Source : The Business Times, November 27, 2008
But it won't be as bad as London given smaller bank job loss
(FRANKFURT) The office property market in Frankfurt, Germany's banking capital, looks set to soften but is likely to hold up better than London, Europe's top financial centre, mainly because fewer bankers are losing their jobs.
Property yields are expected to rise less in Frankfurt than in London, and rents, which generate crucial cash flow for real estate investors in times such as these when properties are hard to sell at a profit, will fall less, industry watchers say.
Thanks to its lower volatility, Frankfurt offices will play a key role for long-term institutional investors such as insurers, pension funds and sovereign wealth funds - all of which are expected by analysts to increase their real estate exposure as part of a more diversified asset allocation mix.
The return on real estate as an asset class was negative to the tune of 30 per cent in January-October, broadly on a par with the S&P 500 US equities benchmark.
Real estate has been hit by falling commercial property prices, lack of access to deal financing, rising re-financing costs, higher vacancy rates and lower rents, investment bank Morgan Stanley said in a report.
Financial firms worldwide have slashed over 150,000 jobs in the current crisis with the drain the most pronounced in New York and London.
Last month, the Centre for Economics and Business Research estimated that London would have lost 28,000 financial-sector jobs by the end of this year, and a further 34,000 in 2009.
'The crisis is also hitting Frankfurt . . . but the impact is quite moderate compared to London,' said Carsten Ape, head of Frankfurt office rentals at property consultancy CB Richard Ellis (CBRE).
In Germany, the biggest finance sector job cut announcement to date has come from Commerzbank, which plans to axe 9,000 positions in the wake of its takeover of Dresdner Bank. About 2,500 will be outside Germany.
Deutsche Bank, the country's top bank, is expected to sack about 900 traders, with most of those layoffs in London and New York.
Frankfurt may not have lost many banking jobs yet, but its office property market took an indirect hit last month when real estate fund managers KanAm pulled out of a deal to buy a skyscraper under construction in the heart of the city.
Swiss bank UBS, which is cutting 7,500 jobs, has signed up as the main tenant of the OpernTurm office tower. KanAm said that its fund did not want an increased rental exposure to banks as the financial market turbulence was making the outlook for the sector uncertain.
Fewer buyers usually translate into lower prices, which move in the opposite direction to yields.
'In a worst-case scenario, you might still see a lot of pressure on prices in Germany,' said Olivier Elamine, chief executive of Alstria Office, which manages a portfolio of 90 properties in Germany valued at about 1.9 billion euros (S$3.7 billion). -- Reuters
Thursday, November 27, 2008
HK's Mortgage Loans Drop 40% In October
Source : The Business Times, November 27, 2008
(HONG KONG) Hong Kong mortgage loans fell for a third month in October as banks tightened lending amid an economic slowdown and a freeze in global credit.
Banks in Hong Kong approved some HK$13.7 billion (S$2.7 billion) of new mortgage loans last month - 40 per cent less than a year earlier, figures from the Hong Kong Monetary Authority (HKMA) show. Loans fell 5.9 per cent from September, the central bank said yesterday.
Hong Kong home prices have slumped at least 22 per cent from their March peaks, according to Centaline Property Agency, and the number of people whose homes are worth less than their outstanding mortgages more than doubled in the third quarter. The collapse of Lehman Brothers in September deepened the global credit crunch, pushing the Hong Kong interbank lending rate to its highest in almost a year on Oct 13.
'Rising unemployment will spread to other industries in Hong Kong, dealing a bigger blow to the economy and the property sector,' Citigroup analysts Tony Tsang and Marco Sze said in a Nov 18 report.
The outlook for mortgage lending may worsen as unemployment rises. HSBC Holdings, which has the biggest bank network in the city, this month cut 500 jobs in Asia and said that most of these would be in Hong Kong as the economy slows.
The proportion of new loans approved at more than 2.5 per cent below the best lending rate almost halved to 51.7 per cent in October, from 94 per cent a year earlier and 83.1 per cent in September, HKMA figures show.
The so-called best lending rate is 5 per cent at HSBC, Hang Seng Bank and BOC Hong Kong (Holdings). The benchmark lending rate at Standard Chartered and Bank of East Asia is 5.25 per cent.
Hong Kong's economy this month entered its first recession since the outbreak of the deadly Sars epidemic in 2003 as the global financial crisis cut exports and spending cooled, forcing the government to lower its full-year growth forecast.
Gross domestic product shrank a seasonally adjusted 0.5 per cent in the third quarter from the previous three months, the government said on Nov 14. The measure fell 1.4 per cent in the second quarter. The decline was more than the median estimate of a 0.2 per cent drop in a Bloomberg News survey of six economists.
The number of homeowners with apartments worth less than the mortgages they borrowed - negative equity - almost doubled in the third quarter to an estimated 2,568 cases worth HK$6 billion, the HKMA said.
The number of negative equity loans is still about 98 per cent less than the peak of 106,000 cases at the end of June 2003, when the city's economy was battling the effects of the severe acute respiratory syndrome outbreak.
Still, not all the news is gloomy. Hong Kong existing home sales posted a fourth consecutive weekly gain last week as falling prices lured buyers who have previously shunned the city's property market.
Transactions at 10 of Hong Kong's biggest private apartment projects rose to 44 in the week ended Nov 23, from 39 a week earlier, according to figures compiled by Centaline, one of the city's biggest real estate agencies. Home prices have fallen 22.4 per cent since reaching a near 10 year-high in March, according to Centaline figures. -- Bloomberg
(HONG KONG) Hong Kong mortgage loans fell for a third month in October as banks tightened lending amid an economic slowdown and a freeze in global credit.
Banks in Hong Kong approved some HK$13.7 billion (S$2.7 billion) of new mortgage loans last month - 40 per cent less than a year earlier, figures from the Hong Kong Monetary Authority (HKMA) show. Loans fell 5.9 per cent from September, the central bank said yesterday.
Hong Kong home prices have slumped at least 22 per cent from their March peaks, according to Centaline Property Agency, and the number of people whose homes are worth less than their outstanding mortgages more than doubled in the third quarter. The collapse of Lehman Brothers in September deepened the global credit crunch, pushing the Hong Kong interbank lending rate to its highest in almost a year on Oct 13.
'Rising unemployment will spread to other industries in Hong Kong, dealing a bigger blow to the economy and the property sector,' Citigroup analysts Tony Tsang and Marco Sze said in a Nov 18 report.
The outlook for mortgage lending may worsen as unemployment rises. HSBC Holdings, which has the biggest bank network in the city, this month cut 500 jobs in Asia and said that most of these would be in Hong Kong as the economy slows.
The proportion of new loans approved at more than 2.5 per cent below the best lending rate almost halved to 51.7 per cent in October, from 94 per cent a year earlier and 83.1 per cent in September, HKMA figures show.
The so-called best lending rate is 5 per cent at HSBC, Hang Seng Bank and BOC Hong Kong (Holdings). The benchmark lending rate at Standard Chartered and Bank of East Asia is 5.25 per cent.
Hong Kong's economy this month entered its first recession since the outbreak of the deadly Sars epidemic in 2003 as the global financial crisis cut exports and spending cooled, forcing the government to lower its full-year growth forecast.
Gross domestic product shrank a seasonally adjusted 0.5 per cent in the third quarter from the previous three months, the government said on Nov 14. The measure fell 1.4 per cent in the second quarter. The decline was more than the median estimate of a 0.2 per cent drop in a Bloomberg News survey of six economists.
The number of homeowners with apartments worth less than the mortgages they borrowed - negative equity - almost doubled in the third quarter to an estimated 2,568 cases worth HK$6 billion, the HKMA said.
The number of negative equity loans is still about 98 per cent less than the peak of 106,000 cases at the end of June 2003, when the city's economy was battling the effects of the severe acute respiratory syndrome outbreak.
Still, not all the news is gloomy. Hong Kong existing home sales posted a fourth consecutive weekly gain last week as falling prices lured buyers who have previously shunned the city's property market.
Transactions at 10 of Hong Kong's biggest private apartment projects rose to 44 in the week ended Nov 23, from 39 a week earlier, according to figures compiled by Centaline, one of the city's biggest real estate agencies. Home prices have fallen 22.4 per cent since reaching a near 10 year-high in March, according to Centaline figures. -- Bloomberg
Occupancy Costs Fall In S'pore: CBRE
Source : The Business Times, November 27, 2008
But survey finds Republic is world's 9th most expensive office market
The republic is still one of the most expensive places in the world to do business in, even though office occupancy costs here have dropped, the latest survey by CB Richard Ellis (CBRE) shows.
As in the firm's previous survey in May, Singapore was the world's ninth most expensive office market, though occupancy cost dropped to US$135.13 per square foot per year from US$139.31 in May.
In CBRE's November 2007 survey, Singapore posted the world's biggest 12-month increase in office occupancy costs. But in the May 2008 survey, it dropped to third place. And in the latest ranking, it is 13th.
Occupancy costs here rose 27.8 per cent in the 12 months to November 2008, down from 86 per cent in the 12 months to May 2008. CBRE's chief global economist Raymond Torto said that globally the rate of change is generally slowing, and in some markets the pricing direction is down. 'Our current perceptions are greatly affected by the current economic malaise.' he said. 'We tend to forget how fast rents and occupancy costs were rising over the past 12 months. The turn in rent trajectory will provide some relief to occupiers and angst to owners.'
Abu Dhabi in the United Arab Emirates (UAE) registered the fastest-growing office occupancy costs in CBRE's November 2008 Survey. Costs there jumped 94.6 per cent in the past 12 months.
'The rise in occupancy costs in the UAE has reflected market fundamentals - limited supply of quality office space and high demand from international firms, primarily law firms, financial institutions and real estate and construction companies planting a footprint in the UAE,' CBRE said. Ho Chi Minh City in Vietnam, which registered the fastest-growing occupancy costs CBRE's May 2008 ranking, fell to second spot in the latest survey. Costs there rose 51.4 per cent in the past 12 months.
London's West End and Moscow remain the world's two most expensive office markets. Hong Kong's CBD, Tokyo's Inner Central District and Mumbai's Nariman Point round out the top five.
But survey finds Republic is world's 9th most expensive office market
The republic is still one of the most expensive places in the world to do business in, even though office occupancy costs here have dropped, the latest survey by CB Richard Ellis (CBRE) shows.
As in the firm's previous survey in May, Singapore was the world's ninth most expensive office market, though occupancy cost dropped to US$135.13 per square foot per year from US$139.31 in May.In CBRE's November 2007 survey, Singapore posted the world's biggest 12-month increase in office occupancy costs. But in the May 2008 survey, it dropped to third place. And in the latest ranking, it is 13th.
Occupancy costs here rose 27.8 per cent in the 12 months to November 2008, down from 86 per cent in the 12 months to May 2008. CBRE's chief global economist Raymond Torto said that globally the rate of change is generally slowing, and in some markets the pricing direction is down. 'Our current perceptions are greatly affected by the current economic malaise.' he said. 'We tend to forget how fast rents and occupancy costs were rising over the past 12 months. The turn in rent trajectory will provide some relief to occupiers and angst to owners.'
Abu Dhabi in the United Arab Emirates (UAE) registered the fastest-growing office occupancy costs in CBRE's November 2008 Survey. Costs there jumped 94.6 per cent in the past 12 months.
'The rise in occupancy costs in the UAE has reflected market fundamentals - limited supply of quality office space and high demand from international firms, primarily law firms, financial institutions and real estate and construction companies planting a footprint in the UAE,' CBRE said. Ho Chi Minh City in Vietnam, which registered the fastest-growing occupancy costs CBRE's May 2008 ranking, fell to second spot in the latest survey. Costs there rose 51.4 per cent in the past 12 months.
London's West End and Moscow remain the world's two most expensive office markets. Hong Kong's CBD, Tokyo's Inner Central District and Mumbai's Nariman Point round out the top five.
Redas Urges 3-Way Plan To Boost Confidence
Source : The Business Times, November 27, 2008
Real Estate Developers Association of Singapore (Redas) president Simon Cheong called last night for a three-way action plan involving developers, financiers and the government to shore up confidence in the property market.
The plan would involve moderating new supply, supporting demand and introducing fiscal measures to help ease funding for the industry, Mr Cheong said.
'For the real estate market to ride out the storm created by the global credit crisis, two imperatives stand out,' he said. 'First, market stability is important to prevent widespread decimation of asset values. And second, confidence must be shored up by keeping credit markets functioning.
'Only with confidence will demand return to the market. Pricing alone does not lead to sales volume. Sentiment and confidence lead to sales volume.'
Mr Cheong was giving the president's address at Redas's 49th Anniversary dinner, the theme of which was 'Living In a World Class Sustainable City'.
The event at Shangri-La Hotel was well attended, with even Redas patron Kwek Leng Beng, executive chairman of Hong Leong Group, making an appearance. Before the dinner, Redas top brass held private talks with National Development Minister Mah Bow Tan, who was guest of honour at the function.
In his speech, Mr Cheong shied away from specifying what measures developers would like the government to introduce to help the property market.
But property consultancy Knight Frank's managing director Tan Tiong Cheng made a few suggestions. 'Tax concessions affecting the property market could help reduce business costs and provide relief to developers immediately, yet leave the government flexibility to withdraw the measures when the market improves,' he said.
He suggested the authorities reinstate the deferment of stamp duty payment to the date of issue of Temporary Occupation Permit for properties under development. At present, buyers have to pay stamp duty within 14 days of their option to purchase being accepted.
The government should also revert to the formula of calculating development charges based on 50 per cent of appreciation in land value, instead of the current 70 per cent.
And property tax exemptions for vacant land, land under development and completed industrial and commercial buildings would help cut the cost of doing business and provide relief to developers so they don't have to rush construction of new projects, given weak demand, Mr Tan said. He also called on the authorities to consider reviewing the stamp duty rate, which now peaks at 3 per cent.
Last month, the Ministry of National Development (MND) announced a halt in state land sales through the confirmed list until first-half 2009. Mr Tan suggested MND could go further and announce a freeze on confirmed-list land sales for the next two years.
'This would provide a psychological booster and create more confidence and stability in the market, so banks and sellers don't panic,' he said.
He also suggested extending the CPF Housing grant available to first-time buyers of executive condos (ECs) and resale HDB flats to private home buyers. 'If necessary, minimum holding conditions could be imposed for private home buyers taking the CPF grant, which is what happens for ECs,' he said.
Real Estate Developers Association of Singapore (Redas) president Simon Cheong called last night for a three-way action plan involving developers, financiers and the government to shore up confidence in the property market.
The plan would involve moderating new supply, supporting demand and introducing fiscal measures to help ease funding for the industry, Mr Cheong said.'For the real estate market to ride out the storm created by the global credit crisis, two imperatives stand out,' he said. 'First, market stability is important to prevent widespread decimation of asset values. And second, confidence must be shored up by keeping credit markets functioning.
'Only with confidence will demand return to the market. Pricing alone does not lead to sales volume. Sentiment and confidence lead to sales volume.'
Mr Cheong was giving the president's address at Redas's 49th Anniversary dinner, the theme of which was 'Living In a World Class Sustainable City'.
The event at Shangri-La Hotel was well attended, with even Redas patron Kwek Leng Beng, executive chairman of Hong Leong Group, making an appearance. Before the dinner, Redas top brass held private talks with National Development Minister Mah Bow Tan, who was guest of honour at the function.
In his speech, Mr Cheong shied away from specifying what measures developers would like the government to introduce to help the property market.
But property consultancy Knight Frank's managing director Tan Tiong Cheng made a few suggestions. 'Tax concessions affecting the property market could help reduce business costs and provide relief to developers immediately, yet leave the government flexibility to withdraw the measures when the market improves,' he said.
He suggested the authorities reinstate the deferment of stamp duty payment to the date of issue of Temporary Occupation Permit for properties under development. At present, buyers have to pay stamp duty within 14 days of their option to purchase being accepted.
The government should also revert to the formula of calculating development charges based on 50 per cent of appreciation in land value, instead of the current 70 per cent.
And property tax exemptions for vacant land, land under development and completed industrial and commercial buildings would help cut the cost of doing business and provide relief to developers so they don't have to rush construction of new projects, given weak demand, Mr Tan said. He also called on the authorities to consider reviewing the stamp duty rate, which now peaks at 3 per cent.
Last month, the Ministry of National Development (MND) announced a halt in state land sales through the confirmed list until first-half 2009. Mr Tan suggested MND could go further and announce a freeze on confirmed-list land sales for the next two years.
'This would provide a psychological booster and create more confidence and stability in the market, so banks and sellers don't panic,' he said.
He also suggested extending the CPF Housing grant available to first-time buyers of executive condos (ECs) and resale HDB flats to private home buyers. 'If necessary, minimum holding conditions could be imposed for private home buyers taking the CPF grant, which is what happens for ECs,' he said.
Limits To What Govt Can Do, Says Mah
Source : The Business Times, November 27, 2008
It cannot dictate to banks on loans or work against market forces on property
National Development Minister Mah Bow Tan told developers yesterday 'there are limits to what the Government can and should do' to ensure the long-term stability and smooth functioning of the property market.
Toast to the future: (from left) Simon Cheong, president of Redas; MND Minister Mah; Kwek Leng Beng, Redas's patron, at its 49th anniversary
'For instance, we cannot dictate to banks that they should extend loans to companies or individuals with weak financial standing,' he said.
'We also cannot work against market forces and try to prop up property prices artificially. Such efforts are not sustainable and will not be beneficial to the health of the property market in the long run.'
Speaking at the Real Estate Developers Association of Singapore's 49th anniversary dinner at the Shangri-La Hotel, Mr Mah said any action the Government takes must be carefully calibrated.
'Any measure seen to be knee-jerk or excessive might even weigh market sentiment down further,' he said. 'It is in our interest to ensure that property prices move in line with economic fundamentals, as this affects home ownership, asset values, retirement savings and other sectors of the economy.'
But he gave the assurance that the Government will keep a close watch on the situation and will not hesitate to take further measures if necessary.
Last month, the Ministry of National Development (MND) suspended Government Land Sales through the confirmed list until the end of first-half 2009.
Since then, MND has received various suggestions from Redas and other stakeholders on how to help the property sector. 'We will study these suggestions as we continue to monitor the property market closely,' Mr Mah said yesterday.
He also told developers that with slower economic growth 'it is inevitable that demand will be lower and (property) prices will soften'. The official private home price index slipped 2.4 per cent in the third quarter from Q2.
On a more upbeat note, Mr Mah said the committed pipeline of major projects secured in the past few years will create a steady stream of job opportunities and sustain capital spending in the economy in the next few years.
'At Marina Bay alone, we have invested close to $5.7 billion in infrastructure and we will continue to invest to support the future growth of Marina Bay and to enhance connectivity with the existing city,' he said.
The Government will also continue with several key infrastructure and housing projects to support medium to long-term economic growth and social needs, as well as to rejuvenate older estates. Mr Mah stressed the importance of the real estate sector.
First, real estate services and construction together accounted for about 9.6 per cent of overall GDP and 13 per cent of total employment in Singapore in 2007.
Second, the health of the property market affects other major sectors of the economy. 'Third, as a country with the highest rate of home ownership of more than 90 per cent, the property sector is where most of us have invested our hard-earned lifelong savings,' Mr Mah said.
'Our economic prospects in the medium term and our fundamentals remain strong. I urge you to continue building up capabilities within the industry and use this period to strengthen your competitive advantages so you are well prepared to capitalise on opportunities that may emerge when the current economic uncertainties subside.'
It cannot dictate to banks on loans or work against market forces on property
National Development Minister Mah Bow Tan told developers yesterday 'there are limits to what the Government can and should do' to ensure the long-term stability and smooth functioning of the property market.
Toast to the future: (from left) Simon Cheong, president of Redas; MND Minister Mah; Kwek Leng Beng, Redas's patron, at its 49th anniversary'For instance, we cannot dictate to banks that they should extend loans to companies or individuals with weak financial standing,' he said.
'We also cannot work against market forces and try to prop up property prices artificially. Such efforts are not sustainable and will not be beneficial to the health of the property market in the long run.'
Speaking at the Real Estate Developers Association of Singapore's 49th anniversary dinner at the Shangri-La Hotel, Mr Mah said any action the Government takes must be carefully calibrated.
'Any measure seen to be knee-jerk or excessive might even weigh market sentiment down further,' he said. 'It is in our interest to ensure that property prices move in line with economic fundamentals, as this affects home ownership, asset values, retirement savings and other sectors of the economy.'
But he gave the assurance that the Government will keep a close watch on the situation and will not hesitate to take further measures if necessary.
Last month, the Ministry of National Development (MND) suspended Government Land Sales through the confirmed list until the end of first-half 2009.
Since then, MND has received various suggestions from Redas and other stakeholders on how to help the property sector. 'We will study these suggestions as we continue to monitor the property market closely,' Mr Mah said yesterday.
He also told developers that with slower economic growth 'it is inevitable that demand will be lower and (property) prices will soften'. The official private home price index slipped 2.4 per cent in the third quarter from Q2.
On a more upbeat note, Mr Mah said the committed pipeline of major projects secured in the past few years will create a steady stream of job opportunities and sustain capital spending in the economy in the next few years.
'At Marina Bay alone, we have invested close to $5.7 billion in infrastructure and we will continue to invest to support the future growth of Marina Bay and to enhance connectivity with the existing city,' he said.
The Government will also continue with several key infrastructure and housing projects to support medium to long-term economic growth and social needs, as well as to rejuvenate older estates. Mr Mah stressed the importance of the real estate sector.
First, real estate services and construction together accounted for about 9.6 per cent of overall GDP and 13 per cent of total employment in Singapore in 2007.
Second, the health of the property market affects other major sectors of the economy. 'Third, as a country with the highest rate of home ownership of more than 90 per cent, the property sector is where most of us have invested our hard-earned lifelong savings,' Mr Mah said.
'Our economic prospects in the medium term and our fundamentals remain strong. I urge you to continue building up capabilities within the industry and use this period to strengthen your competitive advantages so you are well prepared to capitalise on opportunities that may emerge when the current economic uncertainties subside.'
Subscribe to:
Posts (Atom)
.jpg)
