to the Japanese market.
For a while, boosted by the anchor tenant Daimaru, a popular Japanese department store, it was a shining light in Singapore's retail industry, despite being quite a way off the Orchard Road shopping belt.
It is perhaps best remembered for its extravagant Christmas decorations, which electrified crowds and earned accolades from the then Singapore Tourist Promotion Board.
But Liang Court's history provides little comfort for Perpetua Fashion.
Two months ago, the women's store was selling about 10 dresses a week to Japanese customers. 'Now we would be lucky if we sell even a third of that,' said shop assistant Marienel Galano, 23. 'If there is increased traffic from the revamp, we are not seeing it.'
Gillman Heights En Bloc Sale - ‘Drafting Flaw’ Behind Saga:
Source : TODAY, Tuesday, February 10, 2009
IN DISMISSING yesterday the last-ditch appeal by 10 minority owners against the collective sale of Gillman Heights (picture), Singapore’s highest court has set down the clear criteria, going forward, for all other privatised HUDC estates that wish to go en bloc.
In a case that hinged on the completion date of the estate, the Court of Appeal ruled that the age of HUDC estates should be pegged to the date when they became “fit for occupation” instead of when they were awarded the temporary occupation permit (TOP) or certificate of statutory completion (CSC).
Chief Justice Chan Sek Keong, who delivered the judgment, told a packed courtroom that Parliament had indeed intended the law on collective sales to apply to HUDC estates when it was enacted in 1999. But the use of an estate’s TOP or CSC as a point of reference for its age was a “drafting flaw”, he said.
This created an “omission in respect of privatised HUDC estates” because HUDC estates, which were built as a form of public housing, are only awarded their TOPs or CSCs when privatisation works have been completed.
There are 18 HUDC estates in Singapore.
The minority owners’ two-year fight to scupper Ankerite’s$548-million purchase at every turn — through contests before the Strata Titles Board and the High Court previously — had centred around the fact that the 607-unit, 99-year leasehold estate had only received its CSC in 2002, which meant that any collective sale needed 90 per cent approval to be legal.
The law states that 80 per cent is needed for developments more than 10 years old, and 90 per cent if it is younger.
In Gillman Heights’ case, only 87.54 per cent of owners had agreed to the sale, but yesterday’s ruling means the estate has been judged to be more than 22 years old because it was completed in December 1994.
The Appellate Court — comprising CJ Chan, Justice Andrew Phang and Justice V K Rajah — also ordered the 10 appellants to pay the costs of yesterday’s appeal and half of the costs in earlier proceedings after Senior Counsel Michael Hwang, who represented the minority owners, argued that it was “nobody’s fault” that there was drafting flaw in the legislation.
Some minority owners who spoke to Today said they were “satisfied” with the decision.
One of them, who declined to be named, said the entire appeal was about “righting the wrong” — which eventually proved to be the drafting flaw.
“But now that they have admitted that there was a drafting flaw, why are we penalised for it?” he asked, referring to the costs — which is understood to be in the region of $300,000 in total — they would have to bear.
IN DISMISSING yesterday the last-ditch appeal by 10 minority owners against the collective sale of Gillman Heights (picture), Singapore’s highest court has set down the clear criteria, going forward, for all other privatised HUDC estates that wish to go en bloc.
In a case that hinged on the completion date of the estate, the Court of Appeal ruled that the age of HUDC estates should be pegged to the date when they became “fit for occupation” instead of when they were awarded the temporary occupation permit (TOP) or certificate of statutory completion (CSC).Chief Justice Chan Sek Keong, who delivered the judgment, told a packed courtroom that Parliament had indeed intended the law on collective sales to apply to HUDC estates when it was enacted in 1999. But the use of an estate’s TOP or CSC as a point of reference for its age was a “drafting flaw”, he said.
This created an “omission in respect of privatised HUDC estates” because HUDC estates, which were built as a form of public housing, are only awarded their TOPs or CSCs when privatisation works have been completed.
There are 18 HUDC estates in Singapore.
The minority owners’ two-year fight to scupper Ankerite’s$548-million purchase at every turn — through contests before the Strata Titles Board and the High Court previously — had centred around the fact that the 607-unit, 99-year leasehold estate had only received its CSC in 2002, which meant that any collective sale needed 90 per cent approval to be legal.
The law states that 80 per cent is needed for developments more than 10 years old, and 90 per cent if it is younger.
In Gillman Heights’ case, only 87.54 per cent of owners had agreed to the sale, but yesterday’s ruling means the estate has been judged to be more than 22 years old because it was completed in December 1994.
The Appellate Court — comprising CJ Chan, Justice Andrew Phang and Justice V K Rajah — also ordered the 10 appellants to pay the costs of yesterday’s appeal and half of the costs in earlier proceedings after Senior Counsel Michael Hwang, who represented the minority owners, argued that it was “nobody’s fault” that there was drafting flaw in the legislation.
Some minority owners who spoke to Today said they were “satisfied” with the decision.
One of them, who declined to be named, said the entire appeal was about “righting the wrong” — which eventually proved to be the drafting flaw.
“But now that they have admitted that there was a drafting flaw, why are we penalised for it?” he asked, referring to the costs — which is understood to be in the region of $300,000 in total — they would have to bear.
Gillman Heights Sale Gets Go-Ahead
Source : The Straits Times, Feb 10, 2009
Appeals court rules that only 80% consent required for collective sale
THE sale of Gillman Heights has been given the final green light, after Singapore's highest court dismissed a last-ditch plea by minority owners to overturn the sale.
Minority owners, who have fought the collective sale of Gillman Heights since 2007, said they were disappointed, but not surprised by the ruling. -- PHOTO: CAPITALAND
This marks the end of the two-year en-bloc saga which began when buyers CapitaLand, Hotel Properties and two private funds inked a $548 million deal to buy the 607-unit, 99-year leasehold estate in Alexandra Road in 2007.
Majority owners yesterday heaved a sigh of relief, while minority owners told The Straits Times they were 'disappointed, but not surprised' at the decision.
The Court of Appeal's verdict, delivered to a packed courtroom yesterday afternoon, clarifies some ambiguity in the laws surrounding collective sales of former HUDC estates.
Senior Counsel Michael Hwang, acting for the 10 minority owners, had argued in the appeal's hearing last Tuesday that Gillman Heights needed 90 per cent level of consent because it received its certificate of statutory completion (CSC) and temporary occupation permit (TOP) only in 2002.
This document is usually used as a reference to determine the age of an estate, which in turn, determines if 80 or 90 per cent level of consent is required for a collective sale. If the development is more than 10 years old, it needs 80 per cent, 90 if it is less than that.
At Gillman, about 87.54 per cent of owners signed on to the en-bloc sale. A 90 per cent requirement would mean the sale could not go through.
The estate, although physically completed in 1984, received its CSC and TOP only in 2002 because it had began its privatisation process in 1996.
Prior to that, it did not need a CSC or TOP because it was not private property.
Mr Hwang argued that the law would have made a provision for HUDC estates if it did not mean for the usual requirements to apply.
However, Chief Justice Chan Sek Keong yesterday dismissed this, saying that there had been a 'drafting flaw', as a literal interpretation requiring the use of CSC and TOP would have defeated the purpose of the collective sale laws.
This purpose was to promote the rejuvenation of old estates, and the laws apply to all strata developments, which by definition included privatised HUDC estates, he said. He agreed with a previous High Court ruling that Gillman needed only 80 per cent.
The sale of Gillman Heights was approved by the Strata Titles Board in late 2007, but minority owners have fought the sale at every turn, appealing STB's decision at the High Court, and when this failed, to the Court of Appeal.
One minority owner, Mr Kok Chong Weng, said yesterday: 'It's sad we have to lose our homes, but we weren't surprised by the decision.'
He estimates that total costs of fighting the sale would be more than $300,000 for the minority owners.
'The costs are high, but we wanted to see the final card and hear it from the highest authority,' he said.
Another minority owner who declined to be named pointed out that if they had not appealed last year, while the market was still registering high property prices, they would have been unable to buy a replacement unit with the sale proceeds.
Prices have since fallen, so they are now better placed to buy replacements.
Majority owners, on the other hand, were relieved at the conclusion of Gillman's long drawn-out collective sale.
Its sales committee chairman Robert Wiener said: 'It's been in limbo for a long time, now it's finally ended.
'It's a huge relief for many owners who had bought second properties and were really worried.'
The sale will now take about three months to compete, and all eyes are on how the CapitaLand-led joint venture will redevelop the estate.
Analysts that The Straits Times spoke to speculated that the developer might put the estate on the rental market while the property market is in the doldrums.
Knight Frank director of research and development Nicholas Mak pointed out that the sale price of each unit - about $870,000 to $950,000 is still 'pretty attractive', especially with the current downturn.
Appeals court rules that only 80% consent required for collective sale
THE sale of Gillman Heights has been given the final green light, after Singapore's highest court dismissed a last-ditch plea by minority owners to overturn the sale.
Minority owners, who have fought the collective sale of Gillman Heights since 2007, said they were disappointed, but not surprised by the ruling. -- PHOTO: CAPITALANDThis marks the end of the two-year en-bloc saga which began when buyers CapitaLand, Hotel Properties and two private funds inked a $548 million deal to buy the 607-unit, 99-year leasehold estate in Alexandra Road in 2007.
Majority owners yesterday heaved a sigh of relief, while minority owners told The Straits Times they were 'disappointed, but not surprised' at the decision.
The Court of Appeal's verdict, delivered to a packed courtroom yesterday afternoon, clarifies some ambiguity in the laws surrounding collective sales of former HUDC estates.
Senior Counsel Michael Hwang, acting for the 10 minority owners, had argued in the appeal's hearing last Tuesday that Gillman Heights needed 90 per cent level of consent because it received its certificate of statutory completion (CSC) and temporary occupation permit (TOP) only in 2002.
This document is usually used as a reference to determine the age of an estate, which in turn, determines if 80 or 90 per cent level of consent is required for a collective sale. If the development is more than 10 years old, it needs 80 per cent, 90 if it is less than that.
At Gillman, about 87.54 per cent of owners signed on to the en-bloc sale. A 90 per cent requirement would mean the sale could not go through.
The estate, although physically completed in 1984, received its CSC and TOP only in 2002 because it had began its privatisation process in 1996.
Prior to that, it did not need a CSC or TOP because it was not private property.
Mr Hwang argued that the law would have made a provision for HUDC estates if it did not mean for the usual requirements to apply.
However, Chief Justice Chan Sek Keong yesterday dismissed this, saying that there had been a 'drafting flaw', as a literal interpretation requiring the use of CSC and TOP would have defeated the purpose of the collective sale laws.
This purpose was to promote the rejuvenation of old estates, and the laws apply to all strata developments, which by definition included privatised HUDC estates, he said. He agreed with a previous High Court ruling that Gillman needed only 80 per cent.
The sale of Gillman Heights was approved by the Strata Titles Board in late 2007, but minority owners have fought the sale at every turn, appealing STB's decision at the High Court, and when this failed, to the Court of Appeal.
One minority owner, Mr Kok Chong Weng, said yesterday: 'It's sad we have to lose our homes, but we weren't surprised by the decision.'
He estimates that total costs of fighting the sale would be more than $300,000 for the minority owners.
'The costs are high, but we wanted to see the final card and hear it from the highest authority,' he said.
Another minority owner who declined to be named pointed out that if they had not appealed last year, while the market was still registering high property prices, they would have been unable to buy a replacement unit with the sale proceeds.
Prices have since fallen, so they are now better placed to buy replacements.
Majority owners, on the other hand, were relieved at the conclusion of Gillman's long drawn-out collective sale.
Its sales committee chairman Robert Wiener said: 'It's been in limbo for a long time, now it's finally ended.
'It's a huge relief for many owners who had bought second properties and were really worried.'
The sale will now take about three months to compete, and all eyes are on how the CapitaLand-led joint venture will redevelop the estate.
Analysts that The Straits Times spoke to speculated that the developer might put the estate on the rental market while the property market is in the doldrums.
Knight Frank director of research and development Nicholas Mak pointed out that the sale price of each unit - about $870,000 to $950,000 is still 'pretty attractive', especially with the current downturn.
Write Down And Start Selling
Source : The Business Times, February 9, 2009
WHEN Keppel Land announced its quarterly financial results last month, it said it had reviewed its residential landbank and concluded that no provisions or write-downs were required as their breakeven prices were lower than market prices.
Catatonic: The property market is suffering from developers' refusal to accept the pricing realities of the current economic condition
With other developers expected to report their latest quarterly results soon, it will be interesting to see who else takes the same line.
Write-downs by developers have been expected for some time. But most have adopted a head-in-the-sand approach, perhaps hoping that price falls will somehow moderate this year if they drag their feet.
However, with economic data worsening by the day, this reading could be wrong. And it could be time for developers to wake up and smell the coffee, if only to help the property market pick up and move on.
The market, which is near catatonic - with only 700 new units launched for sale in Q4 2008 - is suffering from developers' refusal to accept the pricing realities of the current economic condition.
Keppel Land still has homes to launch for sale, including those at Reflections at Keppel Bay and Marina Bay Suites in which it has a 33.3 per cent stake.
In March 2007, joint-venture partners Cheung Kong Holdings/ Hutchison Whampoa, Hongkong Land and Keppel Land paid $907.67 million for the Phase II site of Marina Bay Financial Centre (MBFC) where Marina Bay Suites is located.
The breakeven price for Marina Bay Suites is difficult to estimate because MBFC is a mixed development site. But the consortium came close to launching the luxury condo in January 2008 at about $3,000 per square foot, before changing its mind.
According to the Urban Redevelopment Authority's data, the latest transacted price (January 2009) for a unit at Marina Bay Residences next door was just $1,638 psf.
In contrast to developers, some real estate investment trusts (Reits) have begun to recognise the fall in asset values.
CapitaCommercial Trust's portfolio booked a 3 per cent or $241.8 million net decrease in fair value at Dec 1, 2008, resulting in an adjusted net asset value (NAV) per unit (excluding H2 2008 distributable income to unit-holders) of $2.92 at Dec 31, 2008, compared with $3.11 at June 30, 2008.
K-Reit, however, did report that its portfolio valuation of $2.1 billion remained unchanged from the previous year. It added that its current aggregate leverage of 27.6 per cent would only exceed 60 per cent if capital values were to drop more than 54 per cent. Capital values of commercial property tend to lag those of residential property.
A write-down will, of course, have an adverse effect on a company's NAV and share price, which partly explains the reluctance to make such a move. By not acknowledging a fall in asset values, developers are likely to continue to resist discounting home prices and rely on external funding, rather than cash flow, to finance holding costs.
But given the rising cost of finance (if you can get it), could launching developments at a discount and locking in some cash be the lesser of two evils?
One developer at least appears to be going about things differently.
Last week, Frasers Centrepoint took the bold step of launching the first phase of its 712-unit Caspian condo next to Lakeside MRT Station in Jurong. It bought the site in late 2007 for $248 psf per plot ratio. At the time, the breakeven price was estimated to be around $550 psf.
It proved a good move. The first phase of Caspian was launched at an average of $580 psf, and sales so far have been very encouraging.
WHEN Keppel Land announced its quarterly financial results last month, it said it had reviewed its residential landbank and concluded that no provisions or write-downs were required as their breakeven prices were lower than market prices.
Catatonic: The property market is suffering from developers' refusal to accept the pricing realities of the current economic conditionWith other developers expected to report their latest quarterly results soon, it will be interesting to see who else takes the same line.
Write-downs by developers have been expected for some time. But most have adopted a head-in-the-sand approach, perhaps hoping that price falls will somehow moderate this year if they drag their feet.
However, with economic data worsening by the day, this reading could be wrong. And it could be time for developers to wake up and smell the coffee, if only to help the property market pick up and move on.
The market, which is near catatonic - with only 700 new units launched for sale in Q4 2008 - is suffering from developers' refusal to accept the pricing realities of the current economic condition.
Keppel Land still has homes to launch for sale, including those at Reflections at Keppel Bay and Marina Bay Suites in which it has a 33.3 per cent stake.
In March 2007, joint-venture partners Cheung Kong Holdings/ Hutchison Whampoa, Hongkong Land and Keppel Land paid $907.67 million for the Phase II site of Marina Bay Financial Centre (MBFC) where Marina Bay Suites is located.
The breakeven price for Marina Bay Suites is difficult to estimate because MBFC is a mixed development site. But the consortium came close to launching the luxury condo in January 2008 at about $3,000 per square foot, before changing its mind.
According to the Urban Redevelopment Authority's data, the latest transacted price (January 2009) for a unit at Marina Bay Residences next door was just $1,638 psf.
In contrast to developers, some real estate investment trusts (Reits) have begun to recognise the fall in asset values.
CapitaCommercial Trust's portfolio booked a 3 per cent or $241.8 million net decrease in fair value at Dec 1, 2008, resulting in an adjusted net asset value (NAV) per unit (excluding H2 2008 distributable income to unit-holders) of $2.92 at Dec 31, 2008, compared with $3.11 at June 30, 2008.
K-Reit, however, did report that its portfolio valuation of $2.1 billion remained unchanged from the previous year. It added that its current aggregate leverage of 27.6 per cent would only exceed 60 per cent if capital values were to drop more than 54 per cent. Capital values of commercial property tend to lag those of residential property.
A write-down will, of course, have an adverse effect on a company's NAV and share price, which partly explains the reluctance to make such a move. By not acknowledging a fall in asset values, developers are likely to continue to resist discounting home prices and rely on external funding, rather than cash flow, to finance holding costs.
But given the rising cost of finance (if you can get it), could launching developments at a discount and locking in some cash be the lesser of two evils?
One developer at least appears to be going about things differently.
Last week, Frasers Centrepoint took the bold step of launching the first phase of its 712-unit Caspian condo next to Lakeside MRT Station in Jurong. It bought the site in late 2007 for $248 psf per plot ratio. At the time, the breakeven price was estimated to be around $550 psf.
It proved a good move. The first phase of Caspian was launched at an average of $580 psf, and sales so far have been very encouraging.
Gillman En Bloc Sale To Proceed
Source : The Business Times, February 10, 2009
The Court of Appeal yesterday dismissed an appeal by the minority owners of Gillman Heights to stop the collective sale of the property.
CapitaLand, Hotel Properties and two private funds agreed to buy the property in 2007 for $548 million. But a group of minority owners have been fighting the sale since it was approved by the Strata Titles Board (STB) that year.
In a last-ditch attempt to block the sale, the minority owners went to the Court of Appeal to try to overturn a High Court ruling that allowed the sale to go ahead.
The main issue has been the level of consent needed for the sale to go ahead. Currently, 80 per cent consent is needed if a development is more than 10 years old, and 90 per cent consent if it is less than that.
The minority owners argued that because Gillman Heights obtained its certificate of statutory completion only in 2002, it needed 90 per cent consent - which the buyers did not have.
However, the judges ruled yesterday that only 80 per cent is required - which means the sale can go through.
The Court of Appeal yesterday dismissed an appeal by the minority owners of Gillman Heights to stop the collective sale of the property.
CapitaLand, Hotel Properties and two private funds agreed to buy the property in 2007 for $548 million. But a group of minority owners have been fighting the sale since it was approved by the Strata Titles Board (STB) that year.
In a last-ditch attempt to block the sale, the minority owners went to the Court of Appeal to try to overturn a High Court ruling that allowed the sale to go ahead.
The main issue has been the level of consent needed for the sale to go ahead. Currently, 80 per cent consent is needed if a development is more than 10 years old, and 90 per cent consent if it is less than that.
The minority owners argued that because Gillman Heights obtained its certificate of statutory completion only in 2002, it needed 90 per cent consent - which the buyers did not have.
However, the judges ruled yesterday that only 80 per cent is required - which means the sale can go through.
NZ Home Prices Still Sliding
Source : The Business Times, February 10, 2009
QV's January index falls 8.3% as buyers expect further drops
(WELLINGTON) New Zealand house prices fell for the seventh month in a row in January, with the pace of decline picking up, government agency Quotable Value (QV) said yesterday.
QV's residential house price index fell 8.3 per cent in the year through Jan 31, compared with a 7.4 per cent decline in December. Tentative signs that the decline in the market may be levelling out at the end of last year had proved short-lived.
'Declining interest rates would normally stimulate buyer activity, but concerns over job security, and a more cautious approach to lending by financial institutions seems to be preventing this,' said QV spokesman Blue Hancock. 'Many buyers also appear to be holding back in expectation of further property value and interest rates drops throughout 2009.'
The housing market, once a key inflationary concern for the Reserve Bank of New Zealand (RBNZ), has been falling steadily over the past year because of high borrowing costs and as consumer spending slowed in the face of an economy in recession. The central bank has slashed interest rates by 475 basis points since last July, and is likely to cut rates again at its next review in early March.
The RBNZ has forecast house prices to fall around 16 per cent by the end of 2010 from their peak in 2007. -- Reuters
QV's January index falls 8.3% as buyers expect further drops
(WELLINGTON) New Zealand house prices fell for the seventh month in a row in January, with the pace of decline picking up, government agency Quotable Value (QV) said yesterday.
QV's residential house price index fell 8.3 per cent in the year through Jan 31, compared with a 7.4 per cent decline in December. Tentative signs that the decline in the market may be levelling out at the end of last year had proved short-lived.
'Declining interest rates would normally stimulate buyer activity, but concerns over job security, and a more cautious approach to lending by financial institutions seems to be preventing this,' said QV spokesman Blue Hancock. 'Many buyers also appear to be holding back in expectation of further property value and interest rates drops throughout 2009.'
The housing market, once a key inflationary concern for the Reserve Bank of New Zealand (RBNZ), has been falling steadily over the past year because of high borrowing costs and as consumer spending slowed in the face of an economy in recession. The central bank has slashed interest rates by 475 basis points since last July, and is likely to cut rates again at its next review in early March.
The RBNZ has forecast house prices to fall around 16 per cent by the end of 2010 from their peak in 2007. -- Reuters
HK Home Prices Unlikely To Fall Below Sars Levels
Source : The Business Times, February 10, 2009
Limited supply has bolstered values, say property analysts
(HONG KONG) Investors waiting for Hong Kong home prices to fall to levels last seen during the 2003 severe acute respiratory syndrome (Sars) epidemic may be disappointed as limited supply bolsters values.
Falling supply: A Hong Kong building site where a billboard advertises new properties; completions of private homes in the next two to three years is expected to be 10,000-15,000 annually, below the 10-year average of about 23,000 units
Home values have fallen as much as 25 per cent from last year's peak, as the city slid into a recession in the third quarter on declining exports and domestic demand. Still, prices are about 40 per cent higher than during Sars, mainly because the government has ended scheduled building-land sales, analysts said.
'Government policy was a driving force in the steep drop in prices between 1997 and 2003,' Buggle Lau, chief analyst at Midland Holdings Ltd, Hong Kong's biggest publicly traded property agency, said yesterday. 'Now, external factors are more severe, but internally, the situation is better as the government has continued to freeze supply.'
Home values have tracked the economy, peaking in the second quarter of 1997, then crashing in the 1997-98 Asian financial crisis. The 2000 dot-com bubble burst; the Sept 11, 2001, terrorist attacks and the 2003 Sars epidemic caused prices to fall as much as 70 per cent.
To support prices, the government, one of Hong Kong's largest suppliers of unoccupied land, suspended its scheduled land sales in November 2002. It resumed sales in January 2004, using a system where developers trigger auctions from a list of sites by promising to pay a minimum amount. The system will stay, Chief Executive Donald Tsang said in October.
Completions of private homes in the next two to three years will be 10,000-15,000 annually, below the 10-year average of about 23,000 units, Marcos Chan, head of research for the Pearl River Delta at Jones Lang Lasalle, said yesterday.
Home prices may bottom out in the second half of 2010, judging from the length of the 1997-2003 decline, Mr Chan said.
Hong Kong has the second- most expensive luxury home prices in Asia, after Tokyo, averaging US$16,125 per square meter (psm), according to the Global Property Guide Web site. That compares with US$20,756 psm in London.
An index of 73 apartment buildings developed by Centaline Property Agency Ltd doubled to a level of 72.8 in the first quarter of 2008 from the 2003 nadir on a booming economy and stock market, before dropping to 55 at the end of last year.
In 2003, when consumer spending fell and companies withdrew foreign workers due to Sars, the index fell to a record of 32. Prices were also soft because completions of non-government built new homes were at a three-year high of 31,052 the previous year.
The government policy has reduced supply; 8,776 private homes were completed last year, according to Hong Kong's Rating and Valuation Department, the lowest since records began in 1972, Centaline said. The government has not sold a residential site for more than HK$1 billion (S$194.1 million) since October 2007.
'The supply of homes right now is much less than in 1998 and 2003,' Raymond Ngai, a Hong Kong-based analyst at JPMorgan Chase & Co, said by phone.
Still, Hong Kong's home sales fell for a seventh month in January, slumping 67 per cent to 4,875, according to the government Land Registry. Mr Ngai forecast values to drop as much as 15 per cent this year, and Louis Chan, managing director of residential sales at Centaline, projected a 10 per cent decline.
The Hang Seng Property Index that tracks the shares of six developers in the city rose 2.1 per cent to 16,578.41 at 12.30 pm local time. It dropped 2 per cent this year, after losing 55 per cent in 2008.
'If the transaction volume rebounds to about 6,000 or 7,000 for three to four months, that would indicate that buying was pretty active' and sentiment may have stabilised, Midland's Mr Lau said. -- Bloomberg
Limited supply has bolstered values, say property analysts
(HONG KONG) Investors waiting for Hong Kong home prices to fall to levels last seen during the 2003 severe acute respiratory syndrome (Sars) epidemic may be disappointed as limited supply bolsters values.
Falling supply: A Hong Kong building site where a billboard advertises new properties; completions of private homes in the next two to three years is expected to be 10,000-15,000 annually, below the 10-year average of about 23,000 unitsHome values have fallen as much as 25 per cent from last year's peak, as the city slid into a recession in the third quarter on declining exports and domestic demand. Still, prices are about 40 per cent higher than during Sars, mainly because the government has ended scheduled building-land sales, analysts said.
'Government policy was a driving force in the steep drop in prices between 1997 and 2003,' Buggle Lau, chief analyst at Midland Holdings Ltd, Hong Kong's biggest publicly traded property agency, said yesterday. 'Now, external factors are more severe, but internally, the situation is better as the government has continued to freeze supply.'
Home values have tracked the economy, peaking in the second quarter of 1997, then crashing in the 1997-98 Asian financial crisis. The 2000 dot-com bubble burst; the Sept 11, 2001, terrorist attacks and the 2003 Sars epidemic caused prices to fall as much as 70 per cent.
To support prices, the government, one of Hong Kong's largest suppliers of unoccupied land, suspended its scheduled land sales in November 2002. It resumed sales in January 2004, using a system where developers trigger auctions from a list of sites by promising to pay a minimum amount. The system will stay, Chief Executive Donald Tsang said in October.
Completions of private homes in the next two to three years will be 10,000-15,000 annually, below the 10-year average of about 23,000 units, Marcos Chan, head of research for the Pearl River Delta at Jones Lang Lasalle, said yesterday.
Home prices may bottom out in the second half of 2010, judging from the length of the 1997-2003 decline, Mr Chan said.
Hong Kong has the second- most expensive luxury home prices in Asia, after Tokyo, averaging US$16,125 per square meter (psm), according to the Global Property Guide Web site. That compares with US$20,756 psm in London.
An index of 73 apartment buildings developed by Centaline Property Agency Ltd doubled to a level of 72.8 in the first quarter of 2008 from the 2003 nadir on a booming economy and stock market, before dropping to 55 at the end of last year.
In 2003, when consumer spending fell and companies withdrew foreign workers due to Sars, the index fell to a record of 32. Prices were also soft because completions of non-government built new homes were at a three-year high of 31,052 the previous year.
The government policy has reduced supply; 8,776 private homes were completed last year, according to Hong Kong's Rating and Valuation Department, the lowest since records began in 1972, Centaline said. The government has not sold a residential site for more than HK$1 billion (S$194.1 million) since October 2007.
'The supply of homes right now is much less than in 1998 and 2003,' Raymond Ngai, a Hong Kong-based analyst at JPMorgan Chase & Co, said by phone.
Still, Hong Kong's home sales fell for a seventh month in January, slumping 67 per cent to 4,875, according to the government Land Registry. Mr Ngai forecast values to drop as much as 15 per cent this year, and Louis Chan, managing director of residential sales at Centaline, projected a 10 per cent decline.
The Hang Seng Property Index that tracks the shares of six developers in the city rose 2.1 per cent to 16,578.41 at 12.30 pm local time. It dropped 2 per cent this year, after losing 55 per cent in 2008.
'If the transaction volume rebounds to about 6,000 or 7,000 for three to four months, that would indicate that buying was pretty active' and sentiment may have stabilised, Midland's Mr Lau said. -- Bloomberg