Wednesday, January 7, 2009

UK House Prices Down 15.9%

Source : The Business Times, January 7, 2009

December's fall steepest in 56 years, driven by global credit crunch, economic downturn

(LONDON) British house prices fell by their biggest annual amount in at least 56 years during 2008 as credit seized up and incentives to enter the market evaporated amid sliding home values, a leading mortgage lender said yesterday.

The Nationwide building society said house prices fell 15.9 per cent in December from a year earlier, the biggest annual fall since it started compiling statistics in 1952. '2008 has been a year of turmoil in the British housing market,' said Fionnuala Earley, Nationwide's chief economist. Prices fell 2.5 per cent in December from the previous month, much more than the 0.4 per cent decline recorded in November, and the biggest one-month drop since May's 2.6 per cent drop.

Despite the historic declines recorded in 2008, the Nationwide did point to one ray of light in the data gloom. It noted that the three-month rate, which smooths out more volatile monthly numbers, showed only a 4.2 per cent decline, the lowest since May. Nevertheless, Ms Earley said the length and depth of the recession in the wider economy is so uncertain that it makes no sense to produce a meaningful forecast for house prices.

'Conditions remain highly volatile going into 2009, making it more difficult than usual to arrive at a specific forecast for house prices. In these unsettled times a forecast subject to frequent change could itself add to greater uncertainty,' she added. The last time Nationwide did not issue a full-year forecast was in 1993 when the British housing market last crashed.

Most economists doubt that 2009 will be any better, primarily because house prices continue to look expensive on affordability measures and the ongoing drying up of credit.

Moreover, with the economy set to contract by up to 3 per cent, according to some forecasts, and unemployment heading towards 3 million, the downward pressure on house prices will likely remain. 'The upshot is that we expect house prices to fall by 20 per cent in 2009,' said Seema Shah, economist at Capital Economics. -- AP

Signs Of Life In US Housing: Economists

Source : The Business Times, January 7, 2009

(SAN FRANCISCO) Karl Case, co-creator of the closely watched Case-Shiller housing price index, said that it is hard to predict when housing prices would finally hit bottom but said that there are a few signs of life.

'People who say, 'Oh, the bottom is coming in February,' are in la-la land,' Prof Case, an economics professor at Wellesley College, said during a panel on housing in the macro economy at the Allied Social Sciences Association's annual meeting here.

However, some of the biggest potential overshooting in home prices on the way down is in states such as Arizona and Florida, areas where major overbuilding took place during the boom. 'Where this glut is occurring is fortunately in places where people still want to go,' Prof Case said. He told Reuters that two other elements in the current data provided some hope of a market turnaround. 'People are showing up at the (foreclosure) auction sales and buying. The price declines are starting to gather in buyers,' he said. 'And a fair number of people are prepared to lower the price on their house until it's sold.'

That capitulation effect, breaking through the phenomenon of 'downward stickiness' on housing prices, started to show up more markedly last year, Prof Case and collaborator Robert Shiller, a Yale economics professor, said in a paper presented at the conference.

The association groups academic and professional organisations linked to the study of economics or finance.

Economists continue to search for ways to stem the tide of foreclosures that continues to subsume the US economy, or to prevent similar problems in the future.

Richard Curtin, an economist at the University of Michigan, was less hopeful of a fast rebound.

'We don't see any hint of a turnaround in housing markets in the next nine months to a year,' said Prof Curtin, director of the University's closely-followed consumer sentiment survey.

A trio of factors continue to dog housing, according to Prof Curtin: Americans' suspicion that home prices will continue to fall; higher credit standards now being applied to mortgage applications; and uncertainty about future income as layoffs run rampant and the jobless rate continues to rise.

Prof Curtin said that research by the University of Michigan supported the link between easy credit and this decade's housing boom.

At the peak of the housing market in 1977, a majority of home buyers, or 52 per cent, said that their main motivation was the idea that house prices would rise. By 2005, 75 per cent said that easy credit was the key motivation.

'The boom couldn't have occurred without granting mortgages to anyone,' Prof Curtin said. 'The 1970s was a pure price bubble; the 2000s was a pure credit bubble.'

Federal Reserve Board economists Wayne Passmore and Diana Hancock discussed their plan to create an 'option' at the time of a home purchase, allowing home buyers to buy back their mortgage at market value if prices dropped. The proposal was initially aired at a UCLA-Berkeley housing symposium in late October. -- Reuters

A Tenants’ Market Downtown

Source : TODAY, Tuesday, January 6, 2009

A 30-per-cent fall in rental market expected this year

TENANTS for office space are beginning to enjoy more bargaining power as increased supply for such commercial property and a weakening economy drive rents lower.

This is good news for business owners such as Mr Hu Yinghan. Mr Hu, who runs an events company Apesnap in Chinatown, will be asking for much lower rent when his lease runs out at the end of the year.

“I shouldn’t have locked in last year,”Mr Hu told Today, adding he hoped to get a 30-per-cent discount from the $4 per square foot (psf) per month he is currently paying.

His wishes are likely to come true, if the forecast of seasoned property consultant Colin Tan proves to be accurate.

Mr Tan, head of consultancy and research at Chesterton Suntec International, said that the office rental market would face a sharp decline of about 30 per cent this year.

“For now, some landlords may not feel the pressure because they still have healthy occupancy. There’s a time lag with administrative procedures,” said Mr Tan, who added that most landlords would feel the pain by the middle of the year.

“Last year, some landlords may have been too greedy and taken advantage of the situation to squeeze the market,” said Mr Tan. “Now it’s facing shrinking demand and everyone’s locked in. There will be a lot more vacant space.”

And it’s not just small business owners who stand to benefit from the lower rents.

Prime office rents in Raffles Place fell last quarter, the first decline since the fourth quarter of 2003. Tenants there paid an average$16 psf per month in the last quarter, representing a 3-per-cent drop from the corresponding period a year earlier, said property consultants DTZ Research.

Grade A office market rents hit as high as $20 psf per month last year, but the office rental market is now turning into a tenant’s market, DTZ Research said.

In the last quarter, more offices became vacant as companies braced themselves for tough economic times by freezing headcount, reducing space needs, shelving expansion plans, as well as moving to cheaper locations outside the CBD. This resulted in office occupancy rates dropping by 2.6 percentage points to 95.6 per cent in Raffles Place, compared to the same period a year ago, said DTZ Research.

Analysts are predicting that prime office rents in the Central Business District (CBD) will dip to between $10 and $12 psf per month.

With the economy expected to remain weak, landlords who have been used to dictating terms now find themselves having to offer attractive lease incentives to retain existing tenants and secure new ones, they said. These include lease packages with rent-free intervals so that the overall effective rates are lower.

Although there have been some cutbacks on new office supply following weaker demand from recession-hit businesses, it does little to ease the impending supply glut, said analysts.

Potential office supply from 2009 to 2013 is now 11.3 million sq ft, just slightly down from the previous estimate of 12.1 million sq ft, said DTZ Research.

DTZ’s executive director, Ms Cheng Siow Ying, said: “More shadow space is likely to emerge, a lagged effect following retrenchments.”

More pockets of office space would become available when companies start relocating from their existing premises to pre-committed space in transitional offices and business park developments that will be completing this year,” she added, citing Citigroup’s move to Changi Business Park as an example.

To compound the oversupply, on top of the 3 million sq ft of new office space to be added islandwide this year, there could be an additional 1 million sq ft vacated by troubled companies as the recession deepens, Chesterton’sMr Tan estimates.

The retail rental market is also facing pressure. CBRE said that prime retail rents in Orchard area fell 1.9 per cent to an average of $36.10 psf per month in the fourth quarter last year, the first time these rents have headed south since 2003.

In the same period, rents of private industrial space also saw its first decline since 2003, said DTZ Research. Private industrial rents dipped by about 2 per cent quarter-on-quarter between $2 and $2.30 psf per month.

Visitors Throng Nova 88 Showflat

Source : The Straits Times, Jan 6, 2009

PROPERTY hunters put aside the gloomy economic outlook last weekend and turned out in force to check out - and even buy - new flats.

At Nova 88 in Balestier - likely to be the only new official launch so far this year - about 500 visitors thronged the showflat, said developer Roxy Homes.

About 20 per cent of Nova 88's units were sold, with prices ranging from $900 to $990 per sq ft. -- PHOTO: WWW.ROXYPACIFIC.COM.SG

Some 20 per cent of the flats in the 88-unit development were sold at prices ranging from $900 to $990 per sq ft, it said.

Potential buyers also flocked to re-launches, indicating that pockets of the market are still showing signs of life.

The Nova 88 showflat numbers were similar to those pulled in during the firm's launches last year, but like most other developments, sales have slowed, with buyers and sellers sitting on the sidelines looking for clearer market signals.

Roxy Homes launched Nova 88 last Saturday after holding special previews over two weekends last month.

'We don't hold back launches as our properties are in the mid-range segment,' said Mr Teo Hong Lim, chief executive of listed Roxy-Pacific, the developer's parent.

'If we advertise today and there are no visitors to our showflats, then the market is dead. But now, potential buyers are still going to showflats, so that is the positive part.'

When the Asian financial crisis hit in 1997, showflats were empty, he added.

Still, demand has taken a big hit since Lehman Brothers collapsed in September last year.

'In the pre-Lehman collapse days, I would have launched Nova 88 at $1,250 psf,' said Mr Teo. 'Now, our style is to go for a reasonable price because we are serious in selling.'

Nova 88 is on the former Aik Khiam Mansion site and a piece of state land, which together cost just under $350 psf of gross floor area.

'The sales are encouraging,' said a property consultant of the Nova 88 sales.

The consultant, who declined to be named, said developers are holding off launching projects as buyers are worried about their jobs or possible pay cuts and few are in the mood to buy.

Some property hunters also headed for showflats of relaunches and recent launches such as The Ambra, The Lucent, Lucida and Newton Edge.

Most launches will come only after Chinese New Year later this month. The 293-unit Alexis near Queenstown MRT station is one of them.

While developer ECPrime has yet to finalise Alexis' prices, it has already tweaked the product given the weaker market sentiment.

'We adjusted the mix recently such that a large number of the units will be smaller and thus more affordable,' said director Melvin Poh.

At least 80 per cent of Alexis comprises small units, with one to two bedrooms, up from 60 per cent previously, he said.

Every 7th UK Shop Site Seen Unoccupied By Eend-2009

Source : The Business Times, January 6, 2009

LONDON - More than one in seven British retail sites, or about 135,000 outlets, will be unoccupied by the end of 2009 as growing numbers of shops are driven out of business by the economic downturn, researchers Experian said on Tuesday.

Experian forecast that vacancy rates on Britain's shopping streets would reach a record 15 per cent by the end of this year, up from 7 per cent.

The proportion of empty shops would rise to 10 per cent as soon as next month, following a string of recent business failures such as sweets-to-DVDs group Woolworths and furniture chain MFI.

'The unprecedented level of retail vacancy will be disproportionately spread across Britain, so that smaller retail destinations, in particular market towns across Britain, will be worse affected,' said Jonathan de Mello, Experian's director of retail consultancy.

Earlier this month Experian forecast that a downturn in consumer spending, rising costs and growing competition from the internet would drive more than 1,600 British retailers out of business this year, sparking thousands of job losses.

'Britain is still a nation of shopkeepers and the retail sector is one of the UK's largest employers. It is not just people directly employed by retailers that will suffer from the fallout this Christmas, it is also their suppliers and service providers,' Mr de Mello said. -- REUTERS

US Pending Home Sales Fall 4%

Source : The Business Times, January 6, 2009

WASHINGTON - US pending home sales fell in November to their lowest level on record amid rising unemployment and a deteriorating economy, the National Association of Realtors said on Tuesday.

The industry trade group said its forward-looking pending home sales index, based on contracts signed in November, fell 4.0 per cent to 82.3 from a downwardly revised reading of 85.7 in October.

The November reading is 5.3 per cent below November 2007's level of 86.9 and is the lowest since the series began in 2001, with an index of 100 representing the average level of contract activity that year.

'Mounting job losses and very weak consumer confidence deterred home buyers from signing contracts in November,' said Lawrence Yun, NAR chief economist.

Mr Yun said a government real-estate focused stimulus plan was urgently needed to address the housing slump at the center of the economy's recession. -- AFP

Reit Model Under Pressure

Source : The Business Times, January 5, 2009

SINGAPORE-listed real estate investment trusts (Reits) are now victims of their own success.

Sliding: CB Richard Ellis reckons that prime Orchard Road rents could contract 5-10 per cent in just the first half of 2009

Over the past three years, most Reits here have taken an aggressive growth path, snapping up expensive properties and pushing up rentals in their properties as they took advantage of the property boom. This has allowed them to increase net property incomes and deliver good dividends to their unitholders.

But now, the good times have come to an end, and it is unclear how these Reits will deliver the kind of returns shareholders have gotten used to.

When reporting their Q3 results, the Reits admitted that growth through acquisitions will slow, what with the current credit squeeze making merger and acquisitions (M&As) more difficult and expensive across all sectors. The Reits said they will look to organic growth, such as enhancing their existing lettable space in search of higher rents.

But how much organic growth there can be under these conditions is debatable.

Retail Reits, for example, increase their property incomes in three ways - from acquisitions, through rental increases after they enhance their properties, and increased sales from their tenants, which they typically take a cut of.

But now, all three avenues for property income growth appear to be blocked. Acquisition growth, as mentioned, is no longer as viable. Retail sales are expected to take a beating this year as consumers cut back on spending as concerns over job and wage security take hold. Because of this, landlords, who typically take a percentage of turnover as part of the rent, will also see takings fall.

And rents will fall, as tenants try to bring landlords back to the negotiating table to ask for more manageable rates. 'A prolonged depression in consumer spending could affect retailers' ability to service their rents and we think it is possible that more retailers would renegotiate for lower rental rates, and retail mall managers may have to give in to avoid a high turnover in tenants,' noted OCBC Investment Research in a recent report. As one market observer put it, 'Reits can't really squeeze the tenants anymore or they will just simply close shop.'

In 2009, CB Richard Ellis reckons that prime Orchard Road rents could contract 5-10 per cent in just the first half of the year. At prime suburban malls, a 2-3 per cent decline is likely, the property consultancy said. Prime Orchard Road rents fell 1.9 per cent quarter-on-quarter in Q4 2008, while prime suburban rents shed one per cent, the firm's data showed.

The same trend holds true for the office and industrial sectors. CBRE's data showed that average Grade A and prime office rental values in Singapore are estimated to have slipped about 20 per cent in Q4 2008. More falls are expected this year. Likewise, rents for industrial space could see double-digit percentage falls, analysts have said.

With retail, office, and - to a lesser extent - industrial Reits, having raised rentals quickly over the last few years, tenants are finding themselves in a tough spot during these trying times. Office rents, for example, nearly doubled in 2007, rising 96 per cent in the Grade A category and 92 per cent for prime space. That was on top of gains of 53 and 50 per cent respectively posted in 2006.

What this means is that tenants, who have been paying jacked-up rentals over the past two years, will in some cases lack the reserves to withstand the current crisis. They are also more likely to push for substantial rental decreases, which could affect the Reit model.

Jannie Tay, president of the Singapore Retailers Association, called for a drop in retail rents - in light of weaker sales - as early as September last year. Recently, she again asked retail landlords to cut rents by between 30 and 50 per cent. Reits are going to face pressure to give in.

Abu Dhabi To Set Up Property Regulator

Source : The Business Times, January 6, 2009

(ABU DHABI) The government of Abu Dhabi, capital of the oil-rich United Arab Emirates (UAE), will set up a new authority to regulate the real estate sector within the next few months, local newspaper Khaleej Times reported yesterday.

The aim of setting up the authority is 'to chalk out an integrated system that streamlines property rent, sale and purchases, including suggesting legislation and rules that lead to stability', Jawaan bin Salem Al Dhahiri, chairman of the Municipal Affairs Department of Abu Dhabi, was quoted as saying.

The new authority will eliminate the realty brokers in general, and the hike in rents in particular, he said. 'It was felt that the property sector was in dire need of such an authority, to curb the unscrupulous traders, which affects people, taking into account that the real estate sector was the main cause of inflation in the country,' he added.

Studies published by the Abu Dhabi Department of Planning and Economy in April 2008 showed that rents constitute 58 per cent of the overall inflation rate in Abu Dhabi, followed by energy and transport with 15 per cent, and foodstuff with 11 per cent. -- Xinhua

HK Home Sales Plunge 65% In Dec For The Sixth Month

Source : The Business Times, January 6, 2009

(HONG KONG) Hong Kong's home sales fell for the sixth month in December, the longest stretch of declines since 2006, as local lenders raised mortgage rates and tightened lending as the economy slowed.

The number of residential units changing hands last month slumped 65 per cent from the same month in 2007 to 4,706, the Land Registry said in a statement yesterday. That follows a 79 per cent decline in November, the biggest drop since at least 1996.

By value, sales dropped 66 per cent to HK$17.7 billion (S$3.4 billion).

The economic outlook and declines in Hong Kong's stock market have curbed demand for real estate and led potential buyers to expect cheaper prices. The Hang Seng Index dropped 48 per cent in 2008, the biggest decline in more than 30 years.

HSBC Holdings and Bank of China, the two biggest home lenders in Hong Kong, raised their mortgage rates last month. HSBC, the bank with the most branches in the city, narrowed its discount for mortgages to 1.5 percentage point below its so-called best rate from two percentage points.

Banks in Hong Kong approved HK$8.5 billion of new mortgage loans in November, 69 per cent less than a year earlier, figures from the Hong Kong Monetary Authority show.

The number of luxury residential units in Hong Kong, those costing more than HK$10 million, sold fell 31 per cent to 4,509 units last year, Centaline Property Agency Ltd, one of the city's biggest real estate agencies, said in a report yesterday.

'Sales were robust in the first half of the year, averaging 500 units a month, but cooled in the second half because of the financial tsunami,' Wong Leung-sing, an associate director at Centaline, wrote in the report.

'As buyers turned cautious on paying for expensive property, transactions fell to fewer than 200 units a month in the second half,' he said. -- Bloomberg

Office Building Vacancies In Major US Cities Rising Rapidly

Source : The Business Times, January 6, 2009

Rental incomes and property values seen sliding further

(NEW YORK) Vacancy rates in office buildings exceed 10 per cent in virtually every major city in the country and are rising rapidly, a sign of economic distress that could lead to yet another wave of problems for troubled lenders.

Towering liabilities: Already, US$107 billion worth of office towers, shopping centres and hotels are in some form of distress, ranging from mortgage delinquency to foreclosure, says a Real Capital Analytics report

With job cuts rampant and businesses retrenching, more empty space is expected from New York to Chicago to Los Angeles in the new year. Rental incomes would then decline, and property values would slide further. The Urban Land Institute predicts that 2009 will be the worst year for the commercial real estate market 'since the wrenching 1991-1992 industry depression'.

Banks and other financial companies have not had the problems with commercial properties in this recession that they have had with residential properties. But many building owners, while struggling with more vacancies and less rental income, will need to refinance commercial mortgages soon. The persistent chill in lending from banks to the credit markets will make that difficult - even for borrowers who are current on their payments - setting the stage for loan defaults.

The prospect bodes poorly for banks, along with pension funds, insurance companies, hedge funds and others holding the loans or pieces of them that were packaged and sold as securities.

Jeffrey DeBoer, chief executive of the Real Estate Roundtable, a lobbying group in Washington, is asking for government assistance for his industry and warns of the potential impact of defaults. 'Each one by itself is not significant,' he said, 'but the cumulative effect will put tremendous stress on the financial sector.'

Stock analysts say that commercial real estate is the next ticking time bomb for banks, which have already received hundreds of billions of dollars in capital and other assistance from the federal government.

Big banks - such as Bank of America, JPMorgan Chase and Morgan Stanley - each hold tens of billions of dollars in commercial real estate securities. The banks also invested directly in properties.

Regional banks may be an even bigger concern. Over the last decade, they barrelled their way into commercial real estate lending after being elbowed out of the credit card and consumer mortgage businesses by national players. The proportion of their lending that is in commercial real estate has nearly doubled in the last six years, according to government data.

Just like home loans that were pooled, then carved up and sold to investors as securities over the last two decades, commercial property loans were repackaged for the financial markets. In 2006 and 2007, nearly 60 per cent of commercial property loans were turned into securities, according to Trepp, a research firm that tracks mortgage-backed securities.

Now that the market for those securities has dried up, borrowers cannot easily roll over loans that are coming due.

Many commercial property owners will face a dilemma similar to that of today's homeowners who cannot easily get mortgage relief because their loans were sliced and sold to many different parties. There often is not a single entity with whom to negotiate because investors have different interests.

By many accounts, building owners have been caught off-guard by how quickly the market has deteriorated in recent weeks.

Rising vacancy rates were expected in Orange County, California, a centre of the sub-prime mortgage crisis, and New York, where the shrinking financial industry dominates office space. But vacancies are also suddenly climbing in Houston and Dallas, which had been shielded from the economic downturn until recently by skyrocketing oil prices and expanding energy businesses. In Chicago, brokers say that demand has dried up just as new office towers are nearing completion.

'The economic recession is so widespread that we believe virtually every market in the country will see a rise in vacancy rates of between 2 and 5 percentage points by mid-2009,' said Bill Goade, chief executive of CresaPartners, which advises corporations on leasing and purchasing office space.

There is no relief in sight for Orange County, where sub-prime lenders and title companies once dominated the market, but are now shedding space because their businesses have dried up, and big banks are now shrinking because of a wave of mergers. The vacancy rate has soared from 7 per cent at the end of 2006 to 18 per cent, a rate that the Tampa area should match this month, local real estate brokers say.

In New York, where rents had risen the highest as financial companies gobbled up office space, vacancy rates are floating above 10 per cent for the first time in years.

What looked like the worst possible case a few weeks ago for Chicago now appears to be the most likely outcome, said Bill Rogers, a managing director at Jones Lang LaSalle, a real estate broker. The vacancy rate, which was fairly stable at 10 per cent, is rising quickly and could hit 17 per cent this year, he said. 'A lot of companies are trying to shed excess space ahead of what is expected to be a worse market in 2009,' he said.

Newmark Knight Frank, a real estate broker, expects the vacancy rate in Dallas to rise to 19 per cent from 16.3 per cent.

Houston, like Dallas, held up while many other cities were showing the strains of an economic slowdown. But job growth and the brisk business of oil and gas exploration have come to an abrupt halt.

Vacant or unfinished shopping centres dot the highways. Among the 8.4 million square feet of office space under construction or recently completed in the metropolitan area, 80 per cent has not been leased. As a result, the vacancy rate is 11 per cent and rising.

Effective rents, after free rent and other landlord concessions, have already started to fall and are expected to decline 30 per cent or more across the country from the euphoric days of the real estate boom, according to real estate brokers and analysts. That is making it all the more difficult for owners, who projected ever-rising rents when they financed their office buildings, hotels, shopping centres and other commercial property. Owners typically pay only the interest on loans of five, seven or 10 years and refinance the big principal payments necessary when the loans come due.

Without new financing, owners will have few options other than to try to negotiate terms with their lenders or hand over the keys to banks and bondholders.

Among commercial properties, the most troubled have been hotels and shopping centres, where anaemic sales and bankruptcies by retailers are leading to more vacancies, and where heavily leveraged mall operators, such as General Growth Properties and Centro, are under intense pressure to sell assets.

The Real Estate Roundtable sees a rising risk of default and foreclosure on an estimated US$400 billion in commercial mortgages that come due this year.

In recent weeks, a group led by the New York developer William Rudin has pleaded with Treasury Secretary Henry Paulson, Senator Charles Schumer and others to have the government include commercial real estate in a new US$200 billion programme designed to spur lending.

Already, US$107 billion worth of office towers, shopping centres and hotels are in some form of distress, ranging from mortgage delinquency to foreclosure, according to a report by Real Capital Analytics.

New York, the biggest market by far, leads the pack with 268 troubled properties valued at US$12 billion. But there are 19 more cities, including Atlanta, Denver and Seattle, with more than US$1 billion worth of distressed commercial properties. - NYT

Raffles Place Q4 Office Rents Slide 15.8%: DTZ

Source : The Business Times, January 6, 2009

Poor demand, more space seen lowering occupancy rates, rents in 2009

Prime office rents in Raffles Place sank 15.8 per cent quarter-on-quarter (qoq) in the final three months of 2008 to an average of $16 per square foot per month (psf pm), representing the first decline since Q4 2003, according to DTZ Research.

Ample supply: In Raffles Place, the average office occupancy fell 1.3 percentage points qoq to 95.6 per cent in Q4 2008. Island-wide, occupancies slid 0.8 of a percentage point to 95.6 per cent

The drop was the biggest among the micro markets tracked by DTZ. Office rents in the Marina Centre micro market also fell a hefty 12.9 per cent qoq to $13.50 psf pm.

'While the low level of new office supply supported rents in the first nine months of 2008, the market began to favour occupiers in Q4 as demand fell,' DTZ said. 'Landlords have lowered their asking rents and are offering attractive incentives to retain existing tenants and attract new ones.'

Office vacancies edged up further in Q4 2008 as demand dwindled. Except for Tampines Finance Park, where occupancy remained at 96.8 per cent, occupancy in all other micro markets declined.

In Raffles Place, the average office occupancy fell 1.3 percentage points qoq to 95.6 per cent in Q4 2008. Island-wide, office occupancies slid 0.8 of a percentage point qoq to 95.6 per cent, as new supply was added and demand weakened as companies shelved expansions, cut back on space needs or shifted to cheaper locations such as high-tech industrial space or converted state property.

DTZ said that shadow space is beginning to surface as occupiers dispose of excess space, although the amount available for occupation in Q4 2008 was still insignificant, at about one per cent of total vacant office space island-wide.

In response to falling demand, there has been a cutback in new office supply - but not enough to ease an impending glut as most major projects are already under construction, DTZ noted. Deferred developments totalling about 872,000 sq ft of new office space include South Beach, office extensions at Tampines Mall and Funan DigitaLife Mall and the redevelopment of Marina House. DTZ puts potential office supply from 2009 to 2013 at 11.3 million sq ft, compared with an earlier estimate of 12.1 million sq ft.

DTZ said that in view of the deteriorating global financial situation and the large amount of new office space coming on stream in Singapore this year, occupancy rates and rents are expected to decline further in 2009.

The firm also noted that sentiment in the industrial property market has soured, as the manufacturing and office sectors continue to weaken. Rents for private conventional industrial space declined in Q4 2008 for the first time since Q3 2003.

Rents for first-storey and upper-storey private industrial space dipped 2.1 per cent and 2.4 per cent respectively qoq to $2.30 and $2 psf pm. Rents for hi-tech industrial property slid 4.4 per cent qoq to $4.30 psf pm - the first decline since Q2 2004.

中国各大银行 下调住房贷款利率

Source : 《联合早报》January 06, 2008