Prime Office Rents In Taipei May Dip 5-10% In '09: DTZ

Source : The Business Times, January 8, 2009

(TAIPEI) Prime office rentals in Taiwan's capital Taipei could fall 5-10 per cent this year and the value of real estate across the island will likely shrink further due to a sluggish economy, property services company DTZ said yesterday.

Cloudy outlook: The value of real estate across Taiwan is expected to shrink further due to a sluggish economy

Listed companies that purchased land in Taipei after the third quarter of 2008 could also suffer a loss of about 20 per cent in the value of the real estate after Taiwan adopted new accounting rules on Jan 1.

'Things are looking very cloudy for the real estate sector right now, and the industry will have to decide whether or not they want to push prices down further,' said Billy Yen, general manager of DTZ's Taiwan unit. Office rentals in prime Taipei areas fell 2.26 per cent in the fourth quarter from the previous three months, logging the first decline since late 2004, as the global financial crisis sapped demand for high-end real estate.

An expected increase in the supply of office space and weakened demand could push rents down even further this year, Mr Yen said.

DTZ figures showed that the value of foreign investors' real estate investments fell to NT$19.9 billion (S$889.5 million) last year from NT$44.5 billion in 2007, and the company was 'even more conservative' on the sector's outlook for this year. -- Reuters

HK Property Prices May Fall By 20% In H1

Source : The Business Times, January 8, 2009

Prices will fall as jobless rate rises, Credit Suisse analysts say

(HONG KONG) Hong Kong residential property prices may fall by about a fifth in the first half of this year, taking the decline from their peak last year to 41 per cent, Credit Suisse analysts wrote in a report.

'Given that prices have already fallen by 23 per cent, we believe the remaining downside for the property market is about 20 per cent,' Cusson Leung and Joyce Kwock, based in Hong Kong, and other analysts wrote in a report dated Tuesday . Prices will fall as the jobless rate rises, they wrote.

The Hang Seng Property Index, tracking six of Hong Kong's biggest developers, has gained 12 per cent this year, amid signs of a rebound in real estate prices and transaction volumes. The gauge slumped 55 per cent in 2008, making it the worst performer among four industry groups within the benchmark Hang Seng Index.

Hong Kong's Land Registry reported this week that the number of residential units sold in December rose 44 per cent compared with November. Still, sales last month were 65 per cent lower than in December 2007.

'We believe it is not time to chase the entire sector now,' Credit Suisse said in the report.

Office rents in Hong Kong are expected to fall this year as vacancy rates climb, Credit Suisse said. Rents in shopping malls may drop as much as 20 per cent as private consumption shrinks, they said.

Cheung Kong (Holdings) Ltd and Sun Hung Kai Properties Ltd, Hong Kong's two biggest developers by market value, remain top picks at Credit Suisse with 'outperform' ratings, the report said. Sun Hung Kai has successfully marketed several projects recently and will start sales on another after the Chinese New Year holiday later this month, the analysts wrote.

Hong Kong landlords Wharf (Holdings) Ltd and Swire Pacific Ltd are also top picks because their offices in less-central locations and prime shopping malls will be relatively less affected than their rivals' will be, the analysts wrote. -- Bloomberg

CBRE: More Than Half Of High-End Condos Unsold

Source : The Business Times, January 8, 2009

It also sees prices falling 10-15% from $2,000-$2,400 in Q4 last year

Fifty-five per cent of about 2,200 units in luxury projects launched by developers between 2006 and 2008 remained unsold in November 2008, according to CB Richard Ellis (CBRE).

And the property consultancy firm is tipping a 10-15 per cent fall this year in the price of luxury apartments/condos, which slid to about $2,000 to $2,400 psf of strata area in Q4 last year from $2,000-3,300 psf a year earlier.

The figures refer to existing luxury developments such as Ardmore Park, Four Seasons Park and Grange Residences.

As for new luxury condos/apartments, the average launch price fell to $2,000 to $2,600 psf in Q4 2008 from $2,000 to $4,000 psf in Q4 2007, says CBRE.

Caveats for only 1,096 luxury apartments/condos in prime districts 9 and 10 were lodged in 2008 based on filings by Jan 7, 2009 - a mere 19 per cent and 32 per cent of sales in 2007 and 2006 respectively.

The number of apartments sold for more than $10 million dropped to 82 last year from 143 in 2007. Still, the 2008 figure was above the 22 units sold in 2006.

Most luxury projects launched in 2006 and early 2007 are fully sold, such as Ardmore II and Tate Residences.

But several projects, particularly those released during or after second-half 2007, remain on the market. 'By then, news of the sub-prime crisis had caused the market to pull the brakes,' CBRE said.

In the landed housing segment, the firm predicts a drop of about 10 per cent this year in the price of Good Class Bungalows (GCBs).

Last year, the average price of GCBs rose 20.7 per cent to a record $822 per sq ft (psf) of land area.

'GCB prices recorded very strong growth in 2006-7,' said CBRE director (luxury homes) Douglas Wong. 'This upswing in prices spilled over into the first half of last year. Right up to July 2008, average GCB prices continued to raise the benchmark.

'Also, the capacity of owners to hold prices added to the resilience in this segment in the second half of 2008.'

The highest psf price in a GCB transaction last year was $1,303 for a property in Leedon Road with only 21,097 sq ft of land. In absolute price terms, it fetched $27.5 million.

The all-time record price for a GCB in Singapore is $1,899 psf, set in October 2007 when 32H Nassim Road was sold for $25.5 million.

While the average price of GCBs rose last year, the number and value of transactions fell.

Forty-nine GCBs changed hands for a total of $785 million in 2008, down from 87 worth $1.15 billion in 2007 and 119 worth $1.23 billion in 2006.

CBRE said: 'Going forward, we expect the activity in the luxury residential market to be lukewarm, similar to the pace in H2 2008. Hence, the number of GCBs and luxury apartments transacted will be small.'

Property Investment Sales Fall In Q4 '08

Source : The Business Times, January 8, 2009

It is the lowest level in five years, says a DTZ report

Property investment sales in the fourth quarter of 2008 fell to the lowest level since Q4 2003, with most players sidelined as prices weakened and credit tightened, a DTZ report shows.

Dormant market: The residential sector slowed tremendously in 2008 as interest in collective sales abated

Total transaction volume was just $352 million - a 74 per cent fall from Q3 2008. With sales falling rapidly towards the end of the year, total transaction value in 2008 plunged to $15.8 billion - a mere one-third of that in 2007 and two-thirds of that in 2006.

The investment market is expected to remain dormant in the first three to six months of 2009 as investors wait for prices to fall further and for tight credit conditions to ease, DTZ said.

Transactions will be confined to the private sector as government land sales through the confirmed list have been suspended and reserve sites are unlikely to be triggered.

'The second half of 2009 is likely to see more deals as the price gap between sellers and buyers closes,' said Shaun Poh, DTZ's senior director of investment advisory services.

'How much the investment market recovers will depend on the depth and length of the economic and property downturns.'

Although there was no major office deal in the second half of 2008, the office sector was still the main driver of investment sales during the year with $5.6 billion or 35 per cent of total sales - an increase from 24 per cent in 2007. All the major office transactions were in the first half of 2008. In the second half, all office deals were below $30 million.

The residential sector slowed tremendously in 2008 as interest in collective sales abated. Residential transaction value tumbled 82 per cent year-on-year to only $3.9 billion, accounting for 25 per cent of total sales, compared with 49 per cent in 2007.

There were only seven residential collective sales in 2008, compared with 150 in 2007. 'With high construction cost, financing difficulties and weak market sentiments, developers are shunning residential collective sales,' DTZ said.

Transactions in the industrial sector, by contrast, increased in 2008 as investors shied away from high office prices. Some $3.4 billion of industrial property was transacted, or double the amount in 2007.

About half of 2008's deals resulted from the divestment of JTC's industrial properties in Q2. And despite the restrained mood in Q4, several notable industrial transactions took place, including the purchase of Applied Materials Building by German fund manager Union Investment.

DTZ said that investment by real estate investment trusts (Reits) was subdued in the second half of 2008, as they shifted attention away from acquisitions and focused on refinancing and deleveraging.

There were only three purchases by Reits in Q3 2008 and just one in Q4, compared with 22 purchases in the first half of the year.

Property Transactions With Contract Dates Between Dec 1 - 20, 2008