Tuesday, November 4, 2008

European Property Derivative Trades In Q3 Down 38%

Source : The Business Times, November 4, 2008

(LONDON) The total volume of European property derivative trades fell 38 per cent quarter-on-quarter to £1.15 billion (S$2.7 billion) in three months to Sept 30 as the global financial maelstrom curbed growth in the infant market.

Data from index provider Investment Property Databank (IPD) showed yesterday that a total 166 trades were struck in the third quarter, the lowest number of quarterly trades since the corresponding period last year. Despite a slowdown in the number of deals, the total notional value of UK trades completed in 2008 so far is still some way ahead of the £5.6 billion of trades seen by the end of the third quarter 2007, indicating a resilient core of support for the most mature of Europe's property derivatives markets.

Some £1.03 billion of UK commercial property derivative trades were completed in the third quarter, bringing the notional value of deals struck to £6.1 billion over the year to date. 'Given the financial crisis besetting investment banks at present, it is encouraging that the level of derivative activity which depends on their participation has held up as well as it has,' said Ian Cullen at IPD.

The property derivatives market mostly offers over-the-counter trading in swaps based on benchmark total return property indexes for fixed periods, in exchange for interest payments.

Property swaps enable investors to increase or hedge exposure to real estate without having to buy or sell bricks and mortar in costly and time-consuming transactions.
Third quarter French property derivatives trading volumes were the lowest since trading began in the first quarter 2007, falling by 55 per cent compared with the second quarter 2008.

In Germany, trades fell by 28 per cent on the previous quarter and by half compared with the same period last year. -- Reuters

Bangkok Real Estate Development Set To Ease

Source : The Business Times, November 4, 2008

(BANGKOK) Property development in Bangkok is expected to drop 18 per cent this year as political turmoil and the global financial crisis hit the market, a leading property consultancy said yesterday.

Beneath the calm: An aerial view of the Chao Praya river that winds through the city of Bangkok. Thailand is suffering from both the global credit crunch and anti-government street protests which has caused overseas investors to pull cash from the Thai stock exchange

Thailand's Agency for Real Estate Affairs (Area) predicts that the capital will see 66,783 new housing units built this year, compared to 81,364 last year.

Earlier this year, Area expected a drop of only seven per cent.

Profits from the sales of new homes in Bangkok are forecast to fall six per cent to 174.7 billion baht (S$7.3 billion).

Thailand is suffering from both the worldwide credit crunch - expected to hurt its exports to the United States and Europe - and anti-government street protests which began in May, raising fears of another coup.

Between the two crises, the global financial meltdown did most of the damage, said Area researcher Sarayut Khanay.

'I think now we have more effect from the economic problems outside of Thailand - from Europe, from the US, from Japan,' he told AFP yesterday.

Domestic political unrest, which erupted into bloodshed last month when police and protesters clashed, killing two people and leaving nearly 500 injured, is familiar to Thais, he said.

No matter the political climate, Thais know they need places to live, Mr Sarayut said.

Buyer demand has stayed high, with Bangkok residents looking for up to 80,000 new homes a year.

The trouble is not finding Thais to buy the new homes, but finding investors with the financial capital to fund new construction.

'It's more a problem of the money, compared to the buyer,' said Mr Sarayut.

The political crisis has had economic effects, causing foreign tourists to avoid the kingdom, industry experts say, and overseas investors to pull their cash from the Thai stock exchange.

The Thai stock market is down about 50 per cent since May 23, the last day of trading before an anti-government group launched their campaign. -- AFP

Q3 House Prices Fall 1.8% Down Under

Source : The Business Times, November 4, 2008

Property prices may remain flat for next few quarters

(SYDNEY) Australian house prices fell in the third quarter, adding to signs that buyers are shunning the property market as the nation's economy slows and unemployment gains.

An index measuring the weighted average of prices for established houses in the nation's eight capital cities dropped 1.8 per cent from the June quarter, when it declined a revised 0.2 per cent, the Australian Bureau of Statistics said in Sydney yesterday.

The median estimate of 12 economists surveyed by Bloomberg News was for 0.5 per cent decrease.

The second quarter of falling house prices will give central bank Governor Glenn Steven's scope to add to last month's one percentage point reduction in the benchmark lending rate, the biggest cut since a recession in 1992.

Turmoil on financial markets and rising unemployment have prompted home buyers to postponed plans to buy property.

'Property market activity has softened significantly,' Alex Joiner, an economist at Australia & New Zealand Banking Group Ltd in Melbourne, said ahead of yesterday's report.

'We see prices remaining relatively flat in the next few quarters, before grinding higher.' House prices rose 2.8 per cent in the year through September, after climbing 8.6 per cent in the second quarter, yesterday's report showed. Economists forecast a 4 per cent annual increase.

Mr Stevens and his Reserve Bank of Australia board will reduce the overnight cash rate target by half a point to 5.5 per cent tomorrow, according to 13 of 14 economists surveyed by Bloomberg. -- Bloomberg

Rental Rates For Mid-Range Retail Space Likely To Fall

Source : Channel NewsAsia, 03 November 2008

Mid-range retail spaces in Singapore are likely to see a fall in rental rates, due to a drop in tourist arrivals and slowing domestic spending.

Properties which are having rental rates renegotiated in the midst of the current economic downturn are likely to be the most vulnerable. Experts said landlords will have to rent out their spaces for less as retailers are hit by lower earnings.

Eugene Lim, associate director, ERA Asia Pacific, said: "For the whole of this year, we will probably see a 5 per cent increase for the retail sector in terms of rent. Next year, quite possibly, we will see less increases and the market will probably be flat for coming quarters."

But rents for high-end properties in prime shopping belts like Orchard Road, as well as low-end suburban mall space, are expected to be more resilient.

High-end tenants, such as luxury goods boutiques, would resist giving up top locations and are likely to be willing to pay more. Tenants in lower-end properties traditionally sell basic necessities which are still in demand, despite the economic slowdown.

Suburban malls also face the least pressure from new retail space supply next year. Only 20 per cent of the new retail space is in suburban locations. The remaining 80 per cent is located in the city centre. - CNA/so

Property Firms Reach Out With Online Portals

Source : The Business Times, November 4, 2008

Knight Frank launches VirtualHomes; ERA ties up with rednano.sg

Property used to be only a bricks and mortar game, but real estate companies are now going online in a big way to boost their profiles and sales.

Knight Frank on Oct 13 launched VirtualHomes, touted to be Singapore's most comprehensive condominium search.

With more than 2,500 developments online, every condominium and apartment in Singapore is featured. The search engine provides detailed information on a property's location and a summary of important amenities such as schools, transportation and shopping malls. Users are also able to 'walk through' the developments and their surrounding neighbourhood via a 720 degree panoramic view. All these are value-added enhancements beyond the basic information such as tenure, number of units, available bedroom types and typical floor plans which contribute to the 'identity' and 'aura' of each development.

Prospective homeowners are also able to check the prices at which recent units in each development were transacted.

'We have consolidated all the essentials that matter to home buyers and investors into each development featured,' said Tan Tee Khoon, director of Knight Frank subsidiary KF property Network. 'Harnessing the power of the Internet, people can now find out all the property information they need before engaging a realty adviser specialising in a specific development or district.'

Knight Frank expects the search engine to be a big hit with everyone in the industry - property investors, developers, sellers, landlords and anyone interested in private residential projects in any district. So far, about 5,000 people have visited the site - www.virtualhomes.sg - Knight Frank said. The initiative will improve Knight Frank's reach to prospective clients so that they can make informed decisions about property investments, said Knight Frank managing director Tan Tiong Cheng.

The property firm also has a tie-up with ST701 in the latter's new condominium directory, launched on the same day.

Another property firm, ERA Singapore, also announced this week that it will work together with local search engine rednano.sg to give homebuyers more relevant information to help them choose the right agent and the right property for their needs.

The tie-up will allow ERA agents to add information about themselves in rednano's 'People' list, including their achievements, years of working experience and their personal photographs.

The ERA agents can also turn to rednano's maps to familiarise their clients with the key details of the area surrounding the homes or offices being offered for sale or rent. Information such as nearby ERP gantries and prices, ATMs and even 4-D outlets in addition to the nearest schools, clinics and shopping centres will be available.

'Anyone who is keen to know more about news or information on properties in Singapore can easily search online at rednano.sg to learn more about ERA, our wide range of housing services and even make contact with any of our friendly and highly experienced associates to address their housing needs,' said ERA senior vice-president Marcus Chu.

Sentosa IR 60% Ready By 2010

Source : The Straits Times, Nov 4, 2008

Casino, four hotels and many attractions will be up by then; hiring starts next year

THE steel frame for the first ride at the Universal Studios theme park in Sentosa, the Revenge of the Mummy, was winched into place last week.

It is one of the 21 attractions that will be ready to roll when the 49ha Resorts World at Sentosa has its soft opening in the first quarter of 2010. The theme park is part of the Resorts World integrated resort (IR).

Three other rides, including the Transformer one, will be added later.

The picture is much the same in the rest of the resort: About 60 per cent of it will be ready for visitors when it debuts in March 2010.

Of the six hotels, four will be opening then. Maxims Residences, Festive Hotel, Hotel Michael and Hard Rock Hotel will make available 1,400 rooms.

Also slated to open then are the casino and the half-kilometre-long Festive Walk with its shops and restaurants.

Resorts World's head of communications Krist Boo said negotiations with the Government to fix the opening dates for the remaining 40 per cent of the resort are ongoing. These include its Marine Life Park, the Maritime Xperiential Museum and the remaining two hotels.

Giving an update on the construction yesterday, Ms Boo and executive vice-president of projects Michael Chin said more than 2,000 people are working round the clock on the project.

Construction cannot begin on the western end of the project because the area is now being used as a staging ground to hold the containers of equipment coming in for the construction and fitting-out of the theme park.

Before The Revenge of the Mummy ride could be assembled on site, for example, space was needed to store, lay out and put together the 20 container-loads of equipment making up the ride.

Resorts World had not reckoned on needing this much space.

Mr Chin said that the original plan was to manage the staging within the Universal Studios' site, but because the park and other properties had to be at least mostly ready by March 2010, this was not possible.

The west end of the resort thus came to be where the theme park attractions were laid out and assembled.

After construction of the four hotels is completed by March next year, their interiors will be fitted out, said Mr Chin.

In the theme park itself, work has also begun on the other attractions such as Jurassic Park and Waterworld. Mr Chin said that by the middle of next year, the exterior of the attractions will be completed, leaving six to eight months to fit out the rides and test them.

Hiring of the 10,000 staff for the resort will also begin then.

Ms Boo also said application for the casino licence should take place 'some time next year' once half the gross floor area and half the $6 billion budget have been committed.

She said: 'By late 2009, we should be very comfortably ready for our soft opening in 2010.'

Resorts World's West Zone Likely To Open Later

Source : The Business Times, November 4, 2008

It needs space to help build up East Zone, which will be occupied by Universal Studios

RESORTS World Sentosa (RWS) is in talks with government agencies including the Singapore Tourism Board, Urban Redevelopment Authority and Ministry of Trade and Industry to start work on the project's West Zone only when its Central and East Zones are well under way.

Quick pace: RWS plans to 'soft launch' Universal Studios Singapore and four hotels in the Central Zone by the first quarter of 2010

The West Zone of the $6 billion integrated resort (IR) on Sentosa will include a Marine Life Park, a Marine Xperiential Museum, an Equarius Water Park and two hotels.

RWS executive vice-president (projects) Michael Chin said that the area to be occupied by the West Zone is needed to facilitate construction of the East Zone, which will be occupied by Universal Studios Singapore.

Mr Chin said the logistics of creating just one of the theme park's attractions - Revenge of the Mummy - will require 150-200 container loads of material, equipment and paraphernalia.

And this requires space for 'container parking' and 'staging'.

RWS has never given firm opening dates for any of its attractions. But Mr Chin said that the pace of construction is 'aggressive'.

'It will be faster to stage in the West Zone and supply to the East Zone,' he said. 'We are trying to talk to the authorities and tell them this is the most sensible, logical plan that we can work on.'

With this plan in place, RWS intends to 'soft launch' Universal Studios Singapore and four hotels in the Central Zone by the first quarter of 2010. This will include 21 theme park attractions and 1,400 hotel rooms.

At present, 2,000 people are working on-site 24 hours a day. In the East Zone, the steel structure for the Revenge of the Mummy ride is being put up. But the all-suite, 12-storey Maxims Residence - which houses the casino - appears to be the fastest-rising structure, with the lift core built up to the seventh floor.

The significance of this is that RWS will want its key revenue generator - the casino - open to gamblers as soon as possible.

And it looks like nothing will stand in the way of the casino being the first attraction to open for business.

Even if the West Zone is not completed by 2010, the government has already said that the casino licence can be awarded when at least 50 per cent of the investment capital has been spent and 50 per cent of the overall gross floor area has been built.

Mr Chin confirmed that about $3 billion of construction contracts have been awarded, more recently to local companies like Cityneon Holdings and Pico Art.

And according to RWS head of communications Krist Boo, the IR will be 'quite ample as a destination', even without the West Zone.